LA pays $38.2M to settle claims it misused housing funds

The city of Los Angeles has agreed to pay $38.2 million to settle allegations of misusing federal funds meant for accessible affordable housing, the U.S. Department of Justice announced Monday.

The settlement resolves a whistleblower lawsuit filed under the False Claims Act in 2011. The United States intervened in the case in 2017. Federal prosecutors accused the city of failing to comply with accessibility laws, including Section 504 of the Rehabilitation Act, for over a decade while using Department of Housing and Urban Development grants to construct and renovate multifamily housing. U.S. ex rel. Ling, et al. v. City of Los Angeles, et al., 2:11-cv-00974 (C.D. Cal. filed Feb. 2, 2011).

In a press statement, Los Angeles City Attorney Hydee Feldstein Soto said, "The City is pleased that the matter is now behind us following the City Attorney's Office's hard work defending this litigation.

"With the settlement agreement now in place and approved by the Court, the City and HUD can focus on working together to advance affordable and accessible housing for LA residents, which is so desperately needed. The City denies that it violated the False Claims Act. Nonetheless, we are pleased to have reached this $38.2 million settlement, particularly in light of the federal government's initial claim that it was entitled to well over $1 billion in alleged damages."

The settlement does not include an admission of wrongdoing by the city.

The city was accused of allowing numerous violations at properties funded by the grants, including excessively steep slopes, unreachable countertops, and doorways inaccessible to wheelchairs. The city also failed to maintain a public list of accessible units and their features, as required by federal law, the DOJ claimed.

"Municipalities that receive federal grant money for affordable and accessible housing must comply with federal law and honor the rights of people with disabilities," said First Assistant U.S. Attorney Joseph T. McNally for the Central District of California. "The nearly $40 million settlement here demonstrates our commitment to ensuring municipalities receiving federal funds comply with federal law. We will continue to work with the City of Los Angeles to ensure equal access for individuals with disabilities."

The lawsuit was initiated by a Los Angeles resident who uses a wheelchair and the Fair Housing Council of San Fernando Valley. Their portion of the settlement has yet to be determined.

This agreement follows a related $3.1 million settlement in 2020 with CRA/LA, the successor agency to the city's former Community Redevelopment Agency.