NEW YORK - A state agency on Wednesday approved using $1.6 billion in tax-exempt bonds to build three office towers at the World Trade Center site.

The Empire State Development Corp. approved use of the Liberty Bonds for towers that are under private developer Larry Silverstein's control. Silverstein retained control of those towers after his lease was renegotiated earlier this year.

The federal government issued a total of $8 billion in Liberty Bonds after the Sept. 11, 2001, attacks to provide tax-exempt financing for downtown Manhattan rebuilding.

The city intends to issue $920.9 million in Liberty Bonds under its control to build the three towers next month.

The remaining $3.35 billion in Liberty Bonds will go to the Port Authority of New York and New Jersey, which is paying to build the symbolic Freedom Tower and another building at the trade center site.

Silverstein spokesman Bud Perrone said the developer is working with three architects on designs for the three towers and "with financing in place, will begin construction of those towers as soon as the sites are made available."