In Long Beach, the city’s ongoing homelessness crisis has come under intensified scrutiny following fraud allegations, a major contract termination, and a widening audit into tens of millions of taxpayer dollars.
City officials recently fired First to Serve, the nonprofit that had been operating the majority of Long Beach’s homeless shelters, after red flags emerged during an ongoing audit. The organization had overseen 423 of the city’s 500 shelter beds and received between $13 million and $14 million annually for shelter operations, rapid rehousing, and prevention programs.
The audit, launched in 2023 by City Auditor Laura Doud, is examining how roughly $70 million in homeless services funding has been spent since 2020. While the full findings have not yet been released, officials say the review uncovered serious concerns related to billing practices, documentation, and whether contracted services were fully delivered.
Long Beach Mayor Rex Richardson declined to say whether fraud is suspected, “I can’t get into the investigation” said Richardson when asked by an NBC reporter. Rex confirmed the city moved to terminate its agreement with First to Serve based on the audit’s findings. Notably, the city had already stopped payments to the nonprofit about four months earlier, in November, signaling growing concern well before the contract was officially ended.
In place of First to Serve, the city has brought in the Los Angeles based nonprofit People Assisting The Homeless, also known as PATH, to take over shelter operations. The transition was approved by the City Council following closed door meetings in early March, raising additional concerns about transparency in the decision making process.
The controversy gained further attention when mayoral candidate Chris Sweeney went to the location and pointed out the existence of “ghost tenants” within the system, saying shelters were reporting higher occupancy than what was actually observed. In a social media video and interview conducted at the Luxury Inn on Long Beach Boulevard, Sweeney pointed to a nearby shelter where only 12 of 78 rooms appeared to be in use, questioning how public funds were being allocated.
Watch Chris Sweeney’s facebook video here: https://m.facebook.com/story.php?story_fbid=pfbid0r7WMXZvsudenLcsrpDcq1VZ9xD7s8JsvHT29itTBhzxxexGtarmVJYBHCdEXWfLtl&id=1361807071&mibextid=wwXIfr
The Luxury Inn property itself has been the subject of past scrutiny. Long Beach Local News previously reported on the site in a controversial project titled “$23 Million Motel Makeover: Long Beach Turns Luxury Inn into Homeless Housing at $296K Per Room,” raising broader questions about costs, oversight, and long term effectiveness of such conversions.
City data indicates other shelters operated by First to Serve had occupancy rates ranging from 78% to 88%, though some units were unavailable due to ongoing construction. Officials have emphasized that regular walkthroughs, inventory checks, and coordination meetings were conducted during the transition to ensure accountability of resources and client records.
Still, the allegations have fueled broader concerns among residents and critics, many of whom are questioning whether shelters have been underused and whether taxpayer dollars have been properly managed. With audits historically conducted infrequently, some argue the situation highlights systemic issues in oversight and accountability.
In response, the city says it has already begun implementing reforms, including stricter financial controls, standardized invoicing procedures, enhanced data tracking systems, and expanded monitoring of service providers.
As the investigation continues, key questions remain unanswered. Were shelters operating below capacity. Were funds misused. And will anyone ultimately be held accountable.
For many in Long Beach, the quality of life continues to decline with how the city is operating. With thousands still experiencing homelessness across the city, critics say restoring trust, transparency, and effective management is critical to addressing the crisis now..
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