LA City accused of misusing homeless funds, drawing federal investigation and hearing

LOS ANGELES - A federal court hearing was held Thursday as the City of Los Angeles is accused of misusing taxpayer funds to address the ongoing homeless crisis.  

The City is also accused of breaching its agreement to create enough shelter beds for the homeless residents.

What we know:

Mayor Karen Bass and two City Council members have been subpoenaed to appear before U.S. District Judge David Carter in downtown Los Angeles to address the situation. It is unknown if Bass and the city leaders showed up to court on Thursday, May 29.

The LA Alliance for Human Rights filed a complaint in March 2020 against the city and county accusing them of not doing enough to address the availability and access to shelter for the homeless.

A judge signed off on a settlement in September 2023 that the county agreed to supply an additional 3,000 beds for mental and substance abuse treatment by the end of 2026 and 450 new subsidies for board-and-care beds.

"The new resources come on top of $293 million the County pledged in a separate agreement over the course of this three-and-a-half-year lawsuit to provide 6,700 beds for people experiencing homelessness near freeways as well as for unhoused seniors," a statement by the coalition read in 2023.

An audit in March 2025 was unable to verify the number of homeless shelter beds the city claims to have created.

Dig deeper:

The settlement agreement, in part, required the city to provide milestones and deadlines for "encampment engagement, cleaning, and reduction" in each council district and citywide, and required the city to "employ its best efforts to comply with established plans, milestones, and deadlines."

According to the LA Alliance, the city first reported there were 2,137 encampment reductions in a three-month period in 2024. The figure was found to be incorrect, and the city subsequently reported only 1,688 reductions in a six-month period.

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The LA Alliance alleges the city does not appear to have an accurate number of encampment reductions, and is mischaracterizing clean-ups as "encampment resolutions."

The judge has stated he agrees with the L.A. Alliance that cleaning an area, only to have unhoused individuals move back in without offers of shelter or housing, is not a "resolution" or encampment "reduction" and should not be reported as such.

The city was ordered to only report encampment reductions that have a more permanent meaning and in which homeless people are moved off of the street and given shelter or housing.

By the numbers:

In April, the Los Angeles City Council called for an analysis of homelessness spending and the creation of a public database of homeless-related programs. The analysis would examine spending under Inside Safe, LAHSA contracts, safe parking, and street medicine teams, among other things.

In the past two fiscal years, the city allocated a significant amount of funding to address the homelessness crisis. In FY 2023-24, the city allocated a combined total of $1.28 billion to homelessness.

In a November 2024 report, the City Controller found that the city had not spent at least $513 million in funding. The report cited an inefficient city approach, a lack of staff and aging technology as contributing to the issue.

What they're saying:

FOX 11's Christina Gonzalez spoke with Skid Row residents in the wake of the hearing.

Don Garza, who is homeless in Los Angeles, said the city's funds haven't reached the street. 

"I want accountability. I want to know that the money's reaching the streets," Garza said.

He adds the homeless crisis is too big to ignore.

"There are a lot of people right now dying on the streets," Garza said. "It's just overwhelming. Especially on Skid Row. And we're overwhelmed."

Homeless CrisisLos Angeles