The first RAOI post office closes, more Village Post Offices open, but where’s the hoopla?


It looks like the first post office on the Retail Access Optimization Initiative (RAOI) may have closed already — weeks ago, in fact — but somehow the news slipped by under radar.  Plus, five more “Village Post Offices” (VPOs) have opened over the past few weeks, and hardly a word from the Postal Service about that either.  Today we learn from an article in Reuters that the Postmaster General is backing off the VPO “concept” altogether and revising plans for closing thousands of rural post offices.  Turns out many of the small towns where they planned on locating a VPO in a small business, like a mom-and-pop convenience store, don’t even have a place to put the VPO.


New Village Post Offices

It had been several months since the first VPO opened in Red’s Hop N’ Market in Malone, Washington, and it was starting to look like Red’s might be not only the first VPO but also the last.  Not so.  Several more VPOs have opened over the past month, but it looks like the Postal Service has decided a “soft opening” was the way to go.

The first part of this VPO story was broken by Jay Bigalke in Linn’s Stamp Magazine, which recently reported that there were three new VPOs in Michigan — in Twining, Tower, and Brant.   Who knew?  There were a few short reports in the local Michigan media, but the openings occurred without any of the hoopla deployed by the Postal Service when the first VPO opened in in Malone.  That one was accompanied by photos, press releases, news reports featuring quotes from USPS VP Dean Granholm, and even a CNN TV spot.

The Stamps article on the new VPOs came up during testimony before the Postal Regulatory Commission last Friday, when James Boldt, the man running the RAOI, was asked about it by PRC Chairman Ruth Goldway.  (The webcast is here.) There was some confusion about how many VPOs actually existed at that moment.  Boldt indicated that later the same day (October 28), a fourth VPO would be opening in Star Tannery, Virginia, but with one in Malone and three in Michigan, that would have been the fifth.  (And according to the Reuters article, there are actually six.)

Boldt seemed almost giddy that another VPO “grand opening” would be happening in “just an hour,” and he was sorry he couldn’t be there and had instead to be present for a grilling by the PRC’s commissioners, the Public Representative, and representatives of the postmasters associations.  No doubt he would have preferred to be anywhere but the PRC hearing room.  But didn’t Boldt get the memo?  Hadn’t the Postmaster General told him that the Village Post Office concept was being revised and there was no reason to get too excited about another “grand opening”?


The VPO concept, come and gone? 

In July when the RAOI was announced, it was accompanied by the unveiling of a great “new concept” — the “Village Post Office” — basically a watered-down version of the “contract postal unit,” which puts a postal counter in a private business.  There had been talk of opening a couple of thousand VPOs, and the Village Post Office concept was used to pacify citizens at many community meetings on post office closings.  “Don’t worry so much about losing your post office,” USPS management told patrons at these meetings.  “We’ll replace it with a Village Post Office.”

But now Postmaster General Patrick Donahoe says, in the Reuters story that its plan to replace post offices with “Village Post Offices” will not work in many rural communities because there’s no business in which to locate the VPO.  “When you get west of the Mississippi,” Donahoe said, “it’s more prevalent that you don’t have stores in these communities, you have nothing in these communities. It’s pretty much just the post office.”  And they didn’t know this before they rolled out the VPO concept?

The Postal Service says that at this point, in addition to the six VPOs already up and running, one more opens next week, four more are finalizing the deal, 30 others are in various stages of contract developing, and about 400 inquiries have come in.

Nixons groceryBut it’s hard to imagine a significant number of VPOs ever opening.  The future is in putting postal services not in mom-and-pop convenience stores but in large chains like Walmart, Staples, and CVS.  These do not require the kind of one-on-one contract negotiation, training, and oversight required when a VPO opens in an owner-operated store.  The VPO was never going to happen on a large scale.  It was mainly a dodge so that it wouldn’t look like the Postal Service was abandoning its universal service obligation.

In any case, the Postal Service is going to have to look elsewhere.  As the PRC’s Ruth Goldway put it in the Reuters article, “It’s not going to be their great solution to the problem.”  So now the Postal Service is talking about keeping some of those small rural post offices open, but for fewer hours — and for less pay and benefits for postmasters.


