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beginning on July 1, 1951, and on the dates and in the amounts indicated, until the entire amount advanced under this agreement has been repaid as follows: Date: Amount Date:

Amount July 1, 1951. $1,000,000 July 1, 1967 -

$2,500,000 July 1, 1952 1,000,000 July 1, 1968

2,500,000 July 1, 1953. 1, 500,000 July 1, 1969

2,500,000 July 1, 1954. 1,500,000 July 1, 1970

2,500,000 July 1, 1955 2,000,000 July 1, 1971

2, 500,000 July 1, 1956_ 2,000,000 July 1, 1972

2,500,000 July 1, 19572,000,000 July 1, 1973

2,500,000 July 1, 1958_ 2, 000, 000 July 1, 1974.

2,500,000 July 1, 1959 2, 000, 000 July 1, 1975.

2,500,000 July 1, 1960_ 2,500,000 July 1, 1976_

1,500,000 July 1, 1961. 2, 500, 000 July 1, 1977

1,500,000 July 1, 1962 2, 500, 000 July 1, 1978

1,500,000 July 1, 1963_ 2,500,000 July 1, 1979.

1,500,000 July 1, 1964. 2, 500, 000 July 1, 1980.

1,500,000 July 1, 1965 2, 500, 000 July 1, 1981.

1,500,000 July 1, 1966_-2,500,000 July 1, 1982

1,000,000 However, in the event the United Nations does not request the entire sum of $65,000,000 available to it under this agreement, the amount to be repaid under this paragraph will not exceed the aggregate amount advanced by the United States. All amounts payable to the United States under this paragraph will be paid, out of the ordinary budget of the United Nations, to the Secretary of State of the United States in currency of the United States which is legal tender for public debts on the date such payments are made. All sums repaid to the United States will be receipted for on behalf of the United States by the Secretary of State.

(5) The United Nations may at any time make repayments to the United States of funds advanced hereunder in excess of the annual installments as provided in paragraph (4) hereof.

(6) The United Nations agrees that, in order to give full effect to section 22 (a) of the agreement regarding the headquarters of the United Nations referred to in paragraph (1) above (under which the United Nations shall not dispose of all or any part of the land owned by it in the headquarters district without the consent of the United States), it will not, without the consent of the United States, while any of the indebtedness incurred hereunder is outstanding and unpaid, create any mortgage, lien or other encumbrance on or against any of its real property in the headquarters district as defined in said agreement. The United Nations also agrees that the United States, as a condition to giving its consent to any such disposition or encumbrance, may require the simultaneous repayment of the balance of all installments remaining unpaid hereunder.

(7) The effective date of this agreement shall be the date on which the Government of the United States notifies the United Nations that the Congress of the United States, with the approval of the President, has made available the funds necessary to be advanced in accordance with the provisions of this agreement.

In witness whereof, the Government of the United States of America, acting by and through the Secretary of State, and the United Nations, acting by and through the Secretary-General, have respectively caused this agreement to be duly signed in duplicate at on this ---- day of

1948. For the GOVERNMENT OF THE UNITED STATES OF AMERICA :

1

Secretary of State of the United States of America

For the UNITED NATIONS :

Secretary-General

CITY OF NEW YORK,
OFFICE OF CITY CONSTRUCTION COORDINATOR,

New York 35, N. Y., April 30, 1948.
Hon. CHARLES A. EATON,
Chairman, House Committee on Foreign Affairs,

House of Representatives, Washington, D. C. DEAR MR. EATON: I am advised that your committee is scheduled to start hearings on United Nations legislation early next week. In order that you may have before you the facts covering the commercial value of donated lands and buildings proposed to be constructed on the United Nations site with funds to be loaned by the United States, I am glad to make the following statement to be used as you may see fit.

I have had such an analysis made by responsible people who have been following this problem from the beginning. They advise me that, based on very conservative estimates, from $50,000,000 to $60,000,000 can be realized from the sale of the property within a reasonable time after the headquarters is constructed. I am attaching a table to illustrate this.

There is no question that, if this property were put up for sale today, it would easily bring the amounts shown in the estimate. Office space in midtown New York is in terrific demand. The small amount of new office space available is being rented at from $6 to $7 per square foot, with the tenant making all alterations. The inability to demolish old buildings because of the difficulty of relocating the tenants, as well as the complete absence of unused space, has created a critical shortage of new office construction. Both the Library and the Secretariat are typical modern office buildings which could be used with little or no alterations. Furthermore, not only would these buildings provide muchneeded office space, but, inasmuch as the United Nations has built on only 60 percent of the available land, several sites for new construction would be available within the city's zoning requirements. On the north end of the site, for example, there is a plot 500 by 500 feet, which is completely free of structures. It is conservatively estimated that this could be soid today for $30 per square foot, thus realizing on this one parcel alone $7,500,000. The effect of this situation will be felt for several years to come. The General Assembly Building and the Meeting Hall Building would provide ideal space for television, broadcasting, and motion-picture studios-space which cannot be found in Manhattan today, and certainly not in midtown Manhattan.

