The U.S. Department of Housing and Urban Development said Thursday it would cut off funding to Los Angeles' lead homelessness services agency, accusing it of fraud.
The Los Angeles Homeless Services Authority, which has received $1 billion in government funding over the past five years, has shown "repeated false statements and its irresponsible actions and failures" including lack of financial management and safeguards, HUD said.
“Year after year, hundreds of millions of taxpayer dollars were funneled to LAHSA with little accountability," HUD Secretary Scott Turner said in a statement. "Meanwhile, homelessness skyrocketed. Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve.”
The move comes the same day that HUD's inspector general opened an investigation of LAHSA. HUD says it is immediately suspending the agency because investigations in 2023, 2024 and 2025 uncovered different problems.
Depending on the outcome of the investigation, HUD could debar LAHSA permanently, it said.
In a statement, Mayor Karen Bass said she also had concerns about LAHSA. And, she said she's also directed LA to move away from the agency. But, she also said the move endangers progrss in curtailing the city's homelessness.
"Threatening federal funds does nothing to house people and jeopardizes the progress Mayor Bass has led to reduce homelessness for two years in a row, after it only went up in Los Angeles for years," the statement said. "Ultimately people will lose their lives. We urge HUD to work with the City of Los Angeles to provide the necessary funding to reduce homelessness.”
Letter to LAHSA details allegations
In a letter to LAHSA CEO Gita O'Neill, HUD detailed a series of problems at the agency.
LAHSA, created by Los Angeles city and county in 1993, coordinates government funding from federal, state, and local sources. It uses those funds for both shelter and services, working with about 100 nonprofits, in a network called Los Angeles Continuum of Care.
Several local investigations uncovered problems at LAHSA. That includes a 2019 report from the Los Angeles City Controller that found LAHSA wasn't keeping proper records of costs and outcomes.
Several lawsuits also alleged "consistent and continued failures related to delays or misdirected payments, failed monitoring of performance, and adequate reviews, lack of payment, and integrity measures, and misconduct in operations," the HUD letter states.
"HUD cannot ignore LAHSA's wanton mismanagement of public funds," the letter states.
Earlier this year, LAHSA announced a restructuring after L.A. County formed its own County Department of Homeless Services and Housing, leading to a reduction in funding. That cost about 400 jobs and oriented the agency more to serving the city of Los Angeles. At the time, it said it hired KPMG to help reassess its finances.
LAHSA called the move "a blatant attempt to pull yet more resources from Los Angeles." In a statement, it laid out its reforms, and said it was improving.
"Local oversight actions have already resulted in strong repairs and reforms to LAHSA’s internal controls, which are accountable and viewable to the public," it said.
HUD has changed the direction of its homelessness programming under Turner, who is critical of “housing first” programs, which aim to provide housing quickly to homeless individuals. HUD sought a 13% budget reduction aimed at defunding some housing programs, claiming they were derailed by “woke” causes.
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Tristan Navera is a senior reporter on housing policy, covering trends and solutions in the housing market from Washington, DC. He was previously a senior reporter at Bloomberg Law, and before that covered real estate for the Washington Business Journal. Earlier in his career, he spent a decade reporting on business and real estate in Dayton and Columbus, OH. A Cincinnati native, he holds a journalism degree from Ohio University.
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