Thank you, for that kind introduction, Lydia. Few people have done more to create affordable housing in our city than you and your late husband, Richard Wong, who was such a vital force in Habitat for Humanity. Thanks to you both-and thanks to Sheila Crowley, too-we have a strong foundation on which to build.

Well Good morning everyone. Thank you for having me here in Washington.

This is a place where we can all feel at home since it is, as President Kennedy once affectionately described it, a city that combines Southern efficiency with Northern charm. A place with something for everyone.

But as Mayor of the City of New York, you probably won't be surprised to hear me say that for entertainment, culture, and holding conventions there's really no city in the nation like New York. Yes, I'm fulfilling a pledge to my tourism promotion agencies-but it also happens to be true.

Now, I also recognize that many Americans have tended to view New York as-while certainly a nice place to visit-rather different from their hometowns. Somewhat exotic, in fact.

But the truth is that those differences have always been exaggerated. And today, more than ever, Cities are all becoming more like one another. I say that with confidence, having cut the ribbon on an Applebee's restaurant in Bedford Stuyvesant just last week…

And having introduced Garth Brooks at the Country Music Awards last November at Madison Square Garden …. How heartland can you get?

Likewise, those of us who work in city governments have our similarities, too. Because the people who lead cities across the nation, including New York, all face comparable challenges:

From ending the threat that illegal firearms pose to all our citizens…

…to sharpening our competitive edges in an increasingly global economy.

By necessity, we share not only common problems, but also a common mindset…

A deeply pragmatic outlook that contrasts sharply with the intensely partisan environment that permeates, and all too often, paralyzes Washington.

At the local level, we don't have the luxury of pursuing ideological purity to the exclusion of getting results.

Our job is to provide the services that affect people directly. That means that we're far less interested in scoring political points off of one another than we are in finding solutions that really work.

New York's own, hardnosed Fiorello La Guardia put it best when he said that there was "no Republican or Democratic way to pick up the garbage."

That no-nonsense, down-to-earth spirit has guided our Administration from Day One. Because after 9/11, we faced the unprecedented task of bringing our city back from the bloodiest attack our nation has ever endured.

To do that, we had to come together, not as Democrats or Republicans, but as New Yorkers, and as Americans.

Over the past four years, we've remained united as never before.

And that's demonstrated by the fact that last November, a coalition of voters that reached across the full ethnic, social, and economic spectrum of our city gave us an historic re-election victory.

It was a resounding vote of confidence-one based on the fact that we've not only brought New York back, but that we've used the spirit of unity, forged after 9/11, to put our city on the path to long-term economic stability and growth.

We've done that by reducing crime by nearly 25% since 2001, keeping New York the safest big city in the nation…

By turning around a failing school system, and producing record-breaking increases in student test scores…

By improving neighborhood quality of life… securing the best municipal bond rating in the city's history… reducing unemployment to the lowest level since 2000…  raising homeownership to a record-setting high…

And by mounting the most ambitious affordable housing campaign ever undertaken by any city in America. And that's what I'd like to talk about today.

Our housing initiative is not based on ideology, but practicality.

We view the production of affordable housing not only as one of the urgent social needs of our time, but also as a sound economic investment for the future.

We envision government's role in housing policy not as a cure-all, but as a catalyst.

And we see fostering affordable housing-like establishing safe streets, like reforming our schools, like producing good-paying jobs in growing sectors of our economy-

All as rungs on the same ladder of opportunity for the New Yorkers who will shape our city's destiny in a new century.

It was my good fortune to meet these New Yorkers in every neighborhood of our city during the last campaign. They're receptionists and janitors… delivery truck drivers and nurses.

They're strong and hopeful men and women, who want and need to raise their families in communities of dignity, achievement, and hope. They will be our city's future-and we're determined to help them make it a bright one.

That's why early in our first term we committed $3 billion to a five-year plan to create and preserve more than 65,000 units of affordable housing throughout our city. And over the past four years, we've made good on that pledge, funding the construction and rehabilitation of 56,000 affordable homes.

But that was just the prologue. Last week, I announced an unprecedented expansion of this housing plan.

