Judge blasts city of LA for 'fraud’ over safe sleep site funding and capacity numbers

There’s a parking lot in the city of Los Angeles lined with plywood platforms where unhoused people can set up tents and access meals, bathrooms and other services — all at taxpayers’ expense.

The Lincoln Safe Sleep Village in South L.A. opened in 2022 and is one of only a handful of similar encampments around the state. Public records show it was contracted to provide space for up to 88 residents last fiscal year.

But two observers who made separate visits to the location during that time — one of them a commissioner with the governing body that oversees the Los Angeles Homeless Services Authority, the other a “special master” appointed by a federal judge — found the site was operating at half capacity.

Still, LAHSA paid a nonprofit organization $2.3 million to operate the site — with 88 spots.

A federal judge this week described the situation as “obvious fraud.”

The nonprofit that runs the site, San Francisco-based Urban Alchemy, told LAist it reduced the site’s capacity by half in April 2024 at the request of L.A. city officials and LAHSA.

The homeless services agency did not update its funding formula for the site until more than a year later.

LAHSA records show Urban Alchemy was paid in full. Because of the reduced capacity at the site, the cost per person served there was about $63,900 for the year — or more than $5,300 each month, according to LAist’s review of records.

The nonprofit said it’s been operating and staffing the Safe Sleep campground according to the terms of its contract with LAHSA.

“We want to make abundantly clear that we have never misreported any data or invoices for reimbursement for the services provided at this site,” said Jess Montejano, a spokesperson for Urban Alchemy. “These issues are more a reflection of LAHSA’s disorganization and management.”

The situation has emerged at a time when LAHSA is under intense scrutiny for failing to properly manage hundreds of millions of dollars in contracts with service providers, and the city of L.A. remains under a court order to provide more shelter for the city’s unhoused residents.

Federal court scrutiny

During a sometimes tense federal court hearing Wednesday, U.S. District Court Judge David O. Carter described the situation at the Lincoln Safe Sleep Village as "obvious fraud."

The hearing was the latest in a series of court appearances stemming from a settlement between the city of L.A. and a group of downtown business and property owners known as the L.A. Alliance for Human Rights.

The judge has been overseeing the settlement, specifically the city’s progress in meeting obligations to provide housing and shelter for unhoused people. The agreement requires the city to open nearly 13,000 new shelter beds by next year.

In April, when the city of L.A. submitted its quarterly bed report to Carter, it described the South L.A. campground program as having 88 beds.

But approximately half of those beds had been unavailable for about a year, according to Urban Alchemy.

According to testimony on Wednesday, Michele Martinez — the special master Carter appointed to help enforce the terms of the settlement — visited the Safe Sleep Village on June 9. She tried to verify the number of beds available at the site with city officials, but did not get an answer, Carter said.

Three weeks later, the city responded by questioning whether Martinez’s inquiry was proper.

In a June 30 email, L.A. Deputy City Attorney Jessica Mariani argued that Martinez had “no authority or basis to review or provide any assessments.” However, Mariani added, the city was still looking into Martinez’ questions about the safe sleep site.

The city later adjusted the count to 46 spots in its July 2025 update to the court.

Carter questioned Mariani during Wednesday's hearing, noting that the city (through LAHSA) continued to pay full amounts for more than 80 spots at the site and tell the court those spots existed, even though at least half appeared to not be available at the time.

"Is the City's position when the Special Master notes obvious fraud and that the documents don't match, that you are bringing forth to this Court that Ms. Martinez should disregard that and not report this to the Court when you try to curtail her monitoring activities?” the judge said, according to a transcript of the proceedings.

Carter described the city’s actions as potentially “contemptuous.”

LAist reached out to Mariani and the City Attorney’s Office, but has not yet received a response.

Weeks before the special master’s visit to the site, LAHSA Commissioner Justin Szlasa stopped by the South L.A. campground. The 10-member LAHSA Commission makes policy and funding decisions for the regional homelessness agency.

Szlasa said later that he noticed during his visit that half of the campground was closed down. He said budget documents sent to him for approval described the site as a “low-cost, high-impact” program serving 88 people.

“We at LAHSA must ensure that we receive what we are contracting for,” Szlasa wrote in a social media post describing his findings.

He filed a public records request with LAHSA to obtain the contracts and payment details for the Urban Alchemy site in South L.A.

“I want to understand, first and foremost, why this was misrepresented to the Commission,” Szlasa said. “Then I want to understand if Urban Alchemy was actually in compliance with the contracts.”

He continued: “I am concerned this Safe Sleep program — which I happened to arbitrarily spot-check — is not an outlier.”

A drone's view of the South LA site prior to one section closing down in 2024.

(

Jay L. Clendenin

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Los Angeles Times via Getty Images

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LAHSA and Urban Alchemy responses

LAist reached out to LAHSA for more information about its contract with Urban Alchemy and about the number of people who lived at the Lincoln Safe Sleep Village during the last fiscal year.

