Mayor Bill de Blasio’s administration plans to use $500 million in New York City taxpayer money to fund initiatives related to superstorm Sandy that were expected to be fully paid for with federal aid, city officials said Wednesday.

The city’s plan to infuse half a billion dollars into Sandy recovery and storm-protection programs comes as the cost to U.S. taxpayers for repairing and elevating some of the houses damaged by the 2012 storm could hit about $1 million a home, according to documents reviewed by The Wall Street Journal....