March 19, 2013
Five large post offices in New York may be closed over the coming months. Most likely, retail services will be relocated to smaller spaces in the neighborhood, and several hundred letter carriers who work out of the back of the buildings will be transferred to other postal facilities.
The closures would have a dramatic impact on their communities, and the Postal Service is coming under pressure from elected officials and historic preservationists to reconsider its plans.
The Postal Service has asked to be put on the agenda at the regular meeting of the Manhattan Borough Board so that it can discuss the situation for several Manhattan post offices. The meeting is open to the public, and it will be held on Thursday, March 21, at 8:30 a.m., One Centre Street, 19th Floor.
Here’s a status report on where things stand with these five post offices.
Bronx General Post Office
The historic post office at 558 Grand Concourse in the Bronx (10451) is heading for closure and sale. Built in 1936, the post office contains several priceless murals by Ben Shahn, who worked with Diego Rivera on the controversial mural that was removed from Rockefeller Center. The Postal Service says it plans to relocate retail services to a smaller location in the community (maybe even in the same building) and to sell the historic structure.
As reported by David Cruz in the Bronx Times, the asking price for the Bronx GPO is $14 million. It’s about seven blocks from the new Yankee Stadium, so it’s in a prime location for repurposing as a big retail center.
The process has been moving along very quickly. The Postal Service informed Bronx Borough President Ruben Diaz on Dec. 31 of its intentions to sell the post office and relocate postal services. A 30-day comment period on the proposed relocation then began, either on Jan. 28, when the notice was posted at the post office, or on Feb. 6, the day of the public meeting. Turnout at the meeting was sparse because people were at work and the notification was poor, so Community Board 4 asked for an evening hearing with the Postal Service, but the request was declined.
The comment period ended on March 5. The Postal Service sent a letter, dated March 14, to the Bronx Borough President saying that it had made a final decision to relocate retail services. The letter states simply, "Upon further assessment and review, the Postal Service has made a determination to proceed with the relocation of retail services. In the near future, we plan to advertise for an existing building in which to relocate the post office. Plans also include marketing the sale of the property." (The letter is here.)
The community has 30 days to appeal the decision to the Postal Service. Requests for an appeal are supposed to be sent to the Vice President of Facilities at the Postal Service, probably the same person who made the final decision.
The process on the Bronx GPO has gone a lot faster than the Postal Service said it would. In a news item dated Feb. 1, 2013, the Postal Service said, “A final decision will be made in about three months after the agency meets with local officials and residents of the 10451 zip code area, which this branch serves.” Instead, it took about six weeks.
In fact, the Postal Service has gone through the process about as quickly as the law allows. According to CFR 241.4, the federal regulations governing relocation of post office, the Postal Service must wait at least 15 days after the date of the public meeting or receipt of the written comments before making a final decision. Depending on how one figures things, the Postal Service may not have even waited that long. It certainly didn't waste any time before coming to a final decision.
The Bronx GPO is on the National Register of Historic Places, so the Postal Service must also comply with Section 106 of the National Historic Preservation Act. The Postal Service maintains that the Section 106 requirements don’t apply to the “relocation” of a post office to elsewhere in the community, so the agency doesn’t have to follow these procedures until it is ready to dispose of the building. The National Trust and Advisory Council on Historic Preservation take a different view of the question, but the disagreement remains unresolved at this time.
For more about the Bronx post office, follow David Cruz's articles for the Bronx Times, and check out the excellent article by David W. Dunlap in the New York Times. For more about the threat to historic post offices across the country, see this great piece by Robin Pogrebin, also in a recent issue of the Times.
Old Chelsea Station
The Postal Service is also planning to sell the Old Chelsea Station at 217 West 18th Street (10011). Built in 1935, it was listed on the National Register in 1989, and it contains two New Deal bas relief murals done by Woodstock artist Paul Fiene.
As reported by Liza Bear for The Villager, a letter about the pending relocation was discovered pinned to the post office’s wall by an alert patron, who notified the media. The Postal Service also sent a letter to the State Office of Parks, Recreation and Historic Preservation notifying them of the pending sale, along with an explanation that the sale will have ‘no adverse affect’ on the building's historic value.
Congressman Jerrold Nadler, in whose district the post office is located, was not pleased about the notification process. "We should not learn of an impending sale and closure only through a letter to the state agency on Historic Preservation,” he said in a statement.
Elected officials first learned of the sale on January 11, and seven of them wrote the Postmaster General on February 6, complaining about the notification process and asking him “to examine all scenarios that would allow it to continue providing services at the site while repurposing the excess space that is no longer needed prior to moving forward with any proposal to sell the property.” (Their letter is here.)
The Postal Service decided to move forward on the sale and started the clock on a 60-day comment period, beginning February 19. The same elected officials wrote a second time to the Postmaster General, "expressing their outrage that the public comment period began without any direct communication to the public from USPS regarding its plans and the process for public engagement, either in an official release to the community or at a public meeting.”
The letter also called on the Postal Service to restart the public comment period, but the Postal Service has not responded to this request, so the comment period is slated to end on April 19.
