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NY agency OKs tax-free debt for World Trade Center

By Joan Gralla

NEW YORK (Reuters) - A $2.6 billion tax-free bond sale for World Trade Center developer Larry Silverstein was approved on Wednesday by a state economic agency though the rebuilding of the shattered complex remains stalled.

The Liberty Development Corporation plans to issue the debt for the developer via Goldman Sachs in the last two weeks of December, a spokeswoman for the umbrella agency, the Empire State Development Corporation, said by telephone.

Following its "common practice," the board approved Silverstein's Liberty bonds one day before holding a public hearing on the offering, she said.

"In case there is a large amount of public testimony, then the board is asked to meet again to review the testimony and the board will deny or affirm the sale," the spokeswoman said.

Bettina Damiani, project director for Good Jobs New York, an advocacy group, criticized the state agency for not waiting until after the public had a chance to comment.

"For the corporation to approve the bonds before a public hearing is the height of hypocrisy," she said.

The agency acted on the same day that the state Legislature approved a bill to rein in public authorities, the state's so-called "shadow government," which have $140 billion of debt outstanding.

Liberty bonds were part of the $21 billion of aid Congress approved to help the city get back on its feet after the September 11, 2001, air attacks that killed thousands and destroyed the World Trade Center.

But rebuilding the World Trade Center complex is years behind schedule. Meanwhile, the developer, Silverstein, and the lead agency, the Port Authority of New York and New Jersey, have submitted their latest clash over financing and plans to an arbitrator.

Silverstein, who will have to repay the Liberty bonds, does not qualify for $700 million of this debt for the Port Authority. The Liberty bond program expires this year and the authority has said it wants Congress to extend it for another year.

A Silverstein spokesman declined comment.

A Port Authority spokesman was not immediately available to comment.

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