The first RAOI post office closes . . . maybe

In written response to a question from the PRC about the status of post offices on the RAOI, the Postal Service replied that “as of November 1, 2011, no Final Determinations have been posted as part of the RAO Initiative.”  However, the post office in Tower, Michigan (49792) appears on the USPS website’s RAOI “Expanded Study List” for Michigan.  And this news account sure makes it look like Tower closed.  Plus, the Tower post office no longer appears on the USPS Locator page.

So it would appear that Tower, MI, is the first of the RAOI post offices to close.  But how could that have happened already?  The closing process implemented in July as part of the RAOI is supposed to take five months, so it seemed as if no post office would close under the Initiative until the end of the year.  What happened?

The RAOI list released on July 26, 2011, includes 265 post offices that had been initiated for closure study but had not progressed to the community meeting stage.  It’s possible that Tower was well along in the 60-day comment period by July 26, and perhaps a community meeting took place soon after.  Maybe the post office received its Final Determination notice in early August.  But the soonest it should have closed would have been 60 days later — early October.

Yet somehow the post office in Tower closed on Monday, September 26, and it was instantly converted into a VPO in the same location — a convenience store called the Black River Party Store.  The postmaster was relocated to a nearby post office, and Tower patrons were able to retain their post office boxes in the Party Store if they chose to, although many preferred not to.  A carrier now sorts the mail for the boxes since the owners of the store are not permitted to do so.  As with all the VPOs, the Party Store is only allowed to sell stamps and flat rate boxes.

The owners of the Party Store were getting $4,500 in rent from the Postal Service when it was a full-fledged post office.  Now that it’s a VPO they’re getting a “fraction” of that — Red’s in Malone gets $2,000 a year — plus, the owners have to do the postal work themselves now that the postmaster is gone.  Not such a great deal, it seems, but the Party Store owners are to be commended for helping the community retain some semblance of a postal facility.


The Star Tannery Story

At Friday’s PRC hearing, the Commissioners seemed especially interested in the new VPO opening in Star Tannery that day because its post office closure is currently being appealed before the PRC.  Apparently the Postal Service didn’t care to wait to hear the PRC’s decision.

A Final Determination to close the post office in Star Tannery was posted in August.  The appeals docket is typical of the 150 now before the PRC, and a look at the Postal Service’s response to the appeal gives a snapshot view.

The appellants argue that the Postal Service is closing the office solely because it’s running at a deficit — which is against the law — but the Postal Service says there were other factors, including the fact that the post office had been without a postmaster since April 1, 2009.  Since then, it was run by a career Operator-in-Charge, who will be reassigned to another facility or, as the Postal Service puts it, “separated from the Postal Service.”  Replacing the OIC with a carrier and closing the post office, which was paying about $3,600 a year, will save the Postal $22,000 a year.

The appellants argue that seniors and those unable to drive will be unduly harmed; the Postal Service says carrier service is better.  The appellants say the community’s identity depends on the post office; the Postal Service says it will help preserve community identity by continuing the use of the Star Tannery Post Office name and ZIP Code.

The appellant also mentions in his letter initiating the appeal that at the community meeting, postal officials stated there was no alternative to the post office closing — part-time hours or a contract postal unit were not on the table.  Apparently the owners of the Star Market had been contacted by phone and asked if they wanted to sell stamps, but there was no discussion of a Village Post Office at the meeting.  The letter states that “only after the decision to close was posted and Congressman Frank Wolf office pressed for the Village Post Office was there any activity for this alternative.”

Congressman Wolf must have been able to convince the Postal Service to pursue the VPO idea, because on October 24, a USPS press release proudly announced: “On October 28, Star Market makes history at its Village Post Office Grand Opening at 2523B Gravel Springs Road, Star Tannery, VA. The Village Post Office is an exciting new concept for USPS. Village Post Offices are operated by local businesses and offer popular postal products and services such as stamps and flat-rate packaging.  The location at Star Market will provide customers time-saving convenience and will continue to be an important example of how the Postal Service is changing to better meet America’s needs.”

