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A New York State agency approved selling $340 million in bonds for three residential development projects in lower Manhattan that were postponed after Sept. 11 terrorist attacks. The bonds, authorized by the New York State Housing Finance Agency's seven-member board, are the first under the $8 billion liberty bond program President George Bush approved in March to help New York City recover from the loss of its World Trade Center.

The projects ``would not be going forward without financing from liberty bonds,'' said Michael Wadman, a senior vice president at the agency. ``They were taken off hold as soon as the liberty bond program became available, because they became financially feasible again.''

Interest payments on the bonds are exempt from federal and state taxes, so rates on loans they provide are about 2 percentage points less than loans from taxable bonds.

States and cities can sell as many tax-free bonds for public works, such as streets and sewers, as investors will buy. Tax-free financings for private projects are limited under U.S. tax law to $75 per citizen annually, or $1.4 billion in New York's case.

The liberty bond program gives New York the authority to issue an additional $8 billion of tax-exempt bonds for private development purposes through 2004. As much as $1.6 billion can be used for residential projects such as those approved today.

Two of the apartment buildings would be in the Battery Park City neighborhood adjacent to the World Trade Center site, and the other would be east of that area, in the financial district. In all, the complexes would contain 844 apartments. The board approved a requirement that 5 percent of the units be rented at subsidized rates, a decision that was criticized by New York City Council Speaker Gifford Miller. ``This decision only makes it more difficult for middle-income families to live in New York City,'' Miller said in a statement. ``I urge the state to create housing that will not just help the wealthy.''

The least-expensive studio apartment will rent for $1,649 a month, putting the developments out of reach for many, said Bettina Damiani, project director at Good Jobs New York, an advocacy group. ``I doubt American taxpayers thought that these resources would go to build luxury housing.''

The agency typically finances projects where 20 percent of the units are available at below-market rates, and such a project is under consideration for another liberty bond financing, said housing agency spokeswoman Sally Crockett.

``This is not a result of the criticism,'' Crockett said. ``We've been encouraging developers to include as big an affordability component as is financially feasible.''

The bonds authorized today probably will come to market by the end of October, said Wadman.

thampton@bloomberg.net. Editor: Mysak