Review of the Postal Service's Site Selection Activities

Published by the Government Accountability Office on 1977-07-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                   UNITED STATES GENERAL      ACCOUNTING      OFFICE
                                             WASHINGTON,      D C.   20548

                                                                              JUL 19 1977

          Assistant      Postmaster    General
          Alfred    C, Maevis
          Real Estate      and Bulldlngs
          United    States    Postal   Seavxe
          Dear        Mr.   Maevis:
                   Weshave reviewed      th; U.S Postal      Servxe's     site   selection
          actlvltles      In the Central       and Western Regions        Our efforts
          centered     around Service       pollcles    and practices   in obtalnlng
          land for faclllty        construction      needs.    This report     summarizes
          our observations       In this      area.                                                         1
                 In the past,       the Service     encountered      community        opposl-               '
          tlon when attempting          to buy sites       due to its     practice       of
          not contacting       local    officials    until    a particular        site     was
          decided    upon.    We found this       to be a maJor cause for delays
          in obtaining     sites.
                   On June 14, 1976, the Service                  Issued       a new polic~~ofi~
          community       contact        which requires        that local        officials         be
          notlfled       by letter        as soon as possible             after    defining        the
          neighborhood          where the new bullding              should      be located.           The
          letter      should describe           the prolect       and the site           neighborhood,
          and contain         an offer       to have a postal           representative           meet
          with     local    officials        and participate          in public        dlscusslons
          to obtain       local       input       Further,     local     governments          should
          be asked to submit              in wrltlng        any llmltatlons          on Its concur-
          rence in the site              nelqhborhood        and any suagested             alternatrve
          areas.        We view the policy             charlge as constructive
                   We have also developed       lnformatlon    on other   aspects   of
          the site     selection   process    which we believe     could be improved
          These concern weaknesses         in the methods the Service          used for
          identifying      srtes and subsequent        management evaluations      of
          these sites      for meeting    Service     needs.
                      A detailed      dlscusslon     of our      findings       follows.
               SITE IDENTIFICATION              PROCEDURES
               COULD BE IMPROVED
                       In surveying         for sites,          postal        policy    provides      that,
                if possible,      Initial        Jnqulrles          be directed         to owners.
               Though advertlslng             and/or      real estate            brokers    could be
               used to identify           sites,      these techniques               generally      are
               not used.       Regional        postal       officials          exolalned       that sites
               are normally       found by performnng                    "qlndow     surveys"--dLIvIng
               around the area to spot sites                      posted       for sale          The Service's
               practice      of relying        pramarlly          on wlndow surveys              to lderltlfy
               sitesp    however p does rot assilre                    that ail potentnal           s3t 5
               are consldered.
                                                      r -
               All available        sites
               are not ldenti?i'led
               -PI_-                                * r
                       To determine     whether     the Service    was overlooking   potential
               sites,    we reviewed      seven Central      and Western Region prolects
               rn which site      selections       had been recently      completed  We                          i
               found that potential          sites    were overlooked     on five of these                           ,
               prolects.      One of these pro-Jects         1s descrabed    below.

           d           A site planning           report     completed       May 10, 1975, showed
                       a postal      real estate        speclallst         ldentlfled      four
                       possible      sites     for a new post offlce                in Yorba Linda,
                       California.         The sites      were found by drlvlng              around- the
                       neighborhood          and dealing        directly      with owners        The real
                       estate      specialist       did not contact           real estate       agents
                       nor did the Service             publicly        announce Its Interest           ln
                       a site.      Two sites       were ellmlnated           due to rough terrain
                       and high site preparation                  costs.     The report      recommended
                       one of the remalnlng             sites.       The site was later          purchased
                       for $240,000          on December 17, 1975.
                       By talking      to relators,   we identified  the followlnq
                       sites     in Yorba Linda that were not considered        by the
                       Service     but were available    at the time   the Service    was
                       ldentlfylng       sites,


