July 2012

In Dubious Battle: The Postal Service, Congress, and Verizon go at it

July 31, 2012

Congress and the Postal Service are locked in a brutal face-off, with the future of the post office at stake.  An angry Congressman writes the Postmaster General accusing postal officials of uttering falsehoods.  The Postal Service defends itself by blaming an Internet provider. 

No, we’re not talking about Darrell Issa, postal D-day, the historic default on the $5.6 billion payment to the retiree health care fund, or the liquidity crisis destined to occur if Congress doesn’t rescue the Postal Service with new legislation.

Those are just abstract bookkeeping issues.  Whatever the headlines say, a default is not going to affect daily operations of the Postal Service in any significant way.  (Not that the headlines will help USPS revenues very much — the stakeholders hate uncertainty.)

The more serious issue is something very concrete — a parking lot

Not far from the halls of Congress and postal headquarters lies the wealthy community of Bethesda, Maryland.  It’s there that three behemoths — the USPS, Congress, and Verizon — are locked in a heated dispute over a half dozen or so parking spaces. 

It’s no joke.  Parking is one of the scarcest resources on the planet, especially in downtown Bethesda.

The problems all started a few weeks ago, when the Postal Service closed two Bethesda post offices — the New Deal post office on Wisconsin Avenue at Montgomery Lane and the Arlington Road office — and relocated them into a new retail facility, about ten blocks down Wisconsin Avenue from the historic post office.  There’s a parking lot adjacent to the new facility, but when customers visiting the post office started parking there, they found themselves being ticketed and possibly getting towed.  

That’s when Maryland Congressman Chris Van Hollen stepped in.  He wrote the Postmaster General in May about the problem and got a reply from the USPS Government Relations Manager explaining that the agency was doing everything it could to minimize the parking difficulties.  With his constituents continuing to complain, the Congressman wasn’t satisfied, so more letters were exchanged.  What postal officials told the Congressman served only to increase his ire.  (The Bethesda Patch has the story and all the letters.)

The Postal Service explained that when they scoped out the new location before signing the lease, they saw a sign saying that the parking was available to the tenant.  The lot didn’t belong to the new post office building, however.  It belonged to the building on the other side, which has two tenants — Mattress Warehouse and Verizon. 

Discontinuances discontinued: Where have all the closures gone?

July 30, 2012

The Postal Service may be taking a new line on downsizing its retail network.  Instead of big plans and long lists of potential closures, the Postal Service is apparently adopting a more incremental approach.

After years of talking about closing thousands of post offices — after all the announcements of new initiatives, after all the town meetings, advisory opinions, appeals, and everything else — the Postal Service has managed to close about eight hundred post offices since 2008, most of them last year.

That's about twice the annual closure rate for the past 40 years (about a hundred a year), but it’s a far cry from what the Postal Service was envisioning just a few months ago, and it's certainly not enough to please Darrell Issa, whose postal reform legislation would create a Postal BRAC Commission  to close thousands of post offices and processing facilities.

In fact, it looks as though the number of closures for 2012 will be well below average.  Since the moratorium began in December, the Postal Service appears not to have gone through a full discontinuance process — initiating a feasibility study, developing the proposal, issuing a final determination notice, and actually closing the doors – for a single post office.

The Postal Service started the big push to close post offices in 2009 with the Stations and Branches Optimization and Consolidation initiative (SBOC) — a plan to close over 3,000 urban and suburban post offices.  In January 2011, there was talk of closing 2,000 small rural post offices

Then in July 2011, the Postal Service presented the Retail Access Optimization Initiative (RAOI), a plan to close 3,700 post offices.  It also published a list of over 700 more that had already been initiated for discontinuance study. 

In September, the Deputy Postmaster General said that another list of 4,000 was in the works.  On several occasions, the Postmaster General himself said he planned to close as many as 15,000 post offices.  As recently as January 2012, the Postal Service was telling the PRC to expect “mass closures.”

That was the rhetoric.  The reality is POStPlan, which will keep 13,000 small post offices open by reducing their hours and getting rid of their postmasters.  And that’s about it.   No 15,000 post offices getting shuttered, no mass closures.  Not a bang but a whimper.


What's going on?

That’s not to say that post offices haven’t been closing.  There have been several “emergency suspensions” over lease problems.  The latest case occurred on July 21 in Memphis, where the Crosstown Station closed because the Postal Service and the landlord "did not reach an agreement to renew the lease." 

There have also been “relocations,” that is, the post office closes and retail services are moved to a carrier annex or some other undesirable spot, but that process doesn’t require a discontinuance study (at least according to the Postal Service and the PRC).  

The Postal Service is also selling off its properties.  More than forty historic post office buildings have been sold or put on the market.  

Just last Thursday, there was a meeting in Santa Monica about the proposed sale of its historic New Deal post office.  The Postal Service says it plans to move retail services to a carrier annex located in what one citizen described as "a desert."  And while the Postal Service held a meeting with the community, there won't be a full discontinuance process for that post office either.

There have been a few discontinuance studies and final determinations — there were lots of them in late 2011 and early 2012 — but those post offices didn't close due to the moratorium.  Now the closure decisions have been superseded by POStPlan, and the final determinations are being held in abeyance.

