SECTION: NEWS; Pg. 27

LENGTH: 303 words

HEADLINE: WHY BONDS FOR BUILDER? WHO KNOWS?

BYLINE: By GREG GITTRICH DAILY NEWS STAFF WRITER

BODY:
City officials are close to approving $400 million in taxpayer-subsidized bonds for the construction of a new 7 World Trade Center. But yesterday they couldn't explain why. At the only public hearing on the matter, officials from the city Industrial Development Agency were asked how they determined that developer Larry Silverstein really needs the so-called Liberty Bonds.

They reacted by whispering to one another. Spokeswoman Janel Patterson eventually said, "We'll respond to that later."

The odd answer came a day before a scheduled vote on Silverstein's request. It was particularly stunning because the Industrial Development Agency, which is controlled by the city Economic Development Corp., has been scrutinizing Silverstein's request for months.

Last month, officials delayed a hearing on the application to make sure Silverstein couldn't pay for the new 7 WTC with insurance proceeds alone.

Silverstein expects to receive some $861 million in insurance payments for the destroyed 7 WTC. He said a new 52-story 7 WTC would cost $700 million.

He intends to use $489 million of the insurance payments to cover an existing mortgage and already has used $65 million for other debts and costs. That leaves only $307 million for construction. Silverstein hopes to cover the shortfall with the bonds.

All of the figures were cited in his request and eventually referred to by EDC President Andrew Alper in a telephone interview - seven hours after yesterday's public hearing.

Alper, who did not attend the hearing, said 7 WTC is a "great use" for the bonds, which were created as a part of the post-Sept. 11 federal aid. The bonds allow developers to borrow money at a cheaper rate. The Industrial Development Agency is scheduled to vote on Silverstein's request today.