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Deal near to end rebuilding stall at WTC site

The stalled development of the eastern portion of the World Trade Center site crept closer to progress Thursday with a tentative deal between New York City and the state, the Port Authority and developer Lawrence Silverstein.

Details of the agreement - which will allow three office towers to be built, although one will be delayed indefinitely because of the poor economy - will be worked out over the next four months by lawyers and officials, after which the 12-member board of the Port Authority will have a final vote. The arrangement was announced by the authority after its board meeting Thursday.

Although Tower 7 was completed by Silverstein in 2006, a stalemate arose over financing the remainder, with the authority offering to provide funding for one tower, but Silverstein, citing the difficult economy, wanting the agency to finance two of the three. The Port Authority had said Silverstein should find corporate tenants and private financing before building the other two.

Under the tentative deal, construction on Tower 4 - funded by special bonds issued by the federal government expected to raise about $1.8 billion - is due to be finished by 2013.

Tower 3 construction would begin immediately if Silverstein Properties meets two criteria: raises $300 million in private equity and pre-leases 400,000 square feet of the office tower. Tower 3 financing is expected to cost $2 billion.

The proposal leaves unclear the fate of Tower 2 due to uncertainty about the office real estate market, officials said.

New York City and the state, as well as the Port Authority, agreed to be on the hook for a total of $390 million in financial guarantees, which Silverstein has agreed to later repay.

The parties welcomed the tentative deal. "The agreement strikes an important balance between the redevelopment goals, financial risks and rewards between the public and private sector," the Port Authority said in a statement.

"This is great news for New York," Silverstein said. "I'm grateful to Governor Paterson, Mayor Bloomberg, Speaker Silver, Governor Christie and all their hardworking staff members for their determination to make sure downtown re-emerges as a world-class neighborhood."

Paterson congratulated partners in the negotiation, saying "even in the midst of the worst economic climate of our lifetime, we have found a way to continue rebuilding."

Asked why the city should commit public money to the project in a recession, Mayor Michael Bloomberg said: "The only way we are going to have the tax revenue to pay our police officers, pay our firefighters and pay our teachers is to have economic development. . . . The worst thing we could do in bad economic times is leave a huge hole in the ground."

Relatives of those who died in the 9/11 attacks were more skeptical, however.

"I am glad they are going forward, but I tend to be a little cynical about these things. It seems to be increasingly about money," said Allison Treulich, 44, of East Islip, who lost her sister Kimberly Bowers, 31, in the attack.

Carol Ashley, of Rockville Centre, lost her daughter Janice Ashley, 25, who worked on the North Tower's 93rd floor. "I am glad they are finally moving forward. . . . It shouldn't have taken as long as it did."

With Keith Wagstaff

and Pervaiz Shallwani

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