Abstract: Negotiations to sell or otherwise transfer the Robert Moses Playground property in New York City to the United Nations for the construction of a second tower have proceeded quickly over the summer, and a final deal appears to be imminent. Regrettably, these negotiations have not included robust congressional consultation even though the associated costs of the project for the U.S. federal government, which pays 22 percent of the U.N. regular budget, would likely be significant. The Administration and Congress should immediately announce their interest in this issue and request detailed information about the project. Congress should also prohibit the use of any federal funds to support this project until relevant information is provided to the appropriate committees.

Earlier this summer, New York Governor Andrew Cuomo signed legislation, passed by both houses of the New York legislature, that would permit New York City to sell, transfer, or lease the property of the Robert Moses Playground to the United Nations to build a second office tower adjacent to the current United Nations building. There are some local issues and concerns that must be overcome by October 10, 2011, before the deal can be finalized, but the deal appears to be moving quickly toward completion.

The debate over this issue has been almost entirely localized in New York. However, constructing a second U.N. building would likely have significant financial implications for the U.S. federal government, which pays 22 percent of the U.N. regular budget and would likely shoulder increased payments to the U.N. in future years resulting from costs associated with the project. Congress has yet either to hold hearings on or to examine the details of this plan. Nor is it clear that the Obama Administration has asked for or been provided detailed information on this project.

To remedy this situation, the Obama Administration should immediately request all relevant details, plans, and cost estimates related to the transfer of the Robert Moses Playground to the U.N. and the construction of a new U.S. tower and share that information with Congress. To encourage cooperation by the U.N., Congress should ensure that no federal dollars are used to pay for the construction, rental, operating, or other related costs of the property deal or any new U.N. building until the details of the deal are fully vetted, the financial implications for the American taxpayer are determined, and both the Administration and the U.N. have provided all relevant information and a detailed financial analysis of the project to Congress.

The U.N.’s Steadily Growing Footprint

Shortly after the establishment of the United Nations in 1945, the U.S. government negotiated an agreement with the new organization identifying the location of its headquarters and reconciling the respective authorities and privileges of the organization and those of U.S. local, state, and federal authorities on the U.N. premises. The resulting 1947 Agreement Between the United Nations and the United States Regarding the Headquarters of the United Nations[1] established the specific geography of the U.N. “headquarters district” as the property on the East River where the 38-floor U.N. tower is located along with an easement over Franklin D. Roosevelt Drive.

Envisioning the possibility that the U.N. might require additional space in the future, the agreement included procedures for adjusting the U.N. headquarters district to include other lands or buildings through supplemental agreements with “the appropriate American authorities.” The agreement defined the appropriate American authorities as “such federal, state, or local authorities in the United States as may be appropriate in the context and in accordance with the laws and customs of the United States, including the laws and customs of the State and local government involved.” When Congress passed a joint resolution authorizing the President to bring the 1947 agreement into effect, it also authorized the President to enter into supplemental agreements at his discretion after consultation with state and local authorities.

In four subsequent supplemental agreements (completed in 1966, 1969, 1980, and 2009), the headquarters district of the U.N. has expanded significantly. As listed in Figure 1, the U.N. headquarters district has been expanded over a dozen times in four separate agreements -most recently under the Obama administration in 2009- and now encompasses entire buildings and warehouses in New York and Long Island beyond the original U.N. headquarters building in Turtle Bay. As part of the U.N. headquarters district, these locations, which in some cases are simply floors and offices in commercial buildings, are “inviolable” to U.S. officers and officials and “under the control and authority of the United Nations” except as specified in the agreement.

Another U.N. Headquarters Expansion on the Horizon

The United Nations, with support from New York City officials, for years has expressed interest in building a second U.N. tower on the Robert Moses Playground, which is located just south of the current United Nations building along the East River. This would allow the U.N. to connect the two towers with an underground tunnel to facilitate movement between the two buildings.