According to in Postal Bulletin, which lists official discontinuances in its Address Management section, only a handful of discontinuances have occurred over the past few months and they were all for post offices that were suspended long ago.  These discontinuances were basically just cleaning up loose ends. 

Double Trouble: DUOed & lease expiring

July 28, 2012

There are two signs your post office may be in danger of closing: The Postal Service is moving the carriers to another facility — that’s called Delivery Unit Optimization (DUO) — or the lease is set to expire over the coming months.  You’ve got double trouble if both of those things are happening.  It could be that the Postal Service is moving out the carriers in anticipation of not renewing the lease and then closing the post office.

There are about 58 post offices that are being DUOed during June through September and that also have leases expiring over the next year.  The list with the details is here, and a quick summary is here:

As the USPS website explains, “Delivery Unit Optimization involves relocating letter carriers out of local Post Offices, stations and branches and consolidating them into centralized delivery offices that will continue to be served by the same processing and distribution center.  The existing retail operation will require less space and the office could then be downsized to a smaller space nearby.”

The public is usually unaware of a DUO since the carriers work in the back of the post office, and when they’re moved to another facility, it doesn’t affect the retail business in the front.  DUOs happen all the time, and it doesn’t mean that the post office will eventually close. 

However, a closure is often preceded by a DUO.  The Postal Service moves out the carriers, then says it doesn’t need all the space so it’s time to close the post office and “relocate.”  Lately, that seems to mean moving the retail services to a carrier annex inconveniently located on the outskirts of town.

Lease expirations are another story.  The Postal Service has a habit of causing problems during lease renewal negotiations, and then declaring an emergency suspension.  The post office closes with hardly any notice, and while a formal discontinuance is supposed to follow soon after, that doesn’t always happen.  The practice has come under scrutiny by the PRC, and it seems to be getting worse now that the Postal Service has turned over all lease negotiations to CB Richard Ellis.

Over the past few months, there have been cases where the Postal Service gave the landlord every indication it wouldn’t be renewing the lease, then declared a suspension after the landlord found a new tenant.  CBRE is apparently demanding big rent reductions (like 30%), an early-termination clause (which allows the Postal Service to cancel the lease on short notice), and changes in who pays for the maintenance.  Anytime a lease is expiring, a post office is in danger of the Postal Service finding a reason not to renew and to close the facility.

It should be noted that 38 of the 58 post offices being DUOed and with a lease expiring soon are also on the POStPlan list.  It’s very likely that in many of these cases, the Postal Service is moving the carriers not in preperation for closing the post office but because under POStPlan there won’t be a full-time postmaster to supervise the carriers. 

There will probably be a lot of DUOs going on at POStPlan post offices.  Of the approximately 300 post offices being DUOed June 1 through September 30, about half are at POStPlan post offices (that list is here).

A list of all the DUOs occurring June through September is here (it comes from the USPS website here).  A list of the post offices with leases expiring over the next year is here (there are over four thousand of them).  That list comes from the USPS facilities lists, which hasn’t been updated in quite a while, so some of these leases may have already been renewed.

Keep an eye on the list of those being DUOed with a lease expiring soon, and see how many of them end up being suspended, closed, or relocated.  It will be a good indication of whether the Postal Service really plans to preserve post offices under POStPlan, or if it's just a distraction while the Postal Service continues to close them.

Photo credits: Post offices in
Catawba, WI (DUO 7/28/12, lease exp. 8/31/12)
Sims, NC (DUO 8/11/12, lease exp. 9/30/12)
Farnham, VA (DUO 8/22/12, lease exp. 10/31/12)
Dunnsville, VA (DUO 7/10/12, lease exp. 8/31/12)
(And a thank you to Don Cheney for some help on this one.)

"A half-vast plan": A postmaster comments on POStPlan

[Today, Postmaster Mark Jamison of Webster, North Carolina, shared these comments on POStPlan with the Postal Regulatory Commission.]

July 27, 2012


I am not an intervener in this docket. I understand that these comments cannot become a part of the record and may not have an impact on your deliberations in this case. I hope, however, that you will read them and give them some thought even if they do not add to the weight of your decision.

I am retiring today after more than thirty years of government service, over twenty-eight of them with the United States Postal Service. I retire having served the town of Webster, North Carolina, as postmaster for the last fourteen years.

Webster, a Level 13 office, serves post office boxes only and as late as two years ago brought in more than $120,000 in revenue. It serves a much wider community than the 476 post office boxes housed within it. People come to Webster because, I am told, the service is both friendly and thorough. They come from a distance even though there are at least three other offices within fifteen miles including a Level 20 in Sylva, North Carolina.

Over the years, in addition to delivering mail, selling postage, and offering advice on mailing, I have filled out money orders for the elderly and others who needed that assistance. I have watched children grow up. I have gone to countless dance and piano recitals, several weddings, and more funerals than I care to mention. I have put together four bicycles so they would be ready on Christmas morning. I have opened stuck jars, called doctors and utilities for explanations for customers. I have been an ear, a friend and a counselor and in all these roles and many others I have proudly represented the United States Postal Service.

I would like to think that all those surveys that claim that the United States Postal Service is the most trusted government entity are because of people like me who serve their communities in many of the same ways. People who make sure that someone gets that package of medicine or an Express mail even though the sign says the office is closed or the address is incorrect, people who serve not as bureaucrats but as unscripted human faces.

