The Postal Service is continuing its push to dismantle the country’s vast network of brick-and-mortar post offices. Post offices are being suspended over minor lease disputes, historic buildings are being sold to the highest bidder, and retail services are being moved to smaller, usually less convenient locations.
Post offices just don’t seem very important to the leadership of the Postal Service. That’s probably because big mailers don’t use post offices, and they’re the ones who send most of the mail. Over 80 percent of total mail volume is “wholesale” — it enters the system workshared, presorted and at discount rates.
The retail business done at post offices accounts for about 16 percent of total revenues — $10.6 billion out of $65 billion. That may seem like a significant contribution to the bottom line, but the leaders of the Postal Service would prefer that average customers did more of their postal business elsewhere — online and through other “alternate retail channels,” like buying stamps at the supermarket.
The Postal Service as a real estate business
The fate of post offices buildings is the subject of this week’s “Pushing the Envelope” blog on the website of the USPS Office of Inspector General. In a post entitled “Mail Business, Real Estate Business, or Both?” the OIG invites public comment on questions like, Should the Postal Service generate revenue by leasing space in its buildings to other businesses, or should it just sell the buildings and lease space for post offices? Should there be restrictions on which facilities it can sell or what types of operations it can lease to?
It’s not the first time such questions have been raised. There’s already a federal regulation (41 CFR 102-73.20) requiring government agencies to “extend priority consideration to available space in buildings under the custody and control” of the Postal Service.
Along similar lines, a 2012 GAO report recommended that the Postal Service do more to make its excess space available to other federal agencies. In its response to GAO, the Postal Service wrote, “In situations where USPS has identified underutilized space, we are actively and aggressively pursuing third party tenants where deemed appropriate by engaging CBRE, a National Real Estate Services Provider.”
Despite the federal regulation, the GAO’s recommendations, and the Postal Service’s claim to be aggressively pursuing tenants, there’s no indication that any effort whatsoever has been expended to lease out the extra space in the historic post office buildings now being sold. Coast to coast, from the Bronx and Chelsea in New York City to La Jolla, Berkeley, and Redlands in California, the Postal Service is simply selling off national treasures to the highest bidder.
PMG to Berkeley: Sorry, the sales must go on
The city of Berkeley learned last week that the Postal Service has decided to go through with the relocation and sale of its 1914 post office. On April 22, the Postal Service issued a “Notice of Approval” stating that it had approved the relocation of the main post office “to a yet to be determined location as close to the current site as possible.” The notice also states that the Postal Service plans to sell the building. Presumably it will now begin the NHPA Section 106 process that it should have begun months ago, when it first announced plans to sell the historic building.
The relocation decision will be appealed by two citizens groups, Save the Berkeley Post Office and the National Post Office Collaborate, which have been fighting the sale for months. Berkeley Mayor Tom Bates says the city will appeal as well, even though he adds, “I think the chances of the appeal going through are about one out of 20.” Even that estimate may be optimistic.
“I’m really disappointed,” said Mayor Bates. “It’s a beautiful building. We talked to the Postal Service about the need to keep the building public, but they just seem to have it in their minds that they want to sell it no matter what.”
In his effort to stop the sale, Mayor Bates also wrote a letter to Postmaster General Donahoe, but it doesn’t look like that did much good either. In his response to Mayor Bates, the Postmaster General cites the usual numbers about the financial crisis: The Postal Service is losing $25 million a day, and it lost $15.9 billion last year. The PMG didn’t mention that $19 million of the daily losses and $11 billion of last year’s deficit were due to the retiree health benefit payments, which he doesn’t believe the Postal Service should be paying in the first place.
The Postmaster General also told Mayor Bates that “the Postal Service has a growing number of buildings with more space than is needed because of a severe decline in mail volume and the fact that fewer people need to come to a brick and mortar Post Office.” A “growing number” indicates that we may have just begun to see historic post offices going on the market. Over the past year or so, more than fifty have been sold, put on the market, or identified for review. There are well over two thousand historic post offices. How many of them will be gone before the fire sale ends?
