Emergency Suspensions

The post office in Freistatt, Missouri, closed today — on two days’ notice to customers.  The Postal Service says it was unable to negotiate a lease renewal with the landlord, so it declared an emergency suspension. 

As usual in these cases, the landlord says he was more than willing to reduce the rent and make other accommodations, but his efforts, along with those of the Village Board, were to no avail.  The Postal Service just wasn’t interested.

The USPS facilities list for Missouri says the rent is $3,900 a year, so the disagreement could not have been over a very large sum of money.  But when you’re looking at a $40 billion deficit, every penny counts.  And that’s probably how the Freistatt post office ended up closing — over a matter of pennies.

The Freistatt City Clerk told the local news station KY3, "From what I have gathered from talking with the building owner, that lease agreement is not unreasonable.  But it looks to me like they're using that as an excuse to close a post office."

The Postal Service wanted to close the post office in Freistatt back in 2011.  It was on the list of 3,700 post offices being reviewed for closure under the Retail Access Optimization Initiative (RAOI).  When the Postal Service held the obligatory public meeting in August of 2011, Mayor Mike Ortwein said, “"I don't see how they are going to save that much money.  They only have two employees and no carriers.  The one full-time employee will be moved and the other is part-time." 

Thanks to the nationwide protest against post office closings, the RAOI never got implemented.  Then a moratorium on closings went into effect from December 2011 to May 2012, so the Freistatt post office remained open.  Then it found itself on the POStPlan list,  set to have the hours reduced to four a day.  Apparently that won’t be happening now.

Contradictory exchanges

There’s been a post office in Freistatt since August 14, 1884.  The post office has been in this building since 1980.  The Postal service has known for years that the lease ended on April 1, 2013.  It’s hard to understand how lease negotiations could have ended in a last-minute “emergency” situation that has terminated a town's post office after 129 years of service. 

Yet somehow the lease problem became public only a couple of weeks ago.  According to the Monett Times, “Contradictory exchanges over the status of the post office surfaced in mid-March.”  After the Postal Service let the town know that there was an issue with the lease, the Village Board held a special meeting on March 21. 

The landlord said that he had encountered no problems in discussions about the lease, and once he learned from the town that there was a potential issue, he made several counter offers, including a cut in the rental rate. 

Rick Belcher, manager for post officer operations for the Mid-America District, told the Village Board that one alternative to having a post office was placing cluster boxes on city property.  The Board was concerned about liability issues — the town has a lot of seniors — and it said it would need to talk things over with the community. 

On Wednesday, March 27, less than a week later, postal customers were officially notified that the post office was closing in two days.  And that’s exactly what happened.  On Good Friday afternoon, crews from the United States Postal Service emptied out the Freistatt Post Office and closed it permanently.  They even sawed off the flag pole.

There’s no home delivery of mail in Freistatt.  Everyone has general delivery and goes to the post office to pick up the mail.  Now they’ll have to drive eight miles to Monett.  Seniors who don't drive are just out of luck.

The Postal Service says rural delivery is not "economically feasible," so it's looking into installing a cluster box unit somewhere in town.  There's no chance that the post office will open at another location. 

(For more on the Freistatt story, check out the videos on KY3 and OzarksFirst.com.)

De facto closings

In the Postal Regulatory Commission’s Annual Compliance Determination review (ACD), published just yesterday, there’s a discussion of emergency suspensions.  (The Postal Service also shared a list, here.)  The report says that there are currently 211 post offices under suspension, 92 of them as a result of “lease expirations,” i.e., a failure to negotiate a renewal. 

Most of these post offices will never reopen.  Just 21 of the 146 offices suspended in 2012 have reopened so far, and those were mostly due to temporary issues like bad weather, not leases. 

One of the big problems with emergency suspensions is that they become, as the Commission’s report puts it, “de facto closings.”  There are 87 post offices under suspension from before October 2011, some of them from as far back as the 1980s and early 1990s.  In these cases, the Postal Service has never bothered following up with a formal discontinuance study or reopening the office, as the law requires.

The main focus of the PRC’s compliance report is postal rates and whether or not the Postal Service is in compliance with the law on rate matters.  The Commission doesn’t make a point of saying that the Postal Service is out of compliance on the suspension issue. 

But you don’t need to read between the lines to see that the Postal Service is failing to follow the law by using the emergency suspension provision to do de facto closures.  The problem is that no one is doing anything about it.

(Photo credit: Google street view)

The Postal Service continues to close post offices by emergency suspension over problems renegotiating leases.  Many of the problems are caused by the Postal Service.  A suspension is an easy way to close a post office — it avoids a lengthy discontinuance process and the possibility of an appeal to the Postal Regulatory Commission, and it makes it look like the closure is the landlord's fault.

