The agency that hands out L.A.'s homelessness money just took its own federal funder to court. If you're just joining: LAHSA is the regional gatekeeper for public homelessness dollars, and that role's been under growing scrutiny. Auditors found serious financial-reporting problems, HUD opened an investigation, and federal officials suspended the agency over alleged failures in financial management and internal controls. All along, the question has been: who's supposed to catch contractor and agency red flags before the homelessness money breaks down in the system? This is L.A. Politics and Urbanism Daily for Tuesday. Today: a lawsuit, an Olympic bill nobody wants to sign for, and one Boyle Heights produce vendor hit twice over. Stick around. If LAHSA financial oversight crisis matters to you, hit follow — we'll be back on it soon. LAist, with Aaron Schrank:
L.A.’s lead homelessness agency, LAHSA, filed a lawsuit against the U.S. Department of Housing and Urban Development on Monday, asking a judge for relief from a federal funding suspension it calls unjustified.
So this started as a bookkeeping story — an audit, missing paperwork — and as of Monday it's a federal lawsuit. LAHSA is taking HUD to court over that June 11 suspension. And read the language in the complaint — LAHSA says HUD's case is, quote, an amalgamation of uncorroborated hearsay cherry-picked from the internet. That's the most heated thing this agency has said all month. Which is the tell, right? When the suspension hit, the question was whether local oversight had already missed the warning signs. LAHSA's answer here is basically, 'you didn't prove anything,' instead of, 'we'll show you the books.' Suing your federal funder doesn't tell me anyone was watching the money. It just moves the question from a hearing room to a courtroom. And meanwhile Boyle Heights nonprofits are still out sixty-nine million in overdue payments. LAHSA's bigger swing is political: they argue this is a backdoor attempt to kill the Continuum of Care program in L.A. entirely, the program that lets local officials decide which homelessness projects get federal money. And there's an August 26 grant deadline sitting behind all of it. So the clock is the pressure point. Win the lawsuit, or miss the regional application window for the whole county. Great spot to be in. This one's from LAist:
After months of hand-wringing, Los Angeles and LA28 have come to a tentative agreement on how Olympics organizers will reimburse the city for its expenses for the 2028 Summer Games. According to the deal, the private Olympic organizing committee will pay upfront for the estimated cost of services that are not eligible for federal reimbursement, like trash pick-up and traffic control.
So the big deal everyone's been sweating over for nine months — LA28 will cover trash pickup and traffic control upfront. Great. The garbage is handled. What's not handled? Security. The one line item that could dwarf everything else is still floating. If the feds don't fully reimburse policing at Olympic venues, the city dips into an LA28 contingency fund — and if that runs dry, taxpayers eat it. Right, and remember the structure here: these Games are supposed to be privately financed, but L.A. is the financial backstop. LAist reports that if LA28 goes into the red, the bill lands on the city anyway. Councilmember Monica Rodriguez told the LA28 CEO earlier this year a bad deal could quote-unquote bankrupt the city. And this deal still hasn't gone to Bass or the Council. Nearly nine months overdue, and it's still just tentative. Trash is covered, security is a maybe. Who eats the overrun on a federal security operation in an Olympic year? Nobody's signed for that. From LAist:
Following weeks of negotiations, Gov. Gavin Newsom and Democratic legislative leaders have agreed on a $351.7 billion budget next year that raises some taxes, sets aside $6.4 billion for the year after and softens or delays billions of dollars in planned social service cuts.
Newsom's last budget — $351.7 billion, and the headline move is the timing. The deep social service cuts don't land now. They land in 2027, after he's gone. Right, so he gets to leave saying "balanced two years running" and the next governor inherits the funding cliff. Convenient. What's actually propping it up is the AI windfall — tax revenue grew faster than anyone projected. Add the new taxes too: sales tax on everyday computer software, capped business credits, and a higher rate on commercial healthcare providers. And they suspended K-12 payments and reserve deposits to make the math work. That's the part that bugs me — the plan leans on 'delay' and 'suspend' while Medi-Cal costs keep climbing. You don't fix a cliff by setting aside $6.4 billion for a deficit that's bigger than that. And remember the squeeze going in: Medi-Cal costs ballooning on one side, the threat of losing tens of billions in federal dollars under Trump's budget bill on the other. The AI boom is the only reason this didn't get ugly in June instead of January. Which means the whole thing's leaning on a tech boom that keeps printing money. Bold strategy. The vote's Monday — and they're adopting it either way. From LAist:
“With the raids, sales dropped by 60%,” said Hernandez. “And this week, because of the smoke, they’ve gone down by about 80%.” The compounding effect of the ICE raids and now a week full of smoke due to the Lineage fire, has left small businesses in both Boyle Heights and East L.A. struggling more than ever.
Felipe Hernandez, over at Ponciano Produce — his nephew's produce truck in East L.A. — said the raids had already cut foot traffic. Then the Lineage smoke rolled in and, in his words, everyone disappeared all at once. And Claudia Hernandez at Mariscos El Manglar — sales down 60% from the raids, then down about 80% during the smoke week. Two separate federal and regulatory failures landed on one block at the same time. And on the map, that's the same East L.A. corridor getting hit twice — credit to Boyle Heights Beat and LAist for putting names to it. The smoke didn't pick a neighborhood at random; it landed where people were already staying indoors. Bass signed a pair of executive orders Monday to speed up the cleanup. That helps the warehouse site. Doesn't do much for a produce truck that's already eaten 80% of a week. Right — the cleanup order is about the building. Nobody's signing an order for the ICE side of this. Hernandez said it was worse than COVID, and that's a guy who lived through COVID telling you. If you follow city politics closely, check out LA Mayor 2026 — a weekday briefing on the Los Angeles mayoral race, covering candidates, polling, fundraising, and policy. Find it wherever you listen to podcasts.
Next up: the L.A. region's federal homelessness grant application is due to HUD on Aug. 26. The tentative LA28 reimbursement agreement still needs approval from Mayor Karen Bass and the City Council. And the Fire Department is due to report within 90 days on its investigation into the Boyle Heights warehouse fire.
You'll find links to every story in today's show notes, if you want to read further on anything we covered.
That's Los Angeles Politics and Urbanism Daily for today. This is a Lantern Podcast.