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Committee backs plan to study and renegotiate LAHSA relationship after HUD suspension notice
Summary
Following a June 11 HUD suspension letter affecting LAHSA's ability to participate in certain federal transactions, the committee approved an amended package directing short‑term analyses, consultant funding for a transition plan, and exploration of governance changes to increase city oversight of homelessness services.
The Budget & Finance Committee approved an amended motion directing city staff to analyze the implications of a June 11 HUD suspension letter regarding the Los Angeles Homeless Services Authority (LAHSA), to explore options for the city to assume or co‑lead Continuum of Care (CoC) responsibilities, and to develop a phased transition plan that could shift administrative functions away from LAHSA.
John Wickham, Chief Legislative Analyst, described the amendment as an effort to "braid" two committee recommendations while taking into account the HUD notice. City staff said the HUD letter appears to prospectively prohibit LAHSA from serving as the lead applicant for certain federal procurement and non‑procurement transactions, most clearly jeopardizing LAHSA's ability to be the Continuum of Care lead applicant for an application due August 26.
The committee adopted short‑term tasks (30–90 days) for the CLA, the City Administrative Officer and the City Attorney to report on the suspension letter, to propose next steps with the county to renegotiate the Joint Powers Agreement to secure clearer majority city governance on LAHSA's commission, and to evaluate whether the city should serve as the CoC lead or co‑lead with the county.
As part of the amendment the committee authorized up to $450,000 from an existing fund for consultants to develop a rapid transition plan and to support the city's assessment of LAHSA's administrative capacity, cost‑sharing arrangements, and operational structure. The motion also instructs a detailed review of contracting processes, invoicing and payments, data collection and performance tracking, and recommends a phased transition timeline through fiscal year 2027–28 with interim reporting requirements.
Councilmembers debated separate votes on recommendation 4 (consultant funding and transition tasks) and recommendation 5 (comprehensive evaluation of LAHSA) before approving the package as amended. Councilmember comments stressed the urgency of preserving federal dollars that flow through LAHSA and of minimizing service disruption for people experiencing homelessness during any transition.
The committee asked staff to coordinate closely with the County of Los Angeles, county counsel, LAHSA and other partners, and noted that some county deliberations may be taking place in closed session; staff said a common‑interest agreement is in place to share legal analysis among attorneys for those entities. The CLA and CAO will report back to the committee on identified risks to funding, options to protect federal awards, and proposed governance changes.
