By Aaron Schrank for LAist
Originally published Jan. 29, 2026
A taxpayer-funded program that provides unhoused people with tents, meals, bathrooms and around-the-clock security in a South L.A. parking lot will close on Jan. 31, according to the nonprofit that operates it.
Urban Alchemy is terminating a $1.2 million contract with the Los Angeles Homeless Services Authority to run the program through the current budget year, which ends in June.
The San Francisco-based nonprofit says it’s not getting enough funding under that agreement to keep the site open.
“The economics of the contract don’t work,” an Urban Alchemy representative told LAist. “It reached a point where we started losing money on it, and we had to make the decision about what’s best for our organization.”
The Lincoln Safe Sleep Village on South Central Avenue was one of only a handful of similar government-sanctioned tent encampments operating around the state.
Regional homelessness officials and a federal judge raised concerns about the Safe Sleep Village last year after observers found the site was operating at half capacity while the Los Angeles Homeless Services Authority, known as LAHSA, was paying it to operate at full capacity.
Urban Alchemy said a portion of the site was closed in 2024 because LAHSA and the city of L.A. instructed it to do so.
Now that the program is closing down entirely, city and LAHSA officials are scrambling to transfer remaining residents to other shelters.
People living at the site first learned of the impending evictions late last week, according to multiple residents interviewed by LAist. One of them, Miles Johnson, said he’d been living there with his girlfriend for 10 months.
“ We just got moved,” he said. “We just got put out. All our stuff is still in bags.”
LAHSA says it has been working to secure alternative shelter placements for 25 people who were living at the Safe Sleep Village.
Ahmad Chapman, a spokesperson for LAHSA, said the agency expects to make housing offers to all remaining participants before the closure.
Residents displaced
The Lincoln Safe Sleep Village is located near the intersection of South Central Avenue and East 25th Street in a parking lot next to the historic Lincoln Theater. It’s in Councilmember Curren Price’s ninth district.
A South L.A. nonprofit called the Coalition for Responsible Community Development purchased the property in 2020 using state Project HomeKey funds. It has plans to build a 60-unit affordable housing complex there soon.
Price’s office told LAist this week that news of Urban Alchemy ending its contract to run the site came as a surprise.
“Until this recent news, our expectation was to transition any remaining residents by the end of this year,” Price’s communications director Angelina Valencia-Dumarot told LAist. “This sudden change disrupts that plan and creates uncertainty for unhoused neighbors currently at the site.”
On Tuesday afternoon, city of L.A. crisis response teams were transporting several residents and their belongings from the Safe Sleep Village to other nearby open shelter beds.
“They dumped me off at a place and I almost didn’t get a bed,” James Rudy told LAist. “This was all last minute. I was afraid they were going to screw me.”
He said he was forced to throw away most of his clothing and belongings during the move. Rudy is now staying at a shelter 5 miles away called Testimonial Community Love Center, where clients are required to leave each day between 8:45 a.m. and 12:30 p.m., he said, adding that he preferred the tent village.
“The place we left wasn’t that bad.” Rudy said. “I was in a tent, but at least I was able to do what I needed to do. Here it’s not really practical.”
Tracy Wallace told LAist on Tuesday that her husband had been transported to another shelter, and she was waiting to reunite with him there.
“We’re gonna be apart, not sleeping together,” she said. “Because one side is for men and the other side is for women, but that’s still fine.”
Urban Alchemy said it was making former residents’ well-being a top priority. The organization estimated that, as of this Wednesday, there were seven residents still waiting on alternative placements.
“As we wind down our operations at this site, we appreciate the efforts underway to help guests move to safe, supportive places.” spokesperson Jess Montejano said in a statement.
Urban Alchemy told LAist that five of its 15 workers were laid off this week. Ten have been transferred to work in other Urban Alchemy projects, and the organization is working to connect the laid-off employees to other jobs, Urban Alchemy said.
The nonprofit bills itself as a social enterprise, hiring mostly formerly incarcerated people.