In its annual compliance report to the PRC, issued just a couple of weeks ago, the Postal Service said it closed 237 post offices in fiscal year 2012.  Nearly all of those closing occurred in October and November of 2011, before the moratorium on closures began in December.  Since then, formal discontinuances have come to a virtual halt.  But the emergency suspensions continue.  The compliance report says that at the end of FY 2012 (September 30, 2012), there were 124 suspensions in effect. There have been several more suspensions since then.

Many of the suspensions have occurred because the Postal Service, or its real estate agent CBRE, put unacceptable demands on the landlord, like a large rent reduction (as much as 30 percent) or an early-termination clause.  So whenever a post office’s lease is coming to an end, it’s at risk for an emergency suspension.  During the first six months of 2013, nearly 1,900 post offices will have a lease expiring.  A list is here, a table here, and a map here. 

About 850 of these offices are on the POStPlan list and set to have their hours reduced.  While POStPlan has been advertised as the Postal Service’s plan to save post offices, that doesn’t mean it won’t suspend a POStPlan post office.  There have been numerous POStPlan offices closed by suspension over the past few months.

In its advisory opinion on POStPlan (August 2012), the PRC expressed concern that post offices would be suspended because of staffing issues and lease problems, but the Postal Service reassured the Commission that it “has no plan for using the lease negotiation process as a pretext to close Post Offices.” 

The Commission hasn't had much to say about suspensions since then.  In its annual report, issued just a few days ago, there’s a section on post office closings and appeals but no mention of “emergency suspensions."

The early-termination issue

Many of the post offices with leases expiring soon have already had a successful lease negotiation, but in most cases, the negotiations are ongoing.  The Postal Service has been cutting it close.  In years past, a lease was negotiated many months before it expired.  These days, the negotiations are often completed with just a few days left on the lease, sometimes even after an emergency suspension has been announced.

The Postal Service and the landlord may disagree over a number of issues, like the amount of the rent or responsibility for maintenance, but the issue that is causing many of the lease problems these days is the Postal Service’s insistence on adding an early-termination clause to the lease.   This clause permits the Postal Service to end a lease whenever it wants, and on relatively short notice too. 

Traditionally, the Postal Service would sign a five- or ten-year lease with an option for another five years.  The fact that the building would house a post office for a long time was one of the main reasons why investors got into the business of owning post offices in the first place.

Now the Postal Service wants to insert early-termination clauses in the leases, giving it the option to get out before the five years are up, sometimes with as little as 60 or 90 days notice.  These termination clauses have been the source of a lot of controversy, and the lessors have complained vociferously to the Postal Service and the PRC about them.

Because of all the complaints over the termination clause, the Association of U.S. Postal Lessors (AUSPL) got the Postal Service to agree to make the shortest termination clause 30 months.  In other words, the lease may not be terminated for the first two years, and after that the Postal Service needs to give 180 days notice. 

The termination clause makes it impossible for lessors to make long-term plans for their buildings.  They are put in an untenable position — accept the clause or lose a tenant — so it’s no surprise that lease negotiations have been breaking down. 

But that’s apparently fine with the Postal Service.  After all, if it had long-term plans to keep the post office open, why would it be insisting on the termination clause in the first place?  

Closed for a quarter in Climax

The post office in Climax, Georgia, was on the POStPlan list, set to be reduced to six hours a day, but on October 31, 2012, the Postal Service suspended operations due a problem negotiating a new lease.  The Postal Service should have looked around for another suitable location. There should have been several possibilities.  After all, the Postal Service cited lower average rents in Climax as justification for a big rent reduction.  But rather than finding another location, the Postal Service initiated a discontinuance feasibility study — the day after the suspension went into effect.

The case is currently being appealed to the PRC.  The Postal Service has filed a motion to dismiss the appeal on the grounds that the post office has not yet been discontinued — it’s just under emergency suspension and only being studied for a discontinuance — so an appeal is premature. 

The PRC’s Public Representative, who can usually be counted on to advocate on behalf of the community, has recommended that the case be dismissed for precisely that reason.  It’s almost inevitable that the PRC will dismiss the case, just as it has in previous cases where an appeal was filed while the post office was suspended but not yet discontinued. 

The Public Representative seems to think everything is fine in Climax. “Because the Postal Service has promptly initiated a discontinuance feasibility study,” writes the PR, “it does not appear that the Postal Service is keeping the citizens of Climax in limbo or abusing its suspension procedures.”  The folks in Climax and the landlord of the building probably have a different opinion on that subject.

In the materials submitted by the Postal Service, there’s a copy of the letter it sent to Climax customers.  The Postal Service explains that it wanted the landlord to drop the rent from its current $11.84/sq.ft. to $8.50/sq.ft., which it considered “fair market value,” with a 60-day termination clause.  The landlord offered to accept $8.75/sq.ft., with no termination clause, but the Postal Service rejected the offer.

