Gov. David A. Paterson announced on Monday afternoon that he would enter negotiations with Larry Silverstein to put off sending his dispute with the Port Authority of New York & New Jersey over funding of the redevelopment of the former World Trade Center site to arbitration.

Mr. Silverstein has asked the authority to finance two of the three skyscrapers he is supposed to build at Ground Zero but the authority has balked and the two parties appeared to be at a stalemate.

The authority recently said it would back one of the two towers in question but only if Mr. Silverstein came up with more than $600 million in financing.

The authority has argued that recent declines in the office market make it difficult for it to justify diverting funds from other projects in the region to finance speculative office space. It has suggested that Mr. Silverstein build two retail "stumps" on the sites in question but the authority still has not prepared those sites for any construction and many observers argue that such an approach would be completely at odds with the grand plans to redevelop Ground Zero.

An article in today's edition of The New York Times by Charles V. Bagli said that "Although his administration had been involved in prior unsuccessful efforts to resolve the dispute, Mr. Paterson said he had been distracted until now by the battling in the State Senate between Democrats and Republicans."

The article said that the governor met with Mr. Silverstein yesterday morning and that they agreed "to continue discussions about a possible settlement, postponing, at least for now, binding arbitration."

According to the article, the governor said that he "could not say that the two sides were 'any closer' today, but he said that he and Mr. Silverstein agreed that binding arbitration was 'an unlimited waste of time' in which each side would be at the other's throat."

Mayor Bloomberg and Assembly Speaker Sheldon Silver have indicated they back Mr. Silverstein's position that the authority should help more with the financing.

In other developments, an article by Douglas Feiden in The Daily News indicated that the major performing arts center long planned for Ground Zero might "rise on the site of the toxic Deutsche Bank tower."

"The Performing Arts Center could be moved to 130 Liberty St. from a cramped site four blocks north, where it would have been shoehorned between the Freedom Tower and the transportation hub, planners say," the article continued.

"Long the poor stepchild of World Trade Center redevelopment efforts, the revival of the PAC - a jewel in the original 2003 Daniel Libeskind master plan - would provide a rare burst of good news for the long-troubled site. The center would become the new home of the Joyce Theater, a modern dance company, and its 1,000-seat theater could provide a round-the-clock venue for a range of cultural offerings, including the TriBeCa Film Festival," the article stated, adding that the site had been planned for a new office tower with trading floors by JPMorgan Chase but those plans were subsequently dropped.