The proposed agreement will allow four office towers to be built, although one will be delayed indefinitely because of the poor economy. The arrangement was announced by the Port Authority of New York and New Jersey following a board meeting Thursday.
"We are in a position where the parties are all on the same page," Port Authority Chairman Anthony Coscia said.
The parties will have 120 days to negotiate details of the deal announced Thursday. The agreement will then be presented to the Port Authority board for final approval.
Construction is already under way on the first ground zero office building, 1 World Trade Center, as well as a Sept. 11 memorial and a transit hub, but other planned skyscrapers have been stalled in a financing dispute.
Under the tentative deal, the Port Authority would finance the second tower at the site, a 64-story building to be completed in 2013. The city and Port Authority have already agreed to rent space in the building.
Developer Larry Silverstein would have to raise $300 million in cash to build a third office tower at the site. New York City, New York state and the Port Authority would provide $600 million in backup financing if Silverstein first secures commitments to lease 400,000 square feet.
Silverstein said in a statement: "Today's agreement between my company and the Port Authority will accelerate the rebuilding of the World Trade Center. This is great news for New York."
The fourth office building at the site would be built up to street level so the lot will be ready for Silverstein to put a tower there when and if the commercial real estate market recovers.
Mayor Michael Bloomberg praised the deal at a Thursday afternoon news conference, where he was joined by Gov. David Paterson.
"First, this is great news for our city's economy, and it really will spur our continued recovery from the national recession," Bloomberg said. "It means that in very short order, thousands of electricians, operating engineers and others in our still hard-hit construction industry will be at work on the eastern portion of the World Trade Center site."
New York State Assembly Speaker Sheldon Silver, whose district includes the trade center site, also touted the agreement.
"It is a great statement that we will rebuild lower Manhattan," Silver said, adding, "I think it's a deal that works for everybody. The taxpayers are protected."
While the details of the plan still have to be worked out, officials hailed it as a breakthrough in ending the delays and uncertainty that have bedeviled the project for years, despite the sense of priority and symbolism invested in it.
"For a long time, everybody thought this was never going to get done," Bloomberg said. "It is very difficult to get everybody on the same page, but I think now we are really making progress."
The rebuilding bogged down last year as Silverstein and the Port Authority clashed over the project's timing and financing.
Silverstein, who has paid billions of dollars in rent to the Port Authority since 2001, said the agency wasn't building its part of the project on time, throwing off the timing and financing for his buildings in a tough real estate market.
The Port Authority said it was meeting its obligations, and committing more of its money to Silverstein's private venture would drain funds from other key public projects at a time when government, too, was strapped for cash.
Now, officials say putting up more public money is an investment in getting the towers built - and ultimately getting the tax revenues and other benefits they expect to flow from it.
"The only way that we're going to have tax revenues to pay our police officers, to pay our firefighters, to pay our teachers, is to have economic development," Bloomberg said.