The exuberant tone of the press release is now undercut by the PMG’s new, more realistic view of the VPO concept.  In the meantime, the PRC’s procedural schedule for the appeal says that it was filed on August 12, and the PRC has until December 6 to issue a decision.  But the post office in Star Tannery will be long gone by then, and the VPO will have been up and running for over a month.


The PRC looks for more information

Besides all the revelations about VPOs, several other interesting things came up in Boldt’s PRC testimony on Friday.

Chairman Goldway pointed out that in the many appeals dockets before the PRC, there were numerous letters and comments from people complaining that community meetings were held at inappropriate times, that the Postal Service representatives were not taking notes, that they seemed to indicate the decision had already been made, and that any written comments were pro forma.

“How is it that the perception of the people at these meetings could be so different from yours, Mr. Boldt?” asked Chairman Goldway.

Doing his best impression of the unflappable comedian Bob Newhart, Boldt could only say that he would look into it.  After all, as Boldt has said on numerous occasions, the RAOI is an opportunity for the Postal Service to learn about how best to “optimize” its retail network.  The RAOI will “yield some of these learnings,” Boldt told Goldway, so the Postal Service can “improve the process going forward.”

Goldway also asked Boldt about changes recently made to the Postal Operations Manual (POM) concerning the redefinition of “consolidation” and the new policy that post offices need not be run by postmasters working in that office.  Goldway wanted to know if the new policies were part of the RAOI process and therefore should be considered part of the Advisory Opinion.  Before Boldt could say the wrong thing, one of the Postal Service attorneys jumped in to say that use of the POM was not confined to the RAOI so it should not be part of the Advisory Opinion.  There was some back-and-forth between Goldway and the lawyer, and it wasn’t clear how things were left.  The PRC will probably comment on the changes in its Advisory Opinion, and the Postal Service will probably object.

The Commissioners wanted more information about where the Postal Service is in the RAOI process at this point in time.  As Commissioner Mark Acton said, “We’re facing an administrative challenge” in terms of dealing with the appeals, and the Commissioners would like regularly updated “snapshots” of where things stand so they can properly prepare for the “huge increase in workload” for post office appeals.

Boldt told the Commissioners that some 2800 post offices on the RAOI list of 3,650 have already had their community meeting and the rest should be having one over the coming weeks.  The discontinuance process for some 10% has not started yet, but it will soon.

That means the Postal Service is a little behind schedule — it was supposed to take ten weeks to get started on all 3,650, so they should have been done with this stage of the process by mid-October.  Still, they’ve made considerable progress, and many post offices are nearing the end of their 60-day comment period.  The Postal Service could start posting Final Determination notices any day now.

The PRC is still working on its Advisory Opinion, but who knows if the Postal Service will wait?  All it has said is that it wouldn’t close any post offices before the Opinion came out.  It could start issuing Final Determinations before that. Given that 2800 meetings were held in about 12 weeks, those notices could come at the rate of a couple of hundred a week.  No wonder the PRC would like weekly updates.

No one outside of L’Enfant Plaza knows yet how many post offices will ultimately be closed under the RAOI.  At this point, only 177 have been taken off the closing list — a fact we learned in Friday’s PRC hearing, when Chairman Goldway revealed she learned of it not from the Postal Service but from a letter from the Postmaster General to Senator McCaskill of Missouri.  (Here’s a list of about 133 that were off the list as of Nov. 1, 2011.  This list was given to the PRC by the Postal Service, and it’s not clear why it does not contain 177.)

It makes you wonder when the PRC has to get important information about the activities of the Postal Service — the agency it’s supposed to be regulating — in a second-hand way like this, from the media and legislators.  When the Commissioners asked Boldt if they could get more information about new Village Post Offices opening up, so they could see how these “alternative access” points figured into the big picture, the Postal Service lawyer said that could be “problematic” since it might interfere with ongoing negotiations with potential VPO operators.  Let’s hope the Commissioners don’t have to read about it in the news.

(Photo credits: Red’s Hop N’ Shop VPO in Malone, WA; Brant post office, now closed; Nixon’s Grocery VPO in Brant, MI;; Black River Party Store in Tower, MI, formerly the post office, now a VPO, from Google Street View; Star Tannery post office, now closed; Star Market VPO in Star Tannery.)