Canada converts 100,000 customers to cluster boxes, only 4.9 million to go

October 24, 2014

Canada is getting cluster boxes, and lots of them.  This week Canada Post rolled out it plan to replace home delivery at the door to centralized delivery at a cluster box down the block.  Nearly 100,000 residences, plus over 3,300 businesses, have been converted so far.  Over the next five years, Canada Post hopes to switch a total of 5 million addresses from door delivery to what Canadians euphemistically call "community mailboxes" (CMBs).  Here in the U.S., they're just called Cluster Box Units (CBUs).  

Canada Post says it will save between $400 and $500 million a year by switching over to cluster boxes.  The savings will come from eliminating 6,000 to 8,000 jobs for the postal workers who walk the streets delivering mail to the door.  

But Canada Post has a long way to go.  The first wave of conversions represents just 2 percent of the goal of 5 million addresses, and there will be little to no savings during the early stages of the program, due to the cost of installing thousands and thousands of cluster box units at an average of $800 each.  (Canada Post outsourced the contract for manufacturing the units to a company in Kansas.)

The plan was first announced last December.  As discussed in a STPO piece, "Canada gets cluster-boxed: Why it can’t happen here," it didn't seem likely then that the USPS would follow Canada Post's example anytime soon.  It still doesn't seem likely.

There are just too many obstacles in the way of mass conversions, not the least of which is customer opposition.  The Postal Service has a policy of not converting customers without their permission, so there are basically three ways to increase centralized delivery: (1) require cluster boxes in new housing developments (customer permission not required); (2) ask for voluntary cooperation from businesses and residents; and (3) determine that the safety of the letter carrier can be ensured only by replacing door or curb delivery with a cluster box.

The Postal Service is using all of these methods to increase the use of cluster boxes, and over the past few years there’s been a steady stream of news articles about threatening dogs and bad road conditions leading to non-voluntary conversions, and about the residents of a new housing development, like this one in Pennsylvania, learning that the Postal Service won’t deliver to their curbside mailboxes and will require the developer to put in cluster boxes.

Despite these efforts, the mail continues to be delivered in much the same way as it has been.  According to a recent GAO report on Delivery Mode Conversions, voluntary conversions aren’t having much impact.  The USPS reported that in 2013, just over 43,000 out of about 5.6 million business door delivery points — or about 0.8 percent — were voluntarily converted to cluster boxes,  Just over 36,000 out of 32.2 million residential door delivery points — about 0.1 percent — were voluntarily converted to cluster boxes. 

Between 2008 and 2013, the number of addresses with cluster box delivery increased by 10 percent, but that was due largely to an overall increase in the number of delivery points.  In terms of total delivery points, the proportions have remained essentially the same over the past five years, as shown in this chart included in the GAO report:

Sold American: An inventory of USPS disposed properties, 2009-2014

October 20, 2014

The Postal Service has sold over 500 properties over the past five years, but it hasn’t released much information about the disposals.  A few weeks ago, however, the Postal Service finally updated its Owned Facilities report, so it’s now possible to learn more about which properties have been sold off.

The overall scope of the disposal program has not been a mystery.  The Postal Service’s annual 10-K reports provide some basic information about the number of facilities it owns and its proceeds from property disposals.

According to the 2013 10-K, the Postal Service owned 8,598 facilities; in 2009, it owned 8,419.  That represents a net decrease of 202 facilities.  This doesn't include other types of property, like parking lots and land, that have also been sold.

The 10-K reports also provide numbers for the proceeds from the sale of property and equipment (but not separated to show just property). The proceeds totaled $158 million in 2013, $148 million in 2012, $137 million in 2011, $70 million in 2010, and $33 million in 2009.  That adds up to about $546 million in revenue. 

That’s about all one can find about the disposals in the 10-K reports.  In order to learn more, we’ve compared two versions of the USPS Owned Facilities lists, one compiled back in 2009 (or thereabouts), and one published just a few weeks ago. These are state-by-state lists of all the properties owned by the Postal Service, which are provided to the public under the Freedom of Information Act.    (There’s also a set of reports for Leased Facilities.)

The current lists of Owned Facilities came out in September 2014.  They were probably updated sometime in August 2014, as indicated by the fact that they don’t reflect some recent sales, including the Bronx GPO and the Union Square post office in Somerville, Mass.

