Council approves funding shift to cover interim housing rate increases; CAO warns HAP reliance may limit new beds

The Los Angeles City Council on June 20 voted to authorize using unspent Homeless Assistance Program (HAP) funds and other eligible accounts to cover a shortfall created by increased interim housing service rates. The measure passed with a recorded vote of 12 ayes and 1 no; Council member Price recused himself from the item.

Ed Gibson of the City Administrative Officer’s (CAO) office told the council the city had identified unexpended HAP balances that were eligible to cover the January 1 rate increase that had been advanced earlier this year. Gibson cautioned that “most of those dollars are already expended” and that using HAP to cover ongoing service-rate increases would leave fewer HAP dollars available to stand up new interim housing units.

Gibson said some interim housing lines are general fund–supported and therefore not eligible for HAP; where HAP remained, the CAO reallocated funds from several HAP lines to cover the immediate rate change. He warned that once services are funded from the general fund the city “can never go back to HAP” for those expenditures. Council members asked whether committing HAP to services would constrain capacity to open new, compliant beds. Gibson acknowledged the trade-off and noted that HAP 6 — the next federal/state HAP cycle — is anticipated to be smaller than prior rounds, creating further constraints on capital expansion.

Why it matters: Council members said they faced a policy choice between paying higher rates to retain interim housing operations and preserving HAP funds to create new beds. The CAO’s explanation signaled immediate fiscal limits: using HAP to cover rate increases will likely reduce the city’s ability to fund capital projects that expand capacity.

Vote and process notes: Council member Price recused himself from the item. The council recorded 12 ayes and 1 no on the motion authorizing the CAO to obligate eligible HAP balances and related accounts to cover the service-rate increase. Council subsequently moved the item forthwith for processing.

Ending: Councilmembers and CAO staff said additional funding will be needed to stand up new beds; the CAO recommended monitoring forthcoming HAP applications and other funding sources before committing further service obligations.