Police responded to a report of an assault inside the halfway house on Hughes Ave. in the Tremont section around 7:30 p.m.
"All of a sudden I heard screaming, like a shout, like somebody had got shot," a resident said.
When officer arrived, they encountered the man stabbing two female security guards.
NYPD officials say security video shows the officers telling the suspect to drop his knife more than 20 times.
Police say he approached still holding the knife, a four-inch steak knife, and that's when both officers opened fire, shooting the suspect several times.
He was taken to St. Barnabas Hospital where he was pronounced dead. He was known in the neighborhood as someone who frequently begged for change on the street.
One woman was stabbed in the chest and arm, and the other in the arm. Both are in serious condition at St. Barnabas Hospital.
At least one officer was taken to the hospital for evaluation.
The officers were wearing body cams and that footage will be included as part of the investigation.
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