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New York City and the United Nations:
Towards a Renewed Relationship
Report by the Special Committee on the United Nations
New York City will inaugurate a new Mayor on January 1, 2002, in the midst of very difficult times. Given the scale of the human and physical devastation from which the City must struggle to recover, and the profound economic difficulties that must be overcome, improving the City's relationship with United Nations would not likely be high on a new Mayor's priorities. Yet the World Trade Center attack imposes substantial new responsibilities on the City regarding the UN, and now more than ever, the City should look to take best advantage of the benefits that flow to the City as result of the presence of UN headquarters here.
The United Nations is the central institution in the world for promoting international peace and security and the rule of law, and the United Nations Charter is the legal cornerstone of international relations. The Association of the Bar of the City of New York, the American Bar Association, and many authorities on international law, have repeatedly called upon the United States to pay its dues to the United Nations, on time and in full, as a treaty obligation under the Charter. In this report, we urge a renewal and strengthening of the relationship between the City of New York and the United Nations, to support the United Nations in its important work, and also for the benefit of the people of New York City.
The UN might well have located elsewhere, and came to have its headquarters in New York largely as a result of substantial inducements. The organizational meeting of fifty countries took place in San Francisco in 1945, and the first meetings of the UN General Assembly and the Security Council both took place in London in January 1946. John D. Rockefeller, Jr. offered to contribute $8.5 million (about $75 million in year 2000 dollars) to purchase a six-block tract on the East River, already assembled by private developer William Zeckendorf,  and this offer was accepted by the General Assembly in December 1946. New York City contributed additional land along the East River and rights to the waterfront, and made alterations to the surrounding streets and land valued at about $20 million (about $143 million in 2000 dollars).  In 1948, the US provided an interest-free loan of $65 million (about $465 million in year 2000 dollars) for the construction and furnishing of UN headquarters. 
After consulting with the City and the State of New York, the United States government signed an agreement in 1947, providing that the UN headquarters would be under the control and authority of the United Nations and "inviolable."  The UN may not be dispossessed of its headquarters property, or removed from its headquarters, except by its own decision.  To the extent requested by the UN Secretary-General, appropriate American authorities (local, state and federal) must provide public services, including police and fire protection, utilities, telephone, and refuse and snow removal. 
New Yorkers, and Americans generally, took pride in the newly created United Nations. Eleanor Roosevelt, a delegate to the founding conference of the UN and leading proponent of its Universal Declaration of Human Rights, served as the first Chair of the City's UN Committee. The American relationship with the UN has deteriorated over the past half century, driven by concerns over preserving national sovereignty, isolationist attitudes towards international law, negative attitudes towards certain countries and social systems, disagreements over UN efficiency and cost, and the frequent minority status of the US in the General Assembly.  So too has the UN's relationship with the City of New York deteriorated, sometimes because of similar concerns, but often because of minor concerns. The importance of the United Nations to the world community, and the benefits its presence brings to the City, have earned little note, and local complaints regarding the burdens of hosting the UN headquarters, such as parking and traffic problems, have become dominant.
City residents, particularly on the east side of Manhattan, have long complained about privileged diplomatic parking, illegal parking, and traffic congestion and street closings resulting from UN sessions, and their complaints have been reported widely in the news media. In recent years, the City has been fiercely protective of what it sees as its interests. The approach has often been confrontational, with repeated public disputes about the collection of parking fines and real estate taxes.
For its part, the UN community has often seemed isolated in its East River enclave, indifferent to the concerns of City residents, and uninvolved with the City. Member State diplomats, being focused on multilateral relations with each other's governments rather than on bilateral relations with the host country, are probably less involved in the social and cultural life of New York than would be their counterparts in a national capital such as Washington.
This resulting stand-off finds the City unappreciative of the benefits of the UN's presence, unable to take better advantage of the UN's presence, and mired in relatively petty disputes over parking and local taxes. Our study concludes it is in the fundamental interest of the City, the United States and the United Nations to improve this relationship. A better relationship between the City and the UN will help to advance the essential work of the UN in the world, to advance American foreign policy objectives widely shared by New Yorkers, and bring economic, cultural and educational benefits to the City. Moreover, the UN Headquarters complex is due for a substantial renovation, and the new City administration can make a lasting contribution to the City and the world by assisting and helping to shape this project.
