HUD Presses Ninth Circuit to Allow LAHSA Suspension in $239 Million Funding Dispute

HUD asked the Ninth Circuit on September 22 to allow its suspension of the Los Angeles Homeless Services Authority to proceed during an appeal, escalating a funding dispute that Courthouse News Service described as involving $239 million.

The hearing centered on how Los Angeles could continue applying for federal homelessness assistance if LAHSA remained suspended. A day later, the Los Angeles Continuum of Care Board advanced a proposal for the county to serve as a replacement collaborative applicant if needed.

How the Dispute Reached the Appeals Court

HUD announced LAHSA's suspension on June 11, citing alleged financial mismanagement, inadequate internal controls and failures to safeguard against conflicts of interest. Those were HUD's stated grounds for its action, which LAHSA challenged in court.

On August 13, U.S. District Judge David O. Carter issued a preliminary injunction blocking the suspension and preserving LAHSA's application role. His order warned that an abrupt interruption threatened housing and services supporting more than 11,000 people. That warning concerned potential consequences of losing funding, not a finding that those people had already lost housing.

The dollar figures in the source materials differ. Courthouse News reported $239 million in its hearing coverage, while Carter's order refers to approximately $241 million in regional funding.

The August injunction did not end the dispute. The Ninth Circuit subsequently granted an emergency stay, and LAist reported that HUD was withholding execution of grant agreements while the appellate proceedings continued. LAHSA also acknowledged the stay in its September 15 statement.

The Hearing Focused on the Application Process

According to Courthouse News, judges questioned whether HUD had given the Los Angeles CoC a workable opportunity to designate another collaborative applicant. That entity prepares the region's consolidated funding application.

LAHSA's attorney argued that requiring individual providers to apply directly to HUD would be impractical. An attorney for the CoC emphasized the role of coordinated applications in reflecting local priorities. Judge Ryan Nelson questioned whether direct applications were necessarily unprecedented.

The panel did not announce a decision at the hearing, according to the report.

Los Angeles Advances a Backup Applicant

On September 23, the CoC Board advanced a proposal involving LA County Homeless Services & Housing and the Los Angeles County Development Authority, MyNewsLA reported.

The proposal still required approval from the CoC's general membership. Board Chair Benjamin Kay said the emergency replacement for the 2026 application cycle would depend on whether LAHSA remained suspended. The board's action therefore represented a contingency plan rather than a completed transfer of authority.

Separately, LAHSA announced September 15 that it would not apply to retain its CoC leadership roles through the ongoing selection process. The agency said it would continue its existing responsibilities until they transitioned to another entity or entities.

HUD Extends the Los Angeles Deadline

HUD's competition page now lists October 14, 2026, as the application deadline for CA-600, the Los Angeles CoC. The extension applies specifically to that CoC. The general national deadline remains September 30 at 8 p.m. Eastern.

HUD also says it expects to make a final determination about CA-600's compliance with CoC program requirements after an anticipated appellate ruling. That CoC determination and LAHSA's suspension are connected issues involving different entities.

Providers Face Immediate Operating Pressure

The practical consequences extend beyond who signs an application. LAist reported that affected providers were drawing down reserves, reducing staffing and relying on donations while grant agreements remained unresolved.

For housing and service providers, the next developments to watch are the appellate ruling, the general membership's decision on a replacement applicant and HUD's instructions for completing the Los Angeles application process. The October 14 extension provides additional time to apply, but it does not itself release delayed grant payments.