Los Angeles Homeless Services Agency Faces Funding Issues

Los Angeles’ primary agency for homeless services has lost federal funding after failing to effectively address fraud concerns. This follows a previous cut in county funding.

A letter from the Fraud Elimination Task Force, in collaboration with the Department of Housing and Urban Development (HUD), notified the Los Angeles Homeless Services Authority (LAHSA) on Thursday that its funding would be immediately suspended pending an investigation. Reports indicate that HUD’s inspector general is looking into possible infractions linked to LAHSA and its leadership.

“Taxpayers will not fund Los Angeles’ fraudulent homeless industrial complex,” the letter emphasized.

Included in the letter were mentions of conflicts of interest, financial negligence, misconduct, and a lack of oversight.

Over the past five years, HUD has poured nearly $1 billion into the LAHSA-led Los Angeles Continuum of Care.

According to the letter, “Ending LAHSA’s involvement in federal programs is essential for fulfilling our mission in Los Angeles.” It continued, citing LAHSA’s severe mismanagement as a key reason for both the county’s withdrawal of funds and the city of Los Angeles considering similar action.

“HUD cannot overlook LAHSA’s gross mishandling of public funds,” the correspondence asserted, adding that continuing to funnel taxpayer dollars to an organization under investigation for potential abuse of federal funds would only exacerbate the homelessness crisis, rather than alleviate it.

HUD’s letter referenced a federal judge’s statement from the previous year, accusing LAHSA of “clear fraud” for seeking full funding for a shelter of 88 beds when only a fraction were actually in use.

Additionally, HUD pointed to a former LAHSA executive, Va. Lecia Adams Kellum, citing conflicts of interest. Reports from LAist indicated that her signing of a $2.1 million deal with a nonprofit led by her husband raised eyebrows. LAHSA has stated that this was a mistake and she has since been distanced from nonprofit-related dealings.

LAHSA’s reported budget for this year is about $828 million, with funding sources that include roughly 46% from Los Angeles County, 35% from the City of Los Angeles, and smaller percentages from federal and state sources, along with private donations.

Last year, Los Angeles County opted to cut $300 million in funding starting this July and launched a new department aimed at enhancing accountability in tackling homelessness.

HUD Secretary Scott Turner reiterated that the agency would “fund results, not corrupt failures,” stating that abuses have persisted while taxpayer contributions rose and homelessness increased.

LAHSA acknowledged receipt of the letter, warning that the department’s decision might lead to many individuals who were previously housed returning to the streets.

In their response, LAHSA described HUD’s actions as an effort to drain resources from Los Angeles. They argued that many issues have already been resolved or are in the process of being addressed. Additionally, they confirmed plans to modernize their financial practices.

The agency expressed hope that a fair review by HUD’s inspector general would reveal the effectiveness of LAHSA in tracking progress and investment in homelessness reduction efforts over the past two years. They stated, “While this review unfolds, our priority is to explore all options to ensure ongoing federal support for the thousands of people relying on LAHSA.”