Webster is an office that will be downgraded by POStPlan. It is slated to go to six hours but if my calculations are correct, based on the slippery and ever moving targets offered by the Postal Service, it is likely to fall to four hours after the next evaluation. And three years from now when the current lease expires the office is very likely to close.

The Annexation of the Post Office

July 26, 2012

A new trend is emerging.  The Postal Service is closing post offices in downtown areas and busy shopping centers, and moving retail services to a carrier annex on the outskirts of town. 

The “annexation” process began a long time ago, when the Postal Service started moving carriers from the main post office or a branch out to an annex, leaving only the retail services behind.  Now they’re moving the retail business to the annex, too.

That’s what’s happening in Camas, Washington, where they’re selling an historic New Deal post office in the center of town and relocating services to the annex.  Same thing in Santa Monica, California, Northfield, Minnesota, Ukiah, California, and Norwich, Connecticut.

A few days ago, there was news it was happening in Redmond, Washington (a town famous for biking), and it's the same story in Cottage Grove, Minnesota.  

Today local news is reporting that the post office in Newbury Park, California, will be relocated to the carrier annex as soon as the lease ends next April.

The Newbury Park branch is located in the Stagecoach Plaza.  It’s a typical suburban shopping center, nothing special in terms of history or architecture.  The Postal Service leases the space, so we’re not talking about selling off a significant New Deal post office like those in Camas, Santa Monica, Northfield, Ukiah, and Norwich.

But the Newbury Park post office has been in the Stagecoach Plaza for 44 years, and it’s a busy place, conveniently located for people shopping and dining in the area.  There are 14 stores and restaurants right in the plaza, and on either side are more stores, a couple of big motels, and not too far away, more shopping centers. 

Citizens Rally to Save the Berkeley Post Office

July 25, 2012

About a hundred people gathered for a rally in front of the post office in Berkeley, California, yesterday.  The historic 1915 post office is for sale, and the citizens of Berkeley are going to do everything they can to stop what New Deal geographer Gray Brechin calls "an old fashioned 19th century land grab."  

There's more on the story in the Berkeley Daily Planet (the source for most of the photos) and SF Gate, here.  Gray Brechin has written several excellent pieces, including one on the Daily Planet and another on the Berkeleyside news site.  Berkeleyside also has one of the best pieces on the whole story, by Frances Dinkelspiel, here, as well as this piece about the rally. There's another good story about the rally here.

For a video, click on the Read more link.

What the post office could be

July 24, 2012

What if instead of closing post offices, cutting window hours, getting rid of career postmasters, and selling off post office buildings, the Postal Service had a different vision?  What if brick-and-mortar post offices were seen as vital community hubs with a lot of potential for bringing in new sources of revenue?  What if the Postal Service stopped pushing customers to use alternatives like the Internet and postal counters in big box stores, and instead began diversifying business at the post office?   

That's the subject of a new report by the USPS Office of Inspector General entitled “21st Century Post Office: Non-Postal Products and Services.”  It presents an excellent summary of some of the things that the Postal Service could do to bring in new revenue and revitalize brick-and-mortar post offices. You can read the entire report here.

The OIG looked at foreign postal systems, took suggestions from postmasters, and reviewed its own previously published reports on the subject.  The new OIG report is packed with interesting possibilities.  Here’s a list of just some of them, in no particular order (and elaborated slightly):

  • Public internet access services (like wi-fi and computer kiosks)
  • Government services on behalf of federal agencies
  • Government services on behalf of state and local agencies, like paying traffic fines, acquiring fishing & hunting licenses, etc.
  • Banking services, such as savings accounts, check cashing, foreign money orders, electronic money transfers, and prepaid cards
  • Other financial services, like retirement planning, insurance, etc.
  • E-bill paying for utility, medical, credit card, etc.
  • Job services
  • Sell packing materials and offer packing services
  • Cell phone products and services
  • Fax and photocopy services
  • Notary services                               
  • Greeting cards, toys, calendars, stationary, etc.
  • Automated teller machines (ATMs)                    

The OIG also mentions having the Postal Service get into leasing and warehouse services.  Rather than "shedding excess capacity," as the Postal Service puts it, why not do something with the space?  Many of the post offices being closed and sold are right in the middle of busy downtowns.  The space in the back where the carriers used to work (they've been relocated to an annex on the outskirts) could be rented out to all sorts of retail businesses, offices for professionals, and government and social services agencies.  Some could be turned into wi-fi equipped cafes, the way bookstores have done — and the way the post offices do it in Uganda!

The post office could also play a key role, notes the OIG, in bridging the digital divide by assisting the National Broadband Infrastructure initiative through partnerships with commercial Internet service providers.  

That, by the way, is a recommendation that was on the table back when the Internet was just getting started.  In the early 1980s, there was talk of the Postal Service extending the “universal service obligation” into the digital realm by providing email service to the entire country.  As an APWU executive warned at the time, if the private sector had complete control over the new technology, the country would end up divided into “two classes, those with and those without access to electronic message systems.”  Too bad that warning wasn't heeded.

