A federal judge is demanding a fix for L.A.'s broken homelessness system. Is receivership his next step?

Los Angeles Times

02-04-2025

With the top city and county elected officials sitting in his jury box, the judge lectured for more than an hour, excoriating what he called the Rocky Horror Picture Show of homeless services in Los Angeles.
But when it came time to reveal the drastic remedy anticipated by a courtroom full of spectators, U.S. District Judge David O. Carter hit pause.
He gave Mayor Karen Bass and Los Angeles County Board of Supervisors Chairwoman Kathryn Barger until May to fix the broken system, vowing only then to become 'your worst nightmare' should they fail.
'I think as elected officials, you've inherited an extraordinarily difficult task,' he told them. 'And I imagine you came to court today thinking that hell and brimstone would rain upon you. Quite the opposite. At the end of this, I'm going to be asking if there's anything that your branch of government can do to resolve the problems that have been presented to you.'
An attorney in the case, alleging that the city had failed to meet its obligations in a settlement agreement, urged Carter to employ his ultimate weapon — appointing a receiver to run the city's homelessness programs.
But that prospect led the often blustery judge to turn openly introspective, ruminating on the limits of his power and the risks of using it to try to reverse decades of mismanagement by other branches of government.
'So unless the two of you can work this out in some way, the court's going to have to,' he told Bass and Barger. 'And I'm not sure what to do about that because then I am intruding. I've got a great chance of a reversal [on appeal], I understand that. But if I don't, then I'm complicit, I'm sitting here doing nothing.'
His dilemma arises from a 5-year-old lawsuit brought by the L.A. Alliance for Human Rights, a nonprofit organization of business owners, property owners and residents. It alleged that the city and county had failed to address street homelessness. Through an order and a settlement agreement reached earlier in the case, the city is required to create nearly 20,000 new beds for homeless people and remove about 10,000 tents and vehicles from the streets.
A separate settlement requires the county to pay for services at some of the city beds and to create 3,000 new mental health beds.
Carter's oversight of those agreements took a sharp turn last year when the Alliance law firm, Umhofer, Mitchell and King, accused the city of noncompliance and asked the judge to fine it $6.4 million.
He declined to do that but, in place of sanctions, pressured the city to pay for an outside audit of its accounting for billions of dollars it has spent on homeless services.
That audit, released late in February, found disjointed services and inadequate financial controls leaving the city's homelessness programs susceptible to waste and fraud. But it focused particularly on the lack of accountability at the Los Angeles Homeless Services Authority, a joint agency formed in the 1990s to manage homeless services for the city and county.
Through the 2017 Measure H homelessness sales tax and an infusion of city and state funds, LAHSA's budget has grown more than seven times over to its current $875 million.
Calling last week's hearing to explore the ramifications of the audit, Carter requested the agency's chief executive, Va Lecia Adams Kellum, to attend, along with Bass, Barger, City Council President Marqueece Harris-Dawson, City Controller Kenneth Mejia and Gov. Gavin Newsom.
The judge treated Newsom's absence as a predictable annoyance.
'He has a blog, and he's busy blogging.'
But he lamented that he had no authority to compel Adams Kellums, who was then giving an address at Harvard University, to be present since LAHSA is not a named party to the lawsuit. Twice he suggested the agency should be sued, bringing it under his jurisdiction.
The judge's outrage over the state of homelessness poured forth for more than an hour as he quoted from a handful of audits going back decades that, over and over, faulted LAHSA for poor accounting procedures.
'So this isn't new,' Carter said. 'This is old news to elected officials and to LAHSA. There's no auditing going on. There's no transparency. There's no accountability.'
But his posture turned skeptical when L.A. Alliance attorney Matthew Umhofer said he planned to petition for a receiver.
'What's this supposed to look like?' Carter asked sharply. 'What's the function of this receiver? What are they going to do?'
'The receiver, from our perspective, becomes the homelessness czar for the city,' Umhofer replied.
'It's going to have to be an 800-pound gorilla,' Carter said.
Umhofer said that he would not propose names off the cuff but that it should be someone with gravitas, such as Kenneth Feinberg, the lawyer who oversaw the compensation for 9/11 claims.
'Anybody know what his fees are?' Carter asked. 'I do.'
In a back-and-forth on what a receiver could do, Umhofer said it might include 'control of the budget around homelessness in Los Angeles.'
Carter found that problematic. 'Nobody elected the court, nobody elected the receivership,' he said. 'That could be construed as a real intrusion of power. And I'm trying to get a resolution from you, but let's hear the drama of this for just a moment, because I'm having trouble sorting through what this would even potentially look like.'
Umhofer argued that the remedy needed to be 'extraordinary because the failure of the city and the county is extraordinary.'
Because the city has failed, he said, the receiver would have authority 'vested by the court to commandeer what it needs within the city in order to solve this problem.'
'That's really a dramatic action by a court,' Carter said. 'And if that was ever to be considered, I need to be very certain what the attainable goals are and why the legislative and executive branch can't accomplish this.'
'Because they have not accomplished it, your honor. That's exactly the point ... because the executive and legislative branches have failed.'
Could the receiver, Carter asked, order Los Angeles City Councilmember Traci Park to proceed with an unpopular housing project in Venice that she has blocked?
'If we need to overcome some NIMBYism to get shelter and housing built,we should absolutely empower a receiver to do that,' Umhofer said. 'It's the kind of power that I would expect this court to exercise if faced with that question.'
When he continued to press the issue, Carter asked: 'Are you asking that the court take over the entire city? First of all, I would be working with a bureaucracy that is not functioning from my situation. I don't know that I want to work with those same people anymore. That's doomed to failure.'
Finally, he said, 'Go back and think, if you're asking for this drama of a receivership, how that really works and why the court would be more effective.'
No mention was made during the hearing of the looming decision made by the Board of Supervisors on Tuesday to strip LAHSA of $375 million in annual funding and shift it into a new county department.
Carter gave no indication whether he would view that as a positive step or a distraction.
But, in response to a question from The Times, Umhofer partner Elizabeth Mitchell later said the move did not address their complaints about the city, characterizing it as no more than 'moving the deck chairs around the Titanic.'
'There needs to be some massive structural changes to address the underlying issues, and I can't see them proposing anything that will possibly come close,' Mitchell wrote in an email.
The firm will soon file a motion asking Carter to appoint a receiver, she said.