A federal appeals court ruled Thursday that the Trump administration cannot remove the Los Angeles Homeless Services Authority from the region’s federal homelessness funding process while its legal challenge moves forward. The decision gives LAHSA until October 14 to submit a regional application for approximately $239 million in grants and allows the organization to continue in its various roles while the case proceeds.
The Ninth Circuit’s ruling lifts a temporary pause on an August injunction issued by U.S. District Judge David Carter. Carter blocked the Department of Housing and Urban Development’s June suspension of LAHSA, which came after the deadline for the region to designate a different agency to apply for the money. HUD appealed, and the Ninth Circuit temporarily put Carter’s order on hold while it considered whether to keep it paused during the appeal. Thursday’s decision restores the order’s main protections.
HUD argued that LAHSA’s history of financial mismanagement justified its suspension. It proposed that individual housing and service providers apply directly to the federal government instead of through the local process, under which providers submit projects for regional evaluation and a single application. As LAist reported, a Justice Department attorney told the appeals court that HUD would not rely on LAHSA’s local funding priorities in its proposed process.
The judges found that HUD had not adequately explained why it needed to suspend LAHSA immediately. They also described its proposed alternative as extremely difficult, if not impossible, to carry out before the application deadline. The ruling keeps LAHSA in place as the region’s lead applicant and as the administrator of its homelessness data system, coordinated entry system and annual homeless count while the case moves forward.
The court also left in place Carter’s order requiring HUD to execute previously approved 2025 grant agreements and release those funds on the usual schedule. Those delays have already reached the people the grants are meant to serve. LAist reported that the Downtown Women’s Center has been covering about $150,000 a month in rent and other costs for survivors of domestic violence while it waits on a $3.5 million annual contract. House of Ruth in Pomona has cut staff hours and laid off workers at its transitional shelter while an awarded grant remains unsigned. More than 50 local providers could be affected by delayed renewals, according to LAHSA.
The approximately $239 million at issue in this year’s new application has not been awarded. The appeals court clarified that HUD does not have to pay out that future funding before it would normally be due.
This does not settle LAHSA’s future. Last week, its governing commission voted not to seek the regional federal roles for 2027. The Los Angeles Continuum of Care is considering applications from other agencies, including the City and County, to take over some or all of those responsibilities. The County has already shifted its own homelessness contracts out of LAHSA, while the City is still studying how to take over its contracts. As of last week, the City had not yet hired the consultant it approved in August to develop a transition plan. The court’s ruling keeps this year’s application moving while those local decisions are worked out.
Another federal court decision complicates the picture. On September 16, the First Circuit Court of Appeals paused a ruling against HUD’s separate 2026 funding notice, which sets aside $1.3 billion nationally for transitional housing and projects offering services without housing. That lets HUD proceed with the competition under its contested rules while the appeal continues. Thursday’s decision preserves Los Angeles’s local application process, but does not resolve the fight over which kinds of housing HUD will fund.
As MVV reported in August, LAHSA’s failures demand accountability, but they do not give HUD a free hand to disrupt housing and services or take funding decisions away from the region. Thursday’s decision preserves that distinction. It gives local officials time to decide who should run the system next without putting the current application in the hands of a haphasard federal process.
The Ninth Circuit is scheduled to hear arguments on HUD’s appeal October 19, and Carter’s order is currently set to expire October 27. A trial over the legality of HUD’s suspension is scheduled for February.