The year of wishful thinking: The market research on Network Rationalization

July 23, 2012

At the end of last week, the participants in the Advisory Opinion on Network Rationalization submitted reply briefs that address the issues and arguments in the initial briefs filed a couple of weeks ago.  Much of the debate about the advisability of proceeding with the consolidation plan hinges on the market research conducted last year to determine how big the revenue losses caused by the change in service standards might be.

As those who have been following this story know well, there were two phases of quantitative research.  The first round was conducted last August.  When the results came in, the Postal Service estimated a total volume loss of 7.7%, a revenue loss of $5.3 billion, and a net contribution loss of $2 billion.  That net loss would have nearly wiped out all of the $2.6 billion in operational savings from the consolidations. 

The Postal Service decided it needed to have the research firm re-do the survey, and the results of the second phase, done in October, were presented as testimony with the Request for an Advisory Opinion in December.  The Phase 2 survey showed a total volume loss of 1.7%, a revenue loss of $1.3 billion, and a net contribution loss of $500 million.  (All the numbers for the two surveys are here.)

The Postal Service didn’t mention the existence of the Phase 1 research in its initial testimony, but after a number of interrogatories were posed concerning the market research, the Postal Service revealed there was an earlier phase.  The Postal Service claimed the earlier round of research had been “abandoned” and left “incomplete.”  This research was “flawed” and “unreliable” because the concept statement read to participants to initiate interviews had mentioned other initiatives on the table — closing post offices and eliminating Saturday delivery — and this led customers to overestimate how much less mail they would send if service standards were changed.  

Several participants in the Advisory Opinion have argued that the Phase 1 research was valid, probably more valid than the Phase 2, and the Postal Service is seriously underestimating how much revenue it will lose.  In its Reply Brief submitted a few days ago, the Postal Service responds to those arguments. 

This section of the Reply Brief is entitled: “Opposition to reliance upon the Phase 2 quantitative market research estimates of the impact on mail volume caused by MPNR [Mail Processing Network Rationalization] is based on wishful thinking, not science: The only valid estimation of impact upon mail volume of changes in service standards derives from the Phase 2 research.”

The tone of that title pretty much captures the Postal Service’s attitude.  This section of the brief is really a piece of work, and it’s worth a closer look.

Revised POStPlan list with APOs

July 21, 2012

A couple of days ago the Postal Service gave the Postal Regulatory Commission a revised list of the 17,752 post offices impacted by POStPlan.  The new list includes the Administrative Post Office (APO) that will manage each Remotely Managed Post Office (RMPO). 

You can download the entire new list on the PRC website here.  An abridged list (with some of the columns omitted) is available more readily online as a Fusion Table here, and as an Excel spreadsheet here.  These lists show the APO for each RMPO, as well as the distance between them. 

The new list also shows that the new EAS Level under POStPlan has been changed for about three dozen post offices. You can see a list of these changes here.


APOs and Distances from RMPOs

There are about 4,500 post offices identified as APOs.  It’s difficult to determine exactly how many because the list provided by the Postal Service last week includes only the post office’s name, not an address or identification number, and several post offices share the same name. 

The Postal Service’s witness for POStPlan, Jeffrey Day, said in his testimony that approximately 4,561 post offices will be upgraded to Level 18, and of these approximately 3,907 will serve as APOs.  That means there are probably about 600 post offices that will serve as APOs that have not appeared on a POStPlan list until now.

There are 12,690 RMPOs assigned to an APO.  The average distance between an RMPO and an APO is 11 miles, and the median is 9.7 miles. 

More than 2,841 RMPOs are more than 15 miles from the APO, and over 400 RMPOs are more than 25 miles from the APO. 

The driving distances range from 0 to 57 miles, but as the zero indicates, there are problems with the distance numbers on the spreadsheet.  Seven RMPOs are listed at 0.0 miles from the APO.  For example, the post office in Colp, Illinois, appears as 0 miles from its APO in Herrin, but on Google maps, the distance is 3.4 miles.

As a random check of the new list indicates, there are many such discrepancies.  For example, the post office in Monticello, New Mexico, is supposedly 10.9 miles from its APO in Truth or Consequences, but Google maps and the USPS locator both show it at 21 miles.  The post office in Custer, Kentucky, is listed as 10.9 miles to its APO in Irvington, but Google maps says 13.1 miles and the USPS locator, 13.3.

Then there are a few howlers, like the post office in Ewell, Maryland, which is said to be 57 miles in driving distance from its APO in Crisfield.  Maybe so, but Ewell is on Smith Island, and you’ll need to do your driving by boat.

A day with Mr. Day: Cross-examining POStPlan at the PRC

July 17, 2012

USPS Manager of Retail Operations, Jeffrey Day —  the Postal Service’s one and only witness for POStPlan — testified before the Postal Regulatory Commission last week.  He was there to be cross-examined about the details in the plan to reduce hours at 13,000 post offices. 

There wasn’t much in the way of Perry Mason moments, and judging by the questions from the Commissioners and the PRC’s Public Representative, there doesn’t seem to be a lot of opposition to POStPlan.  With the two postmasters associations both on board, it appears that only the APWU is interested in challenging the plan, and its concern seems to be who’s going to be staffing the POStPlan offices.

