July 21 2013
The Greeting Card Association (GCA) has produced a long report describing what it calls "commonsense solutions" to put the Postal Service on "a path to solvency." It includes more than 100 deficit reduction proposals.
The main one is simple: "The Postal Service should immediately implement cluster boxes on a widespread national scale using its existing management authority to do so, and drop politically divisive plans for Congress to end Saturday mail delivery."
The report suggests that ending Saturday delivery is highly unpopular, while replacing delivery to the door or curb with cluster boxes would be fine with most customers.
That's a highly dubious proposition. The Postal Service has generally resisted mass conversions to cluster boxes, especially for existing customers, because it knows they will anger customers, and it's been pushing five-day delivery in the belief that customers prefer it to other ways for saving money or to raising rates. When the OIG did a report on the cost savings of switching modes of delivery, the Postal Service responded, "when surveyed, our customers indicated that they would rather lose a day of delivery service than have their mailbox moved from a door or curbside locations to a centralized delivery.”
The GCA's proposals are often contradictory, and there are many numbers mentioned without a citation to check them. For example, the report says, "The cost of modifying the Postal Service’s original proposal [to end Saturday delivery] was to add back $500 million to Saturday delivery costs for packages and medicines." There's no source cited for this figure. The Postal Service, to our knowledge, has never provided such an estimate, nor has the Postal Regulatory Commission, the agency which has done the most work on analyzing cost savings for ending Saturday delivery.
The GCA suggests that selling the Postal Service's real estate portfolio — valued at $85 billion by the OIG — would be a viable way to cover the remaining obligation ($46 billion) in the Retiree Health Benefit Fund. There's no discussion, however, of how much it would cost to replace these facilities with leased spaces. Over the long run, leasing usually costs more than owning, so what good would it do to sell off all this real estate?
The report makes some good proposals for putting the excess space in post offices to better use, such as leasing out the extra space to other government agencies and using post offices as "centers of continuous democracy" and to help people interface with other federal agencies. But such ideas are not exactly consistent with the proposal to sell off the Postal Service's real estate holdings.
Despite its problems, the GCA's report is worth reading. If nothing else, it shows how self-serving each stakeholder's solution for rescuing the Postal Service can be. Read the report.
July 19, 2013
Yesterday two of the country's most significant historic post offices — the 1916 Berkeley post office and the 1935 Bronx GPO — came a step closer to being sold.
Mr. Tom Samra, USPS Vice President, Facilities, rendered his final decision on the Berkeley post office. The Postal Service will relocate retail services to a yet-to-be-determined location, and the historic building will soon be put up for sale. You can read his decision here.
At almost the same moment, the Postal Service filed a motion with the Postal Regulatory Commission to dismiss the appeal on stopping the relocation of the historic Bronx General Post Office, so it too will soon be on the market. .
Neither the decision on Berkeley nor the motion on the Bronx came as a surprise. The Postal Service will not be swayed from its plans to sell historic post offices. Postal officials have denied appeals on Venice, the Bronx, La Jolla, and other relocations, and postal lawyers have consistently argued that relocation decisions can be appealed only to the USPS VP of Facilities, not to the PRC. Community opposition doesn’t matter, the pleas of elected officials don’t matter, and legal arguments by attorneys and historic preservations don’t matter.
Appeals concerning the Berkeley relocation were filed by Congresswoman Barbara Lee, Berkeley Mayor Tom Bates, State Senator Loni Hancock, State Assemblymember Nancy Skinner, the Berkeley Architectural Heritage Association, the National Trust for Historic Preservation, the National Post Office Collaborate, Ford & Huff Attorneys at Law, Save the Berkeley Post Office, the Gray Panthers of the East Bay, and approximately fifty postal customers. The appeals just didn’t matter.
At this point, Mr. Samra’s final decision statements are pretty much boilerplate. He reviews the concerns raised by the appeals, and dismisses each in turn. The impact on the community, he says, will be mitigated by locating a new retail office in a convenient location. Besides, as Mr. Samra reminds us, 40 percent of retail revenue comes from sources other than a post office, which presumably means that many people don’t need a post office to begin with.
Mr. Samra says that allegations that the Postal Service has failed to comply with the National Environmental Policy Act, the National Historic Preservation Act, and so on, are not relevant because it is premature to consider the requirements spelled out in these laws. The Postal Service has only decided to relocate the post office; it will deal with these other matters when the time comes to sell the building.
