An aide of New Jersey Governor Chris Christie has been accused of holding back Hurricane Sandy recovery funds in order to gain backing for a politically linked project.
The Mayor of Hoboken Dawn Zimmer claims Mr Christie's lieutenant governor told her the city would only be given money if a particular commercial development was backed.
Hoboken is a suburb across the Hudson River from Manhattan and was hit badly by the superstorm which left many homeless.
Ms Zimmer told the Associated Press news agency that the conversation happened when Lt Gov Kim Guadagno pulled her aside at an event in May.
She said the Republican governor's aide made it clear that Sandy aid was tied to the project - a proposal by New York City-based Rockefeller Group to build on prime real estate in Hoboken city.
Ms Zimmer told AP: "I was directly told by the lieutenant governor - she made it very clear - that the Rockefeller project needed to move forward or they wouldn't be able to help me."
Mr Christie's office has denied Ms Zimmer's claims, calling her statements politically motivated.
Hoboken was hit by flooding The governor is already embroiled in another scandal involving traffic jams apparently manufactured to settle a political score.
That scandal has tarnished Mr Christie's image as a straight talking Republican capable of working across the partisan divide.
The 55th governor of New Jersey was reelected in November 2013 by a wide margin and with 60% of the vote.
Because of his popularity, he has been widely tipped as a Republican presidential candidate for the 2016 election.
A spokesman for his office, Colin Reed, said the administration has been helping Hoboken secure assistance since Sandy struck.
Mr Christie himself has yet to comment.
Several member of Mr Christie's staff have been subpoenaed over the closing of approach lanes near the George Washington Bridge in September.
It has been claimed that emails from the aides suggest that the bridge lanes were closed to harm a political rival. The closures caused traffic chaos.
The bridge connects New Jersey with Manhattan and is the busiest in the world.
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