The location of the site is perfect for commercial purposes. It is served by two bus lines—one crosstown and one north and south. It is within walking distance of the Grand Central Station, as well as most of the large hotels in the midtown area. When the city-planned Second Avenue Subway is built, it will be within one block. It is easily accessible by car from the East River Drive as well as the Queens-Midtown tunnel. The proposed garage will enhance this accessibility.

The property donated by Mr. Rockefeller, which was an outright gift and is not reimbursable in the event the United Nations abandons its site, has been shown at its original cost of $8,500,000. Already adjacent property in the area bas more than doubled its value. The United Nations plans to spend over a million dollars for landscaping the property alone. The city has already developed plans for improvements around the site costing $13,000,000 including the widening of First Avenue, the construction of a vehicular tunnel for the entire length of the site to divert heavy traffic, the reconstruction of the East River Drive, the construction of improved approaches to the drive at both ends of the site, and the construction of several parks in the immediate vicinity of the headquarters. Furthermore, removal of the slaughterhouses that previously occupied the area has made an enormous improvement in real estate values in this

In view of all this, it is certainly reasonable to expect that the value of the property will at least double.

The figure of $65,000,000 as the total cost of the United Nations building program is, I am sure, conservative. It is not a figure taken from the air, although, of course, it is not based upon detailed estimates and bids. The scope of the project has been cut down and all extravagance and trimmings have been eliminated. In addition, a margin of safety has been provided. Cordially,

ROBERT MOSES, City Construction Coordinator.

area.

Estimate of amount which could be realized from sale of UN property

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1 Based on the latest plans and estimates of the United Nations Headquarters Planning Office. * Originally constructed in 1946 by the New York City Housing Authority and transferred to tbe United Nations on a rental-sale basis. Value has increased 25 percent. Could be used commercially without any alterations.

3 A typical modern office building. Conversion to commercial use would require only normal tenant changes. $3,000,000, representing special features required by the United Nations, has been written

off. 4 Estimated at two-thirds original cost, because of various interior alterations necessary to adapt the buildings to commercial use.

• Carried at original cost. Does not include value of property donated by the city of New York, as this must be repaid to the city in accordance with its agreement with the United Nations.

HISTORY OF THE TAX-IMMUNITY QUESTION IN THE UNITED NATIONS

(Memorandum submitted by Department of State, May 24, 1948)

PREPARATORY COMMISSION (1945)

The Preparatory Commission of the United Nations, composed of the original signatories of the Charter, made arrangements for the first sessions of the General Assembly and the Councils and submitted recommendations for organizing the United Nations within the broad framework of the Charter. One of the major preoccupations was how to assure that the Secretariat could secure a staff with the standards of efficiency, competence, and integrity required by article 101 of the Charter. Equality of conditions of service for members of the Secretariat was an implicit recommendation by the Commission to the General Assembly. The Commission also reported that an adequate system of immunities and privileges for officials, as provided in article 105 of the Charter, is essential. The draft convention on privileges and immunities which the Commission proposed to the General Assembly contained language which became section 18 (b) of the Convention on Privileges and Immunities of the United Nations. Finally, the Preparatory Commission raised the question whether the United Nations should not pay some "special allowance" to those of its employees who pay income taxes on their income from the United Nations in order to produce equality among the staff,

FIRST SESSION OF THE GENERAL ASSEMBLY (FIRST PART, JANUARY-FEBRUARY 1946)

Committee 5 (Administrative and Budgetary) discussed at length the problem of equality of tax treatment of Secretariat employees. It considered proposals for tax reimbursement schemes with a view to assuring equality among staff, but realized that such a procedure would produce inequities among members, all of whom would have to contribute to a budget made larger by the amounts of taxes collected by some of them. A subcommittee concluded unanimously that both equity and equality could be achieved only if each member exempted from income taxation salaries paid by the United Nations. Committee 5 finally recommended and the General Assembly adopted a resolution which provided for tax reimbursements and requested the Secretary-General to submit recommendations to the General Assembly on a staff-contributions plan (annex A). The resolution also requested members who did not already do so to exempt salaries paid by the United Nations from taxation.

The concept of staff contributions as a method of avoiding the creation of a class of tax-privileged international public servants had been discussed inconclusively in Committee 5. The reference to “exemption from national taxation" in the preamble of the resolution had been so phrased specifically to not foreclose the possibility of an internal levy.

United States position.—The United States delegation abstained on this otherwise unanimous resolution. It had pointed out repeatedly in Committee 5 (as well as in the Legal Committee which dealt with the draft of the Convention on Privileges and Immunities) that the Congress is the only authority which can grant tax immunities to United States nationals.

FIRST SESSION OF THE GENERAL ASSEMBLY (SECOND PART, OCTOBER-DECEMBER 1946)

do so.

Committee 5 had before it a report by the Secretary-General, in accordance with the provisions of the resolution adopted by the General Assembly at the first part of its first session. Committee 5 agreed again to request members who had not accorded tax immunity for salaries paid by the United Nations to

A Union of Soviet Socialist Republics proposal to terminate the taxreimbursement authority after January 1, 1947, was defeated. The SecretaryGeneral had submitted an analysis of the administrative and policy questions involved in the consideration of a staff-contributions scheme. His proposal to establish a special committee to consider these questions during the Assembly session was defeated, and Committee 5 recommended that the Advisory Committee on Administrative and Budgetary Questions (a standing committee of nine experts serving the General Assembly in their individual capacities) be requested to study the problem.