One of the more interesting things about the hearing was the appearance of a new participant.  Attorney Elaine Mittleman, who has been helping to save post offices after her office in Pimmit, Virginia, was closed last year, was in the hearing room to ask questions of the Postal Service witness.  Whatever flaws there may be in the Advisory Opinion process, the fact that an average citizen, officially representing just herself, could join the Commissioners in the questioning says a lot about the Commission’s commitment to transparency and public participation.  


In the beginning there was POStPlan

We’ve known for some time that POStPlan got started as early as December 2011 or January 2012, when the Postal Service met with the postmasters organizations to discuss the plan.  The foundations of POStPlan go back months before that, however.  In March 2011, the Postal Service proposed changes in federal regulations that redefined “consolidation” and “postmaster” in ways that made it possible to staff a post office with someone other than a postmaster and to downgrade independent post offices into Remotely Managed Post Offices (RPMO) under the authority of an Administrative Post Office (APO).

The Postal Service itself, however, has not had much to say about when POStPlan was actually conceived.  In his testimony last week, Mr. Day gave us a clue. 

The APWU attorney was asking Mr. Day if the Postal Service had given any consideration to a different set of assumptions for calculating the savings under POStPlan.  (That was apparently a reference to using union workers rather than Postmaster Reliefs.)  In response, Mr. Day said that he had seen a presentation, made “months before” he came on board at postal headquarters, “that did show a couple of different options.” 

A little later in the hearing, Mr. Day was asked explicitly by the APWU attorney — it was her final question — if he knew when POStPlan was conceived.  Mr. Day replied that he didn’t know; he just knew that when he arrived it was at a “very early stage.”

As Mr. Day says in his testimony, he started in his job at postal headquarters in January 2012.  “Months before” would push the origins of POStPlan back into the fall of 2011. 

Relocating Redmond: A promise the Postal Service didn't deliver

July 15, 2012

Redmond, Washington, is a town of 54,000 located just 16 miles east of Seattle.  It’s best known as the home of Microsoft and Nintendo, and it’s one of the most affluent communities in the state.  The town’s biggest problem seems to be growing pains — the economic boom of the past two decades has been causing a lot of traffic and sprawl.

The city has been trying to address the problems by promoting Downtown Redmond.  They’re encouraging walking, biking, and public transportation, and they’re investing in capital improvement projects to make the downtown more vibrant with retail businesses, restaurants, apartment buildings, and recreation destinations.

The whole plan is described in a brochure called “Redmond: Creating Choice, Connecting Community.”  It calls attention to downtown Redmond’s small-town feel and sense of history.  It’s a place “oriented to pedestrians and bicycles, with attractive ‘local’ streets appropriate for a destination environment.” 

Redmond is also known as the “Bicycle Capital of the Northwest,” thanks to an annual bike race, and there are numerous bike shops, sculptures and paintings of bicycles dotting the streets downtown, and bike lanes and unusual bike racks everywhere.

Downtown Redmond has just about everything — lots of restaurants, shops, parks, historic buildings, a pedestrian-friendly streetscape, and a booming economy.  As of July 28, however, downtown Redmond will be lacking one essential civic amenity — a post office.

In a couple of weeks, the post office, which is currently located in the middle of downtown (A on the map), just a few blocks from city hall and the library, will be relocated to a large mail distribution center (the Seattle DDC-East) on the outskirts of town (B). 

The new location couldn’t be worse for a retail business.  It’s on an industrial strip without a shop or home in sight, and it’s separated from downtown by the freeway that goes to Seattle.  No one will be walking to the new Redmond post office, and not many will be biking to it either. 

Knife in the back: More tales of emergency suspensions

July 13, 2012

Tomorrow will be the last day for the Southboro Station post office in West Palm Beach, Florida.  The Postal Service is closing the office as an “emergency suspension” due to a “lease expiration.”

USPS Handbook PO-101 says the Postal Service has 90 days to find another location or to proceed with a formal discontinuance study, but according to the Palm  Beach Post, all indications are that the post office is “closing for good.”  It was hugs and farewells today at the post office, and a lot of unanswered questions.

Emergency suspensions were a topic of discussion earlier this week at a hearing of the Postal Regulatory Commission, where the Postal Service’s witness for POStPlan was being cross-examined.  The plan to cut hours at 13,000 post offices doesn’t really have much to do with suspensions — it’s supposed to be about keeping post offices open, not finding a way to close them — so it was rather strange hearing suspensions come up so often during the hearing.

But suspensions were apparently on the mind of PRC Chairman Ruth Goldway because she had just had a meeting with representatives of the Association of United States Postal Lessors (AUSPL).  The lessors wanted to express their displeasure with the contract the Postal Service signed last year with CB Richard Ellis to handle sales and leases (more on CBRE here).

Chairman Goldway said the lessors association told her that CBRE has been demanding a 20 to 30 percent rent reduction when a lease is renewed, plus an early termination clause that allows the Postal Service to cancel the lease with 30-days notice.  The lessors are particularly disturbed by demands that they pay a commission to CBRE upon renewing the lease, even though commissions are typically paid only when a real estate agent finds a new tenant  (webcast here, discussion at 3:20).

The AUSPL believes that in many cases, CBRE is not overly concerned if a lessor decides not to renew the lease under the conditions it insists on.  That provides an opportunity for the Postal Service to declare an emergency suspension.  It’s an easy way to close the post office — no need to worry about community surveys, town meetings, appeals to the PRC, and so on. 

