I fortunately forgot all details, but Wiki proved this:
"Although the political bureaucracy has forbidden the NRC to transport the toxic wastes through New York because of the large-scale danger to the public, it has secretly been hiding the waste by-products (marked as "Contamination Hazard Urban Disposal") beneath Manhattan in abandoned subway tunnels. Unfortunately, the underground homeless population has been coming into contact with these by-products, turning them into the mutated creatures."
Ah the 80's... "The Toxic Avenger" also comes to mind as a south-of-B movie best seen at a drive in.