Tuesday, December 06, 2011

Who Owns YOUR Post Office?

Where I grew up, in Hettinger in southwestern North Dakota, the big brick Post Office building sat at the most prominent corner in town, the intersection of Main Street and U.S. Highway 12. Still does. A federal building, owned now by either the United States Government or the U.S. Postal Service—I’m not sure which. When I moved away, first to Dickinson, then Mandan, then Bismarck, it was the same. The Post office was, well, the Post Office. So I never gave much thought to who actually owned the Post Office.

Until lately, when there has been much talk of closing small town Post Offices (and not just small towns—in Bismarck there’s talk of closing the downtown Post Office in the Federal Building and moving it to the mail handling facility out on the Expressway, just down the road from the scrap iron yard) and stories are being written about towns like Grassy Butte and Mandaree losing their Post Offices.

Which got me to thinking, “What’s going to happen to all those Post Office buildings in all those small towns when they close them up?” Which led to “Hey, who owns those buildings, anyway?” So I started checking. What I found was pretty interesting.

Lawrence Magdovitz, a country lawyer in Clarksville, Mississippi, owns 850 post offices around the United States. John Hamilton, a dentist in Williston, North Dakota owns fewer than that, maybe a couple hundred, but still a lot. The two of them, plus a few other wise investors and a host of small town non-profits and local development organizations, probably own more post offices than the United States Postal Service. Huh?

That’s right. Because all over America, especially in small towns, the Postal Service has to rent property to house its United States Post Offices. In most small towns in North Dakota, as well as across the country, the Postal Service does not own a building. Instead it rents a building from a local owner.

Now the Postal Service is in big financial trouble. They’re running short of cash and may not be able to make some loan payments. The “B” word is floating in and out of news stories. Not that we will ever allow the Postal Service to go bankrupt, but some serious things are going to have to happen to keep our mail coming. You’ve read the stories. The Postal Service is looking at 3,500 small town Post Offices in the United States—76 of them in North Dakota—to see if they can justify keeping them open.

There’s a very nice man in Minneapolis named Pete Nowacki who gets paid to answer questions about the process here in the Midwest. He has a thankless job, but he does it with seriousness and aplomb. You can hear the sympathy in his voice for the people of Fingal, North Dakota, who might be told in the next few months that their post office is going away.

Pete told me recently that the process is underway across the state to look at the business being done at each of those 76 post offices, which will result in a determination of their future status. Each is getting personal attention. Each town will have public meetings at which community citizens can come forward and provide their input. Each town will go through a series of 30 and 60 day waiting periods while more public comments are sought. This is not a process being taken lightly by the Postal Service.

In the end, each of the 76 Post Offices being studied (out of a total of slightly more than 300 in the state) will receive an “Open” or “Close” determination. For those who receive the “Close” notice, another building will sit empty in another small North Dakota town. And it’s those buildings that caught my attention this fall. Because in North Dakota, the Postal Service rents about 295 of them. It rents all 76 of the buildings on the “hit list.” That’s 76 small-town landlords who are threatened with losing their occupants. Well, not quite that many, because a few folks own more than one. But not many. And in most of those towns, it’s going to be pretty tough to find someone who wants to rent—or buy—a used Post Office.

So I asked Pete who owns these Post Office buildings. He was kind enough to send me to a website that lists the owners of every Post Office in America, except those owned by the Government or the Postal Service itself.

Well, I learned, here in North Dakota, Dr. John Hamilton, the Williston dentist, owns 44 of them. Eleven of them, in Dodge, Fingal, Golden Valley, Kathryn, McGregor, Meckinock, Pettibone, Roseglen, Rutland, Sharton and Zap, are on the Postal Service’s list to be studied for closure. Magdovitz, the Mississippi Lawyer, owns 27 in North Dakota, with 10 threatened with closure.

I called Dr. Hamilton a few times, left messages and voice mails for him at his home, his office and on his cell phone, but he apparently doesn’t want to talk to me about this, because he never called back. Lawyer Magdovitz did, though, and it was a real treat. I could tell from our phone conversation he's just a good old boy, a country lawyer who one day happened to end up owning a building in which a Post Office was located, and saw the benefits of that, and, in 1980, started buying up buildings around the country which housed Post Offices. According to a little website for his real estate company, the Magdovitz Group, he owns 850 Post Office buildings in 42 states and Puerto Rico. Our phone conversation was brief, because he had someone on hold on another line, but I learned that he just started buying these buildings because they seemed like a good investment, and “because I don’t have any trouble collecting my rent.” He’s got a little staff that manages them for him, a toll-free maintenance hotline which local Postmasters can call when they have a problem with the building, a slug of local contractors who do the maintenance work, and a few Realtors who keep an eye out for properties about to come on the market for him. There are, apparently, Realtors who specialize in this kind of thing. I asked him what he thought about this plan to close a lot of the Post Offices in buildings he owns. He seemed unconcerned. “I’ve got good leases, and if they close, they have to pay the rent until the lease runs out,” he said. Most of the leases are for five years, he said.

