Updated

The state's redevelopment agency signed off Friday on a scaled-back Sept. 11 memorial with a list of victims' names to be displayed at street level and less underground space for a museum.

The board of the Lower Manhattan Development Corp. moved forward with a developer's proposal to cut costs for the memorial complex, which would take up half of the 16-acre World Trade Center site, including a plaza with oak trees, twin reflecting pools with waterfalls marking the destroyed towers and a below-ground museum.

The board agreed to proceed with environmental and historic reviews of the memorial plans.

Gov. George Pataki and Mayor Michael Bloomberg ordered a redesign of the "Reflecting Absence" memorial after contractors estimated in May that it could cost close to $1 billion to build. The developer, Frank Sciame, said this version would cost $510 million, although an additional $100 million or so in costs to make the site buildable were taken out of the budget and transferred to the government agency that owns the trade center site.

The decision to move the names of the nearly 3,000 people killed in the 2001 terrorist attacks above ground was a major victory for Sept. 11 family members who had said they didn't want to go underground to mourn their loved ones. It was a defeat for memorial architect Michael Arad, who had argued that mourners could have a peaceful space below ground to view names surrounding the reflecting pools.

But some family members said they still couldn't support the design until other changes are made, including a commitment to group the names of the dead with those that they worked with or died with. Arad had favored listing the victims randomly, and state officials haven't said they would change that plan.

At their meeting Friday, the board said it would not address the issue of how the names will be listed; LMDC President Stefan Pryor declined to comment.

"If they are listed inappropriately, the fact that they moved them above ground isn't meaningful," said Edith Lutnick, whose brother was killed in the attack.

The new design changes also don't address where thousands of unidentified remains of victims will be stored or whether large-scale artifacts like the surviving steel facade of the trade center would be displayed. Families suggested that fundraising would be problematic without the changes.

A nonprofit foundation in charge of fundraising has raised $131 million so far; the head of the World Trade Center Memorial Foundation resigned in May amid the criticism. Fundraising was suspended, although the foundation is poised to launch a national advertising campaign next week. The LMDC has committed up to $250 million of the construction budget.

The agency received more than 1,000 public comments on the memorial since the new design was announced last week. Pryor said that 80 percent of the public comments supported the latest changes.

"It's reasonable to conclude that the fundamental design recommendations have been well received," Pryor said, adding that only about 3 percent of the people who voiced their opinions objected to limiting the underground space.

If construction remains on schedule, the memorial will open by the eighth anniversary of the attacks — Sept. 11, 2009.