The U.S. Department of Housing and Urban Development notified the Los Angeles Homeless Services Authority on Thursday that the agency is barred from participating in federal funding competitions until HUD’s Office of Inspector General completes its investigation.

In its letter, HUD accused the agency, known as LAHSA, of mishandling public money and failing to make progress in reducing homelessness. Federal officials alleged the agency did not properly document when people left motel housing, used government funds to pay for services covered by a separate contract, and could not provide records verifying the existence of housing units it was responsible for.

“Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve,” HUD Secretary Scott Turner said in a statement announcing the action.

LAHSA, a joint city-county agency created in the 1990s, has long served as the central coordinator for homelessness services across the Los Angeles region, which has the largest unhoused population in California. The agency receives federal homelessness funds on behalf of the city, county and nonprofit providers.

Last year, LAHSA received nearly $200 million through HUD’s Continuum of Care program, the largest federal funding stream for homelessness services.

The suspension comes after months of scrutiny and upheaval at the agency. Two critical audits found LAHSA had not adequately tracked spending or program outcomes. The Los Angeles County Board of Supervisors later pulled county funding from LAHSA and shifted it to a newly created county agency. LAHSA’s former chief executive resigned after criticism over contracts signed with a nonprofit connected to her husband. In April, the agency laid off 284 employees.

Despite those problems, LAHSA remains the designated lead homelessness agency for the region, making the federal suspension potentially far-reaching for programs that serve people living on the streets, in shelters and in supportive housing.

In a statement, LAHSA warned that blocking the funding could undermine existing efforts and put thousands of formerly homeless residents at risk of returning to homelessness.

“This appears to be a blatant attempt to pull yet more resources from Los Angeles, a city they have targeted time and again, when it is clear that LAHSA has either corrected or is in the process of correcting nearly all of the issues raised,” spokesperson Ahmad Chapman said.

Chapman said the agency is strengthening internal controls, updating its financial systems and improving how it tracks its programs. He said LAHSA’s immediate focus is to “explore all available options” to keep federal homelessness dollars flowing to the region.

Los Angeles Mayor Karen Bass said she shares concerns about LAHSA’s performance but argued that cutting off funding would worsen the crisis rather than solve it.

“Ultimately people will lose their lives,” Bass said in a statement. “We urge HUD to work with the City of Los Angeles to provide the necessary funding to reduce homelessness.”

The action comes as homelessness in Los Angeles County has shown signs of decline. According to the point-in-time count, the number of unhoused people dropped in both 2024 and 2025. Last year, the county had an estimated 72,000 unhoused residents.

The Trump administration has also been pushing broader changes to how Los Angeles and other California communities address homelessness. Federal officials are seeking to shift money away from permanent housing programs and toward temporary shelters, while giving preference to housing programs that require sobriety.

Earlier this month, HUD opened the latest application period for Continuum of Care funding and included those policy changes. The National Alliance to End Homelessness has estimated the changes could cost California nearly $238 million in funding for permanent housing and could put close to 15,000 people at risk of losing their homes.

California has sued over an earlier Trump administration attempt to impose similar changes. That case remains pending.

Original source: CalMatters

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