Hamilton’s Post Office buildings are mostly in the Midwest. If the Postal Service follows through on its plan, he’ll lose about 25 per cent of his renters in North Dakota, and it looks like a similar number in other states.

While it’s fair to say that Hamilton and Magdovitz, and others like them, are making a nice tidy profit on their investments, it doesn’t appear that they are gouging the Postal Service. In Hamilton’s buildings, rents average about $8 per square foot per year, which doesn’t seem out of line for a small town in North Dakota. In Alexander, ND, for example, the Postal Service rents a 1,269 square foot building for $11,000 a year, at $8.67 per square foot. Over in Fingal, one of the Post Offices selected for closing, Hamilton gets $5,040 a year for a 502 square foot space, about 10 bucks a square foot. In Mekinock, the Post Office only occupies 355 square feet, and the Postal Service pays Hamilton $2,220 a year, or $6.25 per square foot. Looking for one you might recognize? Well, Hamilton owns that nice little brick building next to the Rough Riders Hotel in Medora, and rents it to the Postal Service for $8.12 per square foot per year, a total of $7,500 a year. Now that’s a bargain, I’d say. In all, Hamilton collects a little over $285,000 a year in rent from his North Dakota Post Offices. The Post Offices he owns on the target list are among the smallest in the state, so if all 11 Post Offices on the target list owned by Hamilton in North Dakota are closed, he stands to lose about $54,000 a year in rent. And probably without a lot of hope of finding a new tenant in most of those towns. I don’t know how good his leases are, or if he was as savvy as the country lawyer from Mississippi who claims his are “locked in.”

So who else owns the Post Offices targeted for closure in North Dakota? Well, the city governments of Granville, Hannaford, and Clifford, all towns whose Post Offices are on the hit list, own the Post Offices in their towns. Some other towns on the list: the Antler Rural Fire Department owns the Antler Post Office; in Cogswell, it’s the Cogswell Community Association; in Forest River, the Forest River Improvement Association; in Benedict, the American Legion Post. Those local owners are renting pretty cheap, it appears, to try to maintain postal services in their towns. But there is a sprinkling of out-of-state owners on the closure list too. In Egeland, the building is owned by the Nationwide Real Estate Company of Chicago, Illinois; in Columbus, it’s the Columbus Enterprise Group, of Portsmouth, Rhode Island; and in Bisbee, the Inga Westmeier Irrevocable Trust, of Sun City, Arizona. There are also owners of Post Offices on the target list here from Clinton, NC, Vail, CO, Indianapolis, IN, Fremont, CA, Tyler, TX, Woodbury, MN, Billings, MT, Memphis, TN, Lincoln, NE and Spearfish, SD and a smattering of local owners.

I’m not sure how the rents are negotiated, but the highest amounts per square foot I found being charged by private owners in North Dakota were Theodore and Shirley Mees getting $15.33 per square foot per year in Colfax, and the $14.74 per square foot Gordon Kessel was getting for his space in Amidon. The cheapest rent I found was just $360 per year---a nickel a square foot--that Dale Knutson was charging for his building over in Buchanan.

And so the process begins. Meetings have been held so far in Grassy Butte and Mandaree, that I know of, and decisions on closing them could come early next year. If you want to look at the list of who owns all the Post Offices in North Dakota—to see if one of your neighbors is a savvy investor, or to see who owns YOUR Post Office—you can go to the Postal Service’s website, here. It’s actually kind of a fun list, if you’re nosy like me. Meanwhile, here’s the list of Post Offices in North Dakota owned by Dr. Hamilton, with the annual rent being charged and the amount per square foot. The towns with an * are the ones being studied for closure.

