Court weighs options as LA and Trump administration face off over homelessness funding

A U.S. District judge will soon decide who controls hundreds of millions in federal funding meant to address L.A.’s homelessness crisis, as the Trump administration looks to sideline the region’s embattled lead homelessness agency.

The court will determine whether the L.A. Homeless Services Authority can submit an application for $240 million in federal funding this year and, if not, who can step up to apply for the homelessness money instead.

Homeless services providers across L.A. County rely on the annual funding to pay for shelter beds, housing and services for 11,000 people, according to local homelessness officials.

This year, the crucial federal funds are in limbo after the federal housing department suspended the agency, known as LAHSA, from grant activity in June, citing mismanagement. LAHSA responded by suing the Trump administration and asking the court to block the U.S. Department of Housing and Urban Development’s suspension while the broader legal fight plays out.

U.S. District Judge David O. Carter is expected to decide soon whether to temporarily block the suspension and allow LAHSA to continue to receive federal funding and perform other responsibilities while the case proceeds to a trial next year.

In a crowded hearing in Los Angeles Aug. 6, Carter appeared to be searching for a middle path that would acknowledge legitimate concerns about LAHSA’s history of dysfunction but avoid what he described as “the stark, god-awful situation of 11,000 people hitting the streets” if none of L.A.’s federal homelessness grants came through this year.

“If that occurred … I’d want to know what’s happening on the national level with HUD,” Carter continued. “And I want to know if Los Angeles was being punished.”

A woman pushes her belongings past a row of tents on the streets of Los Angeles on Feb. 1, 2021.

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FREDERIC J. BROWN AFP via Getty Images

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AFP

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What’s the backstory? 

LAHSA applies for and distributes federal funding for the entire regional homeless response system, including various other local government agencies and hundreds of nonprofit service providers across 85 cities within L.A. County.

The federal government argues LAHSA should not get to play that role anymore because it failed to meet federal oversight requirements, pointing to longstanding concerns about the agency's financial management and accountability.

“We simply cannot continue to fund failure,” said Bill Essayli, the first assistant U.S. Attorney, in court last week. “We are the federal government, and it is our money.”

LAHSA’s attorneys and local officials dispute the characterization the agency had violated any federal grant requirements. They said the suspension was abrupt and politically motivated.

“The actions will hurt the unhoused in Los Angeles and all of the stakeholders that service them — and that is the whole point,” Keri Curtis Axel, an attorney representing LAHSA, argued during the hearing last week.

Scott Turner, secretary of the U.S. Department of Housing and Urban Development, speaking at the Dream Center in Los Angeles in August 2026.

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Aaron Schrank

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How does L.A. receive federal homeless dollars?

LAHSA is a joint powers authority established by the city and county of L.A. to coordinate and manage public homelessness funds. One of LAHSA’s many responsibilities is serving as the region’s designated applicant for federal homeless assistance grants.

That responsibility was delegated to LAHSA by a separate federally mandated regional body called the L.A. Continuum of Care.

Run by a 21-member board, the L.A. Continuum of Care is responsible for setting regional funding priorities and designating the local entity that applies for federal homelessness grants. Continuums of Care are required across the country to apply for and receive federal money.

The under-the-radar coalition is the one forum where various government agencies and nonprofits are forced to sit down at the same table and collectively set priorities for how to spend homelessness funding.

“HUD chose instead to drop a bomb into the region and disrupt the most stable part of the homeless services response system,” said Shayla Myers, an attorney representing the L.A. Continuum of Care, who intervened in the lawsuit.

After it suspended LAHSA, the region’s chosen applicant, HUD said the local Continuum of Care no longer met federal requirements, and “remedial action” was necessary.

HUD proposed opening the application process up to allow homeless services providers to ask the federal government for money directly, bypassing LAHSA entirely.

The federal housing department has said it would delay starting that direct application process until after an order from the U.S. District Court in Los Angeles.

Myers called the suspension of LAHSA an “end-run around the congressional mandates” that require the decisions be made locally.

“This is just HUD’s latest attempt to take community control away and insert its own priorities into that funding stream,” she said.

LAHSA Commissioner Stephanie Graves and Gita O'Neill, LAHSA's interim CEO, at the press briefing for the 2026 homeless count at the Los Angeles Homeless Services Authority Commission Room in Los Angeles, on July 24, 2026.

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Nick Gerda

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LAist

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If not LAHSA, then who?

LAHSA’s attorneys argue it’s the only agency equipped for the task, and point out that HUD has consistently awarded it grants for decades.

City and county officials have offered to potentially step up and submit the application in LAHSA’s place, but last week Carter, the federal judge, questioned their ability to do so, especially on such short notice.

Until last week, the deadline to submit the application for federal funding was Aug. 26, a factor pressuring Carter to act quickly.

That changed a day after the L.A. hearing, when a federal judge in Rhode Island struck down HUD’s grant regulations for this year's federal funding competition.

With that ruling, the application deadline no longer exists.

This year’s grant application process will start over after the federal government publishes new regulations later this year.

In the short-term, LAHSA is asking for temporary relief on the suspension from federal grant activity while awaiting trial.

Ultimately, the homelessness authority is hoping for a permanent injunction throwing out its suspension by HUD as illegal.

Carter said he was interested in setting a trial date as early as February 2027.