The Los Angeles City Council raised the rate it pays for services at its homeless shelters on Friday, in an effort to prevent nonprofit contractors from leaving more than a dozen locations.
The council voted 12-2 to raise the rate it pays to $80 per night, from $60 to $66, at its affiliated shelters, home towns and other facilities. The increase, which could include thousands of shelter beds, is expected to begin on January 1.
The decision is expected to add a total of $13 million to this year's budget, at a time when the city's elected leaders are considering cuts to other taxpayer services. Additional costs will be covered by federal housing grants used to open and operate new temporary homeless shelters, said City Manager Matt Szabo.
The council's vote followed weeks of lobbying by the Greater LA Coalition on Homelessness, which represents more than 50 nonprofit homeless service providers who provide food, shelter, care and other services. Most of those groups have warned that they will stop providing more than ten temporary houses unless the council significantly increases the quality of overnight accommodation.
Councilman Bob Blumenfield, who voted for the proposal, said the move to $80 would allow some of those nonprofits to “continue to limp along and provide services” until July, when a larger set of increases go into effect.
“If we do not take this step, I am afraid that we will see service providers closing the sites, which means that there are more people on the street,” he said.
Szabo had recommended a small increase on Jan. 1, which would push the rate to $79 for small shelters — those with 50 beds or fewer — and $69 for larger ones. He told the council that pushing to $80 would “eliminate” the amount of federal funds the city is using to pay for temporary homeless shelters this budget year.
Councilman John Lee voted against the big increase, saying it would burn into those remaining funds.
“You mean, if we pass this, that's the whole pot,” he told his colleagues.
Jerry Jones, who runs the coalition, said homeless service providers have struggled for several years, in part because they don't get overnight accommodation to cover their costs. He cited research that shows the actual cost is an average of $139 per night — a figure Szabo 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 non-profit groups that serve homeless families – and they have huge costs. Those agencies will still come out of city-run shelters, he said.
“Those institutions are very financially strapped,” he said.
Jones repeatedly declined to identify the 14 properties that were at risk of being “decommissioned,” or returned to the city or county. Three are staffed by People Assisting the Homeless, or PATH, a nonprofit group that provides services in the city.
Earlier this year, PATH executives warned council members they were ready to walk away from the three facilities — which have 219 beds. On Friday, the CEO of PATH, Jennifer Hark Dietz, said on Friday that the salary increase is not enough to ensure the future of the three facilities, two of which serve homeless families.
Hark Dietz said his organization is talking with city and county officials about other sources of money to keep those facilities operating for the next six months.
The council is now in a position to provide more money on July 1, the start of the next budget year. Those rates will go up to $89 per night for larger establishments and $116 for smaller ones.
The increase would add about $45 million to the city's spending on homelessness in the 2025-26 fiscal year, Szabo said.
Councilor Nithya Raman, who led the campaign to get a nightly bed rate of $80, said that the changes made by the council will lead to greater oversight and accountability, with specific requirements on the types of services that should be provided by shelters.
“Previously, case managers needed to meet with their clients once a month. That is not an offense to me. Now that has been increased to once a week,” said Raman, who heads the council's homeless committee.
Councilwoman Monica Rodriguez voted against the proposal, saying the council has not received the information she requested about Mayor Karen Bass' Inside Safe program, which pays a completely different rate for homeless services. Rodriguez also expressed frustration with the Los Angeles Homeless Services Authority, an underfunded city agency that recently became the subject of a tough audit.
“We can spray the word accountability on everything and say we are righting this ship. The problem is that even today we have not received accurate data,” he said.
“I will not be able to continue to help and promote this broken system,” he added.
Zach Seidl, spokesperson for Bass, said in a statement that Szabo's office regularly sends council reports on the results of Inside Safe. Seidl also said the decision to increase the nightly rate will ensure that nonprofit providers “have the ability to help more people off the streets.”
“We are focused on solving the problem,” he said. “The days of managing this problem are over.”
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