Yesterday, New York City agreed to pay $4.8 million in damages, interest and legal fees to settle a lawsuit by the AIDS housing and advocacy group Housing Works (HW), which contends it lost government contracts in retaliation for criticizing former Mayor Rudolph Giuliani and his administration.

HW Executive Director Charles King said the settlement is a vindication of the group's work and a repudiation of Giuliani. But Lawrence S. Kahn, a senior litigator for the city, said HW had lost contracts because it mismanaged funds. In a statement, Kahn said the city was settling because of the "unpredictability of litigation" and because HW had provided services for which it was not paid. Had the case not been settled, both sides were due in Federal District Court today for a final pre-trial appearance.

After Giuliani took office in January 1994, HW and its leaders were among the earliest and most outspoken critics of his policies. HW filed lawsuits, protested the mayor's appearances, and disrupted his speeches. HW attorney Matthew D. Brinckerhoff denied that the group was responsible for plastering the city with posters branding former Deputy Mayor Fran Reiter, who oversaw many AIDS programs, as an "AIDS murderer." In October 1997, shortly after the posters went up, HW lost its funding in the wake of an unflattering audit and an inquiry by the Department of Investigation.

Reiter, who had left government by the time HW's contracts were cancelled, insisted there was no attempt to go after the group. But Brinckerhoff said the problems revealed in the audits were no worse than those of other, less aggressive organizations that did not lose their public financing.

HW, which has more than doubled in size since losing its city funding, operates several businesses and today provides homes for 112 people with AIDS. King said HW will likely put some of the settlement money into an investment fund for housing.

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