Ninth Circuit: Trump admin can’t defund LA homeless services agency

The appellate panel said the Department of Housing and Urban Development hadn't given a good enough reason for abruptly cutting funds to the beleaguered state agency.(CN) — A Ninth Circuit panel declined on Thursday to stay a federal injunction blocking the Trump administration from defunding the Los Angeles Homeless Services Authority.A federal judge had ruled the U.S. Department of Housing and Urban Development had “not provided a satisfactory explanation” for why the authority had to be immediately suspended from the grant application process.“We agree that HUD, as a steward of federal taxpayer funds, has the ability and duty to address the serious allegations of fraud and mismanagement levied against LAHSA,” the three-judge panel wrote. “HUD’s ’explanation for its decision’ to suspend LAHSA during the FY2026 application cycle, after approving LAHSA as LA CoC’s Collaborative Applicant, and while knowing of LAHSA’s alleged misconduct for years ‘runs counter to the evidence before the agency.’”The ruling largely keeps the injunction in place. All grant money already approved by the federal agency must be sent over to to the LAHSA, and the authority may continue to apply for more grant money before the rapidly approaching Oct. 14 deadline.The Ninth Circuit will hear oral arguments on the merits of the preliminary injunction next month.Stephanie Graves, Chair commission that oversees the beleaguered homeless services agency, praised the ruling.“For the thousands of people experiencing homelessness or working to rebuild their lives, the systems and funding that connect them to housing and services cannot simply stop,” Graves said in a written statement. “Today’s decision allows that work to continue while the larger issues are resolved. Most importantly, it gives our region the opportunity to keep people housed, help more people find a path home, and give people hope.”A Department of Justice spokesman declined to comment.Los Angeles remains mired in a decades-long homeless crisis, fueled by the ever rising cost of living and housing shortage. By 2023, there were some 75,000 men and women living in their cars, in shelters and on the sidewalks in LA County.And while that number dropped two years in a row, it is now once again on the rise, despite billions of dollars spent on various housing solutions.LAHSA has become a popular scapegoat for the city’s homelessness woes. LA County recently announced plans to pull the $300 million it contributes annually toward the authority and form its own agency, while the city is discussing a similar move.In June, Housing and Urban Development announced it was suspending all funding to the authority, including money it was already promised, due to accusations of waste, fraud and abuse.“HUD will fund results, not corrupt failure or the homeless industrial complex,” secretary Scott Turner said in a statement. “Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve.”The agency sued, accusing the Trump administration of “favoring criminal enforcement, drug treatment, institutionalization and civil commitment of the mentally ill” over providing shelter and mental health services.Last month, U.S. District Judge David Carter agreed to a preliminary injunction, forcing the federal government to keep funding LAHSA, at least for now, given the thousands that rely on the services it provides.The appellate panel comprised U.S. Circuit Judges Roopali Desai, a Joe Biden appointee, Jacqueline Nguyen, a Barack Obama appointee and Ryan Nelson, a Trump appointee. Nelson dissented from the majority, though the dissent has not yet been made public.During oral arguments on Tuesday, Nelson suggested that the defunding of the authority wasn’t entirely without precedent and had been contemplated by Congress.“Everybody is freaking out,” Nelson 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.”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