Legal Aid had to set up a special team of lawyers to manage about 40 tenants who complained that the Living Room had not paid their portion of the rent for months. Many residents have already received eviction notices, Sparks said.

Atlanta has failed to reimburse the nonprofit some $500,000, even though its contract requires that the city make payment within 30 days after receiving a request, said Living Room Executive Director Jerome Brooks . Brooks, who was named to his post nearly a year ago, said the nonprofit’s troubles with the city began soon after he proposed to the city in October that it outsource its administration of U.S. Department of Housing and Urban Development entitlement programs to Living Room.

The city was chronically late on payments to Living Room and other providers in the HOPWA program, Brooks said. He argued that 0utsourcing the duties would speed up payments and keep nonprofits out of financial troubles.

“The folks involved had a really strong negative reaction to it,” Brooks said of city administrators who administer HOPWA. “For me, that’s the only thing I can draw from this,” Brooks said.

City Director of Grant Management Karen Carter said earlier this month that the city would pay the landlords directly, bypassing the Living Room, Brooks and others said. Those payments were never made, they said.

The AJC requested an interview with Carter, but city spokesman Michael Smith did not make her available for comment.

The controversy is an odd turn of events for Mayor Keisha Lance Bottoms, who made affordable housing a cornerstone of her run for office. She released an affordable housing "action plan" on Monday to invest $1 billion in public and private funds to combat rising housing costs and the displacement of longtime residents.

The impasse has Living Room clients living on edge. One told the AJC he cannot qualify for a transplant for his failing kidneys until he can prove that he has stable housing. He asked that his name be withheld because he fears he will be unable to find new housing because certain landlords discriminate against people with HIV.

Living Room is far from perfect, the client, 36, said. He slept on the couches of friends and relatives for months as the nonprofit kept on losing the paperwork he submitted to process his application. But he can’t afford to lose his one-bedroom apartment, for which he pays $265 per month, he said. He has an eviction on his record, and none of his family members can take him in.

“I can’t afford to get kicked out. Where would I go? If I miss dialysis one time I could die,” the client said.

Luke Griffin, another Living Room client, said he’s complained to the city for months but has gotten nowhere. He said he filed an ethics complaint against a city official earlier this year over how an administrator handled a concern he raised about the Living Room’s handling of confidential client information.

“At the end of the day, the city has greater responsibility because city knows without the Living Room having those funds, people are going to be out on the street,” said Griffin, who halted his plan to mount a public protest outside City Hall when city representatives promised to pay the rent. He’s still waiting for the money, he said.

Todd Mitchell of Rebirth Housing, a for-profit company that provides housing to about 50 of the Living Room’s clients, said he too complained to the city, and worries that his funding is being held up because of it. He has since complained to the U.S. Department of Housing and Urban Development.

“It’s just a combination of a lot of things, with a bit of soap opera in it. It’s definitely a drama-soaked situation. I just hope we can get to a good resolution,” said Mitchell.

Housing dollars help those with AIDS

The U.S. Department of Housing and Urban Development’s Housing Opportunities for Persons With AIDS (HOPWA) program gives grants to assist those with the illness who are homeless or at risk of becoming homeless. The city of Atlanta administers these federal dollars for 29 counties in the metro Atlanta area, distributing them to several nonprofits including the Living Room to provide rent, utilities and other services. Nonprofits pay landlords with these funds. Living Room provides housing for 250 city of Atlanta-funded HOPWA clients.