Elected officials have also written to the Chair of the New York City Landmarks Preservation Committee, asking that the Old Chelsea post office be granted landmark status: “Given the substantial threat to this historically significant building posed by any change in occupancy, we respectfully request that the New York City Landmark Preservation Commission (LPC) initiate an evaluation of the building and favorably consider it for designation as an Individual Landmark.” (Their letter is here.)
The Postal Service will hold a public meeting about the Old Chelsea Post Office on April 11 at 6:30 p.m. at Fulton Center Auditorium, 119 Ninth Avenue (between 17th and 18th Streets). There's more about the latest on the Old Chelsea post office here.
March 15, 2013
The National Academy of Public Administration (NAPA) has just published a report about a proposal to create a "public-private hybrid" postal system. The full title is worth noting: “An Independent Review of a Thought-Leader Concept to Reform the U.S. Postal Service.”
Under the proposal, two-thirds of the Postal Service — the retail and processing components (the “upstream activities”) — would be privatized, while the third leg, the“downstream” delivery network, would remain a government entity.
The NAPA study does not fully endorse the proposal, but it says the concept “merits serious consideration as part of a more comprehensive policy reform effort,” and it encourages the Postal Service to analyze how implementation might be accomplished and to work with stakeholders on expanding the role of the private sector.
No way in hell
Privatization as described in the proposal is not going to happen anytime soon. Or, to put in the more colorful terms used by Gene Del Polito, president of the Association for Postal Commerce: “There’s no way in hell that Congress would allow this to happen. And there’s no one in the Postal Service that’s going to make it happen.”
If Mr. Del Polito is right — and there aren’t many people who know more about the inside world of the mailing industry and what’s going on in Congress — then what was the purpose of the NAPA study, and why did Pitney Bowes help pay for it?
Bloomberg News has a very good article by Angela Keane, which goes a long way toward providing an explanation. It begins this way: “The U.S. Postal Service should consider keeping door-to-door delivery while privatizing the rest of its operations, a panel led by former Government Accountability Office head David Walker found.”
The lede thus gives credence to the idea of privatizing the Postal Service — a goal that has generally been viewed as an extremist position associated primarily with conservative think tanks like the Cato Institute and American Enterprise Institute.
The NAPA report thereby shifts the discussion of privatization from the right-wing fringe to a mainstream center and gives advocates of Draconian downsizing — like Congressman Darrell Issa — more leverage in the debate over postal reform.
As it happens, Mr. Walker will also be one of the VIP speakers at the Postal Vision 20/20 event in April, so the report is likely to get plenty of attention there. Members of the NAPA panel, as well as the authors of the original proposal, will probably also be making the media circuit, talking up the idea.
The NAPA report lends an air of respectability to discussions of privatization, and it will fuel speculation in the media about the possibility that it might actually happen. That, in turn, will aid those who want to downsize the Postal Service by slashing the workforce, closing facilities, and cutting services. Thus, even if the proposal never gets implemented, the NAPA report will have done its work.
A “rigorous” and “independent” review
The Foreword to the report provides the background on the "Thought-Leader Concept." The whole thing got started when “four nationally recognized and experienced mailing industry leaders authored a White Paper in 2012” describing a public-private hybrid model for the postal system. Then NAPA decided to assemble its own panel to review the white paper.
“In order to subject this idea to rigorous evaluation,” the report proceeds to say, “Pitney Bowes Inc. made a contribution to the Academy to support the conduct of an independent review of this White Paper.” A few pages later we're told again, “This independent review was supported in part by a contribution from Pitney Bowes Inc.”
One has to wonder how an “independent” review and “rigorous evaluation” could be conducted using funds provided by one of the biggest stakeholders in the mailing industry.
News reports about the initial proposal and the NAPA review have raised the same question. CBS News noted, for example, “The study is being underwritten by Connecticut-based firm Pitney Bowes, which already contracts with the Postal Service for portions of its operations and could stand to benefit from the agency's further privatization.”
Yesterday’s Bloomberg report quotes Sally Davidow, a spokeswoman for the American Postal Workers Union, saying the same thing: Pitney Bowes “stands to benefit enormously from privatizing mail processing operations.”
The Bloomberg article also points out that Pitney Bowes did $30 million worth of work for the Postal Service in 2012. But that’s just the tip of the iceberg.
With 36 major mail-processing centers across the country, Pitney Bowes possesses the “largest national pre-sort network.” In 2011, the company had total revenues of $4.7 billion. (It may have topped $5 billion in 2012.) Over $567 million of its revenues came from what its 10-K financial statement describes as “mailing services,” i.e., the pre-sort business.
The $30 million USPS outsources directly to Pitney Bowes thus represents less than one percent of the company's annual revenues, while its pre-sort business accounts for over 12 percent. That’s where the real money is, and that’s where the potential for growth is.