A. Direct Economic Benefits
A series of studies were performed during the Koch Administration in 1977, 1981 and 1989 on "The Economic Impact of the Diplomatic Community on the City of New York." The 1989 study, performed in collaboration with Chemical Bank, concluded that direct UN expenditures in the City in 1988 totaled $486,562,000, the expenditures by UN Missions in the City totaled $233,645,000, and expenditures by Consulate General offices totaled $138,090,000, for a total of $867,301,000, excluding additional expenditures by nongovernmental organizations.  The 1989 study estimated the costs to the City for education of the children of UN staff and diplomats, at $3,900,000, and the revenues lost to the City, primarily as a result of real estate property tax exemptions and also uncollected parking and towing fines, at $21,957,000, for a total of lost expenditures and lost revenues of $26,502,000.  Subtracting these costs and lost revenues from the estimates of UN economic benefits produced an estimate of $830,799,000 as the net economic benefit of the presence of the UN and its related diplomatic community in New York City in 1988.
Another study was commissioned by the City in 1995, based on survey data collected by the NYC Commission for the United Nations, and economic analysis performed by the NYC Economic Development Administration using the Regional Input-Output Modeling System (RIMS II) developed by the U.S. Commerce Department.  This study found that the UN headquarters, agencies, missions and consulates directly employed 16,400 people, and the extended UN system employed a total of 30,700 people, directly and indirectly, making it one of the twenty largest employers in the City. The study also found that the UN extended system paid a total of $850 million annually in salaries, and that the total of direct and indirect salaries generated in the NYC area by the UN extended system and its "ripple effect" was $1.2 billion annually. The study further found the UN headquarters, agencies, missions and consulates directly spent approximately $1.5 billion in the NYC metropolitan area, and concluded that the total direct and indirect spending related to the UN extended system and its employees was $3.3 billion in the economy of New York City in 1994. 
The 1995 study was later disowned by the City.  City officials we spoke with disparaged the study, arguing it claimed economic benefits for the UN's presence while ignoring the economic costs to the City of the UN's presence. In fact, the 1995 study listed categories of costs and loss revenues connected with the UN-sales and income tax exemptions, unreimbursed "routine" police costs, and public schooling for diplomatic children-without stating their cost. Yet we note from the prior 1989 study that costs and lost revenues associated with the UN equaled only 3% of the amount of positive economic benefits derived from the presence of the UN. 
The 1995 study was apparently a casualty of the City's 1997 public row with UN diplomats over unpaid parking fines, because it contained a statement that "diplomats are not required to pay for parking tickets."  This misleading statement was correctly withdrawn, but as the parking controversy escalated, the City began to cast doubt on the economic value of the UN, claiming greater economic potential for the UN headquarters site if the UN were to leave New York.  It is unfortunate that this posture has affected the City's view regarding the economic benefits of the UN to the present day.
The 1995 study is in any event out of date, and the new administration should want to reexamine the costs and benefits associated with hosting UN headquarters. There is no question however that the UN is an enormous economic enterprise, whose revenues come from national governments around the world, including a major contribution by the United States, but are spent largely in New York City.  The General Assembly session every fall is alone comparable to a major international convention or sporting event, a diplomatic Olympics, on a scale that most cities' visitors bureaus would be happy to attract even once, much more every year. Visitors attending UN conferences held in New York infused $27 million into the City's economy in 1994.  Moreover, public international expenditures are not particularly affected by economic recessions, so these large expenditures will be made each year, in bad times as well as good. The UN provides a continuous large boost to the NYC economy, and the City should be duly appreciative.
Finance and international trade are the most profitable sectors of the New York City economy. New York is in competition with London as the leading center of world finance. The City enjoys a distinct symbolic advantage in this competition as the host city of the United Nations. Everything possible should be done to build on the presence of the UN in promoting New York as a location for international businesses. 
Tourism is a major industry in New York. In the year 2000, 37.4 million visitors came to New York and spent $17 billion dollars while here. However, the number of visitors dropped by 5.4 million to 32 million in 2001, a 14% decline.  The City lists the UN as one of the major tourist attractions in the City.  Since 1952, approximately 37 million visitors have taken the guided tour of UN headquarters buildings. The traffic on the tour route reached its peak in 1964 with over 1.2 million visitors, but the attendance now fluctuates at around 400,000 visitors a year.  Perhaps with a greater interest in foreign affairs, and much better promotion, these numbers can be increased. The UN envisions building a new Visitor's Center on First Avenue at 48th Street, and the City should be supportive of this effort.
