HUD Halts LA Homeless Agency Funding Pending Investigation

Scott Turner speaks at the Opportunity Zone Conference at the White House in April 2019.

The Department of Housing and Urban Development announced Thursday that it was cutting off a major source of funding to the Los Angeles Homeless Services Authority, the embattled joint city and county agency. 

The suspension of funds is pending an investigation launched by HUD’s Office of Inspector General into whether LAHSA violated federal laws, according to a letter HUD sent to LAHSA’s CEO on Thursday. 

The outcome of that investigation determines whether funding is reinstated or whether the agency is permanently debarred. 

“Year after year, hundreds of millions of taxpayer dollars were funneled to LAHSA with little accountability,” HUD Secretary Scott Turner said in a release. “Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve.”

LAHSA has been in the crosshairs at a federal level before and was highlighted in President Donald Trump’s budget, which proposed eliminating continuums of care amid concerns about “fraud and corruption” among administering agencies like LAHSA. 

“Today, HUD announced an action that could put thousands of formerly homeless people back on the street,” the agency said in a statement to Bisnow. “While the review plays out, our immediate priority is to explore all available options to ensure that federal funds continue to support the thousands of people who have been housed through LAHSA and our broader rehousing system.” 

As of July 2025, federal funds accounted for approximately 7% of LAHSA’s annual budget, largely through the Continuum of Care program. The majority of federal funding supports keeping people in permanent housing. Ninety percent goes “directly to rental assistance,” LAHSA CEO Gita O’Neill told the Los Angeles Times in April. 

The news of the funding suspension comes about a month before Los Angeles County is slated to divert hundreds of millions of dollars from LAHSA to a new county agency, citing LAHSA’s record of poor oversight of contracts and spending.

Although the transition won’t happen until July, the decision already led to layoffs of nearly 300 workers this spring. Los Angeles County is the largest funding source for LAHSA, contributing roughly 46% of the agency’s budget, or about $379M. 

The agency has also been under local scrutiny for years. Its former CEO resigned in 2025 after reports that she signed a $2M contract with her husband’s employer. A review completed this year by independent auditors found serious issues with the accounting at the agency, which had an $875M budget in the last fiscal year. The city of Los Angeles is also weighing how to move away from LAHSA.  

In response to local reviews and audits, LAHSA said it has already taken important steps to modernize its financial systems and avoid repeating missteps. 

Mayor Karen Bass, who is on the governing board of LAHSA, agreed the organization’s track record was concerning but said she worried about federal actions leading to worsening conditions in the city of LA, which is the second-largest funding source for LAHSA.  

“Mayor Bass, too, has grave concerns about LAHSA and zero tolerance for mismanagement and negligence, which is why she previously directed the City to evaluate how to move away from the agency,” Bass’ press office said in a statement. “We urge HUD to work with the City of Los Angeles to provide the necessary funding to reduce homelessness.”