Legislative and MOU Framework As of September 8, 2011 Overview State legislation passed in June authorized the disposition to the

United Nations Development Corporation (UNDC) of the blacktop portion of Robert Moses park if and only if, by October 10, 2011 a Memorandum of Understanding (MOU) is signed between State legislators and the City of New York governing the terms of that disposition. State Senator Liz Krueger, State Assemblymember Brian Kavanagh, and City Councilmember Dan Garodnick have been in detailed discussions with City officials about the specific terms of that MOU. While those discussions are ongoing, and it is still unclear whether any agreement will be reached, this document summarizes the rough outlines of the deal currently under consideration. Other documents that may be helpful in understanding the context in which the discussions are taking place are available at www.eastsideopenspace.com, including the text of the State legislation, the official introducers memorandum that accompanied the legislation, and photos, maps, and artists renderings depicting current conditions and future possibilities. The website also provides an opportunity for the public to send comments directly to the East Side elected officials involved in the discussions. It is important to note that if the terms of the deal cannot be negotiated to the satisfaction of Senator Krueger, Assemblymember Kavanagh, and Councilmember Garodnick, the MOU will not be signed and the legislation will expire and have no effect at all. If an MOU is signed, there are two transactions that would become possible as a result of the legislation, each of which would generate substantial sums of money: (1) the alienation of the blacktop at the Robert Moses site and its disposition to the UNDC; and (2) the sale, to the highest bidder, of the City-owned buildings at One and Two UN Plaza, currently leased to the UN. The sale of those buildings would be made possible by the UNDCs ability to construct a new building for the UN on the Robert Moses site. The central goal of discussions between the East Side elected representatives and City officials is to craft an MOU that will unlock monetary value that otherwise could not be obtained, and to use that value to provide enough funding, over time, to: (a) replace the active recreational space that would be lost at the Robert Moses site, complete the East River Greenway from 38th Street to 60th Street (the Greenway), and fund other neighborhood open space projects, which would, together, represent a net gain for the East Side community and the general public; and (b) provide a make-whole payment to compensate the City for the loss of rental payments it currently receives from the UNs lease at One and Two UN Plaza (which it would no longer receive after those buildings are sold). In short, the framework for the MOU currently envisioned would: 1. Set forth an agreed-upon, prioritized listing of park and open space projects, including the Greenway and the mapping of Asser Levy Place as parkland for active recreational space (including a roller hockey rink), that would be paid for with funds received from the transactions mentioned above (and further detailed below).

2. Establish a special fund and an attendant governing board that would include local elected official representation, to receive and spend funds dedicated to the prioritized park improvements. 3. Authorize the alienation of the Robert Moses blacktop parkland, and its disposition to the UNDC, contingent on payment by the UNDC into the special fund of an amount expected to be sufficient to complete the northern portion of the Greenway from 53rd Street to 60th Street (the Outboard Detour Roadway or ODR portion) and other local park projects. 4. Require the City to sell One and Two UN Plaza to the first potential purchaser whose bid meets a minimum hurdle that would, among other things, provide additional funds for the remaining prioritized park improvements, including the final, southern section of the Greenway from 38th Street to 51st Street (the UN portion). The MOU would set forth a detailed set of rules and requirements governing both the process of selling the buildings and the allocation of proceeds, to ensure that neither the City nor the East Side community is shortchanged. 1. Prioritized Project Listing The MOU would include a carefully crafted list of projects, in priority order, on which funds would be spent, so as to provide clarity, now, about the purpose of funds this deal would generate and to avoid ad hoc decision-making later. The projects would be split into distinct groups, and funding expected to be sufficient to complete each groups projects would arrive at four different points: The State legislation required that before alienation the City would take possession of the pier that runs from 38th Street to 41st Street (Waterside Pier), which had been leased until recently by Con Edison, and obtain funding from Con Ed to cover the cost of work necessary to ensure the pier is structurally sound. The City has already taken possession of the pier and will receive $13 million from Con Ed for the structural work. Group 1 projects, including prep work and permitting related to the Greenway and demapping Asser Levy Place as a street and opening it as parkland suitable for active recreational use, would be funded shortly after the execution of the MOU and completed before alienation. Group 2 projects, including construction of the ODR portion of the Greenway, improvements to St. Vartan Park, and the non-structural work on Waterside Pier, would be expected to be funded out of proceeds from the transfer of the Robert Moses site to the UNDC. Group 3 projects, including construction of the UN portion of the Greenway, additional connections to the waterfront, and additional improvements to the current park at Asser Levy Place as well as the new parkland added in Group 1 above, would be projected to be funded out of proceeds from the sale of the buildings at One and Two UN Plaza.