We've just made our affordable housing goal 2 ½ times bigger. We've set our sights on building and rehabilitating 165,000 units of housing by the year 2013-enough to house half a million people.

By the time, I leave office in 2009, 125,000 of these units will be completed or underway-and funding for the remaining 40,000 units will be included in the capital budget that I hand on to my successor. 

Under this revised and expanded plan, we'll both produce and preserve housing for a wide spectrum of our city's residents.

More than two-thirds of the housing units we'll create will be geared to low-income New Yorkers-families who are just beginning to climb that ladder of opportunity.

But we also recognize that they're not the only New Yorkers who face the challenge of affordability-so our plan will benefit thousands of middle-class households as well.

We'll honor the sacrifice and heroism of returning post-9/11 veterans. Hundreds of them will qualify for the city's first-ever veterans' affordable housing "set-aside," a program to award homes taken by HUD because of defaults on Federally guaranteed mortgages.

And we've also launched a multi-faceted, five-year plan to end chronic homelessness in our city.

A centerpiece of this plan is an historic, $1.5 billion City-State partnership to produce 12,000 new units of supportive housing, with on-site social services for those, like the mentally ill homeless, who need extra help getting their lives back on track. It's the kind of housing that, time and again, has proved itself to be compassionate and cost-effective.

It costs no more than the homeless shelters, emergency rooms, and prison cells that for too long have been the refuges of last resort for too many homeless men and women. And the dividends it pays in human dignity are rich indeed.

Taken in its totality, our affordable housing initiative-which we call the "New Housing Marketplace"-is not only unprecedented in size, but also path-breaking in its philosophy and its methods. And that's because the dynamics of the housing marketplace have changed, swiftly and dramatically.

Over the years, many of you, including Lydia, have been New York City's strong partners in preserving affordable housing.

We began working together in the days when neighborhoods across our city were threatened with wholesale blight and abandonment-when Howard Cosell could memorably proclaim to a national television audience tuned in to watch a 1977 World Series game at Yankee Stadium that "the Bronx is burning."

Tax delinquency was so common in many communities that City government acquired the dubious distinction of becoming the biggest landlord in New York. At its peak, we had 100,000 units of abandoned housing in our portfolio.

Heroic efforts were mounted to bring the Bronx, and other parts of our city, back from the brink-and they succeeded.

Because we dramatically reduced crime… and because of aggressive and imaginative partnerships with our non-profit partners to rehabilitate New York's abandoned housing…

Private lenders and developers returned to communities they had once all-but left for dead. 

Nearly 30 years ago, when President Jimmy Carter visited Charlotte Street in the South Bronx, he compared it to devastated post-World War II Dresden. Today, new single-family homes on Charlotte Street sell for upwards of $400,000.

That's not an aberration; Manhattan's Harlem, and such Brooklyn neighborhoods as Fort Greene and Red Hook were among the most distressed in our city during the 1970s and 80s. Today, they're some of the hottest residential areas in the city, with brownstones commonly valued at $1 or $2 million.

Because of that, the tax dollars New York City invested in affordable housing in those communities have been more than repaid in increased tax revenues coming right back to our coffers.

And just last August, I gladly helped close a chapter in New York's history by putting the last of the City's tax-foreclosed vacant properties back on the market for affordable housing development.

Well, it's certainly true that no good deed goes unpunished. And so it should come as no surprise, I suppose, that this reclamation of our city's neighborhoods has made us a victim of our own success, and contributed to a new housing challenge in our city.

Our population is growing rapidly; since 1990, we have added 840,000 people-more new residents than the entire population of Washington DC or Boston. Largely because of continued immigration, demographers project that we could have a population of almost 9.5 million people by the year 2020.

At the same time, our property values have skyrocketed. And that, along with our surging population, has created a housing market that today is plagued, not by abandonment, but by affordability.

The lack of affordable housing-the all-too-frequently ignored "flip side" of the run-up in the nation's housing market-is a challenge for millions of New Yorkers, as it is for people from coast to coast.

It's one that, left unmet, will consign too many Americans to the lowest rungs of that ladder of opportunity they want to climb.

