Silverstein Properties Inc. could use up to $200 million of tax-exempt recovery zone facility bonds to help finance office towers at the World Trade Center site, the developer and deal participants said Monday.

The deal could include part of New York City’s $121 million RZFB allocation, which may otherwise go unused before the program expires at the end of 2010.

“The city and the state have separately expressed an interest into whether there are some recovery zone bonds that should be redirected before they expire at the end of 2010,” said Janno Lieber, president of World Trade Center Properties LLC, an affiliate of Silverstein Properties. “That’s a decision that the state and the city are going to make in the weeks to come.”

A public hearing notice published Monday by the Liberty Development Corp., an affiliate of the Empire State Development Corp., said the issuer was seeking authorization to market the RZFBs to finance a portion of the project’s costs.

The issuer last year sold $2.59 billion of Liberty bonds into escrow on behalf of Silverstein for construction at the World Trade Center. They will be re-escrowed for a second time this week because final documents and agreements with the Port Authority of New York and New Jersey will not have been approved before this week’s mandatory tender date.

An RZFB transaction by the LDC for World Trade Center construction has a major hurdle to overcome: municipalities that received allocations of the tax-exempt private-activity bonds would have to cede those allocations to New York State.

Marvin Markus, managing director at Goldman, Sachs & Co., which is underwriting the Liberty bonds, said at an LDC board meeting Monday they would find out next month about RZFB allocations. 

“The city of New York has indicated that on Dec. 1 they will indicate whether or not any of their recovery zone bonds are available, which they expect some to be available,” Markus said.

New York City Economic Development Corp. spokeswoman Julie Wood did not answer questions about Silverstein’s possible use of RZFBs but said the city was committed to using its full allocation. We “are continuing to explore a number of scenarios to make sure that happens,” she said in an e-mail. New York counties and large municipalities received allocations totaling $555.1 million.

The state asked municipalities to voluntarily waive their allocations if they did not intend to use them, though few have waived them. In August, the Division of Budget reported that municipalities had ceded $2.3 million in RZFB allocations to the state. 

New York City aggressively promoted the bond program, but to date has issued just $31.5 million of recovery zone bonds for three deals through the New York City Capital Resource Corp.

Besides the city CRC, only one other issuer in the state, the Erie County Industrial Development Agency, has sold RZFBs. Congress created the program last year in the American Recovery and Reinvestment Act, allocating $15 billion of private-activity bonds to counties and municipalities nationwide.

The program, intended to provide cheap financing for commercial projects in economically distressed areas, has not been heavily utilized, though the pace has accelerated. Issuers this year have sold $1.23 billion compared to $56.3 million last year, according to Thomson Reuters.

Lieber downplayed the significance of the RZFBs. “Our entire focus is on the issuance of the Liberty bonds during the month of December,” Lieber said.

The LDC on Monday approved the re-escrowing of the $2.59 billion of Liberty bonds that Silverstein plans to use to partially finance the construction of Tower 3 and Tower 4 at the WTC site. The developer plans to refund half of the bonds in December to finance ongoing construction and re-escrow the remainder for future construction.

Congress created the Liberty bond ­program following the terrorist attacks of Sept. 11, 2001, to help revitalize Manhattan with an $8 billion allocation of private-activity bonds.

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