At the PRC hearing, Chairman Goldway asked the Postal Service to address the issue of lease negotiations and suspensions in the context of POStPlan.  The Presiding Officer’s Information Request asks the Postal Service to describe its policies regarding lease negotiations and to explain what it plans to do to avoid suspensions when there are problems renegotiating leases at POStPlan post offices (POIR 5).


Emergency suspensions just keep on coming

The practice of using breakdowns in lease negotiations as the occasion for an emergency suspension has a long history.   In 1997, Congress became concerned about the suspension issue and asked the GAO to look into it.  The GAO report notes that from 1992 to 1997, there were 651 suspensions, almost half due to the termination of the post offices’ lease or rental agreement.  Only 31 of the 651 ever re-opened. 

Initial briefs on Network Rationalization: The parties weigh in with the PRC

July 11, 2012

Yesterday was the deadline for submitting initial briefs to the Postal Regulatory Commission on the Postal Service’s Mail Processing Network Rationalization (MPNR) plan to consolidate processing plants and relax service standards for First Class mail and periodicals.

The briefs summarize key points in the testimony and construct arguments for and against the plan.  They give a good preview of where the Advisory Opinion is headed.  Here’s an overview of these new and important additions to the PRC docket.


The Postal Service

The Postal Service’s brief is over one hundred pages, and nearly all of it is devoted to reviewing the case presented by its own witnesses.  It begins by characterizing the Postal Service’s financial problems as an existential crisis.  The very survival of the postal system is at risk:

“In the face of trends largely beyond its control, Postal Service management must implement measures that preserve the long-term viability and relevance of the national postal system. Simply put, this is no time for strategies founded on half measures and hope. Rather, it is a time for expeditious action that strikes a reasonable balance between historical service levels and the need to eliminate the excess mail processing and transportation capacity that is fueling the imbalance between revenues and operating costs.”

The brief proceeds to address the fact that the Postal Service has already implemented the service standard changes that the Advisory Opinion is supposed to review.  The Postal Service reminds the Commission that an Advisory Opinion is “non-binding,” and it suggests that section 3661 of Title 39 (which establishes Advisory Opinions) should not be seen as “an invitation for the Commission to second-guess the judgment of postal management.” 

Moreover, says the Postal Service, the Commission shouldn’t be spending months “reducing the cost or savings implications to the PRC’s own best estimate.”  According to the Postal Service, it’s up to the Board of Governors to look at the numbers and make a decision.  Only in a footnote does the Postal Service acknowledge that if there were fundamental flaws in its financial analysis, it might be appropriate for the Commission to point them out, but in this case, the Postal Service maintains, there are no flaws of such magnitude.

In any case, having already implemented the service standard changes under review by the PRC and having reminded the Commission that its advice is “non-binding,” the Postal Service says that it “greatly appreciates the potential constructive value that may be derived from the Commission’s exercise of its section 3661 responsibilities and will review and consider the Commission’s advisory opinion with great care when it is issued.”

Coming soon to a post office near you: The POStPlan implementation schedule

July 9, 2012

The implementation schedule for POStPlan just got a little clearer.  In a Q & A fact sheet posted today on the NAPUS website (available here), the Postal Service says the following:

“The PRC advisory opinion is expected August 23rd.  Once the opinion comes back, Dean Granholm will lead the POSTPlan phased implementation.  The POSTPlan implementation is expected to begin at the rate of approximately five offices per District, per week, starting with the vacant offices. The survey to the community will be done first, the survey results will be received, and then community meetings will be scheduled.  The District Manager designee will go on site for the community meeting, they will receive the community’s feedback and recommendations regarding which path they want to take based on the three available paths.  If the chosen path is the POSTPlan, Dean will work with the District to establish the level 2, 4, or 6 conversion date for the offices.”

The PRC’s official Procedural Schedule does not indicate when the Advisory Opinion will be completed, but given that the deadline for filing briefs is July 27 (unless the Postal Service decides to provide rebuttal testimony), the end of August is a reasonable expectation.  In any case, it looks as though the PRC has notified the Postal Service to expect the opinion on August 23.

According to the summary spreadsheet provided by the Postal Service to the PRC, there are over 3,100 post offices on the POStPlan list with a postmaster vacancy.  About 900 are being upgraded to Level 18, while 2,200 will be downgraded to Remotely Managed and have their hours reduced.  A list of the 2,200 is here, and a map, here.

There are also about 4,000 postmasters retiring over the next three months.  We don’t know yet how many of them work at POStPlan post offices, but let’s say 2,800.  That's five thousand post offices without a postmaster.  The Postal Service will begin the implementation process by reducing hours at these offices, probably starting with the 2,200 that have a current vacancy, then proceeding to those where the postmaster is retiring at the end of July, August, or September.  

Since the 2,200 are already staffed by Postmaster Relief employees, the only savings for these post offices will come from reducing the hours.  It probably comes to about $25 million a year — hardly worth the trouble for the Postal Service.  A couple of thousand underpaid PMRs will see their hours cut by a third or half.  They'll be the first to pay for POStPlan.

