The city has stripped AIDS housing giant Housing Works of a key $4.5 million contract charging that the Soho-based nonprofit has had “a history of financial improprieties.”

In a statement dated October 22–the same day that several hundred Housing Works boosters marched on Human Resources Administration headquarters–the agency announced it wouldn’t renew housing and supportive services contracts. The contracts, which involve rent payments, job training, drug treatment and case management for 260 clients throughout the city, lapsed on June 30.

The city’s Department of Investigations is currently looking into HRA’s charges that the seven-year-old AIDS housing provider somehow can’t account for $500,000 in city money, fraudulently endorsed checks meant for landlords and kept inaccurate financial records. “Based on the latest audit report….HRA could not renew the Housing Works scattered site contracts….or enter into new contracts,” read a statement faxed to City Limits by the HRA press office.

“HRA will ensure that clients being served by the Housing Works contract are housed and given services despite the expiration of the contract,” the statement added. Requests for further information were denied.

What HRA sees as financial misconduct, Charles King, co-executive director of Housing Works, chalks up to Mayor Giuliani’s war against his organization–which has not been shy about criticizing the administration. “It’s a strategy of how to cut off oxygen and kill us,” King told City Limits.

King says that since Housing Works signed a contract extension this summer, the city hasn’t paid up the $1 million it owes the group in operating expenses. The organization, whose budget topped out at $28 million last year, might sue to recover the cash.

King says that at least $400,000 of the missing city funds went into generous staff benefits packages. In addition, he offered to place $500,000 in escrow until the investigation was completed. The agency didn’t take him up on it. The fraudulent checks occurred back in 1993 when a Housing Works employee embezzled $5,000 from the organization, which it repaid to HRA, according to King. Other problems can be blamed on Housing Works’ inability to secure bond financing for five development projects.