The General Assembly approved the recommendations of Committee 5 and adopted the resolution which is reproduced in annex B.

United States position.-The United States delegation abstained on the voting in Committee 5 and in the plenary meeting, believing it had no right to participate until the Congress had decided whether to accept the principle of tax exemption.

SECOND SESSION OF THE GENERAL ASSEMBLY (SEPTEMBER-NOVEMBER 1947)

By the time the second session convened, the tax reimbursements procedure had become a major question of controversy in Committee 5. In practice it was for the benefit of only United States and Canadian nationals, and many delegations expressed an opposition to continuing the authority which they regarded to have been only temporary, giving all members an opportunity to grant the desired exemptions. The United States delegation stressed that it had abstained when the original decision to make reimbursements had been made and that it would not oppose terminating the procedure, pointing out that the Congress had not taken final action on the principle of immunity. It was agreed to continue the authority for the Secretary-General to make reimbursement for one more year, i. e., for taxes on 1948 salaries, because termination without warning would create serious personnel contract and administrative problems. A compromise arrangement, whereby the members involved would pay larger contributions to the United Nations in the amounts of tax reimbursements received by their nationals in the Secretariat, was adopted at one stage in Committee 5 (annex C). The decision was later reversed. (A similar proposal had been accepted temporarily by Committee 5 during the first part of the first session.)

The Advisory Committee on Administrative and Budgetary Questions had reported favorably on the principle of a staff contributions scheme but recommended that, for practical reasons, it not be adopted immediately. It made certain policy suggestions on questions raised by the Secretary-General in his report to the second part of the General Assembly's first session and recommended that the Secretary-General submit a detailed plan for a staff contributions scheme to the third session of the General Assembly (1948). These recommendations were adopted by the General Assembly in the resolution which was finally reported out by Committee 5 (annex D). The resolution also requests members to grant relief from double taxation to their nationals in the Secretariat. It was considered that such action would be necessary before the General Assembly could adopt a staff contributions scheme.

United States position.—The United States delegation, as stated above, stated that it would not oppose the termination of tax reimbursements. It objected strongly to the proposal for increasing the assessments of members whose nationals receive reimbursements. It did not oppose the resolution as finally adopted.

ANNEX A. RESOLUTION ADOPTED BY THE GENERAL ASSEMBLY: FIRST PART OF FIRST

SESSION, 1946

Having regard particularly to the administrative and budgetary arrangements of the organization, the General Assembly concurs in the conclusion reached by the Administrative and Budgetary Committee that there is no alternative to the proposition that exemption from national taxation for salaries and allowances paid by the organization is indispensable to the achievement of equity among its members and equality among its personnel.

Therefore the General Assembly resolves that:

Pending the necessary action being taken by members to exempt from national taxation salaries and allowances paid out of the budget of the organization, the Secretary-General is authorized to reimburse staff members who are required to pay taxation on salaries and wages received from the organization.

In the case of any member whose nationals in the service of the organization are required to pay taxation on salaries and allowances receives from the organization, the Secretary-General should explore with the member concerned methods of ensuring as soon as possible the application of the principle of equity amongst all members.

The records and documents of the Administrative and Budgetary Committee and of the advisory group of experts respecting staff contributions plans be referred to the Secretary-Treasurer for his information, and the Secretary-General be requested to submit recommendations theeon to the second part of the first session of the General Assembly.

ANNEX B. RESOLUTION ADOPTED BY THE GENERAL ASSEMBLY: SECOND PART OF FIRST

SESSION, 1946

The General Assembly resolves that:

In order to achieve full application of the principle of equity among members and equality among personnel of the United Nations, members which have not yet completely exempted from taxation, salaries, and allowances paid out of the budget of the organization are requested to take early action in the matter.

The question of a staff contributions plan in lieu of national taxation is referred to the Advisory Committee on Administrative and Budgetary Questions, which may request the Secretary-General to submit new proposals to the next regular session of the General Assembly. ANNEX C. DRAFT RESOLUTION ADOPTED (LATER REVISED) BY COMMITTEE V OF

GENERAL ASSEMBLY: SECOND SESSION, 1947 The General Assembly,

Reaffirming the principles set down in the convention on privileges and immunities of the United Nations and in the resolutions adopted at the two parts of the first session of the General Assembly ;

Considers that in order to achieve both equity between the Member States and equality between members of the Secretariat, there is no solution except to exempt national income taxes on the salaries and indemnities paid by the United Nations :

Since several members have not as yet been able to establish this exemption. the General Assembly decides that the 1948 budget shall still include a credit permitting the reimbursement of officials for national income taxes they will have to pay;

The General Assembly decides that a sum equivalent to the reimbursement thus made to the officials for income taxes they have to pay shall be added to the sum of the contributions to the United Nations budget due from members whose nationals in the service of the organization have been obliged to pay income taxes on the salaries and indemnities paid by the United Nations.

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