The Building Blocks for Private Investment in New York City’s Underserved Communities

[...]There are, of course, more traditional sources of privatesectorcapital for these markets. First among them is theCommunity Reinvestment Act. As we heard earlier, and asmany of us know firsthand, the act has had a dramatic effect interms of directing private-sector resources into urban neighborhoods. The government-sponsored mortgageenterprises—Fannie Mae and Freddie Mac—are anothertraditional source. For many years, there has also been a host oftax-motivated incentives, such as the low-income housing taxcredit and other types of tax partnerships. Quite frankly, thebiggest of these tax-motivated sources has been the mortgageinterest deduction, which encourages people to becomehomeowners no matter where they live. The deduction has hada strong effect on directing private-sector resources into urbanneighborhoods, although its reach is limited to those capable ofbecoming homeowners.[...]