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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. 

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