$607M Nostrand Houses Financing Is First Closing for NYC Public Housing Preservation Trust

The New York City Housing Authority (NYCHA), the New York City Public Housing Preservation Trust and the New York City Housing Development Corporation (HDC) announced the financial closing of a $607 million comprehensive modernization of Nostrand Houses in Sheepshead Bay, Brooklyn. The financing closed Sept. 29 and is the first project to reach financial closing through the New York City Public Housing Preservation Trust.

Merchants Capital, Nixon Peabody and the AFL-CIO Housing Investment Trust provided financing and subsidy for the project, according to the announcement. The U.S. Department of Housing and Urban Development (HUD), the New York City Office of Management and Budget (OMB) and HDC supported the transaction. The Building and Construction Trades Council of Greater New York serves as the labor partner.

Scope of the Nostrand Houses Modernization

The $607 million investment will fully rehabilitate 1,148 apartments and modernize building systems across 16 residential buildings serving approximately 2,000 residents. The development occupies a superblock between Avenues V and X and Bragg Street and Batchelder Street in ZIP code 11229. Dividing the financing across the apartments yields an investment of roughly $529,000 per apartment.

Apartment renovations will include kitchens and bathrooms renovated down to the wall structure, with new finishes, fixtures and plumbing components. Apartments will also receive new appliances, quartz countertops, scratch-resistant flooring, energy-efficient double-pane windows and new intercom systems. Living spaces will get window heat pump systems for resident-controlled heating and cooling, along with dedicated laundry hookups. Units will be remediated for lead and mold hazards, with mold-resistant materials and paint finishes.

All 16 buildings will receive upgrades to heating and domestic hot water infrastructure, electrical wiring and plumbing, along with new elevators. Eighty-one apartments will be upgraded for residents with mobility needs and 48 for residents with visual or hearing impairments. Security improvements include upgraded access-control systems, expanded CCTV coverage and an on-site security guard.

Nostrand Houses will continue to be managed by NYCHA. A new on-site property management office will house more than 40 staff members. Kings Bay Y, selected in coordination with residents, will provide social services including case management, resource navigation, housing stability support and crisis intervention. NYCHA said construction is set to begin this fall.

How the Public Housing Preservation Trust Works

Nostrand Houses residents voted in December 2023 to become the first NYCHA development to join the Trust. Created by legislation sponsored by State Senator Julia Salazar and then-Assembly Member Steven Cymbrowitz and signed into law by Gov. Kathy Hochul in June 2022, the Trust is a fully public entity designed to unlock federal funding for comprehensive renovations at NYCHA developments.

Developments that vote to join the Trust are converted to Section 8, which allows access to greater and more flexible federal funding than traditional Section 9 public housing while keeping the property 100 percent public. Residents retain rights including permanently affordable rents, automatic lease renewal, succession rights for household members and funding for resident associations. Under the Trust legislation, no development can enter without an affirmative resident vote.

Paired with a long-term ground lease between NYCHA and the Trust, the conversion unlocks a federal operating subsidy worth approximately twice what NYCHA currently receives for the development. Three other NYCHA developments — Bronx River Addition, Unity Towers and Hylan Houses — have also voted to join the Trust, with additional elections ongoing.

Officials and Partners Comment

"As the first public housing property to reach financial closing through the Trust, Nostrand Houses is both a historic milestone and a proof point for a new model—one that puts residents at the center while preserving public housing for generations of families to come," said Leila Bozorg, Deputy Mayor for Housing and Planning.

"Today's first closing through the Trust represents the culmination of a years-long effort to deploy new and innovative solutions that will preserve New York City's public housing stock for generations to come," said HDC President Eric Enderlin.

NYCHA Chief Executive Officer Lisa Bova-Hiatt said the closing "demonstrates what the Trust can achieve when residents, NYCHA, and public and private partners come together around a shared vision." Vlada Kenniff, president of the Trust, said the investment "gives us the resources to deliver the modernization residents have been waiting for while keeping Nostrand fully public and preserving resident rights and affordability."

Mathew Wambua, vice chair and executive vice president of agency lending at Merchants Capital, said the firm is "deeply honored to be part of this monumental first financial closing for the Public Housing Preservation Trust."

Funding Context for NYCHA

The Mamdani administration has made NYCHA central to its housing plan, Block by Block, and included $5.6 billion in capital investment in public housing in its first budget, which the administration describes as the most city capital for NYCHA in recent history.

The Trust addresses a gap between NYCHA's capital resources and its needs. NYCHA's fiscal 2025 capital budget was approximately $3.4 billion, with 46 percent expected from federal sources. A 2024 Citizens Budget Commission analysis cited an $8.2 billion five-year capital plan against approximately $60 billion of five-year capital needs, meaning the plan covered about 14 percent of identified needs. That analysis noted that only Permanent Affordability Commitment Together (PACT) and Trust conversions were expected to generate enough capital to fully renovate the affected developments. An earlier Independent Budget Office analysis estimated Trust conversions could provide annual funding capacity of around $1 billion, compared with roughly $220 million under a more limited funding scenario.

Resident Role and Community Investment

The modernization plan was shaped by surveys, visioning sessions, community meetings and design workshops, and a Construction Council continues to guide the renovation. Residents reviewed a model apartment and selected interior design packages. The Trust is also partnering with NYC Kids RISE on the Nostrand Houses Community Scholarship, under which it will contribute $100 annually to the NYC Scholarship Accounts of children living in the development through high school graduation.

Outlook

The Nostrand Houses closing sets a reference point for later Trust transactions, which will involve the three other developments that have voted to join and elections still underway at additional sites. Construction at Nostrand Houses is scheduled to begin this fall.

Sources

NYC Housing Development Corporation, "Mayor Mamdani, NYCHA and the Public Housing Preservation Trust Announce $607 Million Modernization at Nostrand Houses": https://www.nychdc.com/newsroom/mayor-mamdani-nycha-and-public-housing-preservation-trust-announce-607-million