The implementation process will begin with a survey, then a community meeting.  The community will be asked its preferences among "three available paths."  Based on the Postal Service's presentation to the PRC, it's not quite clear how there are exactly three options.  In the market research associated with POStPlan, there are five: (1) close your post office and go to another post office for services; (2) close your post office and set up a contract unit with a local business to run a limited service office; (3) close your post office and set up a contract unit with a local business to run a full service office; (4) close your post office and expand rural delivery; (5) keep your post office open with reduced hours.  

As you can see, whether there are three paths or five makes no difference.  There are really no options at all.  It's just reduce the hours or close the post office.

The Postal Service will probably initiate the implementation process almost immediately after the Advisory Opinion is issued.  It will go through the motions of a survey and community meeting to determine what everyone already knows — the community would prefer reduced hours to no post office at all — and then it will start reducing hours.  It may take a few weeks for the postal bureaucracy to follow all the steps described in the appendix to USPS witness Jeffrey Day's testimony (p. 25), but we can expect to see the first POStPlan post offices with reduced hours in early October.

There are 74 USPS districts, so reducing hours at five a week would mean, on a nation-wide basis, 370 post offices per week.  At that rate, it will take about 14 weeks to downgrade the 5,000 post offices without a postmaster.

That means all during October, November, and December, the Postal Service will be busy holding meetings and reducing hours and finding and training part-time workers to staff thousands of post offices.  The Postal Service will suspend consolidations of mail processing plants from September through December because of the election and the holiday season, but management apparently thinks downgrading thousands of post offices won't be a problem.   

POStPlan has been in production for over a year, yet somehow the Postal Service is going to release it at the worst possible time.   Coming soon, POStPlan, the disaster movie.

OopsPlan: The Postal Service forgets to count PMRs

July 7, 2012

When the Postal Service presented POStPlan to the Postal Regulatory Commission in May, it would not put a number on how much the plan would save, but the USPS press release said $500 million a year.  The Commission asked the Postal Service to provide the calculations that led to this estimate, and the Postal Service submitted a spreadsheet showing how much it currently costs to staff 22,000 post offices, and how much it would cost if 13,000 of them were staffed with part-time workers and the hours of operation were reduced to match revenues (USPS-LR- N2012-2/6).

Using the average salary for postmasters at each level of post office (11, 13, 15, etc.), the spreadsheet estimates the total cost for labor under the current system at $1.66 billion a year.  Under POStPlan, labor would cost $1.14 billion.  That yields a net savings of $517 million.  (There’s more about the cost savings calculations in this post.)

A couple of day ago, the Postal Service responded to a question about cost savings posed by the PRC's Presiding Officer, Nanci Langley: “In calculating the cost savings as shown in Library Reference No. 6, how does the Postal Service treat offices with a current Postmaster vacancy and which may be managed by (a) an Officer in Charge (OIC) and (b) a Postmaster Relief (PMR)?” 

The Postal Service replied that the average used in the calculations was “an average of the salaries for Postmasters currently assigned to each of the respective levels.  The Postal Service used this average salary for offices with an OIC or PMR covering the assignment.” (POIR 4-6)

In other words, the Postal Service based its cost-savings estimate of $500 million on calculations that average the salaries of postmasters, without taking into consideration the fact that in over 3,000 POStPlan post offices, there is no postmaster.  Instead, there’s a non-career employee who earns a half or third as much.  The savings from using these PMRs have therefore already been realized, and they are not part of the savings for POStPlan.  By not counting PMRs, the Postal Service has significantly overstated the cost of labor under the current system.  The $500 million figure thus overestimates the savings by a considerable amount.

The PRC, or one of the participants in the Advisory Opinion process, may ask the Postal Service to provide a revised cost savings estimate using the actual salaries of employees at the POStPlan post offices.  While we wait for the results, here’s a rough estimate of how including PMRs will affect the cost savings analysis.  

Push Back in Pasadena

July 5, 2012

Earlier this week, members of Occupy Democracy - Pasadena joined postal workers, union officials, and area politicians to hold a rally near the steps of Pasadena’s City Hall to protest the closing of the Mack Robinson mail distribution center, where the consolidation process is set to begin at the end of this week.  

“They’re calling it a ‘limited consolidation’ but it’s limited only in name,” Congresswoman Judy Chu told the crowd of 150.  “If the post office goes through with its plan, it will have significant consequences for San Gabriel Valley residents, businesses, and our dedicated postal office workers.”

“I remember when we came here to dedicate this facility and I’m here to say that Mack Robinson is part of our community,” said Congressman Adam Schiff. “These are good, dedicated public servants who deliver our mail, who bring us our packages, and they are part of our community.”

The consolidation will mean the loss of 260 jobs, which will cost the city millions in lost revenue.  Most of these workers will have to commute long distances to other locations, move away, or find another job.  But the problem is not just in Pasadena and the other 230 communities where processing plants will be closed. 

The problem is what’s happening to the mail. 

The chorus of people chanting that the Postal Service needs to be given the freedom to act “like a business” — meaning the freedom to close plants and post offices and lay off tens of thousands of workers — should read the piece by Ron Nixon in today’s New York Times: “With Cuts on the Way, Postal Service Customers Already Bemoan Delays.”

