UPDATED: 5/17/12 5 p.m.

The embattled Wahiawa elderly care center at the heart of a federal investigation for alleged misuse of $7.9 million in federal grants has been awarded money from the Hawaii Legislature.

ORI Anuenue Hale is listed as one of 40 recipients in line to receive coveted grants-in-aid from the state totaling $11 million. The taxpayer-funded grants for “essential” public health, welfare and education services await final approval from Gov. Neil Abercrombie.

ORI Anuenue Hale is set to receive $288,060 — the full amount it requested from the state for its Central Oahu day-care center that serves elderly and disabled people. Other grant recipients include the Hawaii Meth Project, Wahiawa General Hospital, the Kalihi-Palama Health Center and the Legal Aid Society of Hawaii.

ORI requested the money for operations, noting on its application that the center is not receiving any state, federal or county funding at the time. The $288,060 state grant would add to $10,000 from “local charities requests” and $1,940 in “other in-kind resources” to fill out a $300,000 operating budget, according to ORI’s application.

The award to ORI is noteworthy in light of an ongoing federal investigation of the nonprofit’s use of federal grants.

The federal government last June notified Honolulu officials that they might have to return $7.9 million if the city failed to act on possible misuse of the U.S. Department of Housing and Urban Development grant money.

The federal government found ORI was not in compliance with several of the rules associated with accepting the grant money. HUD called the nonprofit’s use of federal monies “unacceptable.”

As recently as this year, Honolulu officials said they were still working with the center to meet federal grant requirements so that the city could avoid repaying the HUD funds that ORI received over a 10-year period.

ORI abandoned plans to seek continued Community Development Block Grants through the city, according to a letter obtained by Civil Beat. The nonprofit also turned down almost $200,000 that had been allocated to it last year, according to HUD.

Legislators touted their budgeting skills in being able to fund the $11 million in grants. Sen. David Ige, chairman of the committee on Ways and Means, said on the Senate floor on the last day of the session that lawmakers were able to pay for some much-needed nonprofit support services, “which we haven’t been able to do for many, many years.”

Updated: Sen. Suzanne Chun Oakland, chairwoman of the committee on Human Services, defended the grant money to ORI despite the federal probe. Chun Oakland said ORI previously received a state grant-in-aid to help cover costs to build its Wahiawa facilities.

“I truly have no problem supporting this particular organization,” Chun Oakland said. “They’ve gone above and beyond the expectations. The families being served by ORI, they are very happy with what Susanna is doing. She has been an excellent partner in helping people with disabilities. … I don’t agree with what HUD is doing. I’m very disappointed that they’re having these kinds of problems with the feds.”

Much of the state grant-in-aid — $130,204 — would be used to pay for salaries and benefits for four employees, according to ORI’s application. Other expenses include utilities, custodial and security services, administrative support and grounds maintenance.

ORI President and CEO Susanna Cheung did not immediately return a call seeking comment.

Here’s a copy of the nonprofit’s grant application.

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