CAO Presents Options To Cut Homeless-Services Spending 10–15%; Council Members Warn of Bed Losses and Legal Limits
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Summary
The city CAO presented options to reduce homeless-services spending by 10–15%—roughly $42–$62 million on a $417.8 million portfolio—by renegotiating hotel rents, targeting small sites and other program categories. Council members pressed for alternatives that preserve beds because of obligations under the Alliance settlement.
The Los Angeles City CAO on Wednesday delivered a financial analysis showing where the city could find $42 million to $62 million in savings—10% to 15% of a $417.8 million homeless-services portfolio—if the City Council directs reductions in specified program categories.
The CAO framed the document as a menu of options, not final recommendations, saying the report was produced to respond to a prior request from the Council’s Budget and Finance Committee to identify opportunities to reduce spending. The analysis lists categories for further study, including renegotiating Inside Safe hotel rents, reviewing small sites with fewer than 50 beds, examining city‑paid rentals, safe‑parking programs and street‑based outreach services.
“How we implement any of these options matters,” the CAO said, noting that the analysis excludes certain mobilization and one‑time costs and that staff will return with more detailed options if the committee requests them. The CAO estimated that renegotiating Inside Safe hotel rents could yield $4.2 million to $6.4 million in savings, and that a 10–15% cut across the portfolio would equal roughly $42–$62 million.
Several council members cautioned that pursuing savings by closing or demobilizing beds could conflict with the city’s obligations under the Alliance court settlement and could disproportionately harm Black residents. Councilmember Bloomenfield asked whether beds removed in a cut could later be “recreated” on paper or replaced through lower‑cost interventions; other members pressed staff on how county reimbursements and existing agreements affect eligibility for reimbursement through June 2027.
The CAO and committee members repeatedly emphasized that the report is an initial analysis and that some proposals—such as removing beds that were established as part of court‑ordered settlements—would require careful legal and operational consideration. The CAO told the committee that some sites being demobilized previously were limited‑term agreements (for example, because property owners requested return of a site) and that mobilization costs are not captured in the $7.9 million line item for certain sites.
Public commenters and nonprofit leaders urged the committee to protect existing programs with high success rates. Amy Turk, identified as chief executive of the Downtown Women Center, said the organization operates programs with a 97% retention rate and urged the city to preserve funding for those services.
Next steps: committee members asked staff to return with disaggregated tables showing occupied units, the CAO’s underlying cost breakdown in Annex 4, and analyses that would explore whether higher‑cost interventions can be transitioned to lower‑cost models without reducing capacity. The committee did not adopt any cuts at the meeting and held the conversation open for future deliberation with county and legal parties invited back for follow‑up.