The bottom line, says Mr. Samra, is that the Postal Service’s financial condition requires it to take steps like selling the Berkeley post office, and that’s about all there is to it.
July 18, 2013
The USPS Office of Inspector General is preparing an audit report about the sale of historic post office buildings. The objective of the study is “to review the Postal Service’s process and plans for the disposal and preservation of historic properties.”
The OIG poses two main questions: “Do you think the Postal Service follows proper procedures when disposing of historic buildings? Also, considering its financial constraints, what should the Postal Service’s role be in maintaining historic assets?”
The OIG invites comments from the public, so here’s a good opportunity to weigh in. Just go to the OIG website and share your thoughts and experiences, especially if you have had a historic post office close in your area. [The OIG website no longer has the announcement, but it is archived here.]
The Postal Service, though it prides itself on listening to its customers, has proved to be deaf to the protests of communities where post offices are being sold. It seems to view legal requirements that it conduct a public participation process simply as an obstacle to be overcome. It goes through the motions of the legal procedures without any regard for their true goal — to ensure that the Postal Service partner with communities on the decisions that affect them.
Instead, the Postal Service makes a decision first, then pretends to listen to what people have to say. Public meetings and comment periods turn into an exercise in bad faith, and when communities and their attorneys complain about the Postal Service’s failure to follow the law, postal officials deny any wrongdoing.
The Postal Regulatory Commission, the agency charged with “regulating” the Postal Service, has taken itself out of the picture. The Commission has dismissed several appeals on the closures and sales, saying that “relocations” of post offices are out of its jurisdiction, and it won’t go near anything related to enforcing the National Historic Preservation Act (NHPA).
That leaves communities few options. They can lobby their elected officials, but the Postal Service doesn’t listen to them either. Another alternative would be to take the Postal Service to court, but that takes a lot of time, money, and legal expertise.
It’s probably being overly optimistic to think the OIG’s audit will have any effect on stopping the fire sale of historic post offices, but perhaps it will provide an opportunity to examine some of the key issues. Perhaps the OIG can encourage the Postal Service to be more forthcoming about what it’s up to and to take more responsibility for preserving its historic properties.
July 17, 2013
The Postal Service has decided to relocate its postal facility in Dana Point, California. The Postal Service currently owns a 20,000-square-foot building housing a retail post office and a carrier operation, but postal officials say they need only 11,000 square feet, so they want to sell the building and lease a smaller space.
Diana Alvarado, manager of property management for the Postal Service, says that downsizing the Dana Point facility would save the Postal Service $52,000 annually. It’s hard to see how.
There’s a detailed description of the Dana Point deal on the USPS-CBRE “Properties for Sale” website right now (if it gets deleted, an archived version is here). It says that the Dana Point facility is being offered for sale at $6.1 million. The buyer must also submit an Alternative Quarters offer to provide space for the new facility.
The new space must be at least 11,511 square feet. The USPS will sign a 10-year lease with four 5-year renewal options at a rent of $19.50 per square foot. The website indicates that buyers “are welcome to submit their own ‘market’ rental rate,” so presumably the Postal Service would be willing to pay a bit more. The terms of the lease include a 2.5% annual increase in the rent.
In the first year of the lease, then, the Postal Service would pay $224,465. By 2043, those 2.5% annual increases would bring the rent to double that amount. The total rent paid out over the 30 years of the lease would be $9.8 million.
The Postal Service thus hopes to sell the building for $6.1 million, and it’s ready to pay out $9.8 million in lease costs. How does that save $52,000 annually?
If the estimate is somehow correct, the total savings over 30 years would come to $1.6 million. As an alternative to selling the facility, the Postal Service could subdivide the space and rent out the extra 9,000 square feet. If it were able to rent the excess space at the $19.50/sf (plus 2.5% annual increases) that it's prepared to pay for a new space, the Postal Service could generate over $7.7 million in revenue over 30 years (minus renovation costs).
It's hard to see how the relocation deal makes sense for the Postal Service. As every homeowner knows, renting may be cheaper in the short run, but owning is a better deal over the long term, especially if the owner also has an opportunity to bring in some rental income as well.
In any case, one entity that is sure to come out ahead on the Dana Point deal is CBRE, the Postal Service’s exclusive real estate broker. It may make a commission on selling the building and arranging the new lease.