The Los Angeles City Council hiked the rate that it pays for services at many of its homeless shelters on Friday, in an attempt to keep nonprofit contractors from pulling out of more than a dozen sites.
The council passed a 12-2 vote to increase the rate it pays to $80 per night, up from a range of $60 to $66, at its congregate shelters, tiny home villages and other facilities. The increase, which would cover thousands of shelter beds, is set to begin Jan. 1.
The decision is expected to add $13 million in costs to this year’s budget, at a time when the city’s elected leaders are contemplating reductions to other taxpayer services. Much of the added cost will be covered by a state housing grant used to open and operate new interim homeless housing sites, City Administrative Officer Matt Szabo said.
The council’s vote followed weeks of lobbying by the Greater L.A. Coalition on Homelessness, which represents more than 50 nonprofit homeless service providers that offer food, security, maintenance and other services. Several of those groups warned they would stop serving more than a dozen interim housing sites unless the council made significant increases to the nightly bed rate.
Councilmember Bob Blumenfield, who voted for the proposal, said a move to $80 would allow some of those nonprofits to “continue to limp along and provide the services” until July, when a larger set of increases goes into effect.
“If we don’t take this action, I’m worried we’re going to see service providers shut down sites, and that means more people on the street,” he said.
Szabo had recommended a smaller increase for Jan. 1, one that would have pushed the rate to $79 for smaller shelter sites — those with 50 beds or fewer — and $69 for larger ones. He told the council that a push to $80 would “exhaust” the pool of state funds used by the city to pay for interim homeless housing during the current budget year.
Councilmember John Lee voted against the larger increase, saying it would burn through the remainder of those funds.
“Just understand, if we pass this, that’s the whole pot,” he told his colleagues.
Jerry Jones, who heads the coalition, said homeless service providers have struggled for several years, in part because they don’t receive a nightly bed rate that covers their costs. He pointed to a study showing that the true cost is an average of $139 per night — a figure that Szabo has challenged.
On Friday, Jones described the council’s vote as “a step in the right direction.” At the same time, he said the decision did not address the needs of nonprofit groups that serve homeless families — and have greater expenses. Those organizations are still on the verge of pulling out of city-owned shelters, he said.
“Those facilities are especially strapped financially,” he said.
Jones has repeatedly declined to identify the 14 locations that have been under threat of being “decommissioned,” or handed back to the city or county. Three are staffed by workers from People Assisting the Homeless, or PATH, a nonprofit group that provides services to the city.
Earlier this year, PATH executives warned council members they were prepared to walk away from three facilities — which house a combined 219 beds. On Friday, PATH Chief Executive Jennifer Hark Dietz said Friday that the pay hike isn’t sufficient to guarantee the future of those three sites, two of which serve homeless families.
Hark Dietz said her organization is talking to city and county officials about other sources of funding to keep those facilities running over the next six months.
The council is now on track to provide larger increases on July 1, the start of the next budget year. Those rates will reach $89 per night for larger facilities and $116 for smaller ones.
The increases will add about $45 million to city spending on homelessness for the 2025-26 fiscal year, Szabo said.
Councilmember Nithya Raman, who led the push for an $80 nightly bed rate, said the changes being made by the council will result in greater oversight and accountability, with more specific requirements on the types of services the shelters must provide.
“In the past, case managers only needed to meet their clients once a month. That is not casework to me. Now that has been upped to once a week,” said Raman, who heads the council’s homelessness committee.
Councilmember Monica Rodriguez voted against the proposal, saying the council still isn’t receiving the information that it requested about Mayor Karen Bass’ Inside Safe program, which pays an entirely different rate for homeless services. Rodriguez also voiced frustration with the Los Angeles Homeless Services Authority, an agency partially funded by the city that was recently the subject of a stinging audit.
“We can sprinkle the word accountability into everything and say that we’re recalibrating this ship. The problem is that even today, we still can’t get direct data,” she said.
“I can’t continue to aid and abet this broken system,” she added.
Zach Seidl, a spokesperson for Bass, said in a statement that Szabo’s office regularly sends the council reports on the outcomes of Inside Safe. Seidl also said the decision to increase the nightly bed rate would ensure that nonprofit providers “have the capacity to help even more people get off the streets.”
“We are focused on solving the problem,” he said. “The days of managing the crisis are over.”