---   ---__-
                                          Size              Price                Total
Site           Zoning                   (acres)
                                         --                ger acre              price
 A          Residential                   2.75            $20,000                55,000
 B          Commercial                    2.34              73,000            $170,820
 C          Resldentlal            d/     4                 22,000               88,000
 D     a    Residential                   3.36              30,000              100,800
 E           Resldentlal           in/ 3.6                  14,000               50,400
Site         Residential            ' * *2.77                 86,643             240,000
a/According      to yreiators,        these sites       could be subdivided        and
   all the land would not necessarily                   have to be purchased.
       All of the sites          are within       2 miles    of the selected
       site   and, as the table            shows, were from $13,643        to
       $72,643     an acre less than the Service                pald for its site.
       We did not evaluate            whether     the SIX alternative       sites
       would have met the Service's                 needs and recognize       that,
       had they been considered,               they might     have been reJected
       However,     the Service         did not determine        whether  any of
       these sites        would have been as suitable              as the one pur-
       chased,     even though they were all               in the same area.
       Had it done so, the Service                may have been able to I%$-
       a suitable       site   for less than it paid.
        In an earlier      GAO report    entitled      "Postal  Service
Acquisition      of Land in Hamllton         TownshIp,     New Jersey,"        dated
February    12, 1976, (GGD-76-44),           we identified     sites     through
area realtors        which the Service       had not considered         because of
its practice       of not advertlslng        or contacting     realtors.        We
concluded     that while     Service    policy    does lot prohlblt         it
from using real estate          brokers     or advertising     to identify
potential     sites,     such practices      were not used in this          case
and may have resulted         in purchasing       an expensive       site when
a considerably        less expensive     site was available,
Use of advertlslng         could
improve site     ldentlflcation
        Service      policy     recommends advertising        as a procedure
for quickly        identifying       all avallable    sites.       It states     that
the time required            to conduct      a realty survey     and prepare       a
site    planning      report     may delay proJects,       thus,     the use of adver-
tising     could be used to speed up the site                selection     process.
Service     policy       1s silent     on the use of real estate         brokers
as a means of ldentlfylng               sites

,            Although      advertising       is considered       a feasible        method
      for quickly       ldentlfylng      all readily      avallable       sites,       the
      the Central       and Western Regions          avoided     using this        procedure
      unless    problems       occurred    in obtaining      sites.       Reglonal        officials
      maintain      that advertising         reveals   Service      interest       in an area
      and may cause increased            land prices         Further,       contacting          local
      brokers     gives    them an opportunity          to list     avallable        sites,       and
      thus collect        a commlsslon       on a sale,      Service      offlclals,          how-
      ever,    could not supply         any evidence       to support        the contention
      that advertising           or use of brokers       would increase           acsulsltlon

             On the other hand, in one instance               in which advertising
      was used in the Western        Region,     Dubllc     knowledge    of postal
      plans   apparently    did not Eause site          costs to increase           In
      January   J.975, the Western Region experimented                bv advertising
      for a site     in Aptos,  Callfornla.         By February       14, 1975, 16
      sites   had been offered     to the Service.           Although,     the Service's
      appraised    fair  market value       of the selected        site was $101,700,
      the cwner sold it to the Service            for $70,000.                                          1'I
               In contrast         to the Service's         normal practices,         GSA publl-I
      clues      its plans       to buy building        sites.       At the start      of each
      prolect,       GSF (1) sends announcements                requesting     proposals
    & for sites        to real estate        firms    in the area, and (2) places
      advertisements           with newspapers        having      the largest     clIculatlon
      in the community              We believe     these techniques          could help
      the Service         ldentlfy     more sites.                                       -c. -
                                                                                           ; c
               Western Region officials              noted that the lack of advertising
      has delayed         prolects      and has caused the Service              to overlpok
      possible       sites.        The Region plans to use advertising                 on ruture
      prolects.          However,     the Regional        Director     of the Real Estate
      and Buildings          Department      believes       that advertising        would
      eliminate        the need for directly            contacting       real estate        brokers
              Real estate         specialists          make preliminary         estimates      of
       each site's           fair market value and the total                estimated       costs
       to the Service.            Speclallsts          also consider      such factors         as
       physical       features,      suitability          for Service     needs, and public
       accesslbllity/vlslbillty                  dhlch are difficult          to measure in
       dollar      amounts        Service       policy,      however,    neither     provides
       guidance        on the weight        to be given to such features                 nor
       emphasizes         the need to hold site              costs    to a minimum.
             Service      policy   specifies        that a representative       from
       the regional       real estate      dlvlslon      be designated    as a member
       of the site       selection    committee,        but provides    no additional

