A judge is deciding whether to seize control of LA homeless spending. 5 things to know

A judge is deciding whether to seize control of LA homeless spending. Here are five things to know.

But first, let's catch you up on what's at stake and how we got here.

The fate of Los Angeles’ homelessness programs hangs in the balance. Final briefings were filed Tuesday to a judge deciding whether the city should lose control of hundreds of millions of dollars in homelessness spending.

The L.A. Alliance for Human Rights is asking U.S. District Court Judge David O. Carter to take control from the city of its homelessness budget. The L.A. Alliance, a group of downtown business and property owners, accuses the city of breaching court-enforced agreements to provide more than 19,000 new beds for unhoused people and remove thousands of encampments.

The alliance accuses the city of falsely declaring more beds than it has actually provided, failing to reach milestones for resolving encampments and ultimately disregarding its obligations.

The city adamantly disputes those allegations and has hired a team of seven attorneys at nearly $1,300 per hour each to defend the city, in addition to at least four in-house lawyers.

This month’s court drama follows five years of disputes between the L.A. Alliance and the city. In 2020, Los Angeles agreed to create and pay for 6,700 shelter beds for unhoused people in the city through June 2025. The city and the L.A. Alliance in 2022 entered into a settlement agreement in which the city promised to provide an additional 12,915 shelter beds by June 2027.

After five days of testimony in an evidentiary hearing and hundreds of pages of follow-up arguments, the decision is now in Carter’s hands. He has said he plans to issue a decision by the end of this month.

Now that you're caught up, here are five key things to know ahead of his decision.

1: What are the major disagreements?

There are three.

• Whether the city used “best efforts” to meet bed and encampment-clearing milestones: The city has not yet reached the 12,915 beds number it promised in the settlement agreement, which it argues  is not a breach of obligation, as it has two years left to reach that number. The L.A. Alliance says the city hasn’t provided a complete plan for how it will meet the bed requirement, violating the settlement agreement and inviting cause for consultation with a court.
• Whether procedure was followed after the January fires: The settlement says that after a natural disaster, parties would “meet and confer about any necessary and appropriate amendments” to their contract. After the January fires, the city says the natural disaster clause paused its obligation to fulfill the bed-creation and encampment-clearing requirements. The alliance disagrees, and says the settlement did not mandate that either party propose or agree to modified terms.
• Whether the city can take credit for “provided” beds: The alliance called out the city for claiming to provide beds that were not created as part of the agreements with the alliance. The alliance concluded that the city of L.A. was not providing any new beds, but “is simply taking credit for them.” The city argued that nothing in the agreement barred it from using external sources of funding when providing beds.

2: Have judges seized control of responsibilities from elected officials before?

It is uncommon.

Assigning a third-party administrator, also called a receiver, is often a last resort. Receivership is often used to protect property or assets, but in recent decades has been used to protect violations of core constitutional rights, particularly in cases with long records of violations. Recent receivership actions include a federal court takeover of California prisons’ mental health system in March and the seizing of New York City’s control over Rikers Island last month.

The city says assigning a receiver over its homeless funding is unconstitutional, as the federal court lacks authority to do so in a matter that concerns only state law. It also says the L.A. Alliance has disregarded other remedies, instead jumping to the most “radical” option, and the imposition of receivership would go far beyond the bounds of the original settlement agreement.

The L.A. Alliance disagrees, saying the city’s persistent non-compliance with a federal court order is grounds for judicial intervention.

The city also criticized the L.A. Alliance’s other proposed remedies, including payment of enhanced attorneys’ fees, additional investigations and reports, and increased housing for Skid Row.

3. How does recent LAHSA scrutiny play into this case?

Multiple issues with the Los Angeles Homeless Services Authority were brought up in court by the L.A. Alliance.

In recent months, the troubled agency has faced a series of scathing audits that criticized its transparency and management of funds, several allegations of official misconduct, and the withdrawal of over $350 million of annual taxpayer funding by L.A. County in April.

An audit by consulting firm Alvarez and Marsal failed to verify the city’s beds, unearthing missing expenditures and street addresses. The alliance found that at least 20% of the beds the city claims to be paying for are not in the city of L.A., and are as far away as Kern, Riverside and Orange counties. L.A. Alliance cited reporting from LAist to indicate the city’s inconsistency with its data, adding that “this Court cannot trust the data coming from LAHSA.”

The city has had to argue that concerns about LAHSA don’t justify giving authority over homelessness services to a receiver.

4. Where does Judge Carter stand?

Carter is no stranger to enacting sweeping reforms to tackle homelessness in L.A.

In April 2021, Carter issued an order for the city and county to shelter all unhoused people on Skid Row by the fall of that year, conduct audits and reports, and place $1 billion into escrow to address the homelessness crisis. The ruling was overturned by an appeals court that September.

In March, Carter blasted Mayor Karen Bass and other L.A. officials for failing to track billions of homelessness spending. He pointed to a series of LAHSA audits going back to 2007 that revealed the agency’s inability to properly track its spending. At the same meeting, he gave the officials until May to resolve a series of issues and conduct audits, or he said he would consider assigning a receiver.

5. Is this the end of the road for this case?

If Carter orders a receivership, his ruling would mark one of the most drastic actions a court has ever taken on homelessness in L.A.

And the city would almost certainly appeal.

Over two weeks, the city’s lawyers objected more than 2,000 times, which could lay a foundation for the city to challenge how the proceedings were conducted. The city’s attorneys repeatedly said in court — and in their final briefing — that “the City has a strong likelihood of prevailing on appeal.”