HUD asks Ninth Circuit to let it cut funding for LA homeless services agency

The appellate panel focused on the practical application of HUD's decision to suspend the key conduit for federal funding for LA's homeless services.(CN) — The U.S. Department of Housing and Urban Development asked the Ninth Circuit on Tuesday to let it proceed with cutting off $239 million in funding for the Los Angeles Homeless Services Authority, the agency that coordinates federal, state and local funding for the unhoused throughout LA County.HUD seeks a stay pending appeal of the preliminary injunction issued last month by U.S. District Judge David O. Carter, who halted the sudden suspension of LAHSA — over its purported financial mismanagement — in June, saying that HUD had abruptly pulled the rug out from under hundreds of service providers, and the thousands of unhoused individuals who rely on their services.The hearing before the appellate panel in San Francisco focused not so much on the legal underpinnings of Carter’s decision as it did on the practical nuts and bolts, as well as the imminent deadlines, of the convoluted process for local homeless service providers to apply for federal funding from HUD.In particular, the panel struggled with whether HUD had given the Los Angeles Continuum of Care, the coalition mandated under federal law to oversee and set priorities for the region’s homelessness response, an adequate opportunity to find an alternative to LAHSA to serve as its designated agency to prepare a single, consolidated application for federal funding for the multitude of service providers in LA County.“I’m just really troubled by what seems as a ‘gotcha’ argument,” U.S. Circuit Judge Roopali Desai, a Joe Biden appointee, said, referring to, on the one hand, HUD’s purported representation in June that service providers would have to apply to HUD directly while ignoring LA Continuum of Care’s request to find an alternative collaborative applicant, and, on the other hand, faulting LA Continuum of Care at the hearing for not having a new collaborative applicant by a Sept. 30 deadline.“I’m curious if HUD is in search of a solution to the problem of its own making,” Desai asked Weili Shaw, the Justice Department attorney representing HUD at the hearing.The LA Homeless Services Authority sued HUD after it was suspended, arguing that the stated reasons for suspending funding, purportedly because of “waste, fraud and abuse,” were a pretext and that the Trump administration seeks to dismantle the regional Continuum of Care Program created by Congress that gives local authorities discretion over projects submitted for federal funding.“Across five presidential administrations, including as recently as January 2025, bipartisan legislation has funded and reaffirmed the CoC Program’s regional approach,” LAHSA claims. “But the Trump administration has made clear it wants to scrap the program entirely in favor of a homelessness policy favoring criminal enforcement, drug treatment, institutionalization and civil commitment of the mentally ill.”Carter, a Bill Clinton appointee and a Vietnam veteran who has used the bench to force both the city and the county to make meaningful steps to address LA’s intractable homelessness crisis, is by no means a fan of LAHSA, but he warned HUD’s rash suspension of the agency would result in deaths among the homeless and the displacement of over 11,000 unhoused individuals onto the streets and into the neighborhoods of LA.“LAHSA may be dysfunctional,” the judge wrote in August. “But thousands of unhoused individuals rely on these services. It may well be an appropriate policy decision to transition away from LAHSA. It is not the providence of this court to make that policy decision. Any transition must nonetheless be gradual and measured, so that this transition does not leave calamity in its wake.”Keri Curtis Axel, an attorney for LAHSA, told the panel at Tuesday’s hearing that it would be extremely impractical for the individual service providers, who now get their funding through the regional agency, to apply directly to HUD because, she said, that’s not how HUD’s bureaucracy is set up.And Shayla Myers, an attorney for the LA Continuum of Care, pointed out that the collaborative application process allows a region to coordinate its resources in line with its priorities.U.S. Circuit Judge Ryan Nelson objected, however, suggesting Congress has contemplated individual, direct applications to HUD by service providers and that this wasn’t necessarily something unprecedented.“Everybody is freaking out,” the Trump appointee said. “I have no doubt that I don’t understand everything on the ground — and let’s just take that as given right now — but Congress provided for this.”U.S. Circuit Judge Jacqueline Nguyen, a Barack Obama appointee, said the panel would try to issue its decision as speedily as possible given the Sept. 30 deadline for HUD applications for the upcoming fiscal year.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads