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Montbrillant Building: Rental Costs

Executive Committee Meetings

Montbrillant Building: Rental Costs

20 November 1996

20 November 1996

5th Meeting


1. The issue of rental costs for the new UNHCR Headquarters building, situated in rue Montbrillant, Geneva (MBT) was discussed at the June and October 1996 Standing Committee meetings (see EC/46/SC/CRP.40 and its Add.1). No decision on the rental costs could be reached in either meeting and further information was requested by the Standing Committee. This paper presents the clarifications called for, as well as background information on the issues under discussion.


2. In a Report of the Secretary-General (A/CN.1/R.1152) of 13 February 1992, the Secretary-General indicated his agreement with the proposal for UNHCR's relocation to the new building at Montbrillant. At that stage rental payments were calculated at SFR 3,748,000 and building maintenance at SFR 1,380,000 (EC/SC.2/1991/CRP.27/Rev.1). The Chairman of the ACABQ then wrote to the Secretary-General on 17 March 1992 indicating that the ACABQ had no objection to UNHCR's proposal for renting the premises at Montbrillant subject to UNHCR's further negotiation with the Swiss authorities on the following issues:

  • the lowering of the rental cost; - the clear definition of maintenance charges; - the inclusion of an "option to buy" clause in the lease agreement (see EC/1992/SC.2/CRP.3/Annex 1).

3. In April 1992 the UNHCR Sub-Committee on Administrative and Financial matters endorsed the move to the Montbrillant building (EC/SC.2/51) subject to the conditions outlined above. The ACABQ, in its 1992 report (A/AC.96/800) on UNHCR Activities Financed by Voluntary Funds, confirmed that it too had no objections to the proposed rental of the new building on condition that UNHCR renegotiate the terms of the offer as related to rental and maintenance charges.

4. UNHCR moved into the new premises in Spring 1995. As stated in the Overview of UNHCR Activities 1994-1996 (A/AC.96/845/Part 1, para.68) of 25 September 1995, UNHCR was not required to pay rental on Montbrillant in 1995, as the Swiss authorities decided to waive rent for that year. In addition, they included in the construction costs, works associated with the telephone installations, part of the computer-line network, security measures and other smaller installations which amounted to SFR 3.7 million, which would normally have been the responsibility of the tenant.

5. The ACABQ in its report following its review of the Overview of UNHCR activities 1994-1996: "expressed the strong hope that the Swiss authorities will generously extend to UNHCR the most favourable financial conditions possible for both occupancy and maintenance of the building, in recognition of the nature of UNHCR's activities and their dependence on voluntary funding" (A/AC.96/854, para.13).

6. Following a formal approach from the High Commissioner in January 1996, the Head of the Permanent Mission of Switzerland to the international organizations in Geneva made, in a letter dated 3 June 1996, a proposal for rental of the building which would result in a decrease of some SFR 1.5 million per year in the rental originally envisaged.

7. The letter of 3 June 1996 referred to above, in which this rental offer was made, noted that the Swiss authorities were conscious of the extraordinary increase in the calls being made on UNHCR to respond to humanitarian crises worldwide, and its difficult financial situation. In view of the overall financial obligations of UNHCR, the Swiss Government further decided to make an additional contribution to UNHCR by increasing from 1996 the normal Swiss contribution to UNHCR's General Programmes by SFR 2 million.

8. These proposals were presented to the ACABQ earlier this year and in their report on UNHCR activities 1995-1997 (A/AC.96/865/Add.4), while asking, inter-alia, for clarification on the points raised in the letter of 3 June 1996, stated that "the Advisory Committee believes that the proposal outlined in document EC/46/SC/CRP.40 would be a fair and reasonable arrangement".



9. Concerns have been expressed both by the ACABQ and the Standing Committee that the amount of SFR 2.4 million should be considered a ceiling and that further negotiation with the Swiss would be necessary if the figure were to rise above that. The Swiss authorities have provided the following information to UNHCR in this regard: "The Swiss authorities are in a position to confirm that the cost related to the amortization of the loan will not exceed SFR 2,420,000. The final costs of the works associated with the construction of MBT have not yet been definitively established. A control of obligations on the one hand, and of expenses on the other, indicates however that the amount of the loan, namely 121 million francs, will not be exceeded. As a result, the financial charges resulting from the reimbursement of this loan will not exceed SFR 2.42 million per annum".


10. The maintenance costs for the building have given rise to requests from both the ACABQ and the Standing Committee for clarification and explanation. Running costs (which include maintenance costs) normally cover the following: salaries (2 FIPOI technicians); maintenance and related reserve; insurances; FIPOI's management charges; and floor space tax. As of January 1997, overall running costs will be reduced to SFR 1,390, 000 as compared to 1995 full year costs of SFR 1,626,220 and 1996 costs of SFR 1,486,000. This difference is accounted for primarily by the Geneva authorities' discontinuation of the floor space tax in 1997, which means that the amount of SFR 172,200 will no longer be payable as from then, and by the waiver of SFR 96,000 administrative charges.

11. The breakdown and the explanation of the running costs for 1997 is as follows:

11.1. Salaries: SFR 180,000.-

For a building such as MBT, FIPOI is of the opinion that it is indispensable to have two full time specialized technicians working in the building. The salary of a technician is made up of the following elements

-Gross salary:

-various social charges (unemployment insurance, accident insurance etc.)