Here’s how that pre-sort revenue works out. The Postal Service gives a hefty “workshare” discount to mailers who deliver their mail to a postal facility already sorted into three or five-digit ZIP codes. A mailer who doesn’t have enough volume or resources to do the pre-sorting can contract with Pitney Bowes to do the work. They then split the savings from the discount. Also, since Pitney Bowes consolidates mail from many sources, its discount is much bigger than an individual mailer would have been able to get.
For example, the Postal Service might offer a discount of 10 cents per piece for pre-sorted First Class mail (the rate chart is here). Pitney Bowes passes, say, 2.6 cents of the savings on to the mailer and keeps the rest.
Those pennies add up, especially when you consider that Pitney Bowes handled 14 billion pieces of mail in 2011. If the company averages, say, four cents per piece, that comes to $560 million a year in revenue — approximately the number cited in its 10-K for “mailing services.”
The potential windfall
Let's consider what would happen if the entire USPS mail processing network were privatized as discussed in the NAPA report.
What are the USPS and CBRE up to? The case of the historic structure report on the Berkeley Post Office
March 10, 2013
The fire sale of the country’s post offices seems to be picking up speed. Yesterday the Postal Service confirmed that it was in contract with a buyer for the 1858 post office in Georgetown, a historic neighborhood in Washington, DC.
The sale of the New Deal post office in the Bronx, New York, also appears to be moving forward with alacrity. The announcement of a possible sale came at the end of January, and already the public comment period has closed. There are rumors a buyer is waiting in the wings.
According to the USPS-CBRE Properties for Sale website, many sales are nearly completed. The 1916 post office in Stamford, Connecticut, the 1934 post office in Saint Paul, Minnesota, the 1940 post office in York, Pennsylvania, and the 1941 post office in Flemington, New Jersey, are all “in contract.” Two others — the 1934 post office in Somerville, Massachusetts and the 1935 post office in Villa Park, Illinois, are described as “negotiating. The 1936 post office in Plymouth, Michigan has apparently been sold as well.
The process is also moving ahead to sell the 1914 post office in Berkeley, California. Recognizing the national scope of the sell-off, Berkeley Mayor Tom Bates has written to 54 mayors across the country asking for their help in fighting what he calls "the privatization of our publicly funded buildings."
Transparency problems are a big issue in these sales. In last week's New York Times' article about the sell-off, Chris Morris, a senior field officer for the National Trust and project manager for post office buildings, told the Times, “Our biggest concern is the way they’re going about it isn’t transparent.... A lot of us are very confused about the process.”
There's no indication, for example, that a public bidding process is taking place. When the Postal Service sells a post office, the public only learns of the buyer’s identity and the sale price after the deal is done. Everything takes place behind the scenes.
Other federal agencies are much more transparent. For instance, in 2011, when the General Services Administration sold the historic post office in Modesto, California, the bidding process was open to the public, and one could see the latest bid on the GSA auction site.
It’s not even clear what role the Postal Service’s exclusive real estate broker, CBRE, plays in these transactions. In one news article about the Berkeley post office, the Postal Service and CBRE told the reporter that “when CBRE handles the transactions, it does not advise the Postal Service which facilities to put on the market.” But another article says that CBRE does advise the Postal Service on “which properties should be sold.” Dismissing any possible conflict of interest CBRE may have in performing its services, a USPS spokesperson said, “They’re just giving advice, it’s up to us if we want to take it.”
Berkeley city officials have also had difficulty getting information from the Postal Service about the sale. When asked, for example, what the appraised value of the post office is, the Postal Service refused to divulge the information on the grounds that it was “proprietary.” The city has been forced to file a request for relevant documents under the Freedom of Information Act (FOIA).
A couple of weeks ago, the Postal Service responded to the FOIA request by sharing several documents with the city. One of them raises some rather disturbing questions.
Customer input welcome
According to federal regulations, when the Postal Service wants to "relocate" a post office — which is how the closure of these historic post offices is being characterized — it must hold a public meeting. In early February, the Postal Service sent a letter to Berkeley customers informing them that a meeting would be held on February 28. It begins by saying that the USPS is "proposing the relocation" of the Berkeley post office, and it proceeds to say, "Customer input on this proposed relocation is welcome."
As reported in the Berkleyside, at the meeting Augustine Ruiz (a USPS communications specialist) and Diana Alvarado (a USPS real estate specialist) gave a presentation about the process that the Postal Service must go through before it comes to a final decision on the sale.
The steps include: Inform city officials of the proposal, hold a public meeting, and open a comment period. Then local USPS officials make a recommendation to executives in postal headquarters in D.C., and then they make a final decision. The Postal Service then informs the community of its decision, and the community is given an opportunity to appeal. At some point (exactly when is a matter of contention), the Postal Service must also go through the steps outlined in Section 106 of the National Environmental Policy Act (NEPA).
At the meeting, the Postal Service representatives explained that no final decision on the sale had yet been made, and Ms. Alvarado noted that in at least a couple of cases (Huntington Beach and Menlo Park), management decided not to go through with the sale after listening to public comments.
Despite these reassurances that the plan to sell the Berkeley post office is a "proposal," "customer input" is welcome, and no final decision has been made, it looks as though the sale may already be a done deal.