  guidance        on what other offlclals       should                 be members of the
  committee        or the procedures      and crlterla                  to be followed  in
  evaluating        alternative   sites
         We found that the site        selection      committees        usually     did
  not meet to discuss       the alternatlve       sites    ldentlfled         by the
  real estate    dlvlslon.      Further,      m revlewlng       the site planning
  reports,    the least    expensive     site was usually         not recommended
  for purchase,        In some cases,      other less costly          sites     appeared
  as suntable    as those that were purchased                As a result,         the
  Service   may not be selecting         the least     expensive        but suitable
  Site      selection       committee          . *
  review       1s-- weak                     6
            In the We&te;n Region,                 after       the real estate            dlvlslon        pre-
  pared and approved               the site planning                reports,      they were given
  to the members of the site                      selectlon         commlttee.          Normally,         the
  committee         consisted        of offlclals           from the real estate                 dlvlslon,
  the operational             requirements            branch,       the area engineering
  office,        and the dlstrlct             office          These officials             usually       did
  not meet to discuss                site planning             report      recommendations.               The
d area      engineering        office       vlslted       sites       to   review     their       suit-
  ability        for constructing              a postal        building.         Officials          from
  the operational             requirements            branch and the dlstrlct                   offices
  usually        did not vlslt           sites     before        selecting       one.       Thus, the
  management          review process            appeared         cursory      at best.          Reg16hal
  offlclals         agreed that exlstang                 practices         resulted       In a weak
  management          review.
            In the Central           region,        after      site     planning      reports         were
  approved         by the real estate              dlvlslon,          the district          office
  manager alone had the authority                          to select         one of the recommended
  sites.         The site       selection         committee         usually      consisted          of the
  dlstrlct         manager and the local                 postmaster          where the new bullding
  was to be located.                 We were told            that offlclals           from regional
  departments           could challenge             the dlstrlct           manager's        declslon
  but this was never done.
   Least expensive    sites
   usually  not selected
          More than one suitable       site was ldentlfled        for each
   of the new buildings     planned      for 19 of the 25 prolects         we
   reviewed    in the Western Region.        The least     expensive    site
   was selected     in only five   instances    or 26 percent        of the
          Our review    of site   selectron      files    showed that site
   features   such as public      accesslblllty         and site  prominence
   weLe usually     used to Iustify       buying     expensive   sites   even

 though the value of these features   are dlfflcult                            to measure.
 The following  example shows how a lower priced                           site may
 have been as sultable  as the site selected.
           Three suitable   sites were ldentlfled     for a new post
           office   In San Brunol Callfornna,      The least expensive
           site consisted   of two parcels    of land; the largest
           parcel --about  90 percent   of the site--was    owned by GSA.
           The site planning       report   estimated      that this site would
           cost the Service       about $360,000 including          site preparation
           costs.     The report     recommended buying either          of the two
           other sites khlch nere prnced by tne owners at $496,585
           and $516,150.      The least     costly    of these, however, was
           withdrawn    by the selEer shortly         after    the site planning
           report    was completed,       The most expensive        site is located
           neaf a shopping       center which 1s within          one mile of the
           GSA site.
           The most ex-Denslve site was approved by the regional            site
           selection    committee.   An independent     appraiser   estimated    1
           $387,000 as the fair market value,        which was considerably
           less than the the price asked by the owner.            A Service
           headquarters    appraiser  revlewed    the site with the
46         independent    appraiser  and adlusted    the fair market value
           to $465,000      On October 31, 1975, the owner agreed to
           sell the site for this price.
           Western Region officials                Justified      purchasing      the?uosX
           expensive        site prlmarlly         because It 1s located            on land
           set aside for future              growth of the shopping             center.     The
           offlclals        pointed       out that the site 1s more vlslble                 and
           1s more accessible              to the public.        Some reqional       officials
           said that post offices               located      in or near shopping           centers
           will      increase       revenue and thereby          offset     the higher       land
           costs.        However, the Service             has not made a study to
           determine        whether this 1s true.              On the other hand,
           some postal          officials     we Interviewed          disagreed     with this
           idea.        These officials         explalned      that any Increases            in
           revenue at one post office                 would be offset          by reductions
           In revenue at other nearby post offices.
           In addition     to being less expensive,    the GSA site is
           centrally   located    for service    City offlclals    added
           that the GSA site was preferred       for the new post offlce
           because the city could lose revenue from the Service
           purchasing    the shopping center site
             The selection   of expensive      sites may be traced,         in part,
     to the views of Western region offlclals              who told us that
     the Service     should consider    future      dlsDosa1 value and should
     buy the best site avallable           We believe       that this point     of
     view 1s not consistent      with the Service's           foremost   goal of
     provldlng    mail service   at the lowest posslbl,e           cost.