Well, with crisis also comes opportunity. And in the case of affordable housing, the opportunity we're seizing in New York is to fundamentally reverse the conventional wisdom that says that a strong housing market crowds out affordable housing production.

We have, instead, found ways to harness private market forces and private sector methods for the greater public good.

That's the heart of our New Housing Marketplace plan.

It's based on a philosophy that sees ideological debates pitting government against the private sector as both passé and pointless.

It's not an "either/or" choice. Both government and the private sector have a stake in producing affordable housing, and both have essential roles to play.

That makes us, like all of you, strong believers in public-private partnerships-but we've taken them one step further.

We've done that by investing public dollars, developing public land, and employing public policy tools, not in lieu of market forces, or in partnership with them, but as catalysts that prompt the market to create affordable housing.

The market must and will take the lead-with the right stimulus from government.

That includes, first, the strategic investment of public dollars.

When we launched the New Housing Marketplace plan back in 2003, we primed the pump with a five-year commitment of $3 billion in City funds.

Part of that was a better use of our own revenues. But much of it was also a creative use of the surging housing market.

Like every state and many cities, we have a housing financing agency-the Housing Development Corporation-that issues tax-exempt bonds for multi-family housing development.

The pace of its lending has risen with the market. And that's allowed us to use a half-billion dollars of its assets to leverage some $2 billion in private funds.

Because HDC is fully self-supporting, this has cost our city's taxpayers nothing. And the kind of creative use of the market it has employed could, and should, be explored by other state and local housing financing agencies as well.

Another mushrooming asset in the market is the volume and value of bank loans for housing. They've soared in New York, as they have across the nation. And we've turned the strong interest that private lenders have in New York to our advantage as well.

The mechanism is our "affordable housing acquisition fund."

With a relatively small investment of City money, we're establishing a $200 million fund-three-fourths of it coming from private lenders.

The fund will make loans to the kinds of small-scale developers who have proven track records in affordable housing, but who still face major obstacles in competing to acquire privately owned land or properties in our booming market. 

Over the life of our affordable housing plan, this fund will help lead to the production of some 30,000 new homes.

The seed of this acquisition fund is an historic partnership that our City has forged with nine major foundations and many non-profit lenders, some of them represented here today.

They include the Ford, MacArthur, Robin Hood, Rockefeller, and Starr foundations, the Open Society Institute, the Local Initiatives Support Corporation, Enterprise Community Partners, and others.

This marks the first time that these foundations and non-profits have ever marshaled their combined financial resources behind affordable housing efforts this way.

We've put up $8 million in City funds; our foundation partners are matching that with a combined $32 million.

The result will be a $40 million pool to guarantee the acquisition and pre-development loans. And what truly makes this fund possible is that this guarantee pool will leverage $160 million from major private lenders.

This acquisition fund mirrors, on the local level, the imaginative proposal that the National Low-Income Housing Coalition advocates on a national level:

Using a tiny fraction of profits from Fannie Mae and Freddie Mac to create a $1 billion National Housing Trust Fund-an idea that I join all of you in enthusiastically supporting.

Public dollars aren't our only way of catalyzing the market. We're also using public land.

Across the city, we've identified pockets of land controlled by a wide range of City and State agencies-including our City public housing authority, our public hospital system and our Department of Transportation.

We're tapping into the strength of the market by making that land available for mixed-income housing.

The production of market-value rental and co-op apartments on these sites will cross-subsidize affordable units. The result will be that over the next seven years, the private market will develop more than 20,000 new affordable homes on the public land we've assembled.

Third and finally, in addition to public dollars and public land, we're also using public policy to stimulate the New Housing Marketplace. And we're doing that both by removing out-dated barriers to development, and also by once again harnessing market forces.

Rezoning is a powerful policy tool, and no Administration in New York City's history has used rezoning more aggressively or imaginatively to encourage housing production.

We've rezoned abandoned waterfront and underutilized manufacturing areas across our city, creating major new opportunities for commercial development, and for the construction of tens of thousands of new apartments. And by revitalizing our waterfront and creating new public parks, we're turning these areas into great new neighborhoods in which to live, work, and play.

On the West Side of Manhattan alone, our historic rezoning of what is now a very lightly populated, 50-block waterfront warehouse district will produce almost 14,000 new apartments in the years ahead.