The current crisis enhances the concern for all Americans and all New Yorkers for accomplishing the relevant national security and foreign policy goals of the United States. New York has the responsibility and the opportunity, as host city for the United Nations, to play an important role in achieving those objectives.
Both the General Assembly and the Security Council of the United Nations quickly and forcefully condemned the terrorist attack on New York,  and the Council mandated a strong program of anti-terrorism measures binding on all 189 Member States.  Speaking to the United Nations General Assembly Special Session on Terrorism on October 1, 2001, NYC Mayor Rudolph Giuliani hailed "the Security Council's unanimous passage of Resolution 1373, adopting wide ranging anti-terrorism measures in the international community." 
The UN General Assembly has adopted four different Conventions against terrorism in the years 1973-1999,  some eight other Conventions against terrorism were adopted under the auspices of specialized agencies,  and a comprehensive new anti-terrorism convention is near completion. Formation of a new government for Afghanistan and relief efforts for that country are all under the leadership of the UN.
The UN's presence in New York creates an inherent solidarity with New Yorkers in a time of peril from terrorism. The reaction in the General Assembly and the Security Council might not have been quite so overwhelming or so sustained had the violence of September 11 happened in a place distant from the UN. UN diplomats again shared the fears of New Yorkers when AA 587 crashed in Queens and UN headquarters were sealed off.
Even if Al Queda is destroyed, other fanatical minds will continue to see New York as a tempting of target for violence and destruction. So long as the UN is based in New York, diplomats from all of the 189 UN Member States will personally continue to share the concerns of New Yorkers. This can only help to encourage the world community to take the strongest possible measures to deter and protect against terrorism.
Diplomats accredited by the United Nations live and work in New York on a daily basis. Their perceptions of America will be colored by what they experience interacting with New Yorkers and with the City of New York. Diplomats weighing their country's response to an American position in the General Assembly or the Security Council may be affected by whether they feel they have been treated fairly, kindly and helpfully by the City.  Important questions of state may be affected not only by the objective interests of nations but by the daily life experiences of their representatives.
The UN is an important posting for the diplomats of most countries, and over time many senior foreign diplomats rotate through a period of service in New York. Their perception of America may long be colored by that experience. It is in the interest of the United States that this important diplomatic community be treated with warmth.  As host city for the UN, New York should be open and welcoming to the accredited representatives of all member states, regardless of politics. 
D. Educational Opportunities
The United Nations is an enormous educational resource for the people of New York City. Using the UN as a basis for classroom instruction can bring to life academic subjects such as geography, politics and history, and teach related research, writing, debate and conflict resolution skills. In this most multicultural of cities, programs based around the UN can help teach mutual respect and understanding between different ethnic groups.
There are some excellent pilot programs underway to take advantage of the UN for enriching public education. We are not in a position to measure the effectiveness of each of these programs, but we would encourage the Board of Education to examine these programs carefully, and seek to expand those which are effective throughout the school system, and to develop additional innovative programs. We summarize some of the traditional programs, new pilot programs, and future possibilities for using the UN in the public schools:
An even more overlooked opportunity may exist in the area of cultural exchange and entertainment, both nonprofit and commercial. Of course, the Lincoln Center Festival, the Brooklyn Academy of Music, and the World Music Institute already present a wide array of performances of dance, theater, music, opera, and circus from around the world. A much greater effort might be made to encourage UN Member States to bring their national music, dance and theater companies to New York. A new program might combine with one or more of the existing performance series, or an entirely separate "United Nations Festival" might be established. A special facility might be developed near the United Nations, or elsewhere in the city, to host performances and art, possibly for dual use with United Nations meetings during the fall general debate of the General Assembly. There might be not only a political season for the United Nations, but also a cultural season, perhaps using the same venue at a different time of the year. An international cultural festival would be not only a spiritual lift for the City, but a basis for increased tourism and revenues.
More might also be done to encourage greater exchange between the UN community and the City, on both a professional and a popular level. An effort could be made to encourage greater social interaction between the UN diplomatic and staff community, and the business, political and social communities in New York. It may also be possible to encourage, especially through cultural programs, greater contact between ethnic communities in New York and their countries of origin.
