October 2, 2015
As a result of all the public protest, the Postal Service has stayed away from post office closings over the past two years, and if legislation recently proposed by Senator Tom Carper were to be approved as is, there would be a moratorium on all post office closings for the next five years.
But opposition to discontinuing post offices is not stopping the Postal Service from closures by other means, often involving the termination of a lease. Recent news reports indicate that a couple more emergency suspensions are taking place, both of them over lease issues, and a couple of other offices are being relocated, possibly for lease-related issues.
On Thursday of this week, services were suspended at the post office in Pyrites, NY. The Postal Service is putting up a cluster box outside the post office for the 25 PO box holders, and residents will need to travel about eight miles to Canton to do their postal business. “No timetable for a return of postal services to the community has been established,” says the news article. Pyrites is a PostPlan post office, open two hours a day.
On October 24, the Postal Service will suspend operations at the post office in Dalmatia, PA. A USPS spokesperson says that the lessor exercised the option not to renew the lease that expires on October 31, 2015. Customers, including 58 with PO boxes, will need to drive ten miles to the post office in Millersburg. The Dalmatia post office is a Level 6 POStPlan office.
In September, the Postal Service approved the relocation of the Mission Hills Branch in Los Angeles to the carrier annex. The annex is just a mile away, but it’s on the other side of a large freeway. The press release says, “This relocation is due to the expiration of the lease at the current location and pending redevelopment of the site.”
Later this month, the Postal Service will hold a meeting later on the proposed relocation of the post office in Wyandotte, MI. Back in 2014, the letter carriers were transferred to another post office, sparking another round of rumors that the Wyandotte post office might close, possibly in April 2015, when the lease expired. The Postal Service says it needs to relocate and will look for a yet-to-be-determined location within the city limits.
Emergency suspensions and relocations are a regular occurrence, but they may be happening with more frequency as an alternative to discontinuances.
According to the annual compliance report prepared by the Postal Regulatory Commission, as of the end of FY 2014 (Sept. 30, 2014), there were 489 post offices under suspension. About 240, or 48 percent, were the result of lease-related issues. Some of the suspensions occurred years ago, and the post office has remained closed all that time with no sign of a new location being sought.
During FY 2014, the Postal Service suspended 102 post offices, 33 of which reopened by the end of the year. About 40 of the suspensions were for lease-related reasons, as shown on this list provided to the PRC by the Postal Service as part of the compliance review. During the first four months of FY 2015, another 22 suspensions occurred, 12 of them over lease issues.
The Postal Service doesn’t publish lists of relocations, and the PRC has not asked for this information as part of its compliance review, but in December 2013, we used news reports and press releases to compile an unofficial list of relocations. It showed 89 relocations, about 24 of which had been completed recently, with the other 65 at some stage in the planning process. Since that time, many more relocations have been announced, as seen in these previous posts.
The suspensions and relocations have been subject to investigations by both the PRC and the USPS Office of Inspector General. Lessors often report that the Postal Service was not very responsive during the lease negotiations and acted as if it had no interest in renewing, but the Postal Service does not take responsibility. It simply identifies the cause for the suspension as "lease expiration" or "lessor cancelled lease."
The Postal Service hasn’t discontinued many post offices over the past couple of years, but it has closed some for emergency suspensions, and it has also relocated several others.
In some cases, the Postal Service relocated from one leased property to another, moving to a smaller space where the rent was cheaper. In other cases, the Postal Service moved out of a building it owned, leased a smaller space, and then put the property up for sale.
This week the Postal Service announced plans for another relocation and disposal — the Fleetwood Station Post Office on Addicks Howell Road in Houston, Texas. There will be a public meeting about the relocation at the post office on September 29.
The Postal Service has owned the Fleetwood Station since 1998. It will probably explain to the public that the 28,000-square-foot building is more than it needs, and leasing a smaller space would save money. The building will eventually be put up for sale, which will also help by bringing in some extra revenue.
The Postal Service doesn’t publish a list of relocations, but back in December 2013, we used newspaper articles and other sources to prepare a list of recent relocations. As discussed in this previous post, the list had about 80 relocations.
Five of them were in Houston (as reported in the Houston Chronicle): Memorial Park Station (10505 Town and Country Way), Julius Melcher Station (2802 Timmons Ln.), Greenbriar Station (3740 Greenbriar St.), University Station (1319 Richmond Ave.), and Southmore Station (4110 Almeda).
