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HUD slams LA for unspent homeless funds

Audit reveals how federal homeless money is doled out, while L.A. says they are doing better

As Los Angeles’s homeless problem escalated, the very part of L.A. government charged with helping the homeless left millions of federal dollars on the table.

That is the finding of a U.S. Housing and Urban Development Inspector General report released last month. Maxine Waters, who is the chair of the House Financial Services committee and a Democratic Congressperson representing South Los Angeles since 1991, declared, “I am absolutely upset,” that cities are not spending HUD money, “Despite the fact that we’re doing everything we can to get the resources to them,” at a committee hearing Wednesday. 

However, the Los Angeles Homeless Services Authority – LAHSA for short – says that it is cleaning up its grant allocation problems and is now productively working with HUD.

The dispute highlights how federal agencies that regulate housing policy administer resources to those without homes.

Continuum of Care, a grant program administered by HUD, is the main source of federal money to help the homeless. Between 2017 and 2019, HUD periodically allocated grants to the L.A. homeless authority, which reports to both L.A.’s city and county government.

The HUD audit contends that during this time LAHSA had “20 expired grants of almost $3.5 million in unused funds.” The inspector general report points to high employee turnover at LAHSA, and difficulty staffing the entity with people who could allocate the money, which typically goes to other local government agencies, housing trusts, nonprofit and charity groups.


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The $3.5 million is a small fraction of LAHSA’s grant budget. But the unspent funds occurred while a growing number of Angelenos sheltered in the sprawling metropolis’s parks, freeway underpasses, sidewalks, and other public areas. The total number of homeless in L.A. County increased 21% between 2017 and 2020 to 63,706, according to the IG report.

The unspent money “primarily impacted spending on leases and rental assistance” or “the activity that directly affects the number of homeless persons on the streets,” the inspector general report stated, adding that LAHSA spent only 41% of the budgeted amount for leases and rental assistance, or $1.5 million out of $3.7 million.

LAHSA, however, contends that the HUD inspector general’s office is reheating three-year-old information. In an email sent to HousingWire, Heidi Marston, executive director of LAHSA, noted that in 2020 the authority “created Housing Central Command” in an “effort to drive increased federal funding utilization.”

“Through two years of increased coordination, and despite the significant impacts of the COVID-19 pandemic, our collective efforts have successfully decreased the underspend in the L.A. Continuum of Care by nearly 9%,” Marston stated.

LAHSA did not respond to a follow-up question about how much money HUD allocated in 2021, and how much was left unspent. According to HUD data, LAHSA got $29.8 million in Continuum of Care funding from the program in 2020.

As to why the inspector general report focused on the 2017-2019 period without an update, the report noted, “The challenges of completing the audit during the pandemic and other matters delayed the draft report.”

An inspector’s general office is intended to function independently from the federal agency they audit. A HUD spokesperson said that they did not know why the inspector general chose to single out LAHSA for an audit.

A statement from the HUD Inspector’s General office explained L.A. was selected through a “risk-based approach to carefully select which HUD grantees to audit. We focus on high-risk and mission critical areas in our oversight to identify opportunities for improvement.” *

Emailed answers to questions from HUD portrayed LASHA as a cooperative actor, and not an outlier in their failure to allocate all grant money.

“Many projects take time to ramp up, and many Continuums of Care grants have funding left over at the end of their initial grant term,” an agency spokesperson explained, adding, “We know that the problem of homelessness and the lack of affordable housing in Los Angeles is immense, and we appreciate LAHSA’s continued efforts and dedication to the work of preventing and ending homelessness.”

Created through Congressional legislation in 2009, the Continuum of Care program has emerged as the predominant way the federal government siphons money toward combating homelessness. In 2020, the program provided $2.47 billion toward over 6,000 discrete grant awards, with 85% of the money earmarked toward permanent housing.

Other federal efforts to deal with housing, meanwhile, have withered on the vine. For example, as the homeless problem became highly visible in the 1980s, Congress created the U.S. Interagency Council on Homelessness, meant to coordinate efforts among the myriad federal agencies that deal in housing.

The Interagency Council is still around, but as of September it has a staff of 18, and an annual budget of $3.8 million.

Georgia Kromrei contributed reporting

* UPDATE Feb. 4: This story was changed after publication to include a comment from the HUD Inspector General’s office.

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