Legislative and MOU Framework as of September 8, 2011

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2. Establishment of a Special Fund and Governing Board The Eastside Greenway And Parkland Board (the Eastside GAP Board or the EGAP Board) would be established to govern the Eastside Greenway And Parkland Fund (the Eastside GAP Fund or the EGAP Fund). The EGAP Board would be comprised of six members representing the Mayor and five representing local elected officials. Many actions of the EGAP Board would require both an overall majority and a majority of the non-mayoral representatives. The EGAP Fund would receive and spend funds for community projects based strictly on the MOUs project list. The MOU would, however, give the EGAP Board the ability to substitute or remove projects in their early stages (before substantial sums are expended and cannot be recouped), or in the event that a project stalls or is deemed to be infeasible. 3. Requirements for Disposition of the Robert Moses Site Shortly after the MOU is completed, the United Nations Development Corporation (UNDC) would be required to pay $3 million dollars into the EGAP Fund for Group 1 projects, all of which would have to be completed before the Robert Moses blacktop could be alienated. This would include mapping Asser Levy Place as parkland and opening it up as active recreational space. Further, the MOU would require the UNDC, immediately prior to the alienation of the Robert Moses blacktop, to make a substantial additional payment into the EGAP Fund sufficient (based on current estimates) to complete Group 2 projects, including the ODR. The terms of this payment are still under discussion as part of the negotiations over the MOU, but it is currently expected that this payment would be at least $65 million. Separate and apart from the MOU, the State legislation passed in June also requires that prior to taking control of the blacktop at the Robert Moses site, the UNDC must propose a comprehensive development plan including plans for the proposed new building, which may not, by law, exceed the 505-foot height of the UNs Secretariat building (which is 39 stories) and must take the project through the Uniform Land Use Review Procedure (ULURP). The ULURP process involves thorough review of the project by the Community Board, Borough President, City Planning Commission, and City Council, and requires approval by the Commission and the Council. The MOU would also require that, in the event of the alienation of the Robert Moses blacktop parkland, certain rent and tax payments the UN and UNDC would make to the City would factor into and reduce the amount of the Citys make-whole payment. Finally, as mentioned above, the legislation required that prior to alienation of the Robert Moses site the City would take possession of Waterside Pier (38th Street to 41st Street) and obtain funding from Con Ed for work necessary to make the pier structurally sound. The City has already taken possession of the pier and Con Ed has agreed to pay $13 million to cover this work.

Legislative and MOU Framework as of September 8, 2011

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4. Sale of One and Two UN Plaza The MOU would require the City to issue a Request for Proposals (RFP), soliciting bids for the buildings at One and Two UN Plaza, soon after the alienation of the blacktop at Robert Moses and at certain prescribed times thereafter. Requirements related to the RFP process would ensure that the buildings are sold as soon as feasible, but not at a fire sale price that would unreasonably short-change either the City or the EGAP, with the goal of providing sufficient proceeds to fund both the Citys makewhole payment and the Group 3 projects. The proceeds from any sale would be distributed to the EGAP Fund and to the City. The distribution would be calculated based on how many of four funding tranches,1 can be covered, given the sale price. The net sale proceeds would cover the following tranches, in order, until the proceeds are exhausted. Tranche 1 would be equal to the Citys make-whole payment as calculated in the year of the sale.2 Funds from Tranche 1 would be paid to the City. (The amount of this payment to the City would fall over time, as the City continues to receive income from tax and rental cash flows prior to disposition.) Tranche 2 would be equal to $190 million (2010 dollars), escalated at 3% per year, minus the amount received from the UNDC at the time of alienation (as noted above, currently expected to be a minimum of $65 million, subject to ongoing negotiations over the MOU). Funds from Tranche 2 would be paid to the EGAP Fund. This amount is what is required, based on current estimates, to fund Group 3 projects, including the UN portion of the Greenway. Tranche 3 would equal some additional fixed amount escalated at 3% per annum. Funds from Tranche 3 would be evenly divided between the EGAP Fund and the City. This would potentially create a further cushion for cost overruns or allow for additional projects to be funded in the event the buildings are sold for a high sale price. Tranche 4 would equal any and all additional proceeds, and would be paid to the City.

It is expected that the market would generate bids in excess of the sum of Tranches 1 and 2 in the latter part of this decade, although that could occur sooner or later depending on market conditions and different bidders valuations of the buildings. Again, this is the level at which all funds expected to be necessary to cover all projects mentioned in this framework are expected to have been paid to the EGAP Fund.

In structured finance, a tranche is one of a number of related financial assets offered as part of the same transaction. 2 This calculation, made at the time of the sale of the buildings, would take the net present value of the previously anticipated rent stream from One and Two UN Plaza assuming no MOU, and subtract from it a sum of actual and projected tax and rental payments from the buildings received by the City given the sale and the terms of the MOU.

Legislative and MOU Framework as of September 8, 2011

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