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155 IRET Congressional Advisory 1 (2003)

handle is hein.taxfoundation/iretcgadv0152 and id is 1 raw text is: INSTITUTE FOR RESEARCH ON THE ECONOMICS OF TAXATION IRET is a non-profit 501 (c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote growth and efficient operation of the market economy. June 24, 2003 Advisory No. 155 THE POSTAL SERVICE'S SURPLUS REAL ESTATE Executive Summary The U.S. Postal Service requires most of the real estate it owns for postal operations, but some is excess. Properties not needed for postal operations should be identified and transformed into revenue. That would simultaneously help the Postal Service financially and assist the economy by putting scarce resources to better uses. In addition, if the tax-exempt Postal Service owned less real estate, that would increase the tax bases of financially strained state and local governments. The Postal Service, which is part of the federal government, already generates some revenue from its excess real estate. Its Realty Asset Management office collected $87 million in 2002: $26 million from real property sales and $61 million from leases and rentals. This amount is small, though, compared to the agency's size and property holdings. Regrettably, the agency has not provided key information needed to evaluate whether it should be doing better. Its real estate portfolio includes over 8,300 facilities, more than 220 million square feet of interior space, and about 900 million square feet of land. The agency's real estate has a book value of $15 billion. If the properties were valued at market prices, their value would undoubtedly be seen to be much higher. However, there has never been a comprehensive appraisal of the current value of the Postal Service's huge real estate portfolio. A recent audit by the Postal Service's Office of Inspector General (OIG) found deficiencies in how the agency disposes of excess real estate. A number of reports from the U.S. General Accounting Office (GAO) have criticized real property practices in the federal government. In a rare instance in which the Postal Service provided a comparison of book and market values, it reported that the excess properties it sold in 1999 fetched prices that were seven times their book values. Unlike the U.S. Postal Service, the German postal service, Deutsche Post, has raised billions by selling surplus real property. Earlier this year, a member of the President's Commission on the Postal Service asked if the agency could obtain more financial support from its real estate holdings. Until more information is developed and released, the question of whether excess real estate should be a much larger revenue source for the Postal Service cannot be answered. What is needed as a reference point is an independent appraisal of the current market values of the Postal Service's properties, along with an independent analysis of which of the properties are excess. It is strange that although the Postal Service says it needs more revenue, and has used that as an argument for dubious proposals like seeking to expand in markets outside its monopoly, it has not looked more closely at disposing of excess real estate.

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