The New York City government supports this project because it would significantly advance Mayor Michael Bloomberg’s long-term waterfront renovation plan, Vision 2020, by facilitating the construction of a waterfront esplanade along the East River. Mayor Bloomberg first proposed building a new U.N. office building on the playground site in 2002. The proposal was rejected by the New York State Legislature in 2005, in large part because of objections from local residents who did not want to lose the park.[2]

The plan has been pursued quietly since that vote. In 2007, Mayor Bloomberg offered to compensate local residents for the loss of the playground with a bike path and a waterfront esplanade along the East River. On December 8, 2010, the Manhattan Community Board 6 approved the plan provided replacement parkland is identified.

Earlier this summer, both houses of the New York legislature approved legislation authorizing New York City to “sell, lease or otherwise transfer such land and interests therein to the United Nations development corporation” for the construction of a new United Nations office building on the playground. Governor Cuomo signed the legislation on July 15, 2011. Under the terms of this legislation, a memorandum of understanding must be completed and signed by the mayor of the City of New York, the temporary president of the Senate, and the speaker of the Assembly providing financial and other details of the project relating to the City of New York.[3] (See Text Box.) However, providing the Administration or Congress with the details of the project and its full financial implications for the U.S. federal government or the U.N. is not mandated.

An agreement on the memorandum of understanding must be reached by October 10, 2011, or the legislative authorization “shall expire and be deemed repealed.” Some local residents remain opposed to the deal,[4] but their approval is not mandated by the legislation, which requires only “consultation with the members of the senate, the assembly and the city council of the city of New York representing the area in which the parkland described in section one of this act is located.”

Mayor Bloomberg and the U.N. are pressing hard for the deal. Unless serious objections are raised, the sale or transfer of the playground to the United Nations Development Corporation (UNDC)[5] with intent to use it for the construction of a second U.N. tower will be consummated.

Significant Projected Costs for the U.S.

In addition to the political incentives of advancing Mayor Bloomberg’s waterfront renovation plan, there are significant financial incentives for the City of New York to support the sale or transfer of the Robert Moses Playground and the construction of a new U.N. building. It is estimated that building the waterfront esplanade from East 38th Street to East 59th Street will cost between $150 million and $200 million. New York hopes to pay that construction cost in part by selling or refinancing two buildings, currently leased to the U.N. through the UNDC, for between $150 million and $300 million.[6] New York is also reportedly seeking at least $75 million from the U.N. in return for permission to build on the playground. According to the New York Post, activists claim that the deal could “generate $200 million to $400 million for the city.”[7]

The UNDC is also keen on the deal because the current U.N. leases on those properties are believed to be 50 percent below market rates. Even if the two buildings currently leased to the U.N. are sold to pay for the esplanade, the UNDC stands to profit by leasing the new U.N. tower to the U.N. at rates that are higher than rates in the current leases.

Thus, the incentives for New York City from this deal are obvious: Financing materializes for the waterfront project, and local residents get the esplanade and, should their demands be met, new parkland. The UNDC gets to update its below-market U.N. lease agreements, increasing its revenue. The U.N. gets a shiny new tower in a convenient location that it has wanted for years.

However, there appear to be only disincentives for American taxpayers outside of New York City. The cost of constructing the new U.N. building was estimated to be $330 million in 2004,[8] but reports recently upped that estimate to between $370 million and $475 million, excluding additional costs for security measures.[9] This is very likely to be a substantial underestimate of the final costs, however, if the current renovation of the U.N. building under the Capital Master Plan (CMP) is any indicator. The CMP cost was initially estimated at $600 million and subsequently rose to $2 billion, but even this vastly increased estimate fell short. The project still has three years until completion, and the U.N. Board of Auditors has stated that the date of completion has slipped and that the project is millions of dollars over budget.[10]

The cost of new leases, construction, operating expenses, and other expenses associated with building a new U.N. tower will likely be paid by member states through their payments to the U.N. regular budget. The U.S. pays 22 percent of that budget and will shoulder 22 percent of the increased expenses resulting from the deal if they are paid through the U.N. regular budget.

In a time of fiscal austerity, neither the Administration nor Congress should mutely accept this likely increase in America’s contributions to the U.N. Thus far, the negotiation has occurred with little public scrutiny or transparency, and minimal explanation has been provided either as to why this project is necessary or as to whether it makes financial sense for the U.S. government.

