The owners of Starrett City, the largest federally subsidized housing project in the country, recently announced they found a buyer for the $850 million Brooklyn development. Located in East New York, Starrett City sits on 145 acres and includes 5,881 affordable apartments for 15,000 residents. As the New York Times reported, President Donald Trump partially owns the housing development and will benefit from the sale of the property. Since the sale requires federal approval from the Department of Housing and Urban Development and state officials, this puts the president on both sides of the agreement, creating a potential conflict of interest for him.
In a joint venture, the buyers include Brooksville Co., a new residential real estate firm, and Rockpoint Group, a private real estate investor. The deal, pending until approved, is expected to close early next year. Secretary of HUD, Ben Carson, appointed by Trump, must review and approve the sale. President Trump currently owns a 4 percent stake, with another 12 percent owned by his siblings. After the partners pay the mortgage and transfer taxes and other costs, Trump could receive about $14 million in proceeds, a real estate executive anonymously told the Times.
In the early 1970s, the housing complex was originally planned as a union-sponsored co-op known as Twin Pines Village. After struggling to pay for the construction, the unions sought help from a private real estate company, Starrett Housing Corp. The corporation pulled together a group of 200 wealthy investors, including Fred Trump, the president’s father. Fred ended up acquiring as much as a 20 percent stake in the property, which he later doled out to his children and other entities.
The owners, Starrett City Associates, attempted to sell the development in 2007 for $1.3 billion to a developer with plans to convert the complex into market-rate housing. City, state and federal official blocked the deal. Later, a 2009 refinancing of the complex required all apartments remain affordable until 2039. About 60 percent of the apartments are a part of HUD’s Section 8 program and the rest are under New York State’s Mitchell-Lama program. HUD gave the owners of Starrett City nearly $80 million in rent subsidies and a tax break of more than $16 million.
Rep. Hakeem Jeffries and Rep. Elijah E. Cummings wrote a letter to the Donald J. Trump Trust regarding their concerns over the property’s sale. In a joint letter written in July, the officials wrote, “The president is on both sides of the negotiation–he oversees the government entity providing taxpayer funds and he pockets some of that money himself.”
[Via NY Times]
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Neighborhoods : east new york