These new facilities lists can be found on the USPS website here.  For easier viewing, we’ve put them on Google Docs here.  A list that merges all the individual state lists into one big list can be seen as a Fusion Table here; a map is here; and an Excel version, with links to Google Maps for each property, is here.

The previous version of the Owned Facilities lists seems to have been updated sometime in 2009.  (The Illinois list shows that the Postal Service still owned the main post office in Chicago; the sale of this facility closed in October 2009.)  You can see these previous lists on Google Docs here.  The merged list of all owned properties back in 2009 is here.

By comparing the two big lists, we’ve developed a list of 516 properties that have been disposed of over the past five years or so.  You can see this list here.

Of the 516 properties sold over the past five years, about 100 were post office buildings.  In many cases, the Postal Service opened a replacement office somewhere in the community, so the closure was classified as a "relocation."  In a few cases, the Postal Service leased back space in the building from the new owner, so the post office's retail business was able to remain in place.

About 40 of the 100 post offices sold over the past five years were historic buildings on or eligible for the National Register of Historic Places.  (Eligibility means that the building is at least fifty years old.)  While this represents a relatively small portion of the Postal Service's real estate holdings, the sales have generated a huge amount of controversy, from Berkeley to the Bronx.

The sale of 40 historic post offices is somewhat more than previous studies have found.  For example, the USPS OIG found 22 historic properties were sold between October 2010 and June 2013; that report is here

The Postal Service also provided a list to the Advisory Council on Historic Preservation to help with its study of the sale of historic post offices.  It contained 13 historic post offices sold in calendar years 2012 and 2013, plus 15 up for sale.  This list appears on pages 24-25 of the ACHP report, here.

Based on the USPS facilities reports, the OIG report, the ACHP report, and many news reports, we’ve put together a comprehensive list of historic post offices that have been sold since 2009, that are currently for sale, or that are under consideration for disposal.  That list is here.  It contains nearly 100 historic post offices.

In addition to selling post offices, the Postal Service has sold about 200 parking lots and 125 parcels of land and building sites, plus a variety of other types of property, including warehouses, modular units, and processing facilities.

The 516 properties disposed of during 2009-2014 encompass 9.3 million square feet of interior space.  That’s a lot of space, but a relatively small percentage of the approximately 432 million square feet of space owned by the Postal Service.

The disposed sites add up to just over 42 million square feet — again, a relatively small percentage of the total of 1.67 billion square feet encompassed by USPS sites.

The average site of the 516 disposed properties was about 82,000 square feet.  The largest properties disposed of were the main post office on Van Buren in Chicago (over 3 million SF), the airmail center in Kennedy airport (about 600,000 SF), and the big post office on Kellogg Blvd. in St. Paul (578,000 SF).

While the disposal of properties has generated over a half billion dollars over the past five years, the proceeds represent a rather small amount compared to the total value of the Postal Service's real estate portfolio.  What that portfolio is actually worth, however, is something of a mystery.

The facilities lists do not indicate the market value or appraised values of the properties, and the Postal Service apparently does not have records indicating these values.  But the Postal Service’s 2014 Integrated Financial Plan says that the value of USPS property and equipment was $17 billion, based on cost.  

In order to determine what the properties might be worth on today’s market, the USPS OIG has taken a couple of approaches. In 2011, the OIG did a report (FF-MA-11-118) comparing purchase price and assessed value on a handful of postal properties, then extrapolated to the rest of the portfolio.  The OIG came up with an estimate of about $50 billion for the entire portfolio. In a subsequent report (FT-MA-12-002), the OIG focused on fair market value and came estimated that the USPS real estate portfolio was worth $85 billion.

As for the value of the properties that have been sold recently, investigative reporter Peter Byrne submitted a FOIA request to the Postal Service and obtained a list of about 50 properties sold between May 2010 and April 2013.  His study found that in many cases the Postal Service's real estate broker, CBRE, sold the properties at below market value, often to companies with which it had a close relationship.   A slightly modified version of Byrne's list is here.

The OIG is also at work on another audit report that focuses on the Postal Service’s internal controls over real estate disposal.  It will probably examine Byrne’s allegations that some properties have been sold too cheap.  It should be out soon.

In the meantime, the Owned Facilities reports contain a wealth of information about the Postal Service's real estate holdings.  If you're interested in learning more, go to the Fusion Table version of the merged list with data for all 50 states, and try filtering using different variables.  You can also try aggregating by variables using the "classic" version of the table by going to Help>Back to Classic Look.  

(Photo credits: Westport, CT, post office; former Chicago post office on Van Buren)

Next in postal privatization: Goin Postal counters in 2,000 Walmarts

October 15, 2014

The Goin Postal pack-and-ship company has signed a deal to put small postal stores inside of 2,000 Walmarts.  While the Postmaster General will probably say it's all about customer convenience, the deal represents yet another step in the privatization of the Postal Service. 

These postal stores, it should be noted, aren’t exactly the same as the mini-post offices that the Postal Service tried piloting in 82 Staples late last year.  The Staples counters were more like contract postal units in that they sold only USPS products and services and they charged regular USPS prices.  The Goin Postal stores are part of the USPS Approved Shippers program, which consists of stores that can also offer FedEx, UPS, DHL, and anything else they want.  They make their profit by charging a fee on top of the USPS pricing.

By expanding its network of “alternate retail channels” — whether through Village Post Offices in convenience stores, stamps on consignment at retail chains, online transactions on usps.com, postal counters in Staples, or an Approved Shipper counter in Walmarts — the Postal Service has been encouraging its customers to do business at places other than regular brick-and-mortar post offices. 

In the short run, that means the Postal Service can save money by reducing the number of clerks in post offices and by cutting the hours of operation, as it’s done with POStPlan, the initiative to shorten hours at 13,000 small post offices. 

While the Postal Service likes to be coy about it, there’s no question that expanding alternate access is about cutting costs.  As a USPS memo about the Staples pilot stated, “The Pilot will be used to determine if lower costs can be realized with retail partner labor instead of the labor traditionally associated with retail windows at Post Offices.”

Along the same lines, in a Nov. 8, 2011, letter to the Government Accountability Office (GAO), a USPS vice president wrote, “Over the last five years, our current retail strategy has resulted in an increase in alternate access revenue from 24% to 35% of our total retail revenue.  This is one of the contributing factors that enabled operations to reduce window work hours by 23.7% during the same period of time.”

In the long run, the agenda of expanding retail access in private businesses is the same as it’s been for years — to close thousands of post offices.  Study after study has recommended closing brick-and-mortar post offices and replacing them with counters in private retailers.  

As the Postal Service states in a typical press release, “With nearly 100,000 places to buy stamps, ship a package or renew a passport, the U.S. Postal Service is expanding customer access to its products and services. It’s not about brick-and-mortar Post Offices anymore, as postal products move online and into retail outlets, grocery stores, office supply chains and pharmacies.”

The 2,000 Walmarts slated to get a Goin Postal store represent just under half of the 4,400 or so Walmarts in the United States.  (A list and map of them are here.)  There's no word yet about Goin Postal or another business expanding into the remaining Walmarts or other big box stores, but that's clearly the direction things are going.

 

Goin Postal Goes Walmart

Goin Postal is a franchise chain of retail shipping & receiving stores based in Zephyrhills, Florida.  The company has already arranged for its current franchisees to put stores in 500 Walmart locations, and it is currently looking for people who want to start a store in one of the other 1,500 Walmarts available for a postal counter. You can see a list of 1,350 of these Walmarts here and a map here.  

There's another map showing the USPS post offices in the same zip codes as most of these Walmarts here.  This map shows about half of the 2,000 Walmarts slated to get a Goin Postal store and it has some errors, but it’s good enough to illustrate an obvious point: Where there’s a Walmart, there’s also a post office nearby.

At this point, there’s no evidence that the Postal Service had anything to do with arranging Goin Postal’s deal with Walmart, but it’s almost certain that postal management signed off on it in some fashion, since Goin Postal, as part of the USPS Approved Shipper program, probably couldn’t have made such a move on its own.

There are currently about 6,000 Approved Shipper retail outlets, so expanding into 2,000 Walmarts represents a significant increase.  This is just the kind of growth in alternative retail access that the Postal Service has been looking for.  

Originally, the Postal Service probably envisioned creating a network of contract postal units to replace post offices, but putting postal counters in Staples ran into a lot of opposition.  The Walmart deal looks to be the next-best thing — considering the reach of Walmart, maybe even better.

