U.N.’s $2 Billion Building Binge: Getting Worse While It Lobbies for $3 Billion More

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Published November 03, 2011

| FoxNews.com

With a $2 billion renovation of its New York headquarters building still more than two years from completion, the United Nations is already lobbying member states for some $3 billion or so for additional major building projects in New York City and Geneva.

About $2.4 billion of the total would go for construction of a new office tower in Manhattan to accommodate the world organization’s burgeoning staff. Another $590 million or so would go for yet another mammoth renovation job -- this one of the U.N.’s venerable offices in Geneva, located in the one-time  home of the ill-fated League of Nations.

And those hefty figures, gleaned from documents presented to this year’s General Assembly, are only early estimates -- and when the U.N. is involved, early building estimates are far more likely to go up than down.

The cost estimate for the U.N.’s ongoing headquarters refurbishment in Manhattan, for example, has climbed roughly 225 percent from its initial estimate of $875 million. And the price hikes there are far from over, as the U.N. tweaks and re-tweaks parts of the project.

An end-of-year analysis of the headquarters renovation project by the U.N.’s independent Board of Auditors warned that “the Board cannot provide assurance on the accuracy of the forecast costs to complete the project."

In fact, the auditors foresaw at least another $227 million in cost increases for the current headquarters renovation, and predicted that “this situation is more likely to worsen than improve.”

One reason for the continuing U.N. push for a global building boom is that whatever austerity the rest of the world faces, the world organization expects its headquarters staff to keep growing -- at a steady 1.1 percent rate annually over the two decades ending in 2034, according to a U.N. study.

That would add 3,000 people in New York City alone who will require nearly 1.9 million square feet of additional space -- hence the desire for yet another additional U.N. tower.

Meantime, its badly aging facilities in Geneva -- some of them 70 years old -- must also accommodate more staff, though the U.N. hopes to do more there through re-jigging its antiquated existing spaces.

Whether the U.N. will get the money it says it needs to accommodate the ongoing bureaucratic bulge is another matter entirely.

The financially hard-pressed score or so nations that put up most of the money for the U.N.’s building plans -- led by the U.S., which is paying 22 percent of the current Manhattan renovation bill, and would likely be dunned the same way for any new building plans -- are already starting to squirm over the likely size of the tab, not to mention the New York City renovation bill they are already paying.

And with reason: the U.S. share alone of the new proposed building costs could run to $660 million or more.

And the U.S. portion of the U.N. refurbishment that is already under way is still growing, too. In addition to 22 percent of the estimated $2 billion cost so far, the U.S. has ponied up $100 million for additional security measures for the midtown Manhattan campus.

But there is more: An additional U.S. share of other cost overruns caused by extensive re-tweaking of the Manhattan renovation, and a 22 percent chunk of a nebulous category known as “associated costs, for outlays that include everything from a $40 million broadcast center that the U.N. wants to install to $44 million for new furniture. Total bill for the associated costs is so far estimated at about $146 million.

Moreover, U.N. overseers of the project still keep changing their minds, leading to literally hundreds of “change orders” that continue to affect the building construction.

One reason for the continued fussing, the U.N.’s external auditors note, is that “designs for some phases of the [renovation plan] were not completed at the time of initial contract bidding and, in order to protect the project schedule, contracts are knowingly awarded on the basis of incomplete designs."

CLICK HERE FOR THE AUDITORS' REPORT

And yet more cost factors continue to loom: though staffers are expected to move back into the U.N.’s landmark Secretariat building by mid-2012 -- a year later than originally planned --renovation of the rest of the U.N. campus will drag into 2014. Even then, U.N. planners are still stymied over what to do about two buildings on the site, which are exposed to additional security concerns. So all cost estimates for their renovation -- currently, about $65 million -- are still in flux.

Indeed, concerns about the still-escalating renovation cost have begun spreading into normally supporting circles in Washington. Earlier this week, Republican Senator Richard Lugar of Indiana called on the Obama Administration to curb the costs of the headquarters renovation, and asked the General Accountability Office to look into the issue -- which it has already done four times before.

Hence the nervousness when the U.N. suggests that still more spending on accommodation, either in New York or abroad, is required. Among other things, some U.N. members are questioning the staff and space projections provided by  U.N. Secretary General Ban Ki-moon as the basis for the proposed extension of the building boom.

A key budget advisory committee has recommended that Ban come back with “more in-depth and comprehensive analysis” to provide the U.N. General Assembly with “a more sound basis to make informed decisions.”

Whether the check-writing member states will like the analysis any better at that time remains to be seen. But the new round of building proposals underscores the fact that even after its refurbished headquarters campus, currently emptied of much of its staff, is back in business in 2014, the U.N. presents a unique case of ongoing urban sprawl.

Nowhere more so than in Manhattan, where a study prepared by Ban to gauge the U.N.’s long-term staffing growth shows that the world organization has already spread across large swaths of eastern midtown well beyond its 18-acre campus.

By the time the headquarters renovation is finished, the study reports, the U.N. Secretariat and its attendant agencies will own about 1.34 million square feet of space but occupy another 2.1 million square feet in 15 buildings, including the landmark Chrysler Building. And even that projection is 20 percent less than it might have been, as the U.N. factored in unspecified “efficiency gains” that will supposedly keep the sprawl from growing faster. 

Bottom line: “The Organization occupies most of the desirable and acceptable commercial properties within the vicinity of the Secretariat compound.” 

It would be better to build new U.N.-owned space, the study argues, rather than continuing the current rental creep.

One way that Ban’s planners proposed to deal with the population pressure was to turn a temporary office space built on the current U.N. campus into a full-fledged new office tower. But that has been superceded by yet another controversial plan, to annex a neighboring New York City build an even bigger tower on a neighboring New York City park, in a complex deal that would add green space on Manhattan’s periphery.

The result, so far, is more uncertainty -- which is, of course, costly. In a document that attempts to deal with all of the options now brewing, U.N. planners laid out a variety of possibilities for new construction that ranged from $1.97 billion to $2.4 billion for new building construction, and $490 million for continuing to lease existing spaces around the city, before recommending the $2.4 billion option as less costly in the long run.

Will U.N. member states buy that? Many have qualms. In a response to the latest new building proposal for Manhattan, the U.N.’s main budget advisory committee has declared it is “not fully convinced of the basis for the assumptions used” by U.N. bureaucrats to project future staffing and office needs.

And when it comes to the building renovation in Geneva, the same committee also says it “is not in a position to ascertain” whether the bureaucracy’s costing methods “are valid or constitute a firm basis to protect the Organization against future cost overruns.”

The committee’s solution, of course, is to ask Secretary General Ban Ki-moon’s building bureaucracy to come up with still more plans.

George Russell is executive editor of Fox News and can be found on Twitter @GeorgeRussell.

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