The Climax post office was thus closed over a matter of 25 cents a square foot.  The landlord was willing to reduce the rent from $1,831 a month to $1,353 a month, but the Postal Service wanted $1,315 a month.  They were $39 a month apart when the deal collapsed.

BY MARK JAMISON

[The following letter was recently sent to the Postal Regulatory Commission and Chairman Goldway in response to issues arising from the implementation of POStPlan.]

Dear Chairman Goldway,

I am writing to you directly but I hope you will share these comments with the other commissioners.

As you are aware, I was very critical of the decision in the POStPlan docket, not because the PRC failed but because the consequences of what was the ultimate result of the Commission’s legal responsibility fell far short of what would be the real world consequences. I think we are now seeing just how duplicitous the Postal Service can be as we witness emergency suspensions and office closures that are inextricably part of the POStPlan process.

There have been many issues that have arisen in the face of the implementation of this program.  I was heartened to see your call for information from the public, although I think the reality is that without a specific investigatory design much of what comes in will be anecdotal.  That’s a consequence of the system.  Your willingness to follow through is admirable.

The two issues I want to address here are the two most common reasons given for emergency suspensions, lease or building issues and lack of personnel to staff an office. Both are, at base, fallacious and constitute an ongoing example of how the Postal Service uses stilted interpretations to evade its responsibilities under the law.           

The PRC already has a long history with respect to suspensions based on building or lease issues.  PI2010-1 was opened just to address these issues, and I would refer the PRC to the comments I submitted in that docket.  The Postal Service has a long history of being abusive during lease negotiations. The tactics we are seeing today have been used for a long time.  The difference is that now they are part of a concerted effort to close post offices.           

As a postal lessor I was told that the Postal Service typically begins the renegotiating process about half way through the final term of a lease, generally from two and a half years to a year before termination.  This logically would give sufficient time to resolve ongoing issues related to the physical condition of a building or, if negotiations failed, to allow time for the identification and acquisition of suitable alternatives. Realistically in the latter instance the Postal Service has never been particularly enthusiastic about finding alternatives, but as the Commission has seen in many appeal cases, communities are often more than willing to locate alternative facilities.        

By shortening the negotiating process and by turning the negotiations over to CBRE, an outside contractor with a limited understanding of postal issues and perhaps with incentives that may not coincide with good faith efforts to renew leases, the Postal Service has cynically created “emergency” situations.  Given the circumstances, we should be very skeptical of any suspension related to a failure to negotiate a lease.

We should also look very carefully at suspensions related to unsuitable building conditions.  We should ask, how long has the condition actually existed and what previous attempts has the Postal Service made to address the condition?  I think the Commission will find that in many cases the condition cited as making a building unsuitable or unsafe has existed, unaddressed, for a significant period.  The condition may actually warrant not using a particular site, but is it an emergency if it is only being addressed now when other agendas are at hand?       

We should also be very careful in examining exactly what conditions the Postal Service is claiming make the building unsafe or unsuitable.  Are the conditions as described by the Postal Service accurate?  Are remedies demanded by the Postal Service reasonable or are they excessive, designed to create the circumstances of a suspension?  The behavior of the Postal Service merits skepticism.

According to a USPS service disruption report issued on November 10, over 330 post offices were impacted by Hurricane Sandy.  About 120 were completely shut down, and another 30 had the retail operations suspended.  Many of these offices remain closed, but it’s likely they will all eventually reopen once power is restored.

The same cannot be said for several other post offices that have been suspended over the past few weeks for reasons other than Sandy.  Since September, when the Postal Service began its implementation of POStPlan, numerous post offices on the list have been closed by emergency suspension, and there’s little chance they’ll ever reopen.

Rather than maintaining these offices at reduced hours as promised, the Postal Service has decided simply to close them.  The explanations being offered for these suspensions aren't very convincing, the circumstances don’t sound like emergencies, and there’s no indication that the closures are only temporary. 

In previous articles on this website, we’ve noted a few cases where the Postal Service suspended offices on the POStPlan list.  For example, the offices in Helen, Maryland and Brownsville, Maryland, were closed by emergency suspension just days after the postmaster retired.  The people in these towns were never given an opportunity to comment on the four POStPlan options (a Village Post Office, rural delivery, a post office in another town, or reduced hours).  They simply received a notice in the mail and found a sign on the door of the post office saying it was suspended due to a lease termination.  

While POStPlan is being advertised as a plan to keep small post offices open, the Postal Service continues to use emergency suspensions to close offices on the list.  Here’s a roundup of a few more examples of the practice.