Since 2013, a few more Houston facilities have been slated for relocation and sale.
Last fall, the Postal Service announced that the Heights Finance Station on Yale Street would be relocated. After making a final decision to relocate, the Postal Service said in January that the property would be put up for sale.
Earlier this year, the Postal Service also closed down the Barbara Jordan Post Office (the Houston P&DC) on Franklin Street. All operations were transferred to the North Houston P&DC on Aldine Bender Road. That consolidation cost over $70 million — about $50 million to modify the North Houston facility, plus another $23 million for “material handling” and other expenses.
In August of this year, the Postal Service sold the Franklin Street P&DC and its 16-acre site to Lovett Commercial for an undisclosed price. It’s a historic building, eligible for the National Register of Historic Places, but it looks as though it is headed for demolition. (More on that in this previous post.)
Aside from the Fleetwood Station, where a final decision hasn’t been made yet, the other relocation decisions have all been finalized, the opportunity for appeal has passed, and the buildings are listed for sale on the USPS Properties for Sale website. At this point, though, the relocation hasn’t happened yet, and the post offices are still open for business.
There is one exception, however. The Postal Service decided not to move forward on the relocation of the Southmore Station. Citizens and elected officials protested vigorously against this relocation because the property was the site of the first sit-in, a 1960 demonstration against segregated lunch counters. In May of 2014, the Postal Service said it had dropped plans to relocate Southmore Station. The other relocations will presumably take place once the Postal Service has found buyers for the properties and new locations for the post offices.
Houston has a lot of post offices — about 37 in leased properties and 54 in buildings owned by the Postal Service — but for some reason it has seen more than its share of these relocation-and-disposal decisions.
The Postal Service owns a total of about 8,600 facilities. According to this OIG report, in fiscal years 2012 and 2013, the Postal Service earmarked 49 properties for sale — less than one percent of the total.
The Fleetwood Station represents the seventh facility earmarked for disposal in Houston over the past two years (not including Southmore). That represents about 13 percent of the USPS-owned properties in Houston. Along the same lines, the USPS Properties for Sale website currently has 39 buildings for sale. Five of them, or 13 percent, are in Houston.
Why Houston has been singled out this way is hard to say. It’s not as if the population of the city has been declining. In 2000, it had a population of 1.978 million; by 2013, it had grown to 2.196 million. According to Wikipedia, it’s the most populous city in Texas and the American South, and the fourth most populous city in the United States.
Maybe all the growth has made postal properties more valuable and more worth selling, or maybe CBRE, which manages USPS properties, has more of an interest in Houston than elsewhere, or maybe there’s another reason. Who knows? The Postal Service works in mysterious ways.
(Image sources: click on the image in the slideshow)
September 25, 2015
The Postal Service is working behind the scenes on a deal to relocate the post office on 100 South in downtown Provo, Utah, and to sell the building to the Church of Jesus Christ of Latter-day Saints.
According to a news report in the Daily Herald, on Thursday of this week Postmaster General Megan Brennan visited the downtown post office, and last week representatives from the Postal Service and the office of Congressman Jason Chaffetz (R-Utah) were in Provo looking at potential locations for a new post office.
Chaffetz, who is the chair of the House committee that has oversight on postal issues, says he thinks Provo needs a new post office.
"That Post Office is tired," Chaffetz told KUTV. "It's an old building; problematic and it doesn't fit in with our downtown renewal project. It needs to go. It can't happen soon enough.... The Postal Service needs to stop ignoring this problem. It's a dilapidated building that doesn't serve Provo well at all."
MJ Henshaw, a spokeswoman for Chaffetz, added this: “We can't confirm much for you because of ongoing negotiations. We are working will all parties to try to resolve this and to get it done."
The Church of Jesus Christ of Latter-day Saints has been interested in buying the post office for several years. Back in August 2013, the Postal Service acknowledged to the news media that it was negotiating with the LDS Church about the sale.
A week later, a USPS spokesperson reversed the announcement: "No office is for sale at this time," he said. "There are no negotiations occurring with the Church of Jesus Christ of Latter-day Saints.”