LAHSA authorities said the site had a 41% average “utilization rate” during the budget year that ended in June. They said that's based on capacity and occupancy information Urban Alchemy provided in a database called the Homeless Management Information System.

But the agency’s calculations appear to have been based on outdated capacity data, not on how many spaces were actually available for use.

LAHSA said it was Urban Alchemy’s responsibility to update the information in the database.

"All providers are required to record their data in [the database]; if the data is inaccurate, it would be based on that data entry,” a LAHSA spokesperson said.

Urban Alchemy said LAHSA is to blame.

“We will not be a patsy or let our integrity be attacked because of the decisions made by and directed to us by LAHSA,” Montejano told LAist Thursday. “We are also extremely frustrated with the lack of communication, transparency, and bureaucracy here.”

The nonprofit told LAist it has operated under the terms of its contract, and that it followed direction from the city to close down part of the site, reducing its capacity.

LAHSA instructed Urban Alchemy to stop accepting any new clients to set up camp in the east half of the campground — one of two parking lots — in March 2024, according to emails reviewed by LAist. In one email, LAHSA staff told a senior leader at the nonprofit that the push to close down a portion of the site came from the L.A. city administrative officer.

LAist has reached out to LAHSA and the city administrative officer with questions about those instructions, but has not received responses.

An agency spokesperson said LAHSA has been “engaged with” Urban Alchemy about the site since April 2024, and that the program has been “under review.”

Property records show a South L.A. nonprofit called the Coalition for Responsible Community Development purchased the property where the tent camp operates in 2020. It has plans to convert the larger property into a 60-unit affordable housing complex.

Until that project is ready to start construction, the site is expected to keep operating as a safe sleeping location, according to the office of L.A. City Councilmember Curren Price, who represents the area.

“When the site first opened, beds were consistently full,” Angelina Valencia-Dumarot, Price’s communications director, told LAist Thursday. “That’s why the current occupancy rate is especially concerning.”

She said council offices are too often left out of updates by LAHSA.

“We can’t address problems quickly if we’re finding out only after numbers fall or from the press,” Valencia-Dumarot said.

A sign at the South LA campground

(

Jay L. Clendenin

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Los Angeles Times via Getty Images

)

LAHSA manages more than $742 million in contracts with 121 service providers.

Over the past year, audits and reports found the agency had mismanaged hundreds of millions in contracts for homeless services, including a failure to collect accurate data on nonprofit vendors or properly track how they spent taxpayer dollars.

The South L.A. campground is the only “safe sleep” site of its kind currently in LAHSA’s portfolio, the agency told LAist. LAHSA also administers funding for about a dozen “safe parking” sites, where unhoused people can legally park and live out of vehicles they own.

LAHSA has paid Urban Alchemy more than $12 million to operate the Lincoln Safe Sleep Village since 2021, according to the agency’s records.

What should this cost? 

At full capacity, the monthly operating cost for the South L.A. campground would have been about $2,180 per participant each month — instead of $5,300.

Shayla Myers, a senior attorney with the Legal Aid Foundation of Los Angeles, said these campground sites are expensive to operate.

“They are the kinds of programs that shock the conscience of taxpayers,” Myers said, adding that they cost much more than paying rent, while keeping people unsheltered.

LAHSA staff say per-person costs for homeless programs differ based on location, hours and staffing needs.

Examples include:

• The region’s safe parking sites, which receive about $1,200 per participant per month to provide a set of similar resources to vehicle dwellers, according to LAHSA contract documents. 

• LAHSA programs that provide temporary rental assistance to families and cost about $2,000 per household per month, officials said. 

• The city of L.A.’s Inside Safe program, which moves people from encampments to hotel rooms. It costs about $6,900 per person served each month, according to a recent report by the city’s chief administrative officer.

Urban Alchemy has operated temporary campgrounds for unhoused people in the city and county of L.A. since 2021, including one in Virgil Village that has since closed and another in Culver City that is still operating.

In 2021, L.A.’s city administrative officer reported the Virgil Village campground cost more than $2,600 per participant per month.

Culver City opened its campground in 2023, so that the city could legally enforce a ban on camping in public approved that February. The city spent nearly $4.6 million on the campground in 2025, according to budget documents.

The Culver City site has space for 40 people, and the city says the occupancy rate is around 85% this year. That’s a cost of more than $11,000 per person served each month.

Myers said interventions like this will always cost more than moving people into homes.

“It doesn’t matter whether you're paying for a hotel room, a shelter, or in this case, lines drawn on a parking lot,” said Myers. “Continuing to provide shelter to folks who are unhoused — rather than providing permanent housing — is always going to be exponentially more expensive.”

After the city finalized its budget in June, LAHSA allocated $1.2 million — instead of $2.3 million — to Urban Alchemy for the South L.A. campground for the current budget year.

LAHSA now lists the site’s capacity as 46 tent spaces, authorities said. The agency said the site now has a “utilization” rate of 70%, compared to 41% the previous fiscal year.

That’s at a cost of about $3,100 per participant per month.

LAist's Nick Gerda and Makenna Sievertson contributed to this story.