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Deal Reached on Rebuilding World Trade Center Site

The Port Authority of New York and New Jersey Thursday reached a tentative agreement with World Trade Center developer Larry Silverstein, ending a 16-month stalemate over rebuilding at the site destroyed in the Sept. 11, 2001 attacks.

People look out toward the World Trade Center site.
Getty Images
People look out toward the World Trade Center site.

The proposed agreement will allow four office towers to be built, although one will be delayed indefinitely because of the poor economy.

The tentative arrangement was announced by the Port Authority of New York and New Jersey following a board meeting Thursday.

Construction is under way on 1 World Trade Center, a memorial and a transit hub, but other planned towers have been stalled in a financing dispute.

Mayor Michael Bloomberg and Gov. David Paterson have planned a late afternoon news conference to discuss the deal reached between developer Larry Silverstein and the Port Authority.

The reconstruction effort has suffered long delays as the agency and developer have fought about money, security, designs and funding, frustrating officials, residents and families of the almost 3,000 people killed in attacks that felled the twin towers.

Silverstein, under an agreement struck in 2001 and amended in 2006, is responsible for building World Trade Center Towers 2, 3 and 4, while the Port Authority is responsible for developing One World Trade Center and Tower 5, along with the WTC Transportation hub, the 9/11 Memorial, underground parking and retail outlets.

Building of One World Trade Center is underway, but Silverstein's projects have been held up in funding disputes.

Thursday's proposed agreement creates a framework under which the reconstruction effort will be paid for using private funds, Liberty Bonds and money from New York state and city.

The Liberty Bond program was set up to create tax-free financing for reconstruction and to support the downtown Manhattan economy after the attack.

The deal would allow for the east side of the site to be restored to street level, for Tower 4 to be completed by 2013 and for the phase-in of Towers 2 and 3 over time, the agency said in a statement.

Silverstein can immediately resume building the Tower 3 transit and retail podium, as long as he raises $300 million of private equity, preleases 400,000 square feet and obtains private financing for remaining costs.

The developer will receive a capped public backstop of $390 million from the agency, New York state and city to help him raise financing, as well as $210 million of equity from the state and city.

CNBC staff contributed to this report