The City employs many policy analysts to devise public policy in housing, environment, economic development, transportation, healthcare, etc. The United Nations and its specialized agencies do so as well, often looking at urban problems from the perspective of many different cities. Greater exchange could benefit the work of policy development both in the City and the UN.
An excellent example is the program presented by the NYC Department of Health during the General Assembly Special Session on HIV/AIDS in June 2001. The three-day program regarding the City's experience as one of the earliest epicenters of the epidemic in devising programs for prevention and treatment was very instructive for health officials from countries where the epidemic is burgeoning now.
On the other hand, the City entirely failed to participate in the major UN conference on human settlements, "Habitat II," including a summit of major cities, held in Istanbul in June 1996 to showcase and develop innovate approaches to urban problems, nor the "Istanbul + 5" follow-up conference held in June 2001. "Istanbul + 5" was held at UN headquarters in New York, and was attended by the Mayors of sixty major cities from around the world, who met with UN Secretary-General Kofi Annan on June 5, 2001. The City should have taken much greater interest in a conference this important and this directly relevant to our own problems.
the City should seek every useful opportunity to learn from the
work done at the UN and its specialized agencies, and to share the
City's policy expertise with the UN.
UN headquarters was the target of a foiled terrorist plan in 1993, and obviously remains one of the most highly prominent targets for a potential terrorist attack in the world. Osama bin Laden himself described the UN as a "nothing but a tool of crime" that sides with Western "crusader" interests against Muslims.  Any future terrorists are also likely to fix on the UN as a target, posing great danger not only to the UN community but also to the entire City.
Baggage x-rays and metal detectors have been in place for some time, and security has been especially stringent since September 11, although diplomats remain exempt. The nearby streets, the FDR Drive, and the East River remain points of vulnerability, and have been shut down entirely at some times since the attack. The challenge will be to attain the highest possible levels of security while still keeping the UN headquarters open and accessible to the world.
The UN is working
at improving its security and emergency plans, and is impressed
with what it has learned from the NYC Office of Emergency Management.
 The City should continue working very closely with the UN in
devising the best possible security and emergency plans. The City
is obligated under the Headquarters Agreement between the United
States and the UN to provide police protection for UN headquarters.
There are substantial costs to the City in providing security, particularly police services, for the UN and the diplomatic community. The federal government reimburses "extraordinary" expenditures at the level of about $7 million annually, but "routine" expenditures are not reimbursed.  The City should continue to seek maximum possible reimbursement from the federal government in return for providing essentially a national service.
The general debate in the General Assembly causes severe traffic congestion each September, when many Heads of State visit the City, and unusual security must be provided for their motorcades and each of their movements. At times the FDR Drive has even been closed.
There are no easy solutions to these traffic problems. One possibility that has been floated is to create a special facility on the Queens side of the East River, or on Governors Island, for use during the general debate. A better-located facility might also double as a hall for presenting cultural events at other times of the year.
By far the most publicized and discussed issue concerning the relationship between the City and the UN in recent years has been the City's difficulty in collecting parking fines from diplomats. The NY Daily News published approximately 30 articles on this subject in the first half of 1997, with comparable coverage in other media. Surely the new administration will want to avoid a repeat of the public brawl that took place between UN diplomats and the Mayor at that time.
The City has a legitimate interest in preventing obstructive and illegal parking, especially at hydrants, crosswalks, etc. The compromise eventually negotiated in 1997, allowing nonrenewal of diplomatic license plates if fines remain unpaid for more than one year, has helped, with the number of tickets issued to diplomatic vehicles dropping from 160,000 in 1996 to 52,000 in 2000. 
The City also has a legitimate interest in collecting unpaid fines, but it faces legal difficulties in doing so due to the diplomatic immunity provisions of the Vienna Convention on Diplomatic Relations and the Convention on the Privileges and Immunities of the United Nations.  So long as persistent illegal parking is discouraged, collecting a few million dollars each year in unpaid fines is not the most important concern. Other capital cities that are host to many embassies bear a similar burden.