Congress and the Administration should demand that the U.N. provide justification for this project and explain why the current U.N. offices are inadequate. Convenience is an insufficient justification for additional expenditures. If the motivation is security-related, the U.N. should be required to provide the underlying studies that it used in making that determination.

If the U.N. needs more space because it is planning to increase the size of its staff, this has significant budgetary implications for member states, and the U.N. should be required to explain why more staff are needed and why they need to be located in New York rather than in other U.N. offices in Geneva, Nairobi, Vienna or other countries. For that matter, the U.N. should be required to explain why current staff, particularly those focused on tasks like document translation that could be handled remotely or outsourced, need to be in an expensive location like New York rather than in less expensive locations.[11]

The U.S. Should Demand Answers

Under the terms of the U.N. headquarters agreement and the joint congressional resolution adopting it, the President may enter into new supplemental agreements regarding U.N. headquarters provided local and state authorities are consulted. Pending Administration approval of the inclusion of the Robert Moses Playground as part of the U.N. headquarters district, that process has been observed. Congress is not in a position to block a prospective supplemental agreement insofar as it involves changes in the territory recognized as part of the U.N. headquarters district.

However, the power of the purse entrusted to Congress in the Constitution makes it incumbent on Congress to ensure that U.S. taxpayer dollars are used prudently. The construction of a new U.N. tower could have significant financial implications for the U.S. federal government. Without detailed information, neither the Administration nor Congress can know whether the proposed project is cost-effective or in the financial interests of the U.S. taxpayer.

Therefore, the Obama Administration should:

• Request immediately all relevant details, plans, and cost estimates related to the transfer of the Robert Moses Playground to the U.N. and the construction of a new U.N. tower. This information should be provided to Congress, and the Administration should facilitate access to additional details and materials as necessary.

To encourage cooperation by the U.N. and the Administration, Congress should:

• Inform the Administration, the United Nations, and the government of New York that it has questions relating to the financial implications of the real estate deal and the proposed new tower for the U.S. federal budget. Congress should insist on detailed analysis of the project’s expenses and the anticipated financial implications for the U.S. federal government resulting from the property deal and new U.N. building and related costs through the U.N. budget.
• Hold hearings to determine the direct or indirect costs associated with the new U.N. tower and whether they are justified. Congress should examine (1) why the U.N. believes that the new tower is necessary; (2) the projected cost of constructing the new tower and compensating New York for the property; (3) the design and plans for a new tower; (4) the financial implications of abrogating current leases and negotiating new leases for the new building through the United Nations Development Corporation; (5) the projected cost of moving to the new tower and any other projected or likely expenses; and (6) how the U.N. expects to pay for those costs and expenses.
• Require the Administration to provide a detailed assessment of the financial implications of the prospective deal for the U.N. regular budget percent over the next 10 years. Congress is currently deciding how to reduce America’s budget deficit over the next 10 years. This project has financial implications for that effort. Since Congress cannot compel U.N. officials to testify or require the organization to provide specific documents or other financial data, it must seek information from the State Department or other U.S. officials with knowledge of the project.
• Prohibit the use of any federal funds to support, either directly or indirectly, the preparatory efforts for or construction of the new U.N. tower until this information is provided. This prohibition should also extend to all New York City projects involving the Robert Moses Playground or the waterfront esplanade along the East River.

Conclusion

Negotiations to sell or otherwise transfer the Robert Moses Playground property to the United Nations for the construction of a second tower have proceeded quickly over the summer, and a final deal appears to be imminent. Regrettably, these negotiations have not included robust congressional consultation even though the associated costs of the project for the U.S. federal government would likely be significant.

The Administration and Congress should immediately announce their interest in this issue and request all relevant details, plans, and cost estimates related to the transfer of the Robert Moses Playground to the U.N. and the construction of a new U.N. tower. Congress should prohibit the use of any federal funds to support this project until relevant information is provided to the appropriate committees.

—Brett D. Schaefer is Jay Kingham Fellow in International Regulatory Affairs in the Margaret Thatcher Center for Freedom, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation and editor of ConUNdrum: The Limits of the United Nations and the Search for Alternatives (Rowman & Littlefield Publishers, 2009).