A Borough of Manhattan Community College building that sustained severe damage after the September 11th terror attacks is being rebuilt, city, state, and City University officials announced Thursday.

Officials announced an agreement to fund the dismantling of Fiterman Hall and construction of a new one in its place. The project will cost $325 million.

The structure was under construction on September 11, 2001 and was severely damaged when 7 World Trade Center collapsed.

"The community has wanted this blight in the community down for years," said Catherine McVay Hughes, vice chairperson of Community Board 1.

Mayor Michael Bloomberg says insurance claims had to be settled before work on the building could begin.

"It took a long time, maybe, in retrospect, longer than it should have," Bloomberg said.

"Our agreement today is great news for the residents and workers in Lower Manhattan," said Assembly Speaker Sheldon Silver. "It is a sign that we are succeeding in our efforts to finally rebuild bigger and better than ever."

The new 14-story building will house classrooms, computer facilities, an art gallery and faculty space.

The college's president says the school has been leasing space to handle the increasing number of students.

"Being a college that had possibly not quite 17,000 students on 9/11, we've gone to 22,000 students, and we really need a permanent home," said BMCC President Antonio Perez.

"This new imagined building is going to give these students and our faculty the ability to realize their dreams," said CUNY Chancellor Matthew Goldstein.

CUNY officials say rebuilding will start late next summer after demolition is complete, and they expect it to be ready for occupancy by spring 2012.