A large portion of the unpaid parking tickets was issued to the diplomats from a small group of nations. Some intensive pressure should be directed at those Missions, perhaps with the aid of UN officials and the US Mission. Russian diplomats had been serious violators, receiving 32,350 tickets in 1996, but received only 251 tickets in 2000 after agreeing to lease garage space. Some diplomats claim, probably not entirely without reason, that parking enforcement personnel issue many unwarranted tickets to diplomatic vehicles, knowing that the tickets will go uncontested in court but will be credited nonetheless to the agents' performance records.
In any event, the City should strive to enforce its legitimate interests in compliance with parking regulations as diplomatically and constructively as possible. This relatively petty issue should not be permitted to overshadow the enormous present and potential benefits the City derives from the presence of the UN, and the important national and international interests in treating foreign emissaries warmly.
Each of the 189 UN Member States has one vote in the General Assembly, and unlike in the Security Council, the United States cannot veto a resolution. Many New Yorkers and public officials have been offended by some policy positions taken by the UN General Assembly, for example regarding Israel. 
It is important to remember that some policy conclusions with which many New Yorkers may disagree will inevitably result from any democratically constituted international organization. Policy positions taken by the UN General Assembly reflect the positions of individual governments around the world, not the institution itself. The presence of the UN in New York gives New Yorkers and organizations based here more opportunity to have their point of view heard by delegates to the UN, through New York news media and direct lobbying. Driving the UN away to Europe, Africa or Asia, would only diminish this opportunity.
Treating all accredited UN representative with courtesy and respect, regardless of their country's politics, is central to our role as host city for the United Nations. The Mayor-elect has already signaled that this will be his policy. 
E. UN Capital Master Plan
The principal UN headquarters buildings were designed by an international team of architects chaired by New Yorker Wallace Harrison, and including Le Corbusier and Oscar Niemeyer.  The cornerstone was laid in 1949, the Secretariat was completed in 1951, and the General Assembly and the Conference Building in 1952. Were these significant architectural buildings within American jurisdiction, they would undoubtedly have been designated as landmarks.
A team of architects and engineers thoroughly examined the condition of the UN headquarters complex in 1998-99. The study concluded that despite the high quality of the original construction, many building elements had deteriorated due to age, or do not meet current standards for safety and energy efficiency. The study concluded "the current condition of the Headquarters complex renders it unacceptable for continued use over the long term." 
The U.S. General Accounting Office reviewed the U.N.'s study, agreed with its assessment of building conditions, and determined the UN's planning for renovation of the complex was sound and professional.  The UN Secretariat offered the General Assembly options of renovating the complex over periods of three, six or twelve years.  A shorter time period would be the least expensive, due to lower construction costs and accelerated energy savings, but most disruptive to the UN, as perhaps half of the Secretariat staff would have to be relocated at any one time. The longer time period is most expensive but least disruptive, requiring only 10% staff relocation at any given time. The Secretary-General recommended the intermediate six-year option, but the General Assembly recently directed the Secretariat to present all three options in depth for final decision.
The Secretariat also considered a reactive approach, making repairs and improvements only as building elements failed. Over a period of 25 years, this would be nearly as expensive as complete renovation due to continuing high energy costs, and would still leave the UN with antiquated buildings. It thus appears neither economical nor sensible. 
The Secretariat further considered demolishing and rebuilding the headquarters complex. Using the present site, this would cost several hundred million dollars more than renovation, and would be highly disruptive to the UN.  Reconstruction of the UN on Governor's Island has also been suggested, bringing considerable security and traffic advantages, and freeing the East River site for commercial development.  While the new administration should be free to explore this imaginative idea with the UN, we would caution against it. The current buildings are of landmark quality and have come to symbolize the UN to the world. A proposal to abandon them might weaken the institution, and damage the psychological ties that bind the UN to New York, leading to consideration of a move to another city.  Further, we would like to encourage greater interaction between the UN and the City, which would not be aided by a move to a less accessible location.
In summary, the UN General Assembly is likely to choose, and the City should support, a plan for the UN to thoroughly renovate its present headquarters complex over a number of years. The primary consequences for the City will be the need to accommodate the UN's need for "swing space" to relocate meetings and staff during renovation work, to make improvements to nearby roads, and to assist with financing the renovation.
Depending on the time period for the renovation, anywhere from 10% to half of the UN Staff will have to be relocated at any given time,  as will major meetings and conferences. Options for securing swing space include commercial leasing, leasing of a building purchased or constructed by the United Nations Development Corporation (UNDC) (see section III.B. below), or new construction on the UN site. 
