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United Nations | Lawmakers and others are challenging the $1.2 billion price tag to renovate the UN building in New York-especially since the UN is holding out for an interest-free U.S. loan for the project

Issue: "John Roberts: Bush's pick," July 30, 2005

For United Nations--weary Washington lawmakers the set-up was a dream: Would billionaire developer Donald Trump, before a public Senate panel, say "Kofi Annan, you're fired"?

Mr. Trump did not utter his famous reality TV line, but after already dubbing the UN "a mess" he testified about the Annan regime's financial waste at a July 21 hearing before the Senate's Homeland Security and Governmental Affairs Committee. His entry into the fray catapulted to notoriety a potential UN boondoggle.

Witnesses including Mr. Trump lambasted the UN's $1.2 billion plan to renovate its crumbling 1950s-era Manhattan headquarters. That amount is exorbitant, Mr. Trump and other New York developers say, but it is one American taxpayers may have to help shoulder, since the United States foots 22 percent of the UN's operating costs each year.

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Mr. Trump became involved when a European delegate to the UN read that the developer had constructed his new 90-story Trump World Tower-a building with 60 more stories than the UN's-for $350 million. The delegate arranged for Secretary General Kofi Annan to meet with Mr. Trump, who later offered to do the UN renovations for $500 million and waive his personal management fee for the job.

The developer never heard back from the world body, and he later told Sen. Jeff Sessions (R-Ala.), one of the main lawmakers investigating the bloated price tag, that the $1.2 billion figure could only come from "incompetence or fraud." Mr. Sessions on the Senate floor relayed Mr. Trump's concern that the UN official "who had been working on this project for four 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."

Last year the United States offered the UN a 30-year, $1.2 billion loan at a 5.5 percent interest rate for the renovations. UN officials have still not accepted the offer, which expires Sept. 30, believing the United States should provide an interest-free loan. The United States, as host country, did so when the body built its headquarters in 1952.

No one doubts that the UN complex needs refurbishment. The last renovation was in the 1970s, and the complex on Manhattan's East River does not conform to current New York safety standards. The complex leaks air conditioning and heat, has no sprinkler system, and has exposed asbestos on its air-conditioning system and pipes. The UN has been leading diplomats and U.S. lawmakers through the headquarters' innards to publicize how much it is crumbling.

But critics of the UN don't trust it to spend money wisely at a time when Mr. Annan and other UN officials are still struggling to account for apparent fraud and kickbacks in the $60 billion Oil-for-Food program. Real estate firms told the New York Sun that the UN refurbishments should cost between $100 and $250 per square foot, but the UN's 2002 Capital Master Plan-the working proposal for the renovations-has 2.6 million square feet being refurbished at a cost of about $450 per square foot.

Other experts think the price is even more: They say the estimated square footage includes parking space and unoccupied areas and is really closer to 1.1 million square feet. In that case, the cost per square foot would be a grotesque $1,100.

So why did the United States agree to offer a loan of up to $1.2 billion in the first place? Richard Grenell, spokesman for the U.S. mission to the UN, said the actual renovations may not cost as much as the loan: "We felt comfortable with the amount of money they were asking for. The UN info was accurate and fair (and) it has been approved by the State Department and Congress." Two General Accounting Office reports from 2001 and 2003 have also affirmed the process-but not the actual estimate-the UN used in drawing up renovation plans.

Curiously, the UN's initial renovation plans were even more ambitious: Officials planned to build a separate, 35-story building over Robert Moses Park and, to compensate the local community for the park's loss, a 100,000-square-foot esplanade park into the East River. That would have added another $650 million to the tab, but irate New York lawmakers refused to pass legislation granting the UN the extra park area, despite the lobbying of acting U.S. ambassador to the UN Anne Patterson. The UN now wants to rent additional office space.

With the July 21 hearing, Senate leaders hoped to begin illuminating precisely how the UN arrived at its renovation estimate-and why the Bush administration agreed to such a hefty loan. Mr. Sessions wants an amendment to 2006 State Department funding halving the offer to $600 million.

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