April 5 (Bloomberg) -- New York City and state officials are working to revive Goldman Sachs Group Inc.'s plan to build a new $1.8 billion, 40-floor headquarters close to the World Trade Center site after the securities firm suspended the project, spokeswomen for the mayor and governor said.

Lynn Rasic, a spokeswoman for Governor George Pataki, said the state was seeking to answer Goldman's objections before presenting a final plan for a motor vehicle tunnel under West Street, an eight-lane road dividing the tower site and the World Financial Center from Ground Zero. The tunnel's northern entrance would emerge near the front door of Goldman, the world's third- biggest securities firm by capital.

``We're confident that the analysis of alternatives for West Street will conclude in the future and allow Goldman to go ahead with their plans,'' Rasic said today. She declined to discuss details.

The Goldman tower, due for completion in 2009, would be the first new headquarters building in lower Manhattan in 16 years. When it was announced last August, Pataki called it ``a major step'' to revitalize lower Manhattan. Its construction was to coincide with that of the 1,776-foot Freedom Tower, anchor of the governor's $11 billion Ground Zero master plan.

The $860 million tunnel project is another part of the master plan. Pataki proposed submerging West Street as a security measure for the Freedom Tower and to make the World Financial Center more accessible to pedestrians.

Looking Elsewhere

Goldman spokesman Peter Rose said ``we have suspended our work'' because ``uncertainty of the master plan for the whole neighborhood makes it difficult to finalize plans for our building and begin construction.'' He said the tunnel was ``a factor, but not the only factor,'' and declined to provide further details.

Rose said resolving the issues to allow the tower plan to go forward ``remains an option,'' and ``we are also looking at our other options in Manhattan.''

Henry Paulson, the company's chairman and chief executive officer, discussed the matter yesterday with Mayor Michael Bloomberg in a phone call, mayoral spokeswoman Jennifer Falk said.

The city ``appreciates'' Goldman's concerns, Falk said. ``There are several complex issues that have taken longer to work out than we would have liked,'' she said in an e-mail ``That said, we are working aggressively to address those concerns and are optimistic that we will be able to resolve them to Goldman Sachs's satisfaction.''

Liberty Bonds

Goldman's tower, partly financed with $1 billion in tax- exempt Liberty bonds issued through New York City, would be built just north of the World Financial Center, and diagonally across West Street from the Freedom Tower.

The company currently has its headquarters about a mile away at 85 Broad Street in lower Manhattan, and employees in various buildings in the area with leases set to expire in the next four to five years. It had pledged to keep its city employment equal to its current total of 9,178 when it occupied the new building.

Last month, New York state economic development chief Charles Gargano said that Santiago Calatrava, architect of the $2 billion transportation hub to be built at the trade center site, had been called in to help design the tunnel to try to make it less objectionable to Goldman.

Moving the tunnel mouth north of the planned tower is ``problematic,'' Gargano, chairman of New York's Empire State Development Corp., said in an interview at the time. One block north is a residential area near two schools and a Little League baseball field.

The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

To contact the reporters on this story: Josh P. Hamilton in New York at at jphamilton@bloomberg.net or David M. Levitt in New York at dlevitt@bloomberg.net.

Last Updated: April 5, 2005 12:41 EDT