One space need not considered by the UN's Capital Master Plan is for additional office space to house nongovernmental organizations (NGOs). Consultative status for NGO's is provided for in Article 71 of the United Nations Charter, and the number of accredited NGOs has steadily increased. Currently there are 2091 NGOs in consultative status with the Economic and Social Council (ECOSOC), some 400 NGOs accredited to the Commission on Sustainable Development, a subsidiary body of ECOSOC, and 1,672 NGO's are registered with the UN Department of Public Information.  The City may want to encourage the growth of NGO's, both for economic development purposes, and to enrich the processes of the UN, and a new facility would help. A building constructed by UNDC as swing space for the UN during renovation might later be leased to NGO's. Another imaginative idea to explore is construction of a new conference hall for meetings and conferences during renovation of the UN headquarters, and later using the space as a cultural venue and/or as a location for the fall general debate if the new location affords easier high-security access for Heads of State. (see Section II.B. above).
Some roadway improvements might be worthwhile for improving security and access to the UN, and enhancing the UN headquarters district. These might include directing First Avenue traffic entirely underground and creating a pedestrian mall in front of the headquarters. Assistance from the federal government would be welcome if it could be negotiated. 
Some UN member states may well look to the US government, and to the NYC and state governments, for assistance in paying for the capital master plan, due to the economic benefits derived from the presence of the UN, and likely to be derived from construction expenditures. Congress might also have expectations of the City.  The severe local economic circumstances would certainly seem to preclude any direct contribution, and the City should be prepared to resist any such expectation. The City must point out that it will continue to incur substantial costs for security, education of the children of diplomats and UN staff, and for other City services, while foregoing various real estate taxes, income taxes, sales taxes and parking fines.
The most important assistance the City and State of New York can give to the UN Capital Master Plan is the assistance and financing power of the United Nations Development Corporation (see III.B. below).
A final decision by the General Assembly on implementation of the UN Capital Master Plan is not expected before the summer or fall of 2002. The new City administration should quickly become involved in the planning process to advocate solutions that are in the best interest of the City as well as the United Nations. In doing so, the administration will have an opportunity to make a long-lasting contribution to the City and to the world community.
III. Public and Private Vehicles for Working with the UN
The New York City Commission for the United Nations, Consular Corps and Protocol, a mayoral agency, was established in 1962.  The Commission is the principal representative of the City in dealing with the UN, foreign Missions and consulates, and state and federal agencies concerned with the UN. The Commission provides pro bono legal and practical advice to diplomats and to the public, advocates for the City with the UN and foreign Missions and consulates, and coordinates meetings between foreign representatives and City officials and businesses.
The US Mission to the United Nations also has an Office of Host Country Affairs, which together with the City Commission, meets with the General Assembly Committee on Relations with the Host Country, traditionally chaired by the Ambassador of Cyprus.  Many issues between New Yorkers and the UN community are resolved quietly through the assistance of the Commission.
The Commission also has an economic development function, assisting international businesses to locate here, and a Sister City Program. These programs should be reviewed and probably enhanced. The Commission should look for ideas to the programs of other UN Host cities, particularly Geneva.
Careful consideration should also be given to the choice of a new Commissioner. Given the increased importance of multilateral relations and of the United Nations as an institution in dealing with terrorism and peacekeeping, and the increased responsibility for New York as host city to the UN in dangerous times, the next Commissioner should have a deep background in international affairs, and substantial knowledge of the United Nations and of the City and its government. Moreover, given the opportunity of the new administration to make a substantial and long-lasting contribution to the manner in which UN headquarters are renovated, the next Commissioner should be knowledgeable concerning real estate and development issues and able to work constructively with the Board and staff of the UNDC.
Further, an imaginative Commissioner can be a catalyst and coordinator for encouraging the sorts of education and cultural programs, and policy interchanges, suggested in this report. Some administrations have chosen this Commissioner based on political ties and contributions, with the functions seen as largely social, and the salary often a dollar a year. These times call for a full-time Commissioner with professional expertise, and it will probably be necessary to pay a salary.
