New York City is giving up federal money for homeless veteran shelter beds, and city officials and the U.S. Department of Veterans Affairs can’t agree on why.
Quick Take
- Mayor Zohran Mamdani’s administration pulled out of a federal Department of Veterans Affairs (VA) grant program that funds homeless veteran shelters.
- The city says the grant terms would force it to sort veterans by biological sex instead of gender identity, which it calls discrimination against transgender veterans.
- The VA says the claim is false and says New York walked away after learning it would get less money than before.
- City Council member Frank Morano says the fight could cost 144 shelter beds for homeless veterans.
- The clash echoes a bigger national fight over whether shelters must separate people by sex or by gender identity.
City Walks Away From Veteran Shelter Grant
The New York City Department of Homeless Services withdrew from a VA program that pays for shelter and support services for homeless veterans, including beds at the Borden Avenue facility in Queens. The city says the federal government required it to separate shelter space by biological sex rather than gender identity, which officials describe as a demand to exclude transgender veterans from VA-funded beds.
City officials frame the decision as a matter of principle. They argue that accepting the grant under those terms would mean turning away transgender veterans who need a place to sleep. Critics, including City Council member Joann Ariola, say the withdrawal has already cost the city close to $4 million meant for veteran housing, and she has sent letters to federal officials demanding answers.
VA Pushes Back With a Different Explanation
The VA disputes the city’s account entirely. VA press secretary Quinn Slaven said New York voluntarily withdrew after being told it would receive less funding than in past years, and called the discrimination claim “false”. Slaven said the agency has limited resources and awards grants based on past performance, need, and quality of service, and that it evaluated the Borden Avenue site and could not justify a bigger award.
Some independent voices question the city’s version of events, too. Veterans advocate Joe Bello noted online that the transgender shelter rule cited by the city is actually a proposed Department of Housing and Urban Development (HUD) rule still in a public comment period, not a final requirement, raising questions about whether it was the true reason for the funding rejection.
Council Member Says Veterans Are Caught in the Middle
Frank Morano, chair of the City Council’s Veterans Committee, criticized the administration for rejecting millions of dollars meant for homeless veterans over the dispute. He said the fight centers on federal rules requiring shelters to separate people by biological sex instead of gender identity, and warned the standoff could jeopardize 144 beds for homeless veterans.
Morano argued the city should have challenged the policy through other means instead of letting veterans lose shelter funding. “If you want to fight the policy, fight it, don’t make veterans collateral damage because of a battle you are waging with Washington,” he said.
Part of a Bigger National Fight Over Shelter Rules
This local clash sits inside a much older national argument. HUD’s Equal Access Rule has long required HUD-funded shelters to serve people according to their gender identity, not just their sex at birth. In April 2026, federal regulators proposed replacing references to “gender identity” in HUD rules with “sex,” and letting single-sex shelters set their own placement rules. That proposal is central to the standoff now playing out in New York.
The dispute also lands amid other city spending choices that have drawn criticism. New York’s fiscal year 2026 budget included about $6.5 million for “trans equity” programs, even as the city says it cannot accept federal terms tied to veteran shelter funding. For veterans waiting on a bed as winter approaches, the policy fight now carries real consequences, regardless of which side’s explanation holds up.
Sources:
redstate.com, foxnews.com, nysun.com, x.com, ground.news, nypost.com
