Goldman Sachs Group Inc. agreed to build a $2 billion world headquarters near the World Trade Center site.
The deal announced Tuesday came after months of negotiations with state and city officials who dropped plans to build a tunnel near the site after the firm objected and lured it with $1.6 billion in post-Sept. 11 Liberty Bonds.
Goldman Sachs said earlier this year it wouldn't move to a piece of land across from the World Trade Center site as planned because a proposed tunnel for vehicles beneath ground zero would send traffic too close to the building's entrance. The company also expressed concerns over other traffic and security plans at the site.
State officials dropped plans for the tunnel, and city and state leaders spent months trying to persuade Goldman Sachs to remain in downtown Manhattan, seeing the investment firm as a crucial piece in the rebuilding of the business district near ground zero.
An additional $600 million in Liberty Bond financing was approved earlier this month for the project, for a total of $1.6 billion.
Goldman Sachs also received $115 million in state and city incentives to remain downtown, according to a release issued by Gov. George Pataki, Mayor Michael Bloomberg and Assembly Speaker Sheldon Silver. They said the incentives represented a "fraction" of the taxes Goldman Sachs generates in a year.
The firm pledged $3.5 million to a planned downtown library branch and $1 million to a neighborhood community center.
Construction of the 2.1 million-square-foot, 43-story headquarters will begin later this year. The building will be ready for occupancy in 2009 and will house at least 9,000 employees currently located in several downtown offices. More than 2,000 employees will remain in Jersey City, N.J., a company spokeswoman said.
Goldman Sachs Chairman Henry M. Paulson Jr. said he was grateful to Pataki and Bloomberg for "having addressed our concerns" and was happy to remain downtown.
Bloomberg called the deal "a shot in the arm for the development of downtown" and said it means "billions of dollars in tax revenue for New York City and state."
Pataki said Goldman Sachs' decision to build in lower Manhattan "sends a powerful message that not only is the rebuilding on track but that lower Manhattan's destiny as a world-class central business district will be achieved."
The $8 billion Liberty Bond program provides federally subsidized, tax-exempt financing for downtown Manhattan projects.
