Court auditors say LA homelessness services are 'extremely broken'

Los Angeles’ system of addressing homelessness is “extremely broken" and cannot be fixed in patches, court-appointed auditors said during a hearing on Thursday.

The city is under various court-enforced agreements to create more shelter for unhoused people, but the auditors have been unable to verify the number of beds the city claims to have created to comply with those agreements, according to a review finalized Wednesday by consulting firm Alvarez & Marsal.

“One of the primary obstacles was the inability to verify the number of beds the City reported” to the court, the review states.

As LAist reported on Thursday, officials withheld spending records from the court’s auditors that show the city only paid for a small portion of the shelters it was reporting to the court.

The auditors' findings helped prompt U.S. District Judge David O. Carter to schedule an evidence-gathering hearing for May 27 to examine whether the city of L.A. has breached its obligations to create more shelter. The hearing comes as Carter considers transferring control of homelessness spending from city officials to a court-appointed receiver.

“Because there are serious doubts about the city’s ability to fulfill its obligations … the upcoming evidentiary hearing is necessary now,” Carter said at Thursday’s hearing.

“All of this needs to be looked at in a different way,” said Diane Rafferty, a managing director at Alvarez & Marsal. Rafferty said a review of the city’s homelessness services “needs to start from the ground up.”

The city has challenged plans for the evidence-gathering hearing on procedural grounds.

What happened

On Thursday, Carter said the evidentiary hearing will examine all of the city’s alleged failures and breaches of two major agreements in the lawsuit that require it to create thousands more shelter beds: The “Roadmap” agreement from 2020 and the L.A. Alliance settlement deal from 2022.

He added that the focus would include allegations that the city incorrectly reported its encampment-reduction efforts to show compliance with the settlement, and a lack of documentation supporting the city’s claims that it is complying with the Roadmap agreement.

The Roadmap agreement requires the city to expand the number of shelter beds for unhoused people in the city of L.A. by adding and paying for 6,000 new beds. And as part of the Alliance settlement, the city agreed to create nearly 13,000 new shelter and housing beds for unhoused Angelenos. The county separately agreed to create 3,000 mental health and addiction treatment beds.

The May 27 evidence-gathering hearing is scheduled to last up to four days. Carter said he plans to decide by the end of June whether to hand control of L.A. city homelessness spending to a court-appointed receiver, after the parties submit follow-up arguments next month.

No-show from Mayor Karen Bass

Carter requested L.A. Mayor Karen Bass and Gov. Gavin Newsom attend Thursday’s hearing. Neither official made an appearance.

The judge expressed disappointment that Bass wasn’t there, calling it a “lost opportunity” to have additional conversations with the court and that he wants to talk directly with the mayor and governor. The conversation has to “start at the top of responsibility,” Carter said, adding that he’s no longer willing to talk with their staff.

While Bass and other city elected officials previously spoke directly with Carter, they have changed their position in the case in recent days. A city court filing this week argued that it’s improper to ask top level officials to testify without first trying to get information from lower level officials.

The city also revoked permission for the judge to have out-of-court conversations with Bass and other city officials.

One elected official did show up in court: Kathryn Barger, chair of the L.A. County Board of Supervisors, who sat in the jury box during Thursday’s hearing. Carter said the Board of Supervisors has become more involved, and that Barger has been one of the few officials who joined him in Skid Row to see things in person for herself.

Carter denied a request by the city to pause his decision in order to allow L.A. Alliance to argue at the evidentiary hearing that the city breached the Roadmap agreement, so that it can be reviewed by an appeals court.

Earlier in the hearing, Carter pushed back on the city’s argument that L.A. Alliance lacked legal standing to challenge the city’s compliance because they weren’t a party to the Roadmap agreement.

Carter pointed to language in the agreement that gives the court jurisdiction to enforce it. He also said the agreement was in “direct response” to L.A. Alliance’s litigation and in response to a preliminary injunction he had issued.

Carter said there’s an “absolute expectation that we’ll be going forward” with the hearing on May 27.