And there and in other communities, we've employed the tool of inclusionary zoning to ensure that a large portion of the housing going there-in some communities, as much as a third of it -will be affordable.

We're bullish on inclusionary zoning for two key reasons. First, it gives affordable housing traction it wouldn't otherwise have in a hot housing market-a gold-star example of the New Housing Marketplace philosophy at work.

Because with inclusionary zoning, the stronger the market, the more valuable the extra apartments in the taller buildings become.

Second, inclusionary zoning promotes the kind of diverse and cohesive neighborhoods that define urban living at its best. It allows us to replace anti-development fears about gentrification and displacement with a commitment to economic and ethnic diversity.

And there's a lesson in there for us all-one that goes to the heart of the changing nature of all our cities.

For decades, urban history in the United States has followed a disheartening narrative line of suburban affluence and center city despair-a story with a strong and bitter subtext of racial segregation.

But in today's economy, that division makes losers of cities and suburbs alike.

As communication and travel continue to become cheaper and easier, employers have ever-wider choices about where to locate.

As someone who founded and ran a multi-national financial information services firm, I can speak from personal experience on that point-and tell you that corporate employers increasingly follow the most talented employees to the places where the quality of life is most stimulating and satisfying.

It's becoming crystal clear that in this new economy, cities with vibrant mixed-income neighborhoods fare the best. Diverse and exciting neighborhoods are where creative capital thrives. That, in turn, attracts employers. That's true in New York-and in other cities as well.

And I believe that it can, and must, also be true of a rebuilt New Orleans.

Historically, culturally, and economically, New Orleans is one of our nation's indispensable cities. Its rebuilding is of paramount importance to all of us who care about the future of urban America.

No city suffered more than New Orleans did from failed housing policies in the past.

Yet I can say, as the mayor of a city that has also come back from disaster-both from the sudden and massive destruction created by terrorists, and also from the slower but relentless blight of years of disinvestment and abandonment-

That I believe strongly that the Crescent City can experience a creative rebirth.

That can happen by using public funding and public policy in ways like the ones I've just described:

Employing inclusionary zoning to create new mixed-income neighborhoods;

Catalyzing the massive private investment in housing and community development New Orleans so desperately needs….

And in the process, beginning to move tens of thousands of the long-suffering citizens of New Orleans out of the backwaters of poverty and into the broad mainstream of the American economy.

I know that most of you will be going to Capital Hill later today, and that the Federal housing budget will be at the top of your agenda-so I'd like to close my remarks with a few thoughts about it.

Make no mistake about it, the New Housing Marketplace that I've been describing today-one I think has great promise for cities across the nation-still needs the active support and cooperation of our Federal government.

Private investment must take the lead in the New Housing Marketplace. But it's also true that private developers have to know that government is going to be their steady and consistent partner.

The future of affordable housing in my city, and in all of yours, depends on a strong Federal commitment to our local efforts.

So I join you in urging Congressional leaders to reject the proposed short-sighted cuts to HUD's budget.

We must ensure adequate funding for Section 202 and 811 housing, and also for a program that exemplifies federalism at its best:  The Community Development Block Grant program.

In New York City, C-D-B-G funds have played a crucial role in everything from reclaiming brownfields for affordable housing to establishing low-income housing co-ops. It's simply too important and too valuable to be allowed to die on the vine.

We need Federal partnership in affordable housing; it is without a doubt, a matter of social justice. But I also ask you to add this to your arguments on Capitol Hill:

Yes, make appeals to conscience and compassion-but not only those. Because if we pitch our arguments too narrowly, we cede too much of the field.

Also go armed with the firm conviction and incontrovertible fact that affordable housing is a good investment-and that in the New Housing Marketplace, the forces of the private market can be harnessed for the good of everyone.

On this issue, all Americans-Republican, Democrat, and Independent-can rise above partisanship, and find common, pragmatic ground.

Our shared humanity makes that possible…

And our shared destiny as Americans makes it imperative.

Nothing short of the future of our cities is at stake-and if we make the right choices, that future will be bright indeed.

Thank you very much, and good luck to you all.