The Trump administration suspended the Los Angeles Homeless Services Authority from receiving federal funds on Thursday, citing repeated mismanagement of funds and a lack of oversight of conflict of interest protections.
In a letter, Deputy Secretary of the Department of Housing and Urban Development Andrew Hughes told LAHSA that the agency has reason to believe that the administration may have violated federal law and that funding will be suspended pending an investigation by the HUD inspector general.
Depending on the outcome, funding may be reinstated or LAHSA may be permanently banned.
“HUD cannot ignore LAHSA’s mismanagement of public funds,” Hughes said in his letter. “Diverting dollars from appropriate programs to LAHSA only makes the problem of homelessness worse.”
Jerry Jones, executive director of the Greater LA Coalition on Homelessness, which represents 63 groups that provide services to the county’s homeless population, had a different view.
“This is intended to create chaos,” he said.
Federal funding made up 8% of LAHSA’s annual budget — about $69 million — this fiscal year, most of which pays for permanent housing subsidies through HUD’s program known as Continuum of Care, agency officials said.
In a statement, LAHSA said HUD’s action “could put thousands of formerly homeless people back on the street” and that it is looking at “all available options” to keep federal dollars flowing.
Established in 1993 as a city-state federal agency, LAHSA oversees the region’s response to homelessness and collects funds from city, county, state and federal governments to do so.
In recent years, the organization has faced constant criticism from the community for mismanagement and lack of oversight of its programs and finances.
After two significant audits, the county voted last year to divest most of its funding from LAHSA, starting in July, and establish its own homeless department. The city is exploring similar options.
In recent months, another audit, required by the federal government and delivered in the past, found “significant deficiencies in the internal control of financial reporting” during the 2025 financial year.
Nonprofit providers with contracts with LAHSA have also repeatedly complained about delayed payments.
In its letter, HUD cited these issues — and the contract LAHSA has with the nonprofit that employed the then-CEO — as evidence that the local agency improperly assured the federal government that it had adequate safeguards and that HUD needed to take “immediate action to protect the public interest.”
In its statement, LAHSA said it has “corrected or is in the process of correcting almost all of the issues raised” by the housing agency and hopes that if the investigation is fair “it will see how our programs now allow us to clearly track the work and investments that have resulted in LA doing the best in the country in reducing homelessness over the past two years.”
Indeed, after years on the rise in LA County, homelessness — particularly the number of people living on the streets — has declined in the past two years, according to LAHSA statistics.
Despite tens of thousands remaining on the streets, Los Angeles Mayor Karen Bass has made the reduction a cornerstone of her re-election campaign.
In a statement, his office said Bass supports exploring moving city money away from LAHSA because he is also “deeply concerned” about the agency, but the sudden freeze on federal dollars not only threatens recent progress, but “ultimately people will lose their lives.”
“We urge HUD to work with the City of Los Angeles to provide the funding needed to reduce homelessness,” Bass’ office said.
Los Angeles County Supervisor Kathryn Barger, the only Republican on the county’s five-member board, called HUD’s decision “serious” but also said it is “consistent with long-standing problems” identified at LAHSA.
“What’s most important to me is protecting the homeless people who rely on these services and the organizations that work every day to help them,” Barger said in a statement. “They should not bear the consequences of the management’s failure.”
Los Angeles City Council President Marqueece Harris-Dawson has promised local politicians and non-profit organizations that they will back down.
“Last year, Trump came after immigrants in our city, and now he’s trying to go after our homeless neighbors,” he said in a statement. “Like last year, we will not back down. We will stand with Mayor Bass, the County Board of Supervisors, and housing providers to fight this attack.”
Elizabeth Mitchell, an attorney for the LA Alliance for Human Rights, a nonprofit group suing the city and county over its handling of the homelessness crisis, agreed that HUD’s decision put LAHSA and the homeless population in a “difficult position.”
“But we welcome the government’s long-overdue recognition that the situation is unacceptable,” Mitchell said. “Real accountability (not the operative words associated with our local officials) is a necessary condition for helping people on the streets.”
The LA Alliance tried, but to no avail, to persuade the judge to introduce a housing program in the city, complaining that this was making it difficult for the city’s most vulnerable people.
County Administrator Lindsey Horvath, who led the county’s disbursement of funds to LAHSA, accused state officials of focusing on “recruitment and retaliation against Los Angeles.”
“This is motivation for advertising, not results,” he said in a statement. “I was asking for change and accountability at LAHSA, but if these managers want accountability, they have to work with LA County.”
