Trump Scoffs at U.N.'s Plan For New H.Q.
BY MEGHAN CLYNE - Staff Reporter of the Sun
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.
Furthermore, the $1.2 billion is not the whole tab. Construction of a 35-story, 900,000-square-foot swing space over Robert Moses Park, plus the 100,000-square-foot esplanade park that the United Nations Development Corporation says will be built into the East River, has a price tag of $650 million, which would be financed initially by bonds issued by that state-city corporation.
According to the United Nations' 2002 Capital Master Plan - which officials of the United Nations, the federal Government Accountability Office, and the State Department said is the operative proposal - the headquarters renovation will make upgrades to several structures at the U.N. campus. Under the Capital Master Plan, a total of 2,650,653 square feet will be renovated.
The United Nations maintains that the renovation of its complex will allow for security upgrades, greater energy efficiency, the removal of hazardous materials, updated fire-safety systems and handicapped access, expansion of meeting facilities, and improvements in technology and communications equipment. Not all of the complex is as old as the Secretariat, which was completed in 1952. Some of the facilities to be renovated were completed in 1976, when refurbishments were made to U.N. buildings currently said to be in desperate need of repair. That 1976 expansion program cost $55 million, or $161 million in year-2000 dollars.
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.
Using the space figure cited in the Capital Master Plan yields a per-square foot cost of $452 for the renovation.
Some in the industry have estimated, however, that, given the dimensions of the U.N. headquarters buildings, the total square footage in need of refurbishment is probably less than 1.1 million. That would put the per-square-foot renovation costs at roughly $1,100 - more than four times the highest estimate of the experts.
The $1.2 billion cost estimate, Mr. Siegel said, was outrageous. He said the cost of the renovation would be nearly as much as the price of putting up a new office building - including the cost of land, which he set at a total of roughly $500 per square foot.
Many experts should be used to try to verify these numbers and bring them down, he said.
Among the agencies that have reviewed the Capital Master Plan is the State Department, whose Bureau of International Organization Affairs oversees allocation of American funds to the United Nations.
A State Department official said that it is too early for an exhaustive analysis of cost-estimate numbers but that there would be very close scrutiny of the U.N. renovation project. We know from experience with all these international organizations that doing major building projects is not what they do, and we know we have to pay extra special attention to make sure they do it in a way where they call on outside experts to do it right, he said.
It's not that we don't trust them, he said, but we can't afford for them to be wrong. He said American experts would be working behind the United Nations' cost estimators to validate the U.N. numbers. The vetting of the merits of different renovation proposals, and the decision to go ahead with the Capital Master Plan, was the purview of the U.N. member states, he said.
Another body that reviewed that plan, according to a U.N. spokesman, Farhan Haq, was the U.N. Board of Auditors. That board, the plan says, was unable to carry out an assessment of the cost estimates due to conflict of interest considerations. Those considerations were not explained.
Mr. Haq said, however, that another U.N. watchdog, the Office of Internal Oversight Services, was regularly auditing the Capital Master Plan in full, including the cost estimates. The Office of Internal Oversight Services was one of two U.N. bodies that audited the oil-for-food program.
Outside the United Nations, the GAO has conducted two studies of the Capital Master Plan, in 2001 and 2003. The agency's director of international affairs and trade issues, Joseph Christoff, said the 2003 report approved the procedure by which the United Nations arrived at its cost estimates - but not the specific numbers. Of those numbers, the 2003 report says: Construction Industry Institute research indicates that the final cost of any project at this early stage may vary from plus or minus 30 to 50 percent of the preliminary estimate.
The $1.2 billion amount already allots $144 million to scope options, improvements the United Nations can choose to make to its facilities beyond the baseline scope upgrades it says are necessary. It also earmarks $88 million for unspecified contingency funds.
If the final cost of the renovation were to run 50% greater than the present $1.2 billion estimate, the total renovation expenses would be closer to $1.8 billion. Adding the proposed $650 million price tag for the new U.N. swing space and the required mitigation park, the total cost of the project could be as high as $2.45 billion.
The GAO report says it assumes the federal government will pay 22% of the $1.2 billion loan principal, because America pays for 22% of U.N. operating costs. If the total construction cost reached as high as $2.45 billion, the portion supplied by American taxpayers would be $539 million. In addition, the GAO reported: The Secretary General anticipates that the United States will provide a no-interest loan to finance the renovation. The United Nations has not yet accepted America's offer of a $1.2 billion loan at 5.5% interest. According to the State Department, the offer expires September 30.
To some legislators in Washington and New York, however, America should not offer any money for the project, even in the form of its U.N. dues.
Rep. Scott Garrett, a Republican of New Jersey, said he had heard of reports circulating in Washington that the cost associated with the U.N. renovation project was exorbitant. Mr. Garrett said that he and some of his colleagues would try to strike all funding for the U.N. renovation and expansion project.
Given that the United Nations criticized America last month for carrying deficits that have a negative impact on the world economy, yet is asking for America to contribute nearly a quarter of the cost of improving U.N. facilities, Mr. Garrett called the U.N. attitude ridiculous.
In New York, a state senator, Martin Golden, a Republican of Brooklyn, expressed dismay at the U.N.'s apparently inflated renovation figures, and at what he called its continuing malfeasance and corruptness.