A federal judge Thursday heard arguments but did not immediately rule in a lawsuit filed by the Los Angeles Homeless Services Authority challenging the Trump administration’s decision to suspend federal funding over allegations of fraud and widespread mismanagement.
U.S. District Court Judge David O. Carter previously issued a stay in the U.S. Department of Housing and Urban Development’s move to suspend federal funding to the agency.
With LAHSA facing a deadline to submit its application to HUD for regional homelessness grants by Aug. 26, the judge has indicated he will attempt to rule on the matter before that date.
LAHSA officials said they are attempting to prevent any interruption of federal resources that support housing and services for more than 11,000 people across Los Angeles County.
In addition to the federal complaint, LAHSA filed an application in Los Angeles federal court for a temporary restraining order to prevent HUD from suspending funding while the matter is reviewed in court.
On June 11, the U.S. Department of Housing and Urban Development announced it had suspended federal funding to LAHSA.
HUD Secretary Scott Turner said in a statement that HUD had “uncovered evidence of LAHSA’s false statements and its irresponsible actions and failures,” including a lack of financial management and lack of safeguards against conflicts of interest.
The Los Angeles Continuum of Care, led by LAHSA, has received nearly $1 billion in taxpayer dollars over the last five years. Despite federal assistance, L.A. remains the epicenter of the nation’s “drug-fueled” homeless crisis, according to Turner.
HUD cited prior financial reviews despite extensive corrective actions already undertaken by the county-city homeless agency, and ongoing efforts to modernize its financial systems and strengthen internal controls, according to LAHSA officials.
LAHSA’s lawsuit strongly disputes the legal and factual basis for the suspension.
The suit alleges several inaccuracies and misrepresentations in HUD’s notification letter to LAHSA, including improperly attributing a failure to spend over $500 million in homeless services funding to LAHSA when the source does not mention the agency.
Other inaccuracies in the HUD letter include conflating reviews, assessments, public comments and media statements — which do not follow rigorous, established standards — with formal audits; misrepresenting the context of corrective actions or cooperation; and suggesting wrongdoing without evidence, LAHSA argued.
“We have worked to build real transparency at LAHSA. Weaponizing old, corrected financial reviews to suddenly strip housing from thousands of people makes no sense — legally or practically,” LAHSA Commission Chair Amber Shiekh has said in a statement.
“LAHSA cannot stand by while an unjustified federal decision threatens to pull the rug out from under Los Angeles’s homeless services system,” Shiekh added.
Despite the allegations that Los Angeles has failed to reduce homelessness, recent data showed significant progress.
In June, Gov. Gavin Newsom announced California achieved the largest reduction in unsheltered homelessness in the nation last year, and saw the largest decline in unsheltered homelessness since 2009, citing HUD’s data.
Los Angeles experienced a 10.3% drop in unsheltered homelessness, with the largest regional drop nationwide, according to HUD’s data.