                  In the Central            Region prolects       we revlewed,       the most ex-
          pensive      sites     were often       consldered      the most desirable.            More
          than one sultable             site    was Identified       for each of the new
          bulldlngs        planned‘ior        5 of 12 prolects         reviewed        The site
          planning       reports       recommended that the Central             Region buy the
          least     expensive       site     in only one instance.            Public    accesslbl-
          llty    and future        property      disposal     values     were important       site
          selection        factors.         However,    at the conclusion          of OUL audit
          work,     the Region had not obtaaned                sates for any of these
          Closer     management      review  could
          reduce     site  acaulsltlon      costs
                 A member of the West&n                Region site      selection    committee
          told us that site planning                report     recommendations      were rarely
          questioned       and that approval            by members other than the real
          estate    dlvlslon     was nearly         automatic         However,    we believe
          that management,        by taklnq         a closer      look at the site planning
          report    recommendations,       can        reduce the chances of the Service                   's
          purchasing       a more expensive           site   than needed.
                  For example,           two suitable        sites    with a cost difference
          of $37,600 were identified                  for a new post office              in Sierra
        #Vista,      Arizona.         The site planning           report      recommended buying
          the expensive            site because it 1s located                 on a corner     with
          traffic      signals         and provided       better     public      access      4 Western
          Region offical             said that he carefully              studied     the Sierr-a     __
          Vista     report       after     we had inquired          about the effectiveness
          of the management               review   process.         A review      showed that the
          alternate        site was the best one operationally                       because    zt pro-
          vided     space for mall loading                operations        and customer      parking.
          Thus, this         official        recommended against            purchasing     the most
          expensive        site      in Sierra     Vista.        9s a result,        the less ex-
          pensive      alternate         site was selected
                   Western Region officials          said that the review          process
          would be changed.           Someone from the operational            requirements
          branch will        be resulred    to vlslt     each suitable      site     to review
          Its adequacy         from the standpoint       of postal    operations       and cost.
          District      office     managers have also been instructed              to take a
          closer     look at site planning         reports   and to visit        the sites
          before     approving      one to be purchased      by the Service.
                 Although     postal  policy   permits      advertlslng,       this technique
          was usually      not used to identify        sites.       By not using this
          technique,      we believe    the Service      has little      assurance    that
          all potential       sites  are being identified           and the most advanta-
          geous site,      cost and other    factors       considered,      1s being purchased.

                                                       - 7 -
            The Service's      management        review      of recommended         sites
    also does not assure selectlon                of the most advantageous                sites
    Some members of the site             selection        committee      in the Western
    Region ucually        dlb not take a close look at the recommenda-
    tions     made in site     planning      reports       and usually       did not visit
    avallable      sites      The Service        has not established            a uniform
    polacy     governing     membership      of the reglonal           site    selection
    committees       or procedures       they are to follow,             nor has it
    emphasazed       the need to hold site             costs   to a mlnlmum.            The
    lack of emohasls         on mnnlmizlng         site costs       together      with no
    guidance      on the weight      to be given to unmeasurable                  site
    features     may be causing        the Service          to purchase      some sites
    when less expensive          and equally         suitable     sites     were known
    to be avallable.                   I -
           The'Service      should ,t&ke advantage     of every opportunity
    to hold site       costs down,     Therefore,   we recommend that the
    Assnstant     Postmaster     General,   Real Estate   and BulldIngs
           --require       regional     offlclals      to place advertisements
               for site      offers    with newspapers       having the largest
               clrculatlon        rn the community       with any devlatlons
d              from this policy          to be lustlfled      and approved;
           --provide     addltlonal      guidance   and direction      on the
              membership      of the reglonal     site  selection      committees
               and procedures       they are to follow      in carrying     OU$ --
               review  functions;       and
           --require      regional    offices             to obtain   the lowest     prlczd
               sites   which are adequate                 to meet postal    needs    with
               any devlatlons      from this              policy   to be Justlfled       and

          We wish to express    our appreclatlon     for the cooperation
    given   us by both Headquarters    and regional      offlclals       during
    our review.    We would appreciate     being informed          of any
    changes In the Service's      site selectlon    pollcles        and/or

                                                         Arnold    P. !X&es
                                                         Associate     Director