Judge blocks Trump administration from suspending $240M in LA homelessness funds

A federal judge temporarily blocked the Trump administration from cutting LAHSA out of Los Angeles’ federal homelessness funding system, keeping roughly $241 million flowing to programs serving more than 11,000 people.

The ruling leaves LAHSA, the region’s main homeless services agency, in its key federal roles through the 2026 funding cycle.

HUD suspended LAHSA from federal grant programs in June, citing financial mismanagement, conflicts of interest and concerns about the agency’s financial safeguards.

But U.S. District Judge David O. Carter ruled Thursday that HUD moved too abruptly, with no replacement ready to take over.

“LAHSA may be dysfunctional,” Carter wrote. “But thousands of unhoused individuals rely on these services.”

Carter did not clear LAHSA of the problems that triggered the federal investigation.

He acknowledged the agency’s long history of financial and oversight failures and allowed federal investigations into potential fraud and misuse of taxpayer money to continue.

But that history also hurt HUD’s case.

Carter found the federal government had known about LAHSA’s problems for years but waited until the middle of the 2026 funding process to suspend it.

“None of this is new,” Carter wrote.

“Paul Webster, Executive Director of LA Alliance for Human Rights, told The Post on Thursday that Judge Carter’s ruling is a balanced response to what LA should do next to address the homelessness crisis. 

“It recognizes that LAHSA has disqualified itself as a responsible and effective administrator of federal funds and also that those who are being hurt the most are the people living and dying on the street,” said Webster.

“HUD has taken action where LA leaders have failed  – it has brought to a head the fact that LA cannot continue to hope that things get better, we must act.  A trial will unpack what specifically has gone wrong at LAHSA and, hopefully create a path forward.” 

HUD Secretary Scott Turner punched back with stronger words on X saying, “The Trump administration will not back down from doing what is RIGHT and I will be working with @TheJusticeDept to fight this legally.”

He went on to say “the court ordered HUD to send tens of millions of dollars directly to LAHSA, an organization that has proven to be incompetent with YOUR tax dollars. The money that YOU worked hard to earn! YOUR tax dollars are worth fighting for.

The homeless and VETERANS on our streets who need the RIGHT type of treatment are worth fighting for. Our LAW ENFORCEMENT officers risking their own safety on the ground are worth fighting for, and the PEOPLE OF LA who have to live in and around drug-ridden streets are worth fighting for.”

LAHSA serves as the lead applicant for Los Angeles’ federal homelessness grants and helps distribute the money to government agencies and nonprofit providers across the region.

It also operates systems used to track homeless people, connect them with housing and conduct the annual homeless count.

After suspending LAHSA, HUD proposed allowing individual providers to apply directly to Washington instead.

LAHSA sued, warning the sudden change could disrupt housing and services.
At an Aug. 6 hearing, federal attorneys argued LAHSA’s troubled record showed Washington could no longer trust the agency with hundreds of millions of taxpayer dollars.

“We simply cannot continue to fund failure,” First Assistant U.S. Attorney Bill Essayli told the court. “We are the federal government, and it is our money.”

Carter agreed Los Angeles has serious problems overseeing homelessness spending. An independent audit he previously ordered exposed major weaknesses in financial oversight, including LAHSA’s failure to provide documentation involving nearly 2,300 housing sites.

But Carter found HUD could not dismantle the existing system without a workable replacement.
“It is much easier to destroy a dysfunctional homelessness system than to take the time and care necessary to make the system function properly,” he wrote.

The reprieve may be temporary.

Carter ordered Los Angeles’ regional homelessness board to immediately begin accepting applications from organizations that could take over LAHSA’s key federal roles in 2027.

LAHSA can also apply to keep them.

The board must report back to Carter by Oct. 13, with HUD responding by Oct. 20.

Both sides return to court Oct. 27, when Carter will review the transition and the next phase of the fight over who controls Los Angeles’ federal homelessness funding.

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