The all but dead Fulton Street Transit Center, a $1.4 billion project designed by Nicolas Grimshaw with James Carpenter, is back on the front burner. The Metropolitan Transportation Authority (MTA) announced Friday that it will spend $497 million in federal stimulus money to complete the project, which stalled last January due to rising costs.

Located a block from the World Trade Center site, the project involves simplifying a busy underground subway network, a tangled labyrinth of 12 lines, and building an iconic structure above. Grimshaw’s design called for a sleek glass pavilion topped off with a stunning 50-foot diameter oculus designed by James Carpenter. But when the project cost came in at $ 870 million, far exceeding the $390 million the MTA budgeted, the structure was put on hold. Since that time, the MTA has proceeded with the underground work with ARUP, while it weighed its options for what to do above ground, including building a park on the site.

Today’s announcement is good news for the downtown community, which fell in love with the structure. But it remains to be seen whether Carpenter’s oculus sees the light of day or gets the axe in favor of skylights. Construction on the structure could begin in 2010, said Michael Horodniceanu, president of the MTA’s capital construction division.