NEW YORK CITY—The nation’s largest federally subsidized housing development is changing hands, according to published reports Wednesday. Bloomberg Business and the New York Times reported that Starrett City Associates (SCA), the group that owns the 5,881-unit apartment complex in Brooklyn, is under contract to sell the property, also known as Spring Creek Towers, to a partnership of Brooksville Co. and Rockpoint Group for $850 million.
The Times reported that the deal for the 46-building rental complex, originally built in the 1970s, is subject to approval from the Department of Housing and Urban Development as well as state housing officials. Among the limited partners in Starrett City Associates is President Donald Trump, who controls a 4% stake and received more than $5 million in income from it in the past year, according to Bloomberg. HUD is overseen by Housing Secretary Ben Carson, a Trump appointee.
A sale or refinancing would represent a potential conflict of interest for Trump, Reps. Elijah Cummings and Hakeem Jeffries asserted in a July letter to the trust overseeing Trump’s holdings. “Many real estate companies receive government subsidies to support affordable housing, but unique conflicts exist with regard to Starrett City because the president is on both sides of the negotiations,” Cummings and Jeffries wrote. “He oversees the government entity providing taxpayer funds and he pockets some of that money himself.”
At the height of the previous cycle, Starrett City went on the block and was poised to sell for $1.3 billion in early 2007. However, then-HUD secretary Alphonso Jackson blocked the sale, on grounds that the buyer had not made clear how it planned to keep the complex affordable. “We are concerned the sale will rapidly change the Starrett City community,” Jackson said at the time. “We are concerned it will be dug open, paved and changed.”
The sale announced Wednesday comes with more assurances that rent-regulated housing will remain the norm at Starrett City. Andrew MacArthur, the founder of Brooksville, told the Times Wednesday that he and Rockpoint were “committed to preserving the original vision of the complex as stable, quality affordable housing.” Cushman & Wakefield’s Doug Harmon arranged the sale on behalf of SCA.