Committee hears evidence of multi‑million dollar payment backlog, directs reforms to speed contracts and reconciliations

City staff and outside consultants told the Special Housing and Homelessness Committee that failures in contracting and fund flow have left nonprofit providers with substantial unpaid invoices and jeopardized frontline services.

"To date the city has distributed $193 million to LAHSA and paid $183 million," consultant Sarah Solen told the committee during a presentation of contract and payment data. "We estimate the city has $67 million in outstanding obligations and roughly $47.9 million is owed to providers." The Solen figures and staff explanations framed a long technical presentation about root causes and remedies.

Why it matters: multiple speakers from service providers described delayed payments that forced the use of credit, staff layoffs and program instability. Megan Hermia of a women’s center said accounts receivable exceed $5 million, with $1.2 million owed to her program alone, and warned that delayed reimbursements reduce capacity to deliver urgent services.

The committee heard three primary causes from staff: (1) no single, centralized office is responsible for all contract payments and reconciliations; (2) some locally generated ballot‑measure funds arrive via county re‑imbursement processes that leave the city temporarily cash‑constrained; and (3) late contract execution and administrative changes (for example, insurance requirements) have prevented providers from invoicing on time. Staff described long average reconciliation times that aggregate through the payment chain and increase the apparent number of days providers wait for final payment.

City staff outlined a set of near‑term and structural recommendations: create a single accountable office or position for homelessness contract payments; produce monthly financial statements showing who has been paid and what remains outstanding; enable faster contract execution and administrative modifications; and reduce dependence on reimbursement timing by negotiating more predictable cash flows with the County. "We have to centralize the accounting and provide monthly reporting so everyone can see where the money is," a city presenter summarized.

The committee also heard that an external audit/consultant engagement has begun: staff confirmed KPMG had been retained to review departmental processes and recommend specific reforms. "KPMG will investigate and give us changes to revitalize the city‑LAHSA link," staff said.

Provider testimony underscored the urgency. George Holley, CEO of Midnight Mission, recounted months‑long delays and an unresolved contract appeal that left his organization operating on credit and uncertain about upcoming quarters. Cherry Jones of the Greater Los Angeles Homeless Coalition warned tens of millions of dollars across the sector are at risk if the backlog is not resolved.

What the committee did: members discussed code and MOU changes and approved item 2 (the analyst’s contracting recommendations) as modified; they instructed staff to return with defined timelines, transparency measures and options for administrative authority. Because the meeting lost quorum, final votes on detailed recommendations were deferred to the April 15 meeting where the items will appear again.

Next steps: staff will present written recommendations, the KPMG engagement will proceed, and members said they expect monthly reporting and clearer timelines before the next meeting.