11.2. Maintenance and Reserves SFR 1,100,000.-

In general, the amount set aside for current maintenance and for the creation of a reserve for a building corresponds to 1.5 per cent of the cost of the construction. FIPOI has only set aside 1 per cent of the cost of the building for maintenance and reserves, thereby saving UNHCR SFR 563,500 per year.

a) Maintenance

The maintenance budget of SFR 580,000 covers a range of annual contracts e.g. elevators, air­conditioning etc.: FIPOI's structure as a non-profit-making foundation enables it to carry out maintenance work at lower cost than the private sector.

b) Reserves

As a non­profit foundation, FIPOI has to set aside reserves of SFR 520,000 in order to maintain the value of its buildings in the long term. The amount set aside for the reserve is destined for significant maintenance work which will become necessary in time. These reserves, which are built up year by year, allow FIPOI to respond promptly when it is necessary to undertake such maintenance work, thereby avoiding any subsequent rent increase. The amount set aside for the reserve represents 0.47 per cent of the building's total value.

11.3. Insurance

SFR 110,000.-

The insurance on the building is equivalent to 0.1 per cent of the total cost of the construction. The insurance covers a range of contingencies e.g. fire and water damage etc.

11.4. FIPOI's Management Costs

FIPOI's management charges had been reduced in 1996 from SFR 149,200 to SFR 96,000. This latter amount represents 4 per cent of the annual repayment of SFR 2.4 million. With a view to lessening still further the running costs to be borne by UNHCR, FIPOI has decided to waive its administrative charges of SFR 96,000 per annum as from 1 January 1997.

12. As the above indicates, the level of running costs as of 1997 will fall from SFR 1,486,000 in 1996 to SFR 1,390,000.


13. The table below shows comparative rental costs for the various premises rented by UNHCR in Geneva. These costs are contrasted with the average rent for commercial properties in Geneva. For the purposes of comparison, only the surface area of the office space (15,622m2) has been considered. The rental amounts cited below include charges.

14. The table shows some comparative costs of the other United Nations agencies which occupy buildings owned by FIPOI. According to information available to UNHCR, however, UNEP, UNFCCC, JIU and UNCCD do not currently pay rent to FIPOI for the Geneva Executive Centre in Châtelaine. Other agencies either own their buildings or rent from other landlords.

15. The cost of SFR 157 per m2/year for the Centre du Commerce International (CCI) is lower than that of MBT because it is a much simpler design and, consequently, does not entail expensive maintenance. The reserve on this building is approximately SFR 180,000 per annum.

16. As regards the other international organizations with headquarters in Geneva which received loans from the FIPOI for the construction of their headquarters buildings (ILO, ITU, WIPO, UNOG, WHO, IOM, BIE, WMO, CERN), FIPOI's relationship is that of the lending body, and consequently does not concern itself with running costs and rentals.

Premises Surface area (m2) Rent (m2/year)

(in SFR)

1. UNHCR: Vermont (CDR) VNG total 478 9,520326

2. MBT (FIPOI) 15,622 369


4. GEC: UNDP (FIPOI) UNFPA 13,307 (Total) 186

5. (FIPOI) WFP (FIPOI) 7,720 186

6. CCI (FIPOI) 186


8. Average Geneva commercial - 525

17. As regards the running costs of other buildings, only the GEC (Geneva Executive Centre) and to a lesser extent the CCI can be compared with MBT (type of construction, office layout, date of construction etc.).

18. The CCI building is simpler in design than those of GEC and MBT which have been adapted for quite specific functions. This consideration ought to be taken into account when one compares their respective running costs.


Maintenance costs and reserves 1,120,000 606,0001,280,000


Surface area (m2) 13,505 7,391 15,622

Storage (m2) 973 592 4,066

Parking 460131 248


19. As regards the arrangements for ownership of the building after the 50 year period, the Swiss authorities have confirmed that while ownership will rest with FIPOI, UNHCR will not be required to pay any rent, as stated in paragraph 9 above, once the 50 year period has expired. An "option to buy" clause will, however, be included in the lease agreement, which is for five years and is automatically renewable for further five­year periods unless cancelled by either party by registered letter.


20. The ACABQ requested UNHCR to clarify whether the additional contribution offered by the Swiss authorities would be an "amount of SFR 2 million ... in addition to the 1995total level of contributions" (para. 26.). The Swiss authorities have confirmed to UNHCR that for 1996, the Swiss Federal Council has approved a total contribution of SFR 13 million (1995: SFR11 million) to the General Programme of UNHCR. Of this amount, SFR 11 million have been paid to date. The balance will be paid as soon as the Executive Committee of UNHCR has given its approval for the conclusion of a contract between UNHCR and FIPOI for MBT. This final payment can be made before the end of the 1996 financial year. The Swiss authorities on numerous occasions within the course of 1996, have confirmed their support for UNHCR. They have also expressed their intention to maintain their contribution to General Programmes in the coming years, at a minimum level of SFR 13 million, subject to annual budgetary approval.


21. In 1964, the Confederation and the Canton of Geneva set up the International Organizations' Premises Foundation (FIPOI), a private foundation governed by articles 80 et seq. of the Swiss Civil Code. The purpose of the Foundation, which is non-profit-making, is to make various premises in the Canton of Geneva available to non-profit-making intergovernmental organizations with headquarters in Geneva or holding international conferences there. In addition to its own funds, which derive mainly from rental and other income, the resources necessary for the operation of the Foundation are provided, as and when needed, in the form of loans, capital grants and tax­free land grants. Operations designed to cover administrative and running costs and building upkeep, as well as for the establishment of reserves, are conducted on a non-profit-making basis. FIPOI is thus able to provide services and building maintenance facilities on the most favourable terms possible.


22. In the light of the above clarification, and in view of the revised rental conditions and reduced maintenance charges proposed by the Swiss authorities, the High Commissioner now proposes to proceed with the conclusion of a formal lease. She asks for the endorsement of this course of action from the Standing Committee.

1 Please note that the figures in these tables have been provided by the FIPOI. The rental figures in the first table do not include parking and storage facilities.