The United Nations Development Corporation (UNDC) is a not-for-profit public benefit corporation established by New York State law in 1968, with the support of the City, to provide commercial office space and other facilities for the United Nations community in New York.  The statute also established a United Nations Development District, for which UNDC has planning and development responsibility.  The UNDC is governed by a fifteen member Board, of whom eight members serve at the pleasure of the Governor, and five serve at the pleasure of the Mayor, together with the City Planning Commission Chair and the NYC Commissioner of Housing Preservation and Development, who serve ex officio.
The UNDC has made an enormous contribution by constructing five buildings of architectural distinction greatly needed by the UN community. Construction proceeded in three phases. In Phase I, UNDC completed construction of a 39-story office building-hotel at One UN Plaza and buildings at 763 and 765 UN Plaza. In Phase II, UNDC completed the 40-story office building-hotel at Two UN Plaza in 1984. In Phase III, a 15-story office-residential building at Three UN Plaza was completed in 1987. In a Phase IV, the UNDC acquired 17 floors of the 633 Third Avenue office condominium property. 
Most of the properties built by the UNDC have been sold, and the remainder are in the process of sale. The properties were sold during the years 1997 to 2001, a strong period in the City's real estate market, and most were sold at a substantial profit. UNDC has thus been a financial success as well. 
Although it will shortly hold no properties, given the need for assisting the UN with its Capital Master Plan, the UNDC should certainly not be disbanded at this time. It is an open question whether UNDC should itself construct and manage any new buildings, or should merely put its financing power at the service of the United Nations. Either way, the UNDC is likely to have an indispensable role in accomplishing the UN capital master plan and building any new facilities that may be needed.
The UN looks to UNDC to likely build or purchase, and then lease to the UN, building(s) for swing space needed during the renovation of UN headquarters.  The UNDC might also be employed to build NGO offices, UN conference facilities, or even a UN-related cultural venue, as contemplated in this report.
The UNDC has the power to issue tax-exempt municipal bonds. Interest on these bonds is substantially lower than on commercial bonds because the interest payments are generally exempt from federal, state and local income tax. Subject to the quality of any development proposals and the response of the bond market, the UNDC thus has the power to carry out very substantial real estate developments on behalf of the United Nations at lower cost than private developers. The UNDC no longer has power however to issue tax-exempt bonds directly on behalf of the UN, as the Tax Reform Act of 1986 treats the UN as a private business ineligible for tax-exempt financing.  Congress would have to reverse this provision as to the United Nations. 
Cable television pioneer Ted Turner gave $35 million to help satisfy U.S. dues arrears to the UN, and has pledged a gift of $1 billion to the UN over ten years, administered through a new UN Foundation.  Private companies based in New York might also be encouraged to collaborate directly with the UN on projects. 
The UN Capital
Master plan does contemplate the possibility of voluntary private
contributions, but assumes they would be "relatively minor."
 In fact, there may be many people around the world willing
to contribute to renovating the home of the United Nations, or for
the development of related facilities, such as an NGO office building
or a cultural venue. It is not known if the UN would tolerate the
American custom of naming buildings for their donors, but related
facilities could certainly be build with such recognition for the
donors. Foundations, and NYC businesses which benefit from the UN's
presence, might also be supportive.
IV. NYC and the UN: Time for Renewal
This study does not purport to thoroughly cover all issues regarding the relationship between the United Nations and the City of New York. Some of the more imaginative proposals require hard-headed economic analysis. We have worked largely from public documents, together with interviews of some officials. The new administration, once in office, will be in a position to probe deeper and utilize confidential information.
We hope our central conclusions provide some useful guidance. Hosting the United Nations is an enormously valuable service to the world community, and it is in the interest of American foreign policy that we do so with grace and warmth. The UN happens to provide very substantial economic benefits to the City, and these greatly outweigh its costs and burdens. Very substantial benefits for education, culture and policy development in New York are possible as a result of the presence of UN headquarters, and these possibilities have never been adequately explored. Especially in these times, the City should attempt to make the most of these potential benefits.
There are legitimate concerns with security, parking, and traffic problems related to the UN, but these should be managed constructively and should not be allowed to overshadow the much more important benefits of hosting the United Nations. The new administration has an opportunity not only to greatly strengthen the relationship of the City with the United Nations, but to leave its mark on New York by helping to shape the renovation of UN headquarters and the possible development of related facilities.
on the United Nations
Emily M. Bass
---------------------------------------------------------------------------------------------* Principal author of the Report.
Recused from participation in the Report.