The Los Angeles region\u2019s troubled homeless services agency announced this month that it will no longer manage the region\u2019s federal homelessness dollars, amid scrutiny from the Trump administration. <\/p>\n
Now, a federal court must help determine who will manage roughly $240 million in annual federal funding after the L.A. Homeless Services Authority gives up that long-held job in the coming months.<\/p>\n
At a hearing Wednesday, U.S. District Judge David O. Carter said most of his attention is on who will administer the round of federal money that will be awarded in December and distributed next year. <\/p>\n
The only potential near-term successor discussed in court was L.A. County, which created a new homelessness department and applied for the role. County officials have promised much stronger accountability and transparency.<\/p>\n
But the city of L.A., where most of the region\u2019s unhoused people live, is also interested in taking over some of LAHSA\u2019s duties. The city could eventually try to break off and form its own regional body to receive federal funds, Carter said.<\/p>\n
\u201cBut that\u2019s for the future,\u201d Carter said. \u201cFor now, we have to focus on providing for people experiencing homelessness \u2014 and also fraud and corruption.\u201d<\/p>\n
\u2018The watchdog wasn\u2019t watching\u2019<\/p>\n
LAHSA has been used as a punching bag, Carter said, but he blamed recent cases of alleged theft of taxpayer funds<\/a> on a broader \u201cfailure of government\u201d by both HUD and LAHSA.<\/p>\n \u201cThe watchdog wasn\u2019t watching, and the money got distributed without accountability,\u201d Carter said.<\/p>\n In the meantime, Carter said, LAHSA isn\u2019t going anywhere. He said any transition must unfold gradually to avoid displacing people from housing and services.<\/p>\n \u201cWe\u2019re going to have to live with LAHSA for at least some period of time,\u201d Carter said. \u201cThe question might be how much?\u201d <\/p>\n How soon could the county take over?\u00a0<\/p>\n Carter said he agreed with LAHSA\u2019s decision to entrust another administrator to manage the money.<\/p>\n Attorneys for the U.S. Department of Housing and Urban Development (HUD) told Carter the next round of annual funding would be distributed over 2027.<\/p>\n Carter acknowledged HUD may be uneasy sending that money to LAHSA, the very agency it is investigating for fraud. Carter said he was struggling with the issue himself.<\/p>\n Carter signaled that he wants to see federal funding transferred to the county by January if it is chosen as LAHSA\u2019s successor.<\/p>\n \u2018The devil is in the details\u2019<\/p>\n At the hearing, federal prosecutor Bill Essayli said the Trump administration would rather reach an agreement than litigate. He said \u201cthe devil is in the details\u201d when it comes to any transition away from LAHSA.<\/p>\n \u201cWe want assurances of anti-fraud measures,\u201d Essayli said. \u201cThat way the money is never stolen again.\u201d<\/p>\n Carter said he hoped a transition plan would keep the parties from spending millions of dollars on attorneys\u2019 fees that could otherwise go toward housing and services.<\/p>\n How we got here<\/p>\n In June, the Trump administration suspended LAHSA from applying for federal funding, alleging years of financial mismanagement. LAHSA then sued, and Carter blocked the suspension in August. Carter\u2019s decision has so far held up on appeal.<\/p>\n LAHSA\u2019s governing commission voted this month to give up its federal roles next year, including managing federal homelessness dollars and conducting the region\u2019s annual homeless count. Local officials have been taking applications from organizations that want to take over those duties in 2027.<\/p>\n Meanwhile, investigations into fraud have been widening. Prosecutors have so far charged six people connected to L.A. homeless service providers. LAHSA has said none of its staff are implicated.<\/p>\n When asked if LAHSA\u2019s current or past leadership has been culpable, Essayli recently said, “It is not against federal law to be incompetent, unfortunately.\u201d<\/p>\n Major shifts happening<\/p>\n For decades, county, city and federal dollars have been managed mainly by LAHSA. But those funding streams are now being redirected in the wake of repeated findings of mismanagement.<\/p>\n