Fed Crackdown Hits L.A. After Decades Of Wasted Taxpayer Money

The Trump administration is cracking down on the homeless crisis in Los Angeles after more than $1.6 billion in federal funding failed to deliver results.

The Department of Housing and Urban Development (HUD) announced on Thursday that all federal funds going to the Los Angeles Homeless Services Authority (LAHSA) will be halted. The suspension will remain in place until the results of HUD’s federal investigation are out, per Fox News. 

“HUD cannot ignore LAHSA’s wanton mismanagement of public funds. HUD’s mission is to reduce the plague of homelessness in America,” the agency wrote in a letter to LAHSA.

“Turning over billions of dollars from American taxpayers to an organization under investigation and suspected of gross misuse of federal funding and ‘obvious fraud’ does nothing to reduce homelessness. Indeed, diverting dollars from worthy programs to LAHSA merely makes the homeless crisis worse.”

The department says LA’s homeless agency has had issues dating back to 2007. Despite millions of dollars flowing into the agency every year, the city’s agency staff reported it was falling behind on its bills. LAHSA owes roughly $69 million to shelters, housing, and other service providers. Most of the outstanding balance is three months past due. HUD pointed to multiple audits, assessments, and lawsuits since late 2024 that identified delayed and misdirected payments, inadequate oversight, and failures to properly monitor programs funded with taxpayer dollars.

The agency also raised concerns about potential conflicts of interest.

In one example that HUD cited, LAHSA approved more than $2 million in contracts involving an organization that employed the husband of then-CEO Va Lecia Adams Kellum in a senior position. Federal officials allege the relationship was not properly disclosed and may have violated HUD conflict-of-interest requirements. Kellum resigned from her position earlier this year amid mounting scrutiny of the agency.

Los Angeles County has also moved away from the agency. In April 2025, county supervisors voted to withdraw roughly $350 million in annual funding from LAHSA beginning July 1, 2026. Since 2024, LA’s homeless population rose 12% despite years of record spending. 

Current LA Mayor Karen Bass said she’s encountered government officials who are “resistant to ending street homelessness.” Bass continued, “The city and the county never made that commitment before, and I found something that surprised me. I found a lot of people who work internally in the system who were very resistant to ending street homelessness.” 

The scale of Los Angeles’ homelessness crisis is reshaping the region’s politics. The issue allowed Republican mayoral candidate Spencer Pratt to gain unusual traction in a Democratic stronghold, underscoring how homelessness has become one of the defining political challenges facing California’s leaders.

Pratt appeared poised to advance, holding the second-place position until seven days after the primary election, when Nithya Raman pulled ahead and secured a spot in the general election.