A federal judge has stayed an order by the U.S. Department of Housing and Urban Development to suspend funding to the Los Angeles Homeless Services Agency while a definitive ruling on the matter plays out.
U.S. District Court Judge David O. Carter on Thursday noted the court concluded that it should not decide the application for a preliminary injunction and that the government must have adequate time to brief this issue.
The court set a hearing on the motion for preliminary injunction for Aug. 6 at 9 a.m. in the Courtroom 1 in the First Street Courthouse in Los Angeles.
With LAHSA facing a deadline to submit its application to HUD for regional homelessness grants by Aug. 26, the judge will attempt to rule on the matter before that date, according to a court document.
“Today’s ruling is encouraging. We appreciate that the court is taking this matter seriously and giving it the attention it deserves,” LAHSA Interim CEO Gita O’Neill said in a statement. “This order lowers the anxieties of thousands of families, veterans and seniors in the L.A. region who rely on federal funding for rental assistance.”
“By issuing a stay on HUD’s unjustified action, Judge Carter has ensured that LAHSA can continue its vital work as the core of our Continuum of Care and as our region’s lead applicant for federal funding.” O’Neill added. “We look forward to our day in court on Aug. 6, when we will have the opportunity to argue for a definitive ruling.”
On Monday, LAHSA filed a lawsuit the Trump administration, challenging a decision to suspend federal funding over allegations of fraud and widespread mismanagement.
LAHSA officials said they are attempting to prevent any interruption of federal resources that support housing and services for more than 11,000 people across Los Angeles County.
In addition to the federal complaint, LAHSA filed an application for a temporary restraining order to prevent HUD from suspending funding while the matter is reviewed in court.
On June 11, the U.S. Department of Housing and Urban Development announced it had suspended federal funding to LAHSA.
HUD Secretary Scott Turner said in a statement that HUD had “uncovered evidence of LAHSA’s false statements and its irresponsible actions and failures,” including a lack of financial management and lack of safeguards against conflicts of interest.
The Los Angeles Continuum of Care, led by LAHSA, has received nearly $1 billion in taxpayer dollars over the last five years. Despite federal assistance, L.A. remains the epicenter of the nation’s “drug-fueled” homeless crisis, according to Turner.
HUD cited prior financial reviews despite extensive corrective actions already undertaken by the county-city homeless agency, and ongoing efforts to modernize its financial systems and strengthen internal controls, according to LAHSA officials.
LAHSA’s lawsuit strongly disputes the legal and factual basis for the suspension.
The suit alleges several inaccuracies and misrepresentations in HUD’s notification letter to LAHSA, including improperly attributing a failure to spend over $500 million in homeless services funding to LAHSA when the source does not mention the agency.
Other inaccuracies in the HUD letter include conflating reviews, assessments, public comments and media statements — which do not follow rigorous, established standards — with formal audits; misrepresenting the context of corrective actions or cooperation; and suggesting wrongdoing without evidence, LAHSA argued.
“We have worked to build real transparency at LAHSA. Weaponizing old, corrected financial reviews to suddenly strip housing from thousands of people makes no sense — legally or practically,” LAHSA Commission Chair Amber Shiekh said in a statement.
“LAHSA cannot stand by while an unjustified federal decision threatens to pull the rug out from under Los Angeles’s homeless services system,” Shiekh added.
Despite the allegations that Los Angeles has failed to reduce homelessness, recent data showed significant progress.
In June, Gov. Gavin Newsom announced California achieved the largest reduction in unsheltered homelessness in the nation last year, and saw the largest decline in unsheltered homelessness since 2009, citing HUD’s data.
Los Angeles experienced a 10.3% drop in unsheltered homelessness, with the largest regional drop nationwide, according to HUD’s data.