City Administrative Officer Matt Zabo told the Housing and Homelessness Committee on Sept. 17 that the city must submit an updated bed plan to the court overseeing the Alliance settlement by Oct. 3 and recommended a mix of non‑congregate units, permanent supportive housing and 2,000 time‑limited subsidies to close the remaining compliance gap.

“The gap, the requirement, of course, is 12,915 beds,” Zabo said. He reported the city currently has 7,440 open beds or units and another 3,776 beds in process, for a total of 11,216 open or in‑process units. Zabo said 394 of the in‑process permanent supportive housing units are at risk of delay beyond the June 2027 compliance date; excluding those units, his office calculated a conservative gap of about 2,093 units to meet the 12,915 target.

Zabo recommended the city close the gap with a package that already has some funding identified — 130 non‑congregate beds, 17 PSH units at Jordan Downs, 53 interim congregate beds at Union Rescue Mission and 60 non‑congregate interim beds in Council District 5 — plus a proposed 2,000 time‑limited subsidies (TLS) to reach a total of 2,130 units in the plan.

Why this matters: The CAO framed TLS as a cost‑efficient, effective intervention and proposed it as the fastest practicable way to increase the bed count within the compliance window. Zabo told the committee the three‑year cost of the plan is “just over $112,000,000,” and that if the city continued all existing beds and services at current funding levels it would confront a combined three‑year budget gap of roughly $488,000,000.

The CAO’s fiscal breakdown: Zabo said the plan’s incremental cost over three years is about $112 million (approximately $29 million in the current year, $54 million in fiscal 2027 and $29 million in fiscal 2028), while the broader set of current city programs and projected carry‑forward expenses generate a larger structural shortfall. For the current fiscal year the CAO reported an $8 million gap; for fiscal 2027 an estimated $166 million shortfall before adding the $54 million plan cost; combined, the three‑year gap (current year + FY27 + FY28) totaled roughly $488 million under the CAO’s assumptions.

Zabo identified three possible sources or strategies to close the gap: (1) fully commit the La Casa portion of Measure A (a locally controlled Measure A housing allocation that includes an estimated $133 million in the renter‑protection category) to time‑limited rental assistance; (2) advocate for the maximum feasible share of state HAP (HAP 7) funding to come to Los Angeles; and (3) seek more efficient use of existing dollars by examining higher‑cost interim beds and potential program consolidations.

Council members pushed back on timing and analysis. Council member Corrado said she was uncomfortable approving a bed plan without a systemwide cost‑per‑bed analysis across interventions and a full inventory of beds and funding sources the city has brought online since the settlement. Corrado asked for a detailed accounting of beds (including DV/IPV beds, PSH units and all sites where city dollars flowed) and the CAO and city attorney were asked to return with a report clarifying the legal flexibility to alter the plan after submission.

LAHSA staff and others answered operational questions: Nathaniel Vergau of LAHSA said tenant‑based voucher turnover is limited because housing authorities are in shortfall and that LAHSA has been matching some TLS participants to newly secured federal vouchers, but that the number of vouchers covered only a small share of need. CAO staff Ed Gibson told the committee that most LAHSA master‑lease units already are counted toward Alliance compliance and that, in the CAO’s view, there is limited immediate potential to bolt on additional master‑lease units beyond what has already been accounted for.

The committee continued the item without a vote and asked staff to return with additional analyses, including: a full inventory of beds and funding sources the city has counted toward Alliance compliance; a per‑bed cost comparison across interim, TLS and PSH interventions; clarification on the availability and legal use of Measure A/La Casa funds for TLS; and guidance on the consequences of changing the plan after submission to the court.

Ending: The CAO’s recommended plan would use a sizable TLS component for near‑term compliance and place substantial pressure on the city budget in coming fiscal years. Committee members asked for more data and legal analysis before endorsing a submission to the court; the item was continued to a future meeting so staff can produce the requested information.