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MY POV - When the City of Los Angeles faced litigation due to purported inactions and policies that allegedly created a hazardous environment in the Skid Row area, what actions did it take? Of course, it hired the best attorneys money could buy—powerful and well connected—to defend itself.
All of this at a time when the city faces a $1 billion deficit, leading to layoffs, service cuts, reduced LAPD staffing, and less funding for affordable housing.
A breath of fresh air was the city`s genuine fiscal watchdog, Councilmember Monica Rodriquez, who was the only one to oppose this squandering of taxpayers 'money.
So startling was that action, the evidentiary hearing in the court case last week focused not on testimony, but on the new legal representation of the city. Gibson, Dunn & Crutcher LLP, the powerhouse legal team will now represent LA with nine attorneys, supplemented with two city attorneys, against allegations that the city failed to uphold obligations under a 2022 federal settlement aimed at addressing the homelessness crisis.
Having served on multiple public boards for many years, I have witnessed the rampant charging methods used by some large law firms to fleece unwary government. First comes the exorbitant hourly rates, then overcharges and surcharges follow. Bureaucrats do not bother to examine the billing, thus approving the extravagant costs.
It is not uncommon for the City Attorney to engage companies on a sole source basis with a small initial fee that eventually balloons to multimillion dollars. When I was appointed to the LADWP Board in 2005, I discovered that the City Attorney had awarded in 1998 a sole source contract to CH2MHill for $550,000 to act as an expert witness on dust litigation to resolve legal issues related to Owens Lake. Subsequently, the scope of work of CH2MHill increased to program manager, designer, and construction manager, a flagrant conflict of interest. By 2005 the contract had reached $120 million! In addition, I initiated a forensic audit and discovered that CH2MHill was overbilling LADWP. CH2MHill was sued in federal court and a settlement for $2.9 million was reached.
Of course, such expensive city tactics consume multimillion funds that can otherwise be used to correctly focus on other needy issues, especially the homeless. Worse yet, it did not have to be this way. I had written earlier that that absent oversight, direction and accountability, homelessness had not only turned bleak and unmanageable, but it had fallen prey to the “Homeless Industrial Complex.”
The recent evidentiary hearings stem from a lawsuit filed by the LA Alliance for Human Rights, an association of downtown businesses and residents. The group alleges the city and county failed to deliver on commitments made in the 2022 settlement to address the region's homelessness crisis. U.S. District Judge David O. Carter is presiding over evidence and argument to determine if the city has met its obligations.
A court-ordered independent audit disclosed that homeless programs funded by the City of Los Angeles operate with minimal oversight, making it nearly impossible to track spending and outcomes effectively. The damning report by the global consulting firm Alvarez & Marsal, analyzed four years of homeless services managed by the Los Angeles Homeless Services Authority (LAHSA) from June 1, 2020, through June 30, 2024. At that time, I had called for a forensic audit to uncover waste, fraud, and abuse. Hopefully, the six federal agencies investigating the "Homeless Industrial Complex" will uncover all the malfeasance, and more.
According to the report, LAHSA’s contracts were vague, leading to inconsistencies in services and costs. Insufficient financial accountability prevented officials from tracing large sums allocated to city-funded homeless programs. “The lack of uniform data standards and real-time oversight increased the risk of resource misallocation and limited the ability to assess the true impact of homelessness assistance services,” the report stated.
As per news stories, after seeing the report Judge Carter is considering transferring control of homelessness spending from county/city officials to a court-appointed receiver.
Los Angeles Mayor Karen Bass and other city officials are expected to take the stand to determine whether the city breached its legal obligations to create more shelter for unhoused people. Rodriguez had earlier called for the city to sidestep LAHSA entirely.
Elizabeth Mitchell, one of only two LA Alliance attorneys, called the finding in the audit “not just troubling, but deadly. The failure of financial integrity, programmatic oversight, and total dysfunction of the system has resulted in devastation on the streets, impacting both housed and unhoused."
Yet, a court-appointed receiver, a homeless czar, even an elite committee of experts may not be enough for the demanding and complex homelessness issue.
I have maintained that without uncertainty, a new nonprofit entity must be created, one like Rebuild L.A. that was formed after the 1992 civil disturbances, independent of LAHSA and composed of volunteer civic leaders, technical professionals, and financial experts to oversee the new infrastructure. A program overseen by three political entities, county, city, and LAHSA, is doomed to failure. If history instructs and predicts, then next will come the finger pointing for the failures.
Drawing upon my many years of experience in weighty yet delicate and critical issues, it becomes plainly obvious that a new structure of the skillful and knowledgeable must take supervisorial control and be guided by public transparency and a heart committed to the homeless.
(Nick Patsaouras has served on key public boards, including the LA Department of Water and Power, Metro, and the Board of Zoning Appeals. He oversaw the ABH, A Bridge Home, (Emergency Temporary Housing Initiative), for Mayor Eric Garcetti. He is the author of the book "The Making of Modern Los Angeles" and a featured writer for CityWatchLA.)
