Save the Post Office

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.  

The New York Times has an excellent front-page article by Robin Pogrebin about the Postal Service’s push to sell off its historic post office buildings.  It includes a great photo scroll, and it's getting lots of very lively comments.

As the Times explains, the Postal Service owns nearly a quarter of its 31,000 post offices (it leases space for the rest), and over 1,100 of them were built during the 1930s by FDR's New Deal.  There are over 2,000 post offices either on or eligible for the National Register of Historic Places.

Now all of these post offices are all in danger of being sold off to private businesses.  In its annual report to Congress, the Postal Service says it has earmarked 600 properties for disposal.  It doesn't say how many are historic.

About a dozen of these historic post offices have been sold recently, and another 40 are listed as for sale or about to be put on the market.  Here's a map showing where they're located:

As the Times notes, historic preservationists are concerned about how the Postal Service is going about the sales and what happens to the buildings after they're sold. 

“Our biggest concern is the way they’re going about it isn’t transparent,” said Chris Morris, a senior field officer for the National Trust and project manager for post office buildings. “A lot of us are very confused about the process.”

Advocates say there have been too few public discussions or assurances that prized buildings will be protected.  Concerns about the post offices “are overwhelming the state historic preservation offices,” said Carol Lemlein, president of the Santa Monica Conservancy.

“There is very little confidence in the Postal Service’s ability to execute a process in a manner that will really protect the buildings,” she added.

The other problem is what happens after the building is sold.  In 2009, the New Deal post office in Virginia Beach was torn down to make room for a Walgreens (which is now an “authorized postal provider” selling stamps). 

More often, the post office is turned into a commercial space, like a high-end boutique, or private offices, like a real estate company.  As the Times points out, historic preservations are concerned that “when these post offices close … important public buildings become private preserves.”

There's more about the legal issues involved in the Postal Service's disposal process in this post from earlier in the week.  To learn more about the country’s legacy of historic post offices and the fire sale going on, check out this resource page.

On Monday, the Postal Service announced that “it is considering plans” to sell the historic post office in Derby, Connecticut.  Such a sale requires a formal review process, and the Postal Service has taken the first steps in that process by informing city officials and the public of its plans. 

The process involves a fairly complicated legal procedure, and it will take some time, at least a couple of months, before a final decision is made and the building is actually put up for sale.  That’s why it comes as something of a surprise to see the Derby post office already listed on the "USPS Properties for Sale" website.

A done deal from the get-go

The USPS press release about the sale says that the Postal Service plans to relocate the letter carriers to another facility, rendering the 12,000 square feet in the post office unnecessary.  It will then either rent space back in the building from the new owner or look for another location.  (Even though the new post office may be in the same building, the Postal Service says in a letter to the city that it will offer the community “an upgraded, modern facility that will provide the level expected by our customers.”)

The press release also says that postal officials have already met with the mayor of Derby, Anthony Staffieri.  It looks as though the mayor has already given his approval.  Staffieri is quoted as saying, “This underutilized building can be sold for retail/commercial space and add to our tax base downtown.”

There’s nothing in the press release about the fact that the Derby post office was built in 1932 and that it is eligible for the National Register of Historic Places (NRHP).

Before selling an historic property like this, the Postal Service is required to go through a review-and-consultation process, as described in Section 106 of the National Historic Preservation Act (NHPA).

But the Postal Service and its exclusive real estate partner, CBRE, are not wasting any time.  The Derby post office is already listed for sale — and has been for at least a few weeks  — on the USPS-CBRE Properties for Sale website.  It’s described as “coming soon,” “list price to be determined,” and “Historic property, eligible for NRHP.”

It would seem that the decision to sell the Derby post office is a done deal. The only problem is that it may be against the law.

The House Committee on Oversight and Government Reform, chaired by Congressman Darrell Issa, has a website entitled “Saving the Postal Service.”  According to the website, “H.R. 2309, the Issa-Ross Postal Reform Act, is the only legislation that saves the Postal Service from financial collapse.” 

Issa would save the Postal Service by dismantling it.  His legislation would end Saturday delivery, cut benefits to postal workers, remove the no-layoff clause from union contracts, eliminate hundreds of thousands of jobs, reduce the oversight authority of the Postal Regulatory Commission, and make it easier to close post offices.  Its BRAC-style task force would “consolidate redundant post offices” in order to save at least $1 billion a year — a goal that would require closing at least a third of the country’s 32,000 post offices.

Issa’s website features a cute little video called “Postal Crisis 101.”  An animation shows dollar signs moving from taxpayers to postal workers while the narrator explains that unless Issa’s legislation becomes law, the taxpayer is going to be on the hook for the cost of retirement benefits for postal workers.  The word “bailout” gets a lot of attention.

The video says that opponents of postal reform want “to cover this up with a fake accounting gimmick.  They call this an overpayment.” 

The video is just over a minute long, so there’s no time to explain the overpayment “gimmick,” but the website has another page that goes into more detail.  It’s entitled “Why the ‘Postal Overpayment’ Is Really A Taxpayer-Funded Bailout.” 

On this page, Issa attempts to debunk what he characterizes as three “myths” about the overpayments in the retirement funds by giving us what he calls the "facts."   But Issa's narrative about the funds omits many important details and gives a very distorted picture.  

It's rather ironic that this misinformation campaign was paid for with our tax dollars — the same tax dollars Issa says he wants to protect.  

Here’s a rundown of the three “myths,” Issa’s “facts,” and the rest of the story.  

The Postal Service has released its financial statement for January 2013.  Compared to January of last year, First Class revenues are down slightly less than 1%, while Standard Mail revenues are up 2.6%, Periodicals are up nearly 3%, and Packages are up over 4%.  Total revenues are up 4.4% for the month and up almost one percent for the year to date (YTD, October-January).

Considering how weak the economy is, those look like pretty decent numbers, but that’s probably not how the financials will be reported.  Instead, we’ll just hear the bottom line: A net loss of $436 million for the month, and a $1.7 billion loss for the first four months of the fiscal year. 

Those losses, however, include two key numbers that probably won't get much attention: the prepayments for the Retiree Healthcare Benefit Fund (RHBF) and the retirement incentives paid out to tens of thousands of postal workers.  The Postal Service shouldn't be paying into the RHBF at this point (at least not $5.5 billion a year), and the incentive buyouts were a one-time expense and not a regular operating cost.

If you put the RHBF payments and the incentive payments to the side, then, the bottom line looks a little different.  It shows that the Postal Service would have actually made a profit of $261 million for January and $482 million for the year to date. 

Here’s how the numbers break down.  Note that the Postal Service includes the retirement incentive expense in the "Personnel Compensation and Benefit" line, but if you look deeper into the financial statement, there's a line for “other personnel related expenses," which includes the incentive expense.  In the table, the incentive figures are approximate because in the financial statement they’re combined with other personnel expenses.  The numbers in the table were derived by comparing this year’s expenses to last year’s (which were minimal because there weren't any incentive buyouts).