The Los Angeles Homeless Services Agency (LAHSA) is preparing for potential legal action against the U.S. Department of Housing and Urban Development (HUD) following a June 11 suspension of the agency from federal grant activity. The suspension, which cites alleged mismanagement, has placed an estimated $150 million in federal homelessness funding at risk and threatens to disrupt the regional distribution of millions more in aid, according to agency officials.
Why is LAHSA facing a federal suspension?
HUD Secretary Scott Turner announced the suspension this month, stating the federal government would no longer fund an organization that prioritizes “its own self-interests” over the people it serves. HUD has accused LAHSA of repeatedly certifying that it possessed financial controls and conflict-of-interest safeguards that it did not actually maintain. This federal intervention follows significant local scrutiny; for instance, a November 2024 report by the L.A. County auditor-controller found that LAHSA had paid contractors late and failed to secure repayment agreements for some. Additionally, a March 2025 court-ordered review identified dysfunction at the agency, contributing to a failure to properly track billions in homelessness spending.

How much funding is currently at stake?
The financial impact of the suspension remains a point of contention between the agency and federal regulators. LAHSA’s interim CEO, Gita O’Neill, stated during a Monday commission meeting that the initial HUD correspondence was “vague,” creating uncertainty regarding which funds were impacted. According to the agency, $115 million in fiscal year 2025 grants are currently awaiting HUD’s final signature. When accounting for both executed and unexecuted contracts spanning fiscal years 2022 through 2025, the agency’s deputy chief financial officer estimates the total exposure at $150 million. While this federal suspension is significant, LAHSA’s city, county and state funding—which makes up the majority of the agency’s budget—remains unaffected.
What happens to the region’s federal grant applications?
The suspension has complicated the region’s ability to secure future federal support through the Continuum of Care grant program. On June 18, HUD informed LAHSA that it is “no longer eligible” to act as the “collaborative applicant” for the region, a role that involves applying for and distributing federal homelessness dollars. Since 2021, HUD has awarded $944 million to the Los Angeles Continuum of Care through this process. Ronald Kurtz, HUD’s assistant secretary for community planning and development, indicated that the agency may permit eligible entities to apply directly for grants rather than routing them through LAHSA. The deadline for the fiscal year 2026 funding cycle is August 26, with approximately $241 million in regional funding at stake.

What are the next steps for the agency?
The LAHSA Commission voted unanimously on Monday to authorize legal action to challenge the suspension, though the agency has not specified the targets or timing of a potential lawsuit. Meanwhile, LAHSA is attempting to address the underlying financial concerns. O’Neill confirmed the agency has hired the accounting firm KPMG to conduct a financial overhaul, with recommendations expected to be presented to the public in July. Both the June 11 suspension and the June 18 notice regarding the collaborative applicant role carry separate 30-day windows for LAHSA to contest the findings.










