Part 134: “The Rocky Horror Picture Show" – A New County Homelessness Agency?

Published November 30, 2024.

and

Nov 30, 2024

The Los Angeles County Board of Supervisors does the Pledge of Allegiance at their November 26 meeting before Thanksgiving holiday by Zachary Ellison (GoPro Hero 11 Black).

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By Ruth Roofless and Zachary Ellison, Independent Journalists

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 scathing audits from both the County Auditor-Controller’s office under Oscar Valdez as well as the Los Angeles City Controller Kenneth Mejia reviewed spending.

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 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 Housing Solutions Agency (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). 600 includes the entire County except Glendale, Pasadena, and Long Beach, which have their own CoCs under the supervision of their separate housing departments. 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” regarding his intent to hold LAHSA, the City of Los Angeles, and the County of Los Angeles accountable for their spending in addressing the homelessness crisis.” 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), which is 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.” 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.”

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.

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” through “Dedicated Account(s)” defined as “a separate interest-bearing account for cash advances” and “Regular Reconciliation” on a “quarterly basis.” While there are admittedly major accounting problems, the issue also goes back to performance. Why are so many still on the streets for so long, or stuck in shelters or motel rooms? How are cash advances to service providers supposed to translate to permanent housing for people on the streets when providers time and time again choose to expand their own staffing capacity with the funds?

Even grants that are supposed to be dedicated for the specific purpose of housing targeted populations haven’t been safe from abuse by nonprofits. For one micro-level example, a $2M State grant that was supposed to move people from the Los Angeles River into permanent housing eliminated the “sustainable housing outcomes” category from its budget. The funds were reallocated to increasing the staffing capacity of provider Ascencia, a Glendale nonprofit that was once affiliated with LA’s major nonprofit PATH. The multiplicity of service providers and the lack of clear financial controls have quite obviously become perhaps more than just problematic.

As part of the LA Alliance Hearing on November 21, Judge Carter asked to hear from a number of individuals who were unsparing in their descriptions of what life is like on Skid Row. Speaking about developer Leo Pustilnikov, who recently acquired 18 buildings of single-room occupancy (SRO) buildings, one man described how security has been pared back since the acquisition:

“They had security in the morning and night. They want to keep the dope man out of there. But now this is what they're doing since he bought them, and you guys paid the money for these people to be in these places, you can be in there and they would never know you were dead because they don't knock on the door to go see the people with the psych, okay?”

This is hardly an exaggeration, which, much like trading war stories, veers into the graphic details of life in poverty. On November 5th, Los Angeles Times journalist Liam Dillion described the change in ownership, quoting from an interview with Pustilnikov: “Instead of simply wasting money to create the appearance of safety, we are investing real money into creating a sustainable, safe and clean environment for tenants.” What ultimately happens with one of the largest chunks of the housing for the most vulnerable residents in the city remains in doubt.

A woman described to the Court: “On every single floor of the SROs and Skid Row are drug lords that are controlling the benefits that are given to these housed but unhoused people.” Did Pustilnikov not know what he was getting himself into? A spokeswoman for the Los Angeles Housing Department ("LAHD") stated that the City is “closely monitoring” the situation but has not concluded yet that the rollback of services has breached the contract under which they had been acquired at an astonishingly low price of $8,333 per unit last summer. Perhaps Leo Pustilnikov, who is famously press shy, needs a date before Judge Carter to explain himself.

So is a new Homelessness Response Agency as proposed the solution to this mess, or is there something different that needs to happen? LAHSA doesn’t have the same intersectoral governance model as the new Los Angeles County Affordable Housing Solutions Agency (LACAHSA), but if we’re not abolishing LAHSA as some have desired, is this simply an administrative makeover? LAHSA would still reportedly retain some response capabilities. Supervisor Janice Hahn boasted how she had called the agency on the weekend about an unhoused man, and they had in fact shown up and gone with their workers. She didn’t know what happened to him in the end. With so many soured on the existing system, wary of being institutionalized, does a rearranging of the deck chairs change the basic dynamic? Moreover, what will make it more capable of increasing the volume of housing or ensuring quality of service to the vulnerable and challenged population it seeks to serve in Los Angeles?

In the Rocky Horror Picture Show, one of the protagonists, Janet Weiss, asks the cross-dressing mad scientist, Dr. Frank-N-Furter, "What have you done to Brad?” To which he responds: Nothing. Why, do you think I should? After 3 plus hours of the County Board of Supervisors, it was clear that something had to happen. Chair Lindsey Horvath was clear on her mission: “Change and structural reform is hard.” With Measure G having just passed with the most razor thin margin possible, 51.6% to 48.4%, the future of a Board of Supervisors expanded from 5 to 8, with an elected CEO and an Ethics Commission, it was clear more change was coming. The illuminated name signs that the line of desks in the Board Hearing Room glowed. Several LA County Sheriff’s stood around, and lunch was delivered, which the supervisors, all female for the first time in county history, quickly ate before going back to work. Public commenters took their turns getting in their quick word on the matter, interspersed with others calling in; one made a lewd, harassing remark toward Chair Horvath, and she rolled her eyes. Business as usual.

A study by McKinsey & Company in March 2023 estimated that “more than 100,000 Los Angeles residents could be experiencing homelessness by the time that the city hosts the 2028 Olympic Games.” The same study found that every day 227 people entered homelessness while 207 were exiting. Los Angeles is spending more money than ever before and yet getting the same results. The County’s new audit didn’t tell us anything most people didn’t already know; it’s a mess. LA City Controller Kenneth Mejia’s audit found that out of a $1.3 billion budget for 2023-24, $513 million had gone unspent. A spokesman for Mayor Bass disputes the findings.

Neither the City nor the County actually has a dedicated Chief Financial Officer position; the City Administrative Officer position is probably the closest thing, and yet it’s not the same. Such responsibilities are centralized under these positions without any actual leadership. Similarly, the ability of public agencies to leverage private financing and philanthropy effectively is also limited. Current efforts are ad hoc at best. The path to meaningful governance reform has never been so revealing; California might as well be Transylvania, as Dr. Frank-N-Furter tells Magenta, his domestic, after she declares, "I ask for nothing, master,” and he replies in turn, "And you shall receive it. IN ABUNDANCE!” Let’s all hope that a new agency is in fact the policy solution.

Link: L.A. County supervisors approve plan to study homeless services overhaul

Link: LA County Board of Supervisors November 26 Supplemental

Link: Following scathing audit, LA County supervisor proposes moving homeless services under direct county control

Link: Nearly half of L.A.’s record homelessness budget went unspent, city controller finds

Link: ANNUAL PERFORMANCE EVALUATION FOR YEAR SIX OF THE COUNTYWIDE HOMELESS INITIATIVE

Link: The Rocky Horror Picture Show

Link: Los Angeles Homeless Services Authority

Link: LA Alliance for Human Rights

Link: Dkt 828 TRANSCRIPT for proceedings held on Thursday, November 21, 2024

Link: Dkt. 833 Letter re Update on Recoupment of Measure H Working Capital Advances

Link: Under Legal Pressure, LA Mayor Promises To Publish Receipts On Homeless Spending

Link: Federal Judge Says LA Misled About Homeless Encampment Promises