It now looks like the deal may finally be coming together. That may be good news for Provo, and it may be fine with the people who use the downtown post office, but they're supposed to be part of the decision-making process. Apparently the Postmaster General and Chairman Chaffetz have forgotten that the Postal Service is required by law to consult with the community before making any decisions about relocating a post office.
According to federal regulations (39 CFR 241.4 – “Expansion, relocation, and construction of post offices”), when a relocation is being contemplated, the Postal Service is supposed to solicit public comment by sending a representative to a regularly scheduled town meeting or holding its own public meeting. A notice of the upcoming meeting is supposed to be sent to the media and posted in the post office, and the public is supposed to be given 30 days to comment after the meeting. The community is also supposed to be given an opportunity to appeal any decision to relocate.
None of that has happened in Provo. Instead, it looks as though the powers-that-be have already made the decision to relocate the post office and sell the building. Once the negotiations are completed, the Postal Service will announce the “proposal” to the community and invite public comments. You can imagine how much influence those comments will have on the final decision. That's not what the federal regulations are supposed to be about.
This is not a new problem, and it's not unique to the Provo story. Complaints about how the Postal Service conducts the relocation process have been widespread, leading to a September 2014 report on post office relocations by the USPS Office of Inspector General.
The OIG criticized the Postal Service for a lack of transparency in the process and found that "officials didn't always efficiently manage the public notification and documentation process." One of the OIG's recommendations was that the Postal Service should "revise regulations and guidelines to enhance transparency."
Later in 2014, the Postal Service did revise its regulations, explaining that the new regulations would require the agency to "notify communities and officials, and solicit and consider their input, regarding proposals to relocate retail services or add a new retail services facility." The new regulations were intended to increase transparency and ensure that the Postal Service "solicits and considers the community's input before making a final decision."
(Photo credits: Post office in downtown Provo, Utah (Google street view); City Center Temple, next door to the PO)
September 24, 2015
The Postal Service has released its financial statement for August 2015. As usual, there’s some good news, and some not so good.
Compared to August 2014, volumes and revenues for First Class, Standard, and Periodicals are all down a few percent, and total volume for market-dominant mail is down 4.3 percent; total market-dominant revenue is down 6.5 percent.
On the other hand, Shipping and Package Services continue to climb. Compared to last August, volume is up 14.4 percent, and revenue is up 13.3 percent.
For year-to-date (which includes all but September, the final month of FY 2015), total volume is down 0.9 percent, and revenue is up 1.6 percent.
For the month of August, the Postal Service posted a small loss of $61 million in Controllable Operating Income, compared to a small profit of $279 million last August.
For the year-to-date, the Controllable Operating Income is $1.265 billion. That’s somewhat less than the same period last year, when there was a profit of $1.465 billion, but it is still a significant profit.
Figuring in the prefunding of the Retiree Healthcare Benefit Fund (RHBF) — $5.225 billion so far this year — and a slight adjustment to worker’s comp, plus some interest income and expense, the financial statement shows a net loss of $4.116 billion for the year-to-date, considerably better than the same period last year, when the Postal Service posted a net loss of $5.245 billion.
At this point, with just one month left in the fiscal year, it looks as if the Postal Service will end FY 2015 with a net loss of something like $4.2 billion — about $1.3 billion better than FY 2014. Factoring in a RHBF payment of $5.7 billion (which the Postal Service will default on) and other adjustments, the Controllable Operating Income will probably show a profit of about $1.2 billion, comparable to the $1.37 billion profit in FY 2014.
While many of the competitive products in Shipping and Package Services don’t have the high profit margin of First Class Mail, their continued growth is more than making up for the lost ground. Revenues for First Class fell 0.2 percent for the year-to-date — about $60 million — but revenues for Shipping and Package rose 10.8 percent — about $1.43 billion.
This gain in package services is almost 24 times the loss in First Class revenues. The Internet may be causing the diversion of some mail away from the Postal Service, but e-commerce is clearly booming.
Apparently all those packages are taking a lot of workhours to process and deliver. For the year to date, total workhours increased 1.9 percent over the same period last year. The number of career employees increased from 487,842 to 490,187; non-career increased as well, from 129,894 to 130,101. At this point, non-career employees represent 21 percent of the total workforce.
The August financial statement can be found on the PRC website here.
(Photo credit: USPS HQ)