Postal Service occupies too much real estate, report says

September 1, 2011

The money-starved U.S. Postal Service operates more than 33,000 facilities and owns or leases millions of square feet it no longer needs, according to a watchdog estimate.

With tens of thousands of post offices, about 500 mail processing facilities and dozens of regional offices, the nation’s mail delivery service occupies about 284 million square feet. Of that, about 67 million square feet — representing 24 percent of its real estate — is extra space it doesn’t need, according to a report by the Postal Service Inspector General. Postal officials dispute the figure.

Those levels exceed the national commercial vacancy rate of 13.4 percent, and “the Postal Service has a much greater opportunity to aggressively optimize excess space through disposal or leasing” than it plans to do, the report said.

Postal officials are expected this month to outline plans to shrink its national mail processing and delivery networks. The changes could result in job losses and include closing dozens of its mail processing plants, in addition to the thousands of post offices it’s already planning to shutter.

New plans would be good, the report said, because the Postal Service’s current consolidation plans would trim just 1 percent of its real estate.

Postal officials quoted in the report said they appreciated the audit, but disputed the estimates on excess space.

But the report said the Postal Service lacks a reliable way of knowing exactly how much space it owns or leases.

Meanwhile, the Postal Service said Wednesday that it plans to pay into a government fund compensating federal employees for work-related injuries as required by law.

The assurances come as the Labor Department is warning lawmakers that the fund will run out of cash later this year if the Postal Service fails to make its payments, which last year totaled about $1.2 billion.

Reuters first reported news of the department’s concerns.

David Partenheimer, a Postal Service spokesman, said the Postal Service should at least be able to provide enough money to keep the $2.7 billion fund afloat into the next fiscal year, which begins Oct. 1.

There would be no penalty against the Postal Service if it failed to make its payment, Labor Department Assistant Secretary Brian Kennedy told lawmakers in August.

With more than 560,000 employees, the Postal Service is the largest employer covered by the Federal Employees Compensation Act. Its workers claim 40 percent of the benefits paid each year, according to the office of Rep. Darell Issa (R-Calif.).

Issa, who heads the House Oversight and Government Reform Committee, is pushing legislation that would allow the Postal Service to restructure itself, but permit Congress to establish a receivership-like authority if it defaults on its debt obligations to the federal government.

Lawmakers are expected to consider Issa’s plans and similar bills when they return to Washington next week.

Ed O’Keefe is a congressional reporter with The Washington Post and covered the 2008 and 2012 presidential and congressional elections.
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