The city and developer Larry Silverstein are hundreds of million of dollars apart in their estimates of the amount of financing necessary to rebuild ground zero, making it increasingly unlikely the two parties will come to a compromise before the Tuesday deadline set by Governor Pataki.

Testifying before a City Council committee yesterday, Deputy Mayor Daniel Doctoroff explained the administration’s claim that Mr. Silverstein will run out of money after constructing only two of four buildings planned for the former World Trade Center site, leaving the city with only a half-rebuilt site and a “financial train wreck” in four or five years.

“They will have to borrow over $4 billion to complete the site,” Mr. Doctoroff said during more than an hour of testimony. “It can’t be done.”

For the first time, the deputy mayor indicated that there is flexibility in the city’s plan to transfer the building rights for Tower 3 and Tower 4 to the Port Authority in exchange for lower rent payments for Mr. Silverstein. Mr. Doctoroff said the city would support any plan where four towers could be realistically financed and completed by about 2011 or as quickly as possible.

Yesterday, Mr. Doctoroff advocated using about 700,000 square feet of space for a hotel at ground zero, saying it would make financing the entire project more feasible. The deputy mayor also indicated the city is willing to drop the mixed-use condition if another favorable agreement is reached.

At yesterday’s hearing, an executive of Silverstein Properties, John Lieber, challenged the city’s economic assumptions, saying Mr. Silverstein is willing and able to complete the four towers as planned. The analysis presented by Mr. Lieber said the developer would have to borrow far less money to build out the site than the city predicts.

Mr. Lieber said Mr. Silverstein is “prepared to assert his legal right to build,” and he noted that the developer has been paying the Port Authority roughly $10 million a month since he leased it, weeks before the terrorist attack of September 11, 2001.

He said the developer is willing to build less than 10 million square feet of office space, but added that Mr. Silverstein wants enough office space to create a critical mass, like Rockefeller Center in Midtown.

Mr. Lieber said the developer is opposed to turning Towers 3 and 4 into a “government office complex,” because of their potential commercial value.

The city is holding back its $1.67 billion in tax-exempt financing, known as Liberty Bonds, with the hope that it can compel Mr. Silverstein and the Port Authority to renegotiate their lease agreement.

Mr. Pataki has committed the state’s remaining $1.67 billion of Liberty Bonds to Mr. Silverstein under the condition that he strikes a deal with the Port Authority by March 14. The city appears to be using that deadline to exert pressure on the developer and the Port Authority to rewrite their deal. Silverstein Properties has said it is ready to start construction on the Freedom Tower next month, but it needs the state’s tax-exempt financing to do so.

The Port Authority submitted testimony but did not send a representative to yesterday’s hearing, a decision that the speaker of the City Council, Christine Quinn, called “disgraceful.”

Council Member David Yassky, a Democrat of Brooklyn who is running for Congress, questioned Mr. Doctoroff’s assertion that handing over part of the site to a government entity – the Port Authority – would speed construction.

Mr. Yassky said it is the city’s reluctance to dedicate the Liberty Bonds to Mr. Silverstein that is holding up the progress at ground zero.

“I do not understand why the administration is disinclined to do that,” he said.