NYC inks $1 billion shelter contract with hotels despite end of migrant crisis

The Adams administration has inked a nearly $1 billion no-bid contract with the hotel industry for emergency shelter space — despite boasting that the migrant crisis is tapering off, The Post has learned.

Taxpayers are on the hook for the $929.1 million reupped with the Hotel Association of New York City Foundation as the total city population still includes a whopping 86,000 people, including homeless individuals and asylum seekers.

“These hotel units will be used by social services vendors to house emergency shelter clients who have entered the [Department of Homeless Services] shelter system,” the agency said in a notice posted Wednesday.

The reupped contract took effect in January and runs through June 30, 2026. It was awarded via “negotiated acquisition” – meaning it was not put put out for competitive bids. The initial contract was negotiated through the end of 2025, as previously reported by The Post.

The move is head-scratcher, said Nicole Gelinas, senior fellow at the Manhattan Institute.

“Why do we need to be using so many hotels for day to day homeless management?,” Gelinas said. “This is turning an emergency program into a permanent program and taking a block of hotel rooms off the tourist market while people complain the city’s hotel room costs are so high.”

Gelinas said the city should have made hotels bid against each other instead of treating the hospitality industry “as a monopoly” with a sole source contract.

Under the new contract, it’s up to the Hotel Association as a “fiscal agent” of the program to connect the city with hotels that are willing to set aside rooms to shelter homeless individuals and families in exchange for rental payments.

The overall cost to house migrants per night is $352 — including $130 to hotels for the room rental, city officials said last year. The association takes a “nominal fee” for administrative expenses, its CEO said.

“This agreement is an extension of the non-profit HANYC foundation’s ongoing work since COVID to connect city funding with hotels to address New York’s need to provide emergency services to the homeless,” said Hotel Association CEO Vijay Dandapani.

“The foundation began providing this service five years ago pro-bono and only takes a nominal fee for limited administrative expenses in order to ensure taxpayer money is spent efficiently.”

Dandapani said the $929.1 million is the maximum authorized but not guaranteed to be spent under the contract, and noted the city’s spending on these services “has declined steadily over the last two years.” The contract comes as the trade group is lobbying city lawmakers to slash the hotel occupancy tax on tourists from 6% to 3%.

The city began relying more extensively on hotels for emergency lodging and shelter during the COVID-19 pandemic, to help contain the spread of the deadly bug, a trend that dramatically expanded during the peak of the migrant crisis, when 4,000 asylum seekers flooded the Big Apple each week.

The Adams administration defended extending the emergency contract with hotels, saying the Big Apple is still grappling with a high shelter population compared to the pre-pandemic year 2019, when there were 61,415 people in shelters.

The number hit as high as 140,134 in January 2024, a staggering 127% from two years prior, according to a report issued by state Comptroller Tom DiNapoli.

Under New York’s right to shelter policy, the city must provide emergency shelter to all who need it, sources said.

The city said it has now spent $3.12 billion on shelter and related costs to house migrants since the crisis began in 2022, including costs to rent hotel rooms.

“As the city’s shelter system was pushed to its limits following an influx of new arrivals, the Adams administration acted quickly and decisively to effectively address the crisis and acquire emergency shelter capacity to serve households in need,” a Department of Social Services/Homeless Services spokesman said.

“While the administration’s whole-of-government response to the crisis has significantly reduced the number of households living in shelter, the total shelter census still far exceeds pre-pandemic highs.”

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Some 150 hotels in the five boroughs sheltered migrants in tens of thousands of rooms at the peak of the migrant crisis set off in the midst of an influx at the southern border during the administration of former President Joe Biden.

The historic Roosevelt Hotel in Midtown Manhattan became a very visible symbol of the city’s struggles to contend with the influx of migrants into the city. Roosevelt was used as an intake center near tourist hot spots and in an area packed with commuters while “tent cities” plagued by issues including crime popped up elsewhere in the five boroughs.

But Mayor Eric Adams announced the phase-out and closure of the city’s largest emergency shelters in recent months — including the massive tent encampments at Randall’s Island and Floyd Bennett Field. The closure announcements came as the number of new arrivals plummeted and some asylum seekers were moved outside of the Big Apple.

President Trump returned to office in January, launching a border crackdown and taking a hardline stance on illegal immigration, which has further fueled the slowing influx into the city. Illegal border crossings have slowed to a trickle under beefed up enforcement — from a peak of 4,000 per week to just a few hundred.

Locally, dozens of hotels that were used as migrant shelters were slowly phased out and transitioned back to lodging tourists, including those in Times Square and around John F. Kennedy Airport and LaGuardia Airport.

The controversial move to pay hotels to house migrants has sparked some friction between Mayor Adams and the president — after the Trump administration in February yanked $80.5 million in federal funding sent to the city after Elon Musk and the Department of Government Efficiency deemed the money was being wasted on “luxury hotels” to house illegal immigrants.

City Comptroller Brad Lander discovered the funding — approved by Congress and former President Joe Biden — had been pulled back from its accounts. Adams sued Trump in federal court to recoup the $80.5 million, denying the space was “luxury.”

Part of the federal funding offered the city $12.50 a night reimbursement for each hotel room. City officials denied that migrants were getting luxury accommodations.