$239 Million Saved: 9th Circuit Orders Trump Admin to Hand Over LA Homelessness Funds to LAHSA
Federal appeals court blocks HUD attempt to cut LAHSA out of the loop for millions in aid.
A federal appeals court just handed the Los Angeles Homeless Services Authority a major win. The 9th Circuit rebuffed the Trump administration’s attempt to control how local groups get millions in federal housing funds. The ruling released Thursday stops the department from dictating terms to local nonprofits. At stake was a massive pile of cash. HUD wanted to stop LAHSA from applying on behalf of dozens of organizations seeking $239 million. The court largely agreed with a lower judge who said HUD was acting arbitrarily.
Here is how Sacramento procedure works in this mess. HUD suspended LAHSA in June citing a record of mismanagement. The department said organizations should apply directly to the government for the 2026-27 funding cycle. This was a power grab. LAHSA sued to block the move. District Court Judge David O. Carter issued a preliminary injunction finding that the suspension was arbitrary and capricious. He ordered HUD to restore LAHSA’s authority. HUD appealed. Now the appellate panel has put the brakes on that appeal. You can read the district court decision here.
The decision is a 2-1 split. Justices Jacqueline H. Nguyen and Roopali H. Desai sided with the lower court. They denied HUD’s request for a stay. Trump appointee Ryan D. Nelso dissented. The majority opinion is blunt. It notes that HUD “chose to suspend LAHSA at a time when it would leave the Los Angeles region particularly vulnerable.” The panel found the department’s plan is likely unworkable and difficult to implement at this late stage. You can see the court documents for the full context.
This ruling means good news for vulnerable populations on the streets. LAHSA’s Interim Chief Executive Officer Gita O’Neil says the agency is “moving at full speed” to meet the new deadline to apply for HUD funding on October 14. The order also forces the department to release funds from last year’s grants that were approved but never released. This impacts about a dozen Los Angeles organizations. These groups have been operating without reimbursement for months.
The impact hits the most vulnerable people hardest. “Today’s 9th Circuit decision is welcome news for the survivors of domestic violence and their children,” said Jewish Family Service LA. Their Hope Transitional Shelter has been bleeding cash since April 1. The shelter has operated without $300,000 in promised funding, barely covering half its budget. The court ruling does not solve the funding crisis. Until the money hits the bank, the situation remains critical.
The reprieve is temporary. As directed by Judge Carter, the board of the federally mandated committee issued a request for proposals from other applicants. Los Angeles County is ready to step in. The county, which last year diverted its more than $300 million in homeless funds from LAHSA to the new Department of Homeless Services and Housing, applied to take over all core functions. Those functions include operating the homeless database and the housing matching system. You can learn more about the uncertainty facing these funds.
The legal battle over homelessness in Los Angeles continues to drag on. A trial date has been set for February. The ideological makeup of the appellate panel reflects the current political fight. Nguyen and Desai are Obama and Biden appointees respectively. They sided with the local government. Nelso, a Trump appointee, argued for the federal government’s right to intervene. While courts allow this work to continue, the long-term stability of LAHSA remains in question.
First reported by LA Times: California.
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