Judge keeps Trump suspension of LAHSA on hold as key homelessness roles shift to LA County

A federal judge on Tuesday agreed to keep the Trump administration’s suspension of the Los Angeles Homeless Services Authority on hold, allowing the joint city-county agency, known as LAHSA, to keep running key homelessness systems while it hands its federal roles to L.A. County.

That means federal homelessness money will continue to flow to the L.A. region through LAHSA while the agency’s lawsuit over the suspension plays out.

U.S. District Judge David O. Carter’s order came at the joint request of LAHSA, the U.S. Department of Housing and Urban Development and a regional planning group called the L.A. Continuum of Care. The decision came as Carter’s earlier order blocking the suspension was set to expire Tuesday.

LAHSA sued the federal housing department, HUD, in June. The L.A. Continuum of Care joined the lawsuit on LAHSA’s side.

Lawyers for both sides told the court they’re close to settling LAHSA’s entire lawsuit. “In terms of a settlement agreement, we are 90% there,” said First Assistant U.S. Attorney Bill Essayli, adding that a signed settlement agreement could be ready in about two weeks.

Their joint request, filed Monday, came the same day the L.A. Continuum of Care voted to make L.A. County the lead agency for the region’s homelessness database (in a 253-43 vote) and its system for matching unhoused people with housing (in a 219-38 vote).

With those votes, the county’s new homelessness department has now been formally selected to take over all four federal roles currently held by LAHSA — in a process ordered by Carter. The group picked the county earlier this month to run the annual homeless count and manage the region’s applications for federal homelessness funding.

In court Tuesday, Carter said the city and county have “bickered” for years, and that LAHSA was created “to solve that problem but was just a punching bag on many occasions.”

Sarah Mahin (center) speaks earlier this year about the launch of the new county homelessness department she will direct. Standing behind her are L.A. County Supervisors Kathryn Barger (left) and Lindsey Horvath.

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What does all of this mean for how L.A. homelessness will be addressed?

In the short term, not much will change for people seeking shelter and services. LAHSA will keep running the system used to match people with housing and the database where outreach workers log the people their organizations help.

But the handoff to L.A. County will happen in stages. Shayla Myers, an attorney for the Continuum of Care, told the court the settlement would include “staggered transition times.”

HUD’s lawyers said the database and housing matching system would move last, no later than the end of next year.

Once the transition is complete, one government will be in charge of the region’s core homelessness systems. That’s a big shift.

For years, these roles have been held by LAHSA, a joint agency overseen by both the city and county, which made it hard to hold anyone accountable when the system fell short.

The shift in overseeing the homeless count will be one major change for the region. The timing hasn’t been announced and is being worked out in settlement talks. For now, LAHSA plans to run the next count in January, according to the agency’s leadership.

LAHSA has run the count for about two decades, and its accuracy has faced repeated scrutiny. In August, the L.A. City Council unanimously called for a review of this year’s count, citing possible errors.

How did we get here? 

HUD suspended LAHSA from federal programs in June, citing alleged financial mismanagement. The federal housing department announced proposed penalties against the L.A. Continuum of Care, saying it wanted to have local service providers apply directly to HUD for funding.

LAHSA sued later that month, calling the suspension “a baseless attempt to eliminate” both the agency and the L.A. Continuum of Care. LAHSA argued HUD’s stated reasons were a cover for the Trump administration's goal of dismantling the regional system. The L.A. Continuum of Care joined the lawsuit on LAHSA’s side, arguing that “HUD’s actions threaten to dismantle the very role Congress assigned to local Continuums of Care.”

In August, Carter, the federal judge, blocked the suspension through Oct. 27 to avoid disrupting funding for homeless services amid a transition away from LAHSA.

He also ordered the L.A. Continuum of Care to start looking for replacements for LAHSA in four key federal roles. As of this week, that selection process is complete, and the parties in the case agree LAHSA needs to keep running key homelessness systems until those roles move to L.A. County.

The court’s order Tuesday keeps the suspension on hold until the end of the lawsuit. It also blocks HUD’s proposed penalties against the Continuum of Care for now, so local providers won’t be forced to apply to HUD directly.

HUD and local officials are now ironing out a transition plan. HUD’s lawyers said the responsibilities would fully move away from LAHSA no later than the end of 2027.

Carter Hewgley is chief strategy officer for the county’s Department of Homeless Services and Housing, which will take over the responsibilities from LAHSA. Hewgley said at Monday’s meeting the department “is committed to a transition plan that preserves vital subject matter expertise and continuity of services.”

LAHSA budgeted about $24 million to run all four of these roles in the current budget year, according to a report from the county’s chief executive officer.

LAHSA spokespeople did not immediately respond to requests for the number of employees who support those functions.

Bill Essayli, First Assistant United States Attorney for the Central District of California, speaks on the phone outside the United States District Court in Los Angeles in December 2025.

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What will happen next with the lawsuit?

HUD, LAHSA and the L.A. Continuum of Care will continue negotiating a settlement.

Essayli said Tuesday the parties have agreed to more than two dozen provisions, with four or five still left to work out.

HUD’s attorneys said the department needs assurances that federal money will be spent properly during the transition, but flagged that the agency doesn’t have the funds to pay for a court-appointed monitor.

As settlement negotiations continue, one sticking point is “harm reduction,” which refers to programs that aim to make drug use less dangerous. Harm reduction strategies can include using public money to distribute clean pipes or syringes.

Essayli said that going forward, “federal dollars can no longer be used for harm reduction.”

Myers, the L.A. Continuum of Care’s attorney, argued that harm reduction is already covered by HUD’s current funding rules and doesn’t need to be part of the settlement.

Carter's order Tuesday requires HUD to process the region’s pending funding application — for about $240 million — as usual.

HUD's current rules bar federal grant money from going to organizations that knowingly distribute drug paraphernalia or knowingly allow illicit drug use on their property.

HUD’s broader funding guidelines are being challenged in federal court in Rhode Island. In the meantime, a federal appeals court has allowed HUD to move forward with them.

HUD's June notice suspending LAHSA did not mention harm reduction. It cited LAHSA's alleged failures in financial management, internal controls and safeguards against conflicts of interest. It also described what HUD called “repeated false statements” to the federal agency.

On Tuesday in a downtown L.A. courtroom, the federal judge pressed the parties to quickly settle their remaining differences.

“Ultimately, you hold the cards in terms of approval,” Carter told HUD’s lawyers. “You have to be happy with this.”

The attorneys said they expect to finish working out the details by the end of this week.

Carter also weighed in on a separate deal between the city and county of L.A. over how the city will use the systems once the county takes over.

In court Tuesday, he displayed the agreement’s terms and warned that deals like it “cannot supplant my rulings.”

“It’s essential to this court that we have a centralized authority, one place of accountability,” he said. “We don’t want a decentralized LAHSA situation again…We’re done with that.”