 “Even before the Postal Service begins closing hundreds of processing centers to cut costs, several businesses say they are beginning to see a decline in service,” writes Nixon.  The article goes on to cite many examples of newspapers arriving when the news isn’t news anymore, advertising flyers arriving after the sale they’re promoting has ended, and businesses losing customers because of all the delays.

“The problems only seem to be getting worse,” Max Heath told the Times.  “And the odds of it getting better is almost zero when you consider the changes the Postal Service is about to make, closing plants and lowering its delivery standards.”   Heath knows what he’s talking about.  He's been in the community newspaper business for 45 years, and he's now a consultant for the Publishing Group of America, whose magazines are distributed through small newspapers.  In testimony before the Postal Regulatory Commission earlier this year, Heath said,  "“Frankly, in my view, I think the Area Mail Processing system has been quite a disaster for most mailers,".

Postal workers may be the ones taking to the streets right now because they are most immediately affected by the consolidations.  But it’s the whole country that’s going to come out at the losing end. 

There’s more about the Pasadena fight in this excellent post, and there’s more on this week’s demonstration here and here.

(Photo credits: Patrick Briggs.  Photos here.  Slideshow created with flickr slideshow.)

Eureka! The Postal Service finds gold in California

July 3, 2012

The Postal Service has been actively selling off historic post office buildings for over a year now.  About forty have been sold or put up for sale.  They’re scattered around the country, but for some reason more than a third of them are in California.

Last week news came out that one of the most beautiful post offices in the country would be sold, the 1915 post office in Berkeley.  The protest is already beginning (SF Gate and Daily Californian).

The Berkeley post office was built during a period when many believed architectural beautification could bring harmony to urban living, explains Gray Brechin, UC-Berkeley geography professor and founder of the Living New Deal.  “The federal government went to special lengths to give Berkeley one of the handsomest postal facilities in the state and possibly the nation,” says Brechin. “It represents the high idealism of the City Beautiful Movement.”

Apparently the country is done with that kind of idealism, and rather than building beautiful public places, the federal government is selling them off.  What’s going on in California is one of the main reasons the National Trust named the Historic Post Office to its list of America’s 11 Most Endangered Places of 2012.

Historic post offices are highly prized by their communities.  They anchor the downtown area, help local businesses, enable people to walk to the post office, and elicit pride of place.  People may complain about the long lines, but they love their grand old post office.   

If something doesn’t stop the sell-off, it looks as though the Postal Service is prepared to dispose of all 2,200 of the country’s historic post offices.  Postal officials seem to think that this legacy belongs to them, to do with as they please.  They forget that these post offices are the property of the American people.  They seem unaware of the magnitude of the crime they're committing. 

The Postal Service says it needs the money these sales bring in, and the old buildings cost too much to maintain, especially when a lot of space is underutilized.  But the sales bring in a relatively small amount of money in the context of the USPS budget, the maintenance costs are less than the rent the Postal Service pays on the replacement post office, and the underused space is the Postal Service's own fault.  Rather than making the most of the downtown location, the Postal Service moves letter carriers to other locations (which also cost money to lease or maintain), so that the mail processing that used to go on in the back now goes on somewhere else, leaving just the retail services in the building.

The explanations offered by the Postal Service disguise what's really going on.  The Postal Service is selling off its properties because divestiture of assets, along with outsourcing, is one of the main steps in the process of privatization.  The plans have been in the works for a long time.  Back in 1998, President Reagan's Commission on Privatization recommended selling off "obsolete buildings in central business districts" — historic downtown post offices — to help move the Postal Service toward privatization.  You can read all about it in the Commission's report, "Privatization: Toward More Effective Government" (pp. 122-125).


Why California?

California has fourteen historic post offices that have been sold, put on the market, or planned for sale — the most of any state in the country.  Connecticut is number two, with five (most of them in the “Gold Coast” area around Westport).  Several other states have one or two. 

One might assume that so many historic post offices are being sold in California because the state has an unusual number of them, but that explanation doesn't hold up.  California ranks fifth in terms of how many historic posts offices it possesses, 106.  New York is number one (with 238); Pennsylvania, second (182); then come Illinois (170) and Ohio (126).    Yet these states have only one or two historic post offices for sale.

Of California's approximately 1,800 post offices, the Postal Service owns around 600.   Using fifty years old as a rule of thumb for listing on the National Register of Historic Places, over a hundred California post offices are eligible and 24 are currently on the Register.  (A list of California’s historic post offices is here, a map here, and a spreadsheet showing how post offices and historic buildings break down state-by-state, here.)

Percentage-wise, California is not at all unusual in the number of historic post offices it possesses.  About 6 percent of the state’s post offices are historic, which ranks California 29th.   By contrast, in the New England states, about 13 percent of the post offices are historic.  

There must be another reason why the state is seeing so many sales compared to other states. One possible explanation is that postal management in the Pacific District is simply being more aggressive about selling post offices than other districts, perhaps to please postal headquarters back east.  It’s also possible that the California post offices are among the country’s most valuable, and the Postal Service wants to work on the big-ticket items first.  That would also explain why it sold off the post offices in Connecticut’s Gold Coast and Palm Beach, Florida.  Or maybe the Postal Service is just starting the divestiture process on the West Coast, intending to work its way east, so it’s only a matter of time before other states suffer their share of the damage. 

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