Blue City Could Lose Control Of Its Billion-Dollar Homelessness Budget

A federal judge will decide whether to appoint a receiver to take control of Los Angeles’ billion-dollar homelessness programs after the city allegedly flouted settlement agreements requiring shelter beds and encampment removals, according to the Los Angeles Times.

U.S. District Judge David Carter, a Clinton appointee, wrapped an evidentiary hearing riven by more than 2,000 objections and told both sides to file closing briefs by Tuesday, a prelude to a ruling that could strip City Hall of day-to-day control over homelessness spending, according to the Times. The LA Alliance for Human Rights argues the city’s fragmented bureaucracy, shaky data and missed deadlines have kept thousands of Angelenos sleeping outside despite record funding.

LAHSA tallied some 75,000 homeless people in Los Angeles County in 2024, up from about 46,000 in 2016 — an over 60% jump even as annual spending tops $1 billion.

“Breached and broken, your honor,” LA Alliance attorney Matthew Umhofer told the court, the outlet reported. “The system is broken and demands extraordinary judicial action.”

A transcript of proceedings is not yet publicly available.

Carter has presided over the case since 2020 — in 2021, he ordered $1 billion in city funds placed in escrow after finding officials “unable or unwilling” to stem what he called a “public health and safety emergency,” and in 2022 he hired operations firm Alvarez & Marsal to conduct a an audit that branded the system “disjointed” with “fragmented data systems.”

The escrow order pre-dated Mayor Karen Bass, who took office in December 2022, but Carter later gave her until May 2025 to prove she could remedy the homelessness problem — warning he would become officials’ “worst nightmare” if reforms stalled, the Times reported.

The mayor argued her strategy is beginning to work in her State of the City address in April, saying, “the state of our city is this: homelessness is down … these are tough challenges, and they show that we can do so much more.”

The city has turned to heavyweight law firm Gibson Dunn, fielding a seven-lawyer team led by Supreme Court litigator Theane Evangelis, who warned that receivership would transform a “narrow proceeding … into a referendum on the city’s policy choices relating to homelessness,” the outlet reported. Her group contended alliance witnesses ventured into impermissible expert testimony and that the city remans on track to deliver nearly 13,000 additional beds by 2027 — a figure spelled out in a 2022 settlement that raised the overall promise to nearly 20,000 “housing solutions.”

Emily Vaughn Henry, former data chief at the Los Angeles Homeless Services Authority (LAHSA), reportedly testified that she was fired after refusing to delete emails and “do whatever we can to make the mayor look good,” echoing allegations that bed counts were inflated or unverifiable.

Defense attorneys insisted LAHSA has since “taken steps to ensure the data we are reporting is accurate” while acknowledging the city has struggled with data collection in the past.

Carter mused about moving the proceedings to Skid Row after Marine veteran Don Garza testified that people are “languishing, dying on the streets” while public dollars vanish, according to Bloomberg.

Bass — subpoenaed but spared the witness stand amid talk of an instant appeal — had until May to satisfy the judge and demonstrate that the city’s system can be repaired without a takeover.

Umhofer reportedly cited a quote from the judge’s 2021 ruling while closing his argument.

“This court cannot idly bear witness to preventable deaths,” Carter said in 2021. “This ever-worsening public health emergency demands immediate, life-saving action. The City and County of Los Angeles have shown themselves to be unable or unwilling to devise effective solutions to L.A.’s homelessness crisis.”

Bass, Evangelis, Umhofer and LAHSA did not respond to a request for comment.

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