As a tower begins to rise at the World Trade Center site in lower Manhattan, the property’s owner, the Port Authority of New York and New Jersey, yesterday authorized the sale of $1 billion of taxable bonds to finance further construction.

Citi will underwrite the bonds, which will be sold in multiple series over the next year and half.

Looming over the site is the impending expiration at year-end of the authorization for selling $3.29 billion of Liberty

Bonds to partially finance four towers on the site.

Following the 9/11 terrorist attacks, Congress created the Liberty Bond program, which authorized $8 billion of private-activity bonds to revitalize Manhattan. Delays and ongoing arbitration between the authority and developer Silverstein Properties Inc. — which has sought greater financial support — have made issuance by the end of the year problematic. Closing arguments in the arbitration are expected next month.

The Port Authority and state and city officials have lobbied Congress and urged the state’s congressional delegation to get the program extended by one year.

The Empire State Development Corp. would prefer to get an extension for the $2.59 billion of bonds it plans to issue on behalf of the developer to build three towers on the site, but is readying the deal to go to market next month and put the proceeds in escrow if an extension is not granted, an ESDC staff member said.

The New York City Industrial ­Development Agency plans to issue $701 million of Liberty Bonds on behalf of the Port Authority for its tower, but it’s unclear when.

The Dec. 31 deadline for the debt program may not be as hard as it appears. If the Liberty Bond extension doesn’t get rolled into a package dealing with other expiring tax provision by the end of the year, an extension could be passed retroactively next year, said a U.S. House staff member with knowledge of the issue.

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