* Unanimous vote denies landmark status to building
* New legal challenge to mosque to be filed Wednesday
* Strong opinions on both sides (Adds Bloomberg reaction in paragraphs 13-14)
By Karina Ioffee
NEW YORK, Aug 3 (Reuters) - A New York city agency on Tuesday cleared the way for construction of a Muslim cultural center near the site of the Sept. 11 attacks.
In a case that triggered national debate, the City Landmarks Commission voted unanimously to deny landmark status for an old building on the site of the planned center.
Opponents of the Muslim center, which would include a mosque, say it will be a betrayal of the memory of victims of the Sept. 11 attacks, which were carried out by the militant Muslim group al Qaeda with hijacked passenger planes.
Critics had hoped to stall the project by having the 1857 Italianate building declared a landmark worthy of protection because pieces from one of the hijacked planes hit it.
Commission members argued the building, set among a row of businesses about a block from Ground Zero, had no historic value and their vote allows the old building to be demolished.
At least one more legal challenge looms but the commission's ruling will clear the way for construction of the Cordoba House, which will include a prayer room and a 500-seat auditorium as part of a 13-story Muslim cultural complex.
"We are grateful to the Landmarks Commission," said Sharif El-Gamal, chairman and CEO of Soho Properties, which owns the building. "It has been a whirlwind for the past four months, during which we have worked tirelessly to realize an American dream which so many others share."
The commission's vote attracted several people with signs reading "This mosque celebrates our murders" and "Don't glorify murders of 3,000."
SURVIVOR GROUP APPROVES
But the September 11th Families for Peaceful Tomorrows, founded by family of those killed in the 9/11 attacks, praised the commission for making its decision without caving in to politics and emotion.
"We strongly support the establishment of the Islamic Cultural Center as we believe that welcoming the center, which is intended to promote interfaith tolerance and respect, is consistent with the fundamental American values of freedom for all," the group said in a statement.
The American Center for Law and Justice, representing a firefighter who survived the attacks, said it will file a lawsuit on Wednesday challenging the decision and seeking to stop the building of the mosque.
The group said in a statement that the city was guilty of "ignoring proper procedure and ignoring a growing number of New Yorkers and Americans who don't believe this site is the place to build a mosque."
New York Mayor Michael Bloomberg said with or without landmark designation, the owners could open a mosque within the existing building. In a speech where he was joined by Christian, Jewish, Muslim and Buddhist clerics, he noted that America was founded on the principle of religious freedom.
"It is my hope that the mosque will help to bring our city even closer together and help repudiate the false and repugnant idea that the attacks of 9/11 were in any way consistent with Islam," Bloomberg said.
Some opponents of the Muslim center had pointed to comments by imam Feisal Abdul Rauf, leader of the project, that "United States' policies were an accessory to the crime that happened" as evidence to the center's ulterior motives.
Rauf, a Kuwaiti who opened his first New York mosque in 1990, condemned the Sept. 11 attacks and was later chosen by the FBI to teach sensitivity training to law enforcement.
Another contentious issue was how the center would raise the needed $100 million to finance the project, giving rise to speculation that the money could come from extremist groups.
Sharif El-Gamal dismissed such allegations, saying the money would come from a mix of equity, bonds, grants and contributions. He also called the building's proximity to the World Trade Center site accidental and said it was purchased to meet the needs of a growing Muslim community. (Editing by Mark Egan and Bill Trott)