Trouble in the air: USPS may sell rights over Old Chelsea post office

September 9, 2014

Late last year, the Postal Service announced that it would not proceed with its controversial plan to sell the Old Chelsea post office at 217 West 18th Street in Manhattan.  Now the Postal Service has decided it wants to sell the air rights above the historic building.

According to a letter to the New York State Office of Parks, Recreations and Historic Preservation dated August 14, the Postal Service says it is initiating a Section 106 consultation process under the National Historic Preservation Act.  The letter says that “the air rights above the Property are slated for sale, which will transfer the air rights out of federal ownership.”

The Postal Service has already determined that there will “no adverse effect” from the sale because as part of the disposition of air rights there will be a protective covenant safeguarding the post office.  According to the letter, “The covenant requires the future owner to submit rehabilitation, alteration, or modification plans for the interior and exterior historic character defining features of the Property to the NY SHPO for review to avoid potential adverse effects by ensuring consistency with the Secretary's Standards for the Treatment of Historic Properties and applicable guidelines.”

The Postal Service used a company called Tetra Tech to evaluate the potential impacts.  That is itself of some interest.  Tetra Tech is the same company the Postal Service and its real estate broker, CBRE, chose to do the historic structure report on the Berkeley post office.  As discussed previously on Save the Post Office, Tetra Tech has a long relationship with Richard Blum, until recently the chairman of the board of CBRE (and husband of California Senator Dianne Feinstein).  It’s not exactly the company you would turn to if you wanted to avoid the appearance of a conflict of interest.

Selling the air rights is clearly preferable to selling the historic post office itself, and in fact, back in May 2013, Manhattan Community Board 4 suggested that the Postal Service consider selling the air rights for transfer to another location as an alternative to selling the building.  But even if MCB 4 gets behind the plan, it could turn out to be controversial.  It wouldn't be the first time selling air rights over a post office caused problems.

In 2005, the Postal Service sold the air rights over the Cooper Station in the East Village and the Times Square Station on West 42nd Street.  In these cases, the air rights were transferred to developers of adjacent properties, permitting them to erect larger buildings than would otherwise have been permitted.

At the time, the Advisory Council on Historic Preservation and community organizations criticized the Postal Service for selling the rights without first studying the impacts on nearby historic buildings and going through the Section 106 process.  The Postal Service responded that the air rights transfers would not in themselves have any impact on historic properties and that impacts would occur only when the developer who bought the rights put them to use.  That, of course, is exactly what happened.

The air rights over the Times Square Station were sold to Intell Management and Investment, which ended up building a 61-story condominium that obscured the view from the west of the McGraw Hill building, a 1930 New York City landmark adjacent to the post office.

The rights over the Cooper Station post office were sold to a developer who built a 26-story dorm for New York University, angering many in the community because it was far taller than anything else in the East Greenwich Village neighborhood.  (There's more on the story here, with helpful links to official letters, etc.)

In March 2006, Manhattan Community Board 4 sent the Postal Service a letter expressing concern about how the Postal Service had sold the air rights without going through a Section 106 process.  The Board encouraged the Postal Service not to do this again, and it recommended that the Postal Service establish guidelines requiring potential buyers of development rights to disclose exactly how the rights would be used.

This time around, it appears that the Postal Service did decide to initiate the Section 106 process before selling the air rights to Old Chelsea, and the protective covenant at least acknowledges that the Postal Service takes some responsibility for how the rights will be used. 

But the proposed covenant is brief — just two pages — and it restricts itself to the interior and front façade of the post office.  It doesn’t get into other potential impacts of a large new structure adjacent or even above the post office.  The Postal Service probably doesn’t want to have to encumber the sale with a more detailed covenant putting a lot of restrictions on what the developer can or cannot do.

For this and other reasons, the finding of “no adverse effect” may be questioned by one or more of the agencies participating in the Section 106 process for Old Chelsea.  That includes the National Trust for Historic Preservation, the New York City Landmarks Commission, the New York Landmarks Conservancy, and the community organization Save Chelsea. 

Save Chelsea is already engaged in a fight over the sale of air rights from Hudson River Park piers for development along the waterfront in the neighborhood.  It may soon find itself in a similar fight over the air rights over the Old Chelsea post office.

(Photo credit: Old Chelsea post office - Evan Kalish; condo tower next to Times Square Station - Keith Bedford)

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