July 20 (Bloomberg) -- New York Governor David Paterson said public funds shouldn’t guarantee most of the financing for developer Larry Silverstein’s plans for office towers at the World Trade Center site.

The governor said he would intervene in negotiations to resolve a financing dispute between Silverstein and the Port Authority of New York and New Jersey, which owns the 16-acre lower Manhattan site. He said Silverstein has agreed to postpone today’s deadline to go to binding arbitration, saying such a move “could take up to nine months, maybe longer.”

“I think it’s unfair to the taxpayers, because you could go to the private equity firms, and they don’t want to extend that kind of credit,” Paterson said on a conference call from Albany. “So I don’t think that the taxpayers should run a greater risk than what makes good business sense for a number of private institutions.”

Silverstein has asked the Port Authority, which runs the region’s ports, airports and interstate bridges and tunnels, to guarantee financing for two of the three towers he plans for Ground Zero. A stalemate could hold up construction on other projects planned for the site, including a commuter rail hub, almost eight years after the original trade center’s destruction.

Sharing Risk

The state is unwilling “to be the only entity that has risk in the project,” Paterson said. He offered “public- private partnerships” as one example that could work.

“We appreciate Governor Paterson’s leadership and agree with his principled position on protecting public resources,” said Stephen Sigmund, a Port Authority spokesman, in a statement. “In the meantime, the Port Authority will continue to make daily and visible progress on the Memorial, One World Trade Center, the Transportation Hub and the other public infrastructure.”

Silverstein has asked for more than $2.6 billion of financial guarantees from the Port Authority, whose board is split equally between New York and New Jersey gubernatorial appointees. The agency has said the request would cost it at least $4 billion when all costs are factored in.

“I appreciate the governor’s direct involvement,” Silverstein said in a statement e-mailed by spokesman Bud Perrone. “I look forward to continuing these discussions.”

To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net.

Last Updated: July 20, 2009 17:43 EDT