A VPO replaces the PO in Climax

The post office in Climax, Georgia, was on the POStPlan list, with its hours set to be reduced to six a day.  Its postmaster took the retirement incentive back in July, and since there was a postmaster vacancy, Climax was among the first group of post offices to be reviewed under POStPlan.

On September 28, Climax residents and city officials received the survey about the four POStPlan options, as well as a letter informing them that there would be a public meeting with a representative from the Postal Service on November 8th. 

In mid October, everyone got a second letter from the Postal Service.  This one said that the post office would be closed at the end of the month.  People were obviously confused about what was going on and how the Postal Service could have decided to close the office before the meeting even took place.

The post office closed on October 31, and the meeting was held, as scheduled, on November 8, in the parking lot of the (closed) post office.  Angela Collier, the Postal Service operations manager, explained that the office was being suspended because the lease expired and could not be renewed. 

As reported in the local news, Collier said that while she did not have first-hand knowledge of the negotiations — they'd had been handled by the USPS’s Facilities Department — her understanding was that the landlord said, “this is what I want, period,” and the Postal Service said, “this is what we can do, period.”  Since “those two would never match,” said Collier, the negotiations ended, and the post office was closed for an emergency suspension.

The landlord of the Climax post office building, Morgan Wolaver, has a different version of what happened.  Mr. Wolaver, by the way, is not your typical post office lessor, someone who usually owns one or two post offices and doesn’t have much experience negotiating leases with the Postal Service.  Mr. Wolaver’s family has been in the business of owning and leasing post office buildings for over fifty years, and they own dozens of them.  Mr. Wolaver also happens to be the President of the AUSPL, the country’s largest association of postal lessors.  There aren't many people who know more about negotiating leases with the Postal Service than Mr. Wolaver.

In a conversation this morning, Mr. Wolaver told me the Climax story as he saw it.  In mid-July, a couple of weeks after the postmaster decided to retire, the Postal Service’s real estate agent, CBRE, finally contacted him about renewing the lease.  Negotiations on lease renewals traditionally begin six months to a year before the end of the lease, so Mr. Wolaver was concerned that CBRE had waited until there were just three and a half months left on the lease. 

The Postal Service has closed another POStPlan post office by emergency suspension.  The Postal Service's reassurances to the Postal Regulatory Commission that it wouldn't be doing that don't seem to count for much.

A few days ago, we noted the emergency suspension of the post office in Helen, Maryland.  It’s on the POStPlan list, set to be downgraded to two hours a day.  The postmaster took the incentive offer and retired on July 31.  The next day the local news reported that the office would be closed by emergency suspension on August 17.

Now the herald-mail.com is reporting that the post office in Brownsville, Maryland, has also been closed by emergency suspension.  As with Helen, which is about 120 miles away, the postmaster was looking at seeing her office reduced to two hours, and she took the incentive offer and retired on July 31.  The post office closed the same day. 

The Brownsville office was a Level 11 that had been studied for closure under the Retail Access Optimization Initiative (RAOI).  The post office has been located in the home of its retiring postmaster, Mary Ellen Younkins, since 1979.  She told the Postal Service that she wanted to end the lease on her last day, July 31, and the lease termination is now being cited as the cause for the emergency suspension.

Brownsville is a very small place, and there may not be many spaces available that could serve as a post office.  And there may not be anyone in town who wants to share part of their home with a post office, especially if the postmaster job is for just two hours a day at $11 an hour.

But the Postal Service created this situation, so it shouldn’t be an excuse for an emergency suspension.  The Postal Service has known for at least a month that it would be closing the Brownsville post office, but it didn’t bother with a meeting or a survey, and there’s no indication that it looked for someone to replace the postmaster or to find a new location. 

The Postal Service’s witness for POStPlan, Jeffrey Day, testified to the PRC that it wouldn’t be suspending POStPlan post offices because of lease issues or postmaster vacancies.  The briefs filed by the Postal Service repeat the same promise.  Yet that’s exactly what’s happened in both Helen and Brownsville.

Mr. Day and the Postal Service also said on numerous occasions that communities would be given four options — (1) reduced hours or close the post office and (2) use the post office in another town, (3) switch to rural delivery, or (4) open a Village Post Office (a postal counter in a private business like a general store).  

The Postal Service said it would decide what to do only after the community expressed its wishes in a survey and town meeting.  The Postal Service said it expected that in almost every case, the community would choose to have the hours reduced, and that’s what the Postal Service intended to do.

The folks in Brownsville were never given an opportunity to comment on the four options.  They just got a notice in the mail and found a sign on the door of the post office saying it was suspended due to a lease termination.  

A few houses down the block, workers contracted by the Postal Service could be seen pouring a cement footer for a cluster box unit.  

So there's a fifth option the Postal Service didn't mention — close the post office and replace it with a cluster box.