The Los Angeles County Board of Supervisors approved by a vote of 4-0-1 a motion to study the feasibility of creating a new homelessness response agency on November 26, right before the Thanksgiving holiday. As noted by Los Angeles Times journalist Doug Smith writing on the notable approval, the County Chief Executive Office under Fesia Davenport will need to produce:

“a feasibility report in 60 days, an analysis of which County and LAHSA programs would be absorbed by the new department in 90 days, and a fiscal and staffing plan in 120 days.”

A “friendly amendment” from Supervisor Janice Hahn to allow staff more time to complete the feasibility report was met with a lukewarm response despite “the holidays.” The move to restructure comes after a scathing audit from the County Auditor-Controller’s office under Oscar Valdez as well as a review of homelessness spending by Los Angeles City Controller Kenneth Mejia.

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In question are tens of millions of dollars in “working capital” advances made to service providers in 2017-18 from County Measure H funding. Similarly, questions remain regarding spending at the City of Los Angeles that have yet to be resolved, even as an audit approved by the City of Los Angeles in response to the LA Alliance for Human Rights v Los Angeles lawsuit filed under Judge David O. Carter.

The audit underway by firm Alvarez & Marsal (A&M) is now expected to issue a report no later than the end of February due to delays getting data from the Los Angeles Homeless Services Authority (LAHSA). Under review, pending the audit findings, is whether LAHSA should be streamlined to have a narrower set of responsibilities limited to conducting the annual point-in-time count and managing the Homeless Management Information System (HMIS) versus direct fund administration for service providers.

LAHSA has struggled with these tasks even as it’s obligated under federal guidelines to be responsible for the Greater Los Angeles Continuum of Care “CoC 600” under the U.S. Department of Housing and Urban Development (U.S. HUD). CoC 600 includes the entire County except Glendale, Pasadena, and Long Beach, which have their own CoCs under the supervision of their separate public housing authorities.

President-elect Donald Trump has nominated former NFL player Scott Turner to lead U.S. HUD. The extent of mismanagement by LAHSA left even former Labor Secretary Hilda Solis, now a member of the Board of Supervisors, openly wondering whether LAHSA had allowed funding in the past to be illegally comingled:

“Was it criminal?”

Expenditures of federal funds require full accounting.

Whether follow-up from the U.S. Attorney’s Office is the next step remains to be seen after Judge Carter singled out providers with outstanding balances. In response, Supervisor Holly Mitchell declared she was concerned that service providers were being "demonized.”

Apparently, after Measure H’s passage, service providers were given large cash advances that did not require repayment across multiple fiscal years. This was years before many of the same nonprofits received $250k in cash advances on contracts for operating Homekey sites they were to acquire. Undoubtedly, there has been mismanagement at all levels of government, which must be resolved so housing efforts can move forward.

The week prior, Judge Carter had held a hearing to overcome delays in fully funding the A&M audit. With Los Angeles City Council on recess until the week of December 2, Carter was irate, declaring that this was like:

“The Rocky Horror Picture Show”

The 1975 musical horror comedy cult classic is noted for its revealing takes on sexuality and a plot twist involving extraterrestrials. Carter, aged 80, who also referenced Groundhog Day (1993), a film about time travel, noted that LAHSA has also been accountable for State funding, declaring:

“The State had about $13 billion plus invested.”

None of this should have been news to LAHSA, which left Carter questioning how the mismanagement had gone on for so long despite prior auditing:

“What occurred here was these findings were made by an auditor/controller at the time, but it took a year and a half of your bureaucracy to get to this Board for any attempted correction, while all this money just continued to flow out, with no data.”

Several County Supervisors during their November 26 meeting had referenced Judge Carter in describing what’s been happening as:

“untangling the spaghetti”.

Thankfully to our knowledge or recollection, there are no spaghetti scenes in The Rocky Horror Picture Show, which ends with an unnamed character, “The Criminologist - An Expert,” declaring:

“And crawling on the planet's face, some insects, called the human race... lost in time... and lost in space... and meaning.”

Whether any taxpayer funds have truly been lost to embezzlement remains to be seen. Auditing, in essence, is after all a form of investigation. LAHSA has been a significant delaying factor in completing the Alvarez & Marsal audit, as A&M’s Laura Collier explained to the Court:

“delays (in receiving requested data) and complexity coupled with its condition” have “required additional time and resources.”

Since being launched in March with Mayor Karen Bass’s approval, the A&M audit’s scope has been expanded several times, which has also increased its costs. The apparent move by the Los Angeles City Council to block additional funding was met with furor from Judge Carter, who declared that it:

"will not be compromised by a budget imposed by the City Council that limits the adequacy and sufficiency of this assessment.”

The pressure to fully fund the A&M audit left the City Attorney’s office sputtering, with Deputy City Attorney Valerie Flores promising:

“Over the lunch break and after the clarifications of this morning, the council president [Marqueece Harris-Dawson] will be scheduling the item regarding consideration of the $440,000 additional payment to A&M next -- well, the week of December 2nd.”

Advisor scapegoated

Whether LA City Council will swiftly approve additional funding remains to be seen, but resistance wouldn’t be well-received by the Court. Some within the City of Los Angeles have been resistant to the auditing of spending on homelessness, even asserting to Controller Mejia’s office that they lacked the authority. Last March, Judge Carter had read aloud LAist journalist Nick Gerda’s report, citing text messages from former Karen Bass advisor Mercedes Márquez that she:

does “not want to be anybody’s scapegoat.”

Cursed committee chair

For her part, Councilmember Nithya Raman, at the center of the City of Los Angeles’s response to the homelessness crisis, may have the most to lose politically from non-cooperation, having inherited her seat as Chair of the Homelessness and Poverty Committee and seat on the CAO’s Homeless Strategy Committee from Kevin de León, who filled it when Mark Ridley-Thomas was indicted. Is this City position cursed? Or is homelessness in Los Angeles simply an intractable problem? While the LA Alliance for Human Rights hardly has clean hands, declaring in a November 20 email that readers should:

“Follow the Money of LA's Homelessness Industrial Complex,”

billing themselves as:

“the region’s only organization holding the City and County accountable for the homelessness issue”.

You have to wonder whether political leadership is capable of turning the ship around. The Alliance seems to be relying on demagoguing on the issue versus providing any sort of best practices input that might actually improve governance on the issue. Undoubtedly, there is no single solution to this complicated issue.

CEO-Dr. Adams-Kellum ”clawing back” funds

Stuck in the middle is LAHSA CEO Dr. Va Lecia Adams Kellum, Ph.D., appointed by Mayor Karen Bass. The day before Thanksgiving, after appearing before the County Board of Supervisors, she wrote to Judge Carter, trying to assure him that the joint-powers authority of the City and County was on top of recouping funds from Measure H, which Measure A increased and extended indefinitely.

“Since the County audit, LAHSA has recouped an additional $3.8 million, bringing the total recouped in the past year to $6.3 million.”

Adams Kellum added:

“This reduces the outstanding balance to $44.5 million.”

LAHSA plans to clawback the funding through:

“Reduced Payables: Offsetting future payments to service providers against their outstanding balances”

and

“Direct Payments: Providers making direct payments to LAHSA."

It wasn’t immediately clear if the service providers, which now have a guaranteed funding source, have the capacity to repay these advances while still making payroll. Ironically, in many discussions, “expanding capacity” seems to be the top goal for these providers, referring to their staffing, not the number of people they are able to house.

Additionally, LAHSA plans:

“to improve financial management and oversight”