Cutting ties with LAHSA
LAHSA had contracted with Urban Alchemy to operate the Safe Sleep Village since 2022. Annual funding for the site was reduced from $2.3 million last budget year to $1.2 million this year.
The latter amount was supposed to pay for 46 tent spaces. But Urban Alchemy said the contract didn’t cover its fixed costs.
“We have to provide the staff no matter what, per the terms of the contract, whether it’s one person or 46,” an Urban Alchemy representative said. “We tried to work with [LAHSA] often, to try to find a way for it to pencil, and it just wasn’t the case.”
Urban Alchemy said LAHSA “arbitrarily changed its funding formula,” resulting in the nonprofit losing nearly $1 million on the contract.
The nonprofit first notified LAHSA on Dec. 22 that it planned to terminate the contract, both parties confirmed to LAist.
According to LAHSA payment records, Urban Alchemy spent about 69% of its budget on personnel for the 2022-23 budget year. Payroll records for February 2024 showed an average of eight staff members working at the site around-the-clock.
Last Thursday, one month after notifying LAHSA about the closure, Urban Alchemy’s director of operations in L.A. emailed city and LAHSA staff, demanding help rehousing residents.
“Given the urgency of the closure date, ongoing uncertainty places guests and frontline staff in an untenable position,” Tim Kornegay wrote in a Jan. 22 email. “Leadership action is critically needed now to prevent avoidable harm.”
The next day, LAHSA representatives told Urban Alchemy about a transfer plan for the people still living at that Safe Sleep site, the agency said.
Early this week, Mayor Karen Bass’s office and Price’s office told LAist they were aware of the situation and supported LAHSA’s work to prevent people from winding up with nowhere to go.
A federal judge weighs in
Months before Urban Alchemy announced it would shut down the South L.A. site, questions about its funding and capacity made their way to a federal judge.
The situation emerged as the city of L.A. is under a court order to provide more shelter for unhoused Angelenos and LAHSA is under scrutiny for having failed to properly manage hundreds of millions of dollars in contracts with service providers like Urban Alchemy.
Last year, LAHSA paid the nonprofit $2.3 million based on inaccurate data about the site’s capacity, records show. On paper, Urban Alchemy had 88 available beds on site. In reality, half that many were available.
Officials from the Homeless Services Authority had instructed the nonprofit in April 2024 to close down operations in one of two converted parking lots, according to emails reviewed by LAist. Dozens of plywood tent platforms were removed, but LAHSA did not update the capacity data or funding for the site until more than one year later.
The city of L.A. and LAHSA continued to report outdated capacity data about the South L.A. tent program to a judge overseeing a settlement that requires the city to open 13,000 new shelter beds by next June.
In November, U.S. District Court Judge David O. Carter described the situation as “obvious fraud.”
Michele Martinez, a special master appointed to help enforce the terms of the settlement, visited the site in June and found that it appeared to be operating at half capacity. She then tried to verify the number of beds available at the site with city officials, but did not get an answer, Carter said at a November court hearing.
The city of L.A. corrected the information reported to the judge after one member of LAHSA’s governing board, the LAHSA Commission, visited the site and reported what he saw there.
Commissioner Justin Szlasa said he had voted to approve millions in funding for Urban Alchemy last year with the understanding that the South L.A. space could accommodate 88 people. But when he visited in May 2025, he saw that half of it was closed.
Szlasa filed a public records request with LAHSA in September to obtain the contracts and payment details for the Urban Alchemy site, but he has not yet received a full response, he said.
He told LAist he’s been asking for an evaluation of the contract to be put on the LAHSA Commission’s agenda.
Urban Alchemy does not have any remaining contracts with LAHSA, but the organization runs a tent village in Culver City and has some other contracts with the city of L.A.
The organization recently pulled out of operating a large homeless shelter in San Francisco’s Tenderloin district after city officials said the nonprofit had knowingly overspent its budget at the shelter.
This report is reprinted with permission from Southern California Public Radio. © 2026 Southern California Public Radio. All rights reserved.