Berkeley is not only up against the Postal Service. It’s also contending with the fact that California Senator Dianne Feinstein, who might otherwise be counted on for help, is married to Richard Blum, Chairman of CBRE, the Postal Service ’s exclusive real estate agent. Since 2011, CBRE, the world’s largest commercial real estate company, has been adding to its wealth by selling post offices and negotiating leases for the Postal Service. It will not only profit handsomely by negotiating the sale of the Berkeley post office; it will also earn a big commission on the lease for the new space.
York post office, going, going, gone
The 1911 post office in York, Pennsylvania, is finally closing. Yesterday came word that the deal to sell the building had been completed, and retail postal services will be relocated to a new leased space about a half mile away.
The closure has been in the works for a long time. Back in the 1980s, administrative offices were moved to other facilities, and then in the 1990s mail processing employees were consolidated to another facility. About four years ago, the letter carriers were sent to work out of the office in West York. A small retail operation remained, but transferring all those workers left a lot of unused space in the building.
The Postal Service has been looking for a buyer at least since 2011, when the relocation and sale was first announced to the public. The story may go back even further than that, however. Last May, Themi Sacarellos, the local real estate developer who’s buying the building, told the news media, “I’ve been chasing that property for three years. That’s the only building that looks like that in the whole city.”
While many long-time residents will be very sad to see a downtown landmark no longer operating as a post office, city officials are doing their best to put a positive spin on things. They say that it will be a plus to have the huge old post office building and all the businesses it will house on the tax rolls, and they hope that having a post office in the new location will spur redevelopment in the surrounding area.
Back in 2012, however, city officials weren’t very pleased with the news that Mr. Sacarellos wanted to buy the building. That’s because he owed the city more than $109,000 for delinquent sewer and refuse bills and about $75,000 in taxes.
“This is not something that we want,” York city council Vice President Henry Nixon told the local media. “Frankly even if this guy makes good on everything, he has a behavior pattern of doing exactly that all the time.” In another report, Mr. Nixon called Mr. Sacarellos “an irresponsible property owner.”
While the building had been listed for $800,000 at one point, it’s currently priced at $650,000 on the USPS-CBRE website, so that’s probably closer to the actual sale price. Mr. Sacarellos has not disclosed his plans for the building, but he says that it would be suitable for restaurants and offices.
The location for the new post office is hardly grand. It’s a small leased space in between the Junior League of York and Chinatown Express Chinese restaurant. The contrast between the new location and the 1911 landmark says everything you need to know about the state of the Postal Service and the priorities of its leadership.
Mr. Mulvey wants to hear from Derby
The Postal Service is also proceeding with plans to sell the historic post office in Derby, Connecticut. One of the interesting things about the Derby story is that the Postal Service listed the post office for sale on the CBRE-USPS website before going through the process legally required for the relocation of retail services and the sale of a historic building.
Even though the decision to relocate retail services and sell the building is obviously a done deal, the USPS real estate specialist in charge of the process, Mr. Joseph Mulvey, is acting as if the end result were an open question. He actually told the media that public input is key and he wants to hear from residents.
This is the same Joseph Mulvey who is overseeing the controversial closure, relocation, and sale of several post offices in New York City, including the historic Bronx General Post Office and the Old Chelsea Station. He’s been sitting through meetings in these communities, listening patiently to angry citizens yell at him, acting as if he cares what the public says.
Mr. Mulvey has an interesting history. About ten years ago, when he was a postmaster in Southborough, Massachusetts, he got into it with a letter carrier under his supervision. In a grievance and subsequent lawsuit, the carrier claimed that Mulvey promised to make his life “a living hell” and harassed him repeatedly about minor details concerning the mail count, sign-in time, sign-out sheets, the arrangement of his sorting racks, and delivering mail out of sequence. The carrier was eventually driven to consult a therapist for stress, take a medical leave, and finally retire. Mr. Mulvey was promoted from postmaster to real estate specialist.
The Postal Service has come up with a new strategy for closing post offices: relocate two post offices to the same new location.
In February of this year, the Postal Service relocated retail services at the Main Post Office on Kellogg Street (photo at the top) in downtown Saint Paul, Minnesota, to a new location a few blocks away, at the U.S. Bank Building at on East Fifth Street. Also known as the Eugene McCarthy Post Office, this used to be a large processing facility, but in 2010 the processing work was moved to a new location, leaving only the retail behind. This historic building is now listed on the CBRE-USPS Properties or Sale website as “in contract.”
In March, the Postal Service also closed St. Paul’s Uptown Station, located in the historic Hamm Building on St. Peter Street. Its retail services were also relocated to theU.S. Bank Building. Two post offices were thus relocated to a single post office. The whole story, with map and pictures, was laid out by Evan Kalish on Going Postal back in January.
The same thing is happening in Rochester, New York. The Postal Service is closing both the Midtown Station on East Broad Street (which replaced the now demolished Midtown Plaza a block away) and the Federal Building Station on State Street. Retail services at both post offices are being relocated to a new location on West Main Street, where there are likely to be issues over the lack of parking. (Video news report here.)
“Relocating” two post offices to one location is probably illegal. According to federal law, when the Postal Service wants to close a post office completely, it must go through a formal discontinuance study. If the Postal Service wants to close a post office and relocate retail services to a new location in the same community, it doesn’t have to do a discontinuance study, but it’s required to go through a similar, though simpler, “relocation” process.
There’s nothing in the law that permits the Postal Service to close two post offices and relocate them both to one new location. In such a situation, it’s obvious that only one of the post offices is being “relocated.” The other is being closed and should be treated as a discontinuance. If that were not the case, the Postal Service could conceivably relocate not just two but several post offices to one new location and avoid discontinuance studies on all of them.
Middle Amana suspended
The post office in Middle Amana, Iowa, is on the POStPlan list. It was supposed to have the hours reduced to four a day, but last week, on April 26, 2013, the Postal Service closed the post office. A USPS spokesperson said the owner of the building was charging more than the USPS wanted to pay.
The disagreement over the rent can’t have involved a lot of money. According to the USPS facilities list, the rent is $2,520 a year — just over $200 a month.
The post office has been in this location since 1948, and the lease was due to expire on April 30. It’s not clear when the town was first informed of a potential lease problem, but the news item came out on April 26, the day the office closed, so it looks as though the town was taken by surprise. (Video news report here.)
“We have a lot of handicapped older people that live in our community. We have a blind neighbor as well who is really going to be affected by this,” said Middle Amana resident Joshua Turner. According to the local news, “the USPS apologized for the inconvenience.”
The landlord is the Amana Society, and Middle Amana is located in an area in Iowa settled by a group of radical German Pietists who lived a communal life, with a self-sufficient local economy. This isn’t the first time a post office owned by the Amana Society has been suspended.
The post office in Homestead, Iowa, closed in November 2011 because of “failed lease negotiations.” There had been a post office in Homestead since 1852, and in the same building since 1913. The Homestead post office remains suspended, and the Postal Service has yet to proceed with a discontinuance study.
The Middle Amana post office is likely to remain in a similar limbo for a good, long time. Not that there’s much of a chance it will ever reopen. The news item had it right when it said the Middle Amana post office is closing is “for good.”
Happy ending in Geronimo
The post office in Geronimo, Texas, is also on the POStPlan list. The Postal Service held the pro forma meeting on October 10, 2012, and on November 17, the new hours went into effect, 8 a.m. to noon.
On April 26, 2013, the post office was suspended, again over a lease dispute. The rent was $400 a month, the same as it’s been since 1980. The landlord wanted an increase to make up for three decades of no rent increases, but the Postal Service wanted a 15 percent reduction. After some back-and-forth negotiations, the Postal offered a 5 percent increase, which would have put the rent at $420, the equivalent of about $150 in 1980 dollars.
The landlord wouldn’t agree, so the Postal Service closed the Geronimo post office by emergency suspension.
But the story has a happy ending. After hearing from his neighbors how much they were going to miss the post office, the landlord decided to turn the building into a Pack and Ship, offering USPS services, FedEx, UPS, and private mailboxes.
While Geronimo residents will now need to pay for a post office box, things may work out fine, thanks to the landlord. Still, it’s disturbing to see yet another POStPlan post office closed over a few dollars in a lease dispute. The Postal Service told the Postal Regulatory Commission that it would not be using emergency suspensions like this as a pretense to close POStPlan post offices. But that’s exactly what it’s been doing, again and again.
Photo credits: Main Post Office in St. Paul, MN (Evan Kalish); post offices in Bronx, NY; Berkeley, CA; York PA and new location in York; Derby, CT; Rochester, NY (rendering of new location); Middle Amana, IA; and Geronimo, TX.