Alexander: $11,000 ($8.67)

Ambrose: $4,500 ($6.82)

Belfield: $10,080 ($7.00)

Binford: $7,200, ($12.00)

Coleharbor: $5,616 ($6.61)

*Dodge: $3,600 ($8.22)

Dunn Center: $5,400 ($9.02)

Douglas: $4,390 (6.96)

Elgin: $9,828 ($7.00)

*Fingal: $5,040 ($10.04)

Fordville: $7,481 ($6.50)

Gladstone: $5,650 ($6.52)

Glenfield: $6,732 ($7.51)

*Golden Valley: $9,360 ($7.49)

Hurdsfield: $5,980 ($6.50)

*Kathryn: $6,000 ($7.95)

Keene: $2,800 ($6.41)

Killdeer: $8,035 ($6.22)

Lawton: $4,160 ($8.00)

Makoti: $6,216 (8.00)

Manning : $4,575 ($7.50)

McHenry: $6,000 ($6.52)

*McGregor: $4,380 ($6.52)

Medina: $5,160 ($5.64)

Medora : $7,500 ($8.12)

*Mekinock: $2,220 ($6.25)

Montpelier: $4,400 ($5.83)

New Town: $25,020 ($9.00)

*Pettibone: $4,404 ($7.00)

Pisek: $4,000 ($8.11)

Plaza: $7,164 ($8.00)

Reeder: $8,160 ($8.50)

*Roseglen: $3,600 ($7.50)

*Rutland: $4,933 ($6.50)

Sarles: $4,404 ($7.00)

*Sharon: $5,550 ($8.75)

Sheyenne: $7,894 ($7.15)

Stanton: $14,100 ($10.36)

Verona: $5,434 ($6.50)

Walhalla: $10,800 ($7.50)

Westhope: $10,500 ($7.87)

Ypsilanti: $4,500 ($7.99)

*Zap: $5,220 ($7.99)

11 comments:

lattn said...

I started to wonder myself what is going to happen to the Post Offices that are being closed. Does the POst Office own or rent them. Your article was so informative, clearly stated and interesting. Thanks!
I can only surmise from a current bill proposed by Issa (HR2309) and another by Lieberman (S1789) that the Post Office is being set up for privatization, with low wage unorganized workers,higher prices and lower service for the public.
I made and posted the following videos on YouTube the effect both these bills would have. Just because Issa has made considerable profits as a business owner doesn’t qualify him to dictate how the Post Office should be run particularly when his solutions promoted as saving the Post Office, if enacted, would do the exact opposite.
If Issa wants to save the USPS he should look at what expenses can be deleted without disrupting the service.
#1. The Postal Accountable and Enhancement Act needs to be rescinded. In 2006 the PAEA ,signed by Bush, mandated that the USPS fund 75 years of retiree health benefits in 10. As the USPS was solvent before the PAEA (HR6407) was passed it stands to reason that the USPS would once again become solvent if this law was rescinded.
#2. Overpayments the USPS has made to the Civil Service Retirement Service should be returned.
#3. Overpayments the USPS made to FERS need to be retrieved.
#4. Charge more for delivering UPS parcels that UPS has the Post Office deliver to places they don’t.
#5. Adjust the ratio of managers to workers .
But Issa, in HR2309 hasn’t proposed that any of these things .
Issa’s solution is to cut the workforce by at least 100,000. Issa’s solution is to weaken the unions, so that Postal Workers’ wages and benefits would depend on a separate board when a contract wasn’t agreed upon by the USPS and a union.
This is a case where Issa’s cure would cause the death of the USPS as a public service and have it revived as a business with lower paid workers, higher rates and less service.
http://www.youtube.com/watch?v=09ybkkiH2Ho

http://www.youtube.com/watch?v=am4wez1ShPY

http://www.youtube.com/watch?v=dsPIY9bFFZY

S1789, sponsored by Lieberman, would cut 100,000 jobs with the USPS when we don't need to have more unemployed workers. S1789 would decrease compensation for injured workers and end it for those over 65, when we don't need to take away compensation or lower compensation for injured workers.It would weaken the unions which promote a "living wage" at a time when we don't need to add more people to the "working poor", S1789 would close smaller post offices (some have already closed),and slow mail delivery by closing 200+ distribution centers.
In 2006 Congress voted to have the USPS fund 75 years of retiree health benefits in 10 amounting to 5.5 Billion a year.
Saddled with funding 5.5 Billion a year that had nothing to do with mail delivery, the USPS could no longer have it's revenue =costs as it had done until 2005.
If this bill is passed or HR2309 the USPS will end up virtually privatized with lower wages and benefits for it's workers,a scaled down and overworked workforce, more mail services contracted out, less services for the public including encouragement of curbside service in place of home delivery.


http://www.youtube.com/watch?v=-chx0j3_8IU

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