Health Care Group Sues City Over Unspent AIDS Grants


Escalating a feud with the Riordan administration over its handling of money for poor people with AIDS, the nation’s leading health care provider for AIDS patients filed a lawsuit Monday alleging that the city of Los Angeles has mismanaged federal money by failing to disburse millions of dollars allocated to secure housing for the ill.

According to the lawsuit, filed by the AIDS Healthcare Foundation and its director, Michael Weinstein, the city’s Housing Department has applied for and received federal money every year since 1992 under the government’s Housing Opportunities for Persons With AIDS program. Year after year, however, local authorities have been slow in passing it along to those who need it, critics say, resulting in a pool of unspent money that has reached more than $15 million.

“Defendants have failed to spend the money received in the manner and in the time in which they promised,” the lawsuit alleges. “Because of defendants’ repeated and continual breaches of their agreement and violations of rules of the . . . program, defendants are in jeopardy of losing the funds currently allocated and future funding, to the detriment of the citizens of Los Angeles city and Los Angeles County with AIDS and their families.”

The lawsuit caps more than a year of mounting frustration over the city’s handling of the AIDS money. Activists have staged news conferences outside Mayor Richard Riordan’s office and protests outside his official residence.


Riordan has generally downplayed the issue’s seriousness, but a city audit completed late last month amplified some of the critics’ complaints.

That audit, whose findings were disputed by the Housing Department, concluded that the program lacked adequate long-term planning, failed to adopt measures to gauge performance and fell far short of what was needed to reach out to those who might need the money for housing.

Weinstein said the audit confirmed what he and others have been saying: Problems with the program’s management have kept some poor people with AIDS from getting the help they need and to which they are entitled.

“The bottom line here is that people with AIDS can’t get housing,” he said. “Everyone wants to change the subject, but that is the subject.”


Riordan had no comment Monday, but last month his office released a statement welcoming the audit.

“It has useful and important information about the AIDS housing program,” that statement said, adding that Riordan was attempting to correct some of the problems identified in the audit by including enough money in his budget for the coming fiscal year to add one more person to the program’s administrative staff.

The audit tracked money granted by the federal government to the Housing Department under the program and concluded that $8.2 million of it was committed to projects but unspent as of Feb. 28. More money is granted every year, with an additional $8.7 million anticipated in the coming fiscal year, which begins July 1. That would bring the unspent total to almost $17 million.

The question of whether the money is being spent quickly enough has dogged the program for years, and members of the committee that makes recommendations on how to spend it recently approved a list of recipients. The committee voted to appropriate $9.7 million in rent subsidies, $3.3 million in support services and $2.6 million in housing development money, clearing much of the backlog of unallocated money.

Some of that money still is subject to City Council approval.

But the grant money keeps pouring in, in some cases faster than the city’s bureaucracy can pass it out. The result is a continuing pool of money and a testy dispute over how well it is being managed.

In 1996, the federal Department of Housing and Urban Development warned that the city would lose the money unless it applied for a waiver. The city did and the waiver was granted, but the auditor’s report concluded that the city may still lose some of that money. Federal guidelines require the money to be spent within three years of the grant, and city records indicate that more than $4 million of the money that today remains unspent from the program was granted in 1996 or earlier.

Auditors warned that the continuing backlog could threaten the money again and cited that as an example of poor management.


Gary Pinney, the general manager of the city’s Housing Department, said in response to the audit that the city no longer is worried that the federal government will withdraw its backing.

“We have verbal confirmation from the HUD local office that HUD appears to be in the process of changing its focus,” wrote Pinney, whose formal response to the audit was longer than the audit itself.

Pinney’s defense of the city’s progress in allocating the AIDS money has drawn him into increasingly pitched conflict with Weinstein and the foundation. In his lawsuit, which names Pinney as a defendant, Weinstein alleges that “defendants repeatedly and willfully have failed to fulfill their obligations with respect to the . . . program. Further, defendants show no sign that they intend to fulfill their obligations.”

Pinney was not available for comment Monday.

In the lawsuit, Weinstein asks a judge to order the city to comply with federal regulations for distributing the housing money. It does not seek fines or punitive damages against the city, and Weinstein said he hoped that the suit would goad the city into action without the need for a trial.

“We have no interest in pursuing a lawsuit,” he said. “We have an interest in getting people housing.”