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Trouble At Turtle Bay

The numbers for the U.N.'s new renovation project just don't add up.

1:10 PM, May 16, 2005 • By JOHN HINDERAKER
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THE UNITED NATIONS has been in the news of late. As usual, most of the news is negative: evidence suggesting that one or more members of the Security Council were bribed by Saddam; an inability to deal effectively with various crises in Africa; the embarrassing presence of nations such as Iran, Syria, Libya, Zimbabwe, and Saddam's Iraq on U.N. commissions on human rights, proliferation and weapons of mass destruction; the oil for food scandal.

In the midst of these controversies, the United Nations is proceeding with plans to upgrade its Manhattan headquarters. The organization's headquarters at Turtle Bay were completed in 1950 and renovated in the 1970s. The United Nations now believes that another renovation project is necessary, and has prepared a $1.2 billion plan to carry out the work.

While the construction is underway, the organization will need to be housed elsewhere. In its original form, the U.N. plan included construction of a new, 35-story building over Robert Moses Playground, a park near Turtle Bay, at a cost of an additional $650 million. This new building was slated to be the U.N.'s home during the renovation project, and to continue in use by the organization thereafter.

It was the construction of this new building--for which approval by the New York legislature was required--that first drew public criticism of the project. Bipartisan opposition to the new building stalled legislative action in the New York Senate. With no sign that senators opposing the project would relent, Kofi Annan, on May 10, issued a statement urging the United Nations to abandon its plan for the new building, on the ground that it could not now be completed in time for its projected use as a temporary home. Instead, the United Nations will look for existing office space elsewhere in Manhattan.

There has been little debate over the broader issue of the renovation project itself, perhaps because so few people are aware of it. Establishment figures such as Colin Powell, Ed Koch, and Mortimer Zuckerman have been enlisted to head a committee to lobby for the project. With the notable exception of the New York Sun, however, the press has been virtually silent. This seems odd, in view of the serious questions that have been raised about the cost of the renovation.

The U.N.'s Capital Master Plan states that a total of 2,651,000 square feet will be renovated. Assuming that figure to be correct, the per square foot cost would be $452. But, as reported by the Sun, real estate experts question whether the U.N.'s facilities contain anywhere near that amount of space. According to the U.N.'s website, the organization's headquarters include four main structures, whose size has been estimated as follows:

* Secretariat Building: 39 floors and three subfloors, approximately 500,000 square feet.

* General Assembly Building: Five total floors, approximately 380 ft. by 160 ft., or 304,000 square feet.

* Conference Building: Four stories, approximately 115,000 square feet.

* Dag Hammarskjold Library: Four stories and two sublevels, 219 ft. by 84 ft., total 110,376 square feet.

If these estimates are correct, only around 1,029,000 square feet will be renovated under the U.N.'s proposal. At a total cost of $1.2 billion, the project would then weigh in at over $1,100 per square foot.

Either of these figures is regarded by local real estate developers as stunning. The New York Sun reported on February 4, 2005:

The United Nations has said its plans to renovate its headquarters at Turtle Bay will cost $1.2 billion.

That strikes Donald Trump as far too much. "The United Nations is a mess," the developer said yesterday, "and they're spending hundreds of millions of dollars unnecessarily on this project."

And he's not the only one. Several Manhattan real-estate experts told The New York Sun this week that renovating premium office space should cost a fraction, on a per-square-foot basis, of what U.N. officials expect to pay.

An executive managing director at the commercial real-estate firm Julien J. Studley Inc., Woody Heller, said a thorough renovation of an office building would probably cost between $85 and $160 per square foot.

An executive vice president at Newmark, Scott Panzer, said renovation prices could range between $120 and $200 per square foot. Mr. Panzer, who works with many corporations to redevelop their buildings for future efficiency and energy cost savings, put a price of $70 to $100 per square foot on infrastructure upgrades. Those would include heating; ventilation; air conditioning; replacing the central plant; fenestration (specifically, switching from single-pane to thermal-pane windows); upgrading elevator switch gears, mechanicals, and vertical transportation; improving air quality, and making security upgrades. On top of that amount, another $50 to $100 per square foot would take care of the inside office improvements.

The chairman of global brokerage at commercial real-estate firm CB Richard Ellis, Stephen Siegel, said high-end commercial renovation usually runs $50 to $100 per square foot. For a renovation that does not include new furniture--according to the 2002 Capital Master Plan, the United Nations' will not--but does provide for improved heating, ventilation, and air-conditioning equipment, as well as work on the building exterior, the cost would be closer to the $100 end of the range, Mr. Siegel said. Even accounting generously for upgrades that might be peculiar to the United Nations, Mr. Siegel added, he would set $250 per square foot as the absolute maximum.

It would appear, then, that hundreds of millions of dollars are unaccounted for, even on the most generous assumptions.

Trump has gone further, expressing the view that the expenses projected by the U.N. can only be the result of graft or incompetence. In a speech on the Senate floor on April 6, 2005, Senator Jeff Sessions recounted his conversation with Trump:

Let me share this story with you, which is pretty shocking to me. The $1.2 billion loan the United Nations wants is to renovate a building. Some member of the United Nations, a delegate, apparently, from Europe, had read in the newspaper in New York that Mr. Donald Trump . . . had just completed the Trump World Tower--not a 30-story building like the United Nations, but a 90-story building, for a mere $350 million, less than one-third of that cost. So the European United Nations delegate was curious about the $1.2 billion they were spending on the United Nations. He knew he didn't know what the real estate costs are in New York. So, he called Mr. Trump and they discussed it. Mr. Trump told him that building he built for $350 million was the top of the line. It has the highest quality of anything you would need in it. They discussed the matter, and an arrangement was made for Mr. Trump to meet Kofi Annan, Secretary-General, to discuss the concerns. . . . So according to Mr. Trump, who I talked to personally this morning, they go meet with Mr. Annan, who had asked some staff member to be there . . . When the European asked how these numbers could happen, Mr. Trump said the only way would be because of incompetence, or fraud. That is how strongly he felt about this price tag because he pointed out to me that renovation costs much less than building an entirely new building. So he has a meeting with Mr. Annan, and they have some discussion. And Mr. Trump says these figures can't be acceptable. He told me in my conversation this morning, he said: You can quote me. You can say what I am saying. He said they don't know. The person who had been working on this project for 4 years couldn't answer basic questions about what was involved in renovating a major building. He was not capable nor competent to do the job. He went and worked on it, and talked about it, and eventually made an offer. He said he would manage the refurbishment, the renovation, of the United Nations Building, and he would not charge personally for his fee in managing it. He would bring it in at $500 [million], less than half of what they were expecting to spend, and it would be better. . . . Yet he never received a response from the United Nations.

It appears there are serious questions about the U.N.'s renovation project. Depending on which assumptions one accepts about cost and square footage, anywhere from $500 million to $1 billion in expense is unaccounted for. Given the U.N.'s history, is there any reason to doubt that the costs projected by that organization include substantial sums representing, as Trump put it, incompetence or fraud? Given what we know about the oil-for-food program, is there any reason to trust the U.N.'s business or accounting practices?

American taxpayers have a legitimate interest in knowing the answers to these questions. The renovation is to be financed by a low-interest, 30-year, $1.2 billion loan from the U.S. government. (Kofi Annan's original request for an interest-free loan was turned down.) And, of course, the loan will then be repaid largely by American taxpayers, who foot a little over 20 percent of the U.N.'s bills.

A few congressmen and senators have finally begun to ask whether the U.N. building project is a boondoggle. It's about time.

John Hinderaker is a contributor to the blog Power Line and a contributing writer to The Daily Standard.