The Federal Emergency Management Agency (FEMA) has reclaimed over $80 million from New York City, intensifying a dispute between the Trump administration and the city regarding funds for housing migrants. A federal judge ruled that FEMA could proceed with recovering the funds.
The funds include a $59 million grant that was disputed earlier in the week, as well as an additional $21.5 million award. City Comptroller Brad Lander confirmed the money went missing overnight, adding that his office was unaware that the federal government had access to the city’s bank account.
Mayor Eric Adams, a Democrat, stated that city officials had reached out to the White House to request the return of the funds, are seeking an urgent meeting with FEMA, and are considering legal actions. Adams also plans to discuss the issue with Tom Homan, President Trump’s border czar, during a meeting in New York on Thursday.
This marks the first major challenge for Mayor Adams’ relationship with Trump’s team, following the U.S. Justice Department’s decision on Monday to have federal prosecutors in Manhattan drop corruption charges against the mayor. A senior official stated that the administration wanted Adams to be free to support President Trump’s immigration agenda.
The grants were applied for and awarded under the Biden administration, but the funds were not distributed until last week, according to the city.
Shortly after, Trump adviser Elon Musk highlighted the $59 million in payments, claiming on X that his so-called Department of Government Efficiency had found the money was used to house migrants in “luxury hotels.” Musk did not provide any evidence to support his claim.
Over the past two years, New York City has leased several budget hotels and vacant buildings, converting them into shelters for migrants.
FEMA’s acting administrator stated in court documents filed Tuesday that the funds were being reclaimed due to concerns about “illegal activities” at one of the hotels.
Brad Lander questioned the legality of FEMA’s actions, stating he had never encountered a situation where someone could “enter your bank accounts and take money back due to shifting political winds.” Lander, who is a critic of Mayor Adams and is challenging him in the upcoming Democratic primary, called it “the first critical test of whether we still have independent leadership at City Hall.”
White House press secretary Karoline Leavitt suggested during a briefing on Wednesday that the administration believed funding hotels for migrants in New York City was not a justifiable expense, especially while FEMA is managing costly disaster responses elsewhere.
Homeland Security Secretary Kristi Noem claimed on X that she had “clawed back the full payment” that FEMA officials allegedly gave to New York City for migrant shelters, calling it a decision by “deep state activists.”
On Wednesday, a federal judge ruled that the administration could continue its efforts to withhold the FEMA funds from New York City. U.S. District Judge John McConnell in Rhode Island determined that the money was not covered by an existing order, which prevents the administration from halting federal funding.
On Tuesday, the government dismissed four employees from the Department of Homeland Security, accusing them of bypassing leadership to authorize the payments. These payments are part of a long-standing program designed to help cover costs associated with an increase in migration.
Most of the former hotels leased by the city are now housing families with children and would not be considered “luxury” accommodations by typical travel standards.
In 2023, the city also began leasing the Roosevelt Hotel, which had closed in 2020 due to the COVID-19 pandemic, and turned it into an intake center for migrants seeking city services. The Roosevelt Hotel has a storied history but was an affordable option for visitors before its closure.
Under city law, New York is required to provide shelter to anyone in need, and at the time, the city’s regular homeless shelter system was overwhelmed by the influx of new arrivals. As a result, the Roosevelt Hotel now functions as both a place where migrants can apply for services and a temporary shelter for hundreds of families, who can stay for up to 60 days.
The Shelter and Services Program, which is funded by Congress and administered by FEMA, has become a point of contention for Republicans, who wrongly argue that the funds are being diverted from those affected by hurricanes and floods.