Just days after City Council voted to preserve Stay Housed L.A. and continue funding tenant legal services despite objections from City Attorney Hydee Feldstein Soto, they quietly adopted a new policy that could restrict how those same legal service providers contract with the city going forward.

The political pressure shaping that decision did not originate inside City Hall. In recent weeks, a newly launched right wing outlet, the California Post, has aggressively pushed the narrative that the city is handing public funds to “activist” legal groups that sue the city. That argument was then taken up by City Attorney Hydee Feldstein Soto in her effort to block the Stay Housed L.A. contract, warning against awarding funds to a “frequent litigant against the city.” What began as a media narrative has now translated into policy, shaping how the city approaches the very organizations it relies on to keep tenants housed.

Council File 26-0215, introduced by Council President Marqueece Harris-Dawson and approved on March 13, requires any entity entering into a city contract to disclose whether it is currently a plaintiff in litigation against the City of Los Angeles. On its face, the policy is framed as a transparency measure, but in practice, it lands squarely in the middle of the same political conflict that nearly derailed eviction defense funding in the first place.

As previously reported, City Attorney Hydee Feldstein Soto attempted to block a major contract with the Legal Aid Foundation of Los Angeles, the primary provider for Stay Housed L.A., arguing that the city should not award such a large contract to an organization that also sues the city on issues related to homelessness and housing policy. Tenant advocates and legal experts pushed back hard, noting that Legal Aid’s litigation is part of its broader mission to enforce rights and that its eviction defense work is separate and essential. The Council ultimately sided with tenants, approving funding while adding reporting requirements.

But the concern about “who sues the city” is not being applied consistently. In 2023, Feldstein Soto’s office supported a sole-source contract for the receiver overseeing the collapse of the Skid Row Housing Trust, a decision made without fully vetting his background. The receiver, who had hosted a political fundraiser for the City Attorney, lasted just three months. During that time, the portfolio was saddled with millions in additional debt, hundreds of eviction notices were issued to tenants, and basic safety conditions deteriorated. He ultimately resigned at the request of a judge as disputes with the city escalated, leaving taxpayers on the hook for at least $37 million and thousands of vulnerable tenants in limbo. The city then had to scramble to stabilize and offload the properties to prevent mass displacement.

That episode exposed the real stakes of these decisions. When the city fails to properly oversee contractors, the consequences fall on the most vulnerable residents. But when organizations step in to hold the city accountable through litigation, they are now being treated as a risk.

Instead of blocking contracts outright as Feldstein Soto had hoped, the city is now formalizing a system to track who is suing it. The Budget and Finance Committee report makes clear that officials view contractors engaged in litigation against the city as presenting “potential conflicts,” stopping short of a ban but establishing a framework that can be used to scrutinize, delay, or challenge future agreements. In practice, this is part of a broader shift. The Council preserved eviction defense, but only after narrowing its scope, shortening the contract term instead of approving the full three years, adding new reporting requirements, and now requiring disclosure of litigation. Taken together, these changes send a clear message. The program will continue, but under tighter constraints that introduce new uncertainty into the very system designed to keep tenants housed.

This matters because many of the most effective legal and advocacy organizations in Los Angeles routinely take the city to court on issues ranging from homelessness and tenant protections to disability rights and policing. Litigation is often the only tool available when the city fails to comply with its own laws or constitutional obligations. Treating that work as a “conflict” reframes accountability as a liability and raises a deeper question at the heart of the Stay Housed L.A. dispute. Should the city be able to deny or restrict funding to organizations precisely because they challenge it when it is in the wrong? Legal Aid and similar groups argue the answer must be no. Their work defending tenants in eviction court and suing the city when policies violate the law are not separate functions, but part of the same mission. Tenants facing eviction are often harmed by the very systems being challenged, and separating those roles would weaken both.Council File 26-0215 does not explicitly bar those organizations from contracting with the city. But in context, it functions as a warning. The same groups that enforce tenants’ rights are now being flagged, tracked, and potentially scrutinized for doing exactly that.

The Council’s decision to move forward with disclosure rather than prohibition suggests an attempt to thread the needle, but it also creates a new layer of political pressure that could resurface every time a contract comes up for renewal. That political pressure is already weighing heavily on Stay Housed L.A., which is now funded through a shortened contract term rather than the full three years originally proposed. That means the program will be back before Council sooner rather than later, potentially under even greater scrutiny.