CAO outlines options to cut 10–15% of homelessness spending; council pauses to seek project-level data

The City Administrative Officer on Wednesday presented a preliminary analysis of potential savings to meet a directive to reduce homelessness spending by 10–15 percent, prompting council members to ask for more project-level data before endorsing any cuts.

Matt Szabo, the city administrative officer, told the Housing and Homelessness Committee that the CAO’s initial menu of options is intended to identify projects for further study rather than to require immediate action. The analysis used an interim-housing spending baseline of about $417.8 million and estimated a 10–15 percent target would mean $42 million to $62 million in annual savings. Szabo said the CAO also calculated larger general-fund shortfalls — roughly $181 million in fiscal 2026–27 and about $247 million in 2027–28 — if existing program scope continues without new revenues.

The report breaks potential efficiency opportunities into categories: sites already in demobilization (five sites the CAO estimates could yield $7.9 million in ongoing savings, excluding one-time demobilization costs); smaller interim housing sites (fewer than 50 beds) that cost more per bed; city-funded leased sites where the city pays lease costs; the InsightSafe motel portfolio, which the CAO said averages about $225.81 per bed per night versus $86.37 for other interim housing; safe parking (11 city-funded sites, 244 spaces, $3.6 million annual cost); and a range of street-strategy services (hygiene programs, access centers, street medicine) that the CAO flagged as potentially more appropriate for county funding.

Szabo emphasized the InsightSafe comparison requires nuance: about $110 of the $225-per-night InsightSafe cost is currently reimbursed by the county under the MOU through June 2027, and the CAO recommended negotiating lower lease rates, pursuing double occupancy where feasible and minimizing use of leased rooms for non-residential storage.

Council members questioned the logic of closing lower-cost interim beds to preserve higher-cost Alliance‑compliant beds and pressed the CAO to present conversion pathways that would move residents from higher-cost motel rooms into lower-cost time-limited subsidy (TLS) or permanent housing without shrinking overall bedstock. Ed Gibson of the CAO’s office explained TLS, as structured today, is a two-year subsidy and does not always meet lenders’ long-term financing requirements, which complicates efforts to use TLS as a one‑for‑one conversion financing mechanism.

Several members raised equity concerns. Council member Corrado warned cuts concentrated in Skid Row would disproportionately affect Black Angelenos and urged the committee to use engagement and outcome measures — not enrollment-only metrics — when evaluating programs such as access centers and the Downtown Women’s Center.

The committee did not adopt any CAO recommendations at the meeting. Instead it asked city staff to return with project-level outcome and utilization data (including safe parking occupancy and site-by-site Homekey conversion status), a plan to identify opportunities to move people into lower-cost interventions while preserving bed counts, and to invite county representatives, LAHSA and the CLA to the next hearing. The CAO said the Council should resolve UB fund reallocation by early March to avoid disrupting provider payments.

The committee continued the item for a future meeting, leaving the CAO’s analysis open for further refinement and asking that any demobilization proposals include one‑time demobilization costs and equity impact analysis.