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Downtown post office redevelopment update

Remember the big post office at the north end of downtown? It was sold a few years ago and slated for redevelopment, and after a few years that project is getting ready to get started.

Photo by Houston In Pics

Lovett Commercial, the Houston-based company that purchased the property in 2015, plans to keep the structure and, with the help of historic tax credits, transform it into a coworking, shopping and culinary destination with a concert venue, hotel and rooftop farm. The ambitious project, which will fill more than 550,000 square feet of space, will be called POST Houston.

“We envision a catalytic development that will create something very unique, not only from an adaptive reuse standpoint, but what POST will offer in terms of showcasing the talent and entrepreneurial spirit of Houston’s diverse population,” said Frank Liu, Lovett’s president.

The developer and architects on the project say it will reinvigorate this quieter, more industrial northern part of downtown. The site is near the corner of Franklin and Bagby, across Buffalo Bayou from the bulk of the city’s office and residential towers. The location may prove challenging in one sense, but it is also a benefit.

The site offers postcard views of the Houston skyline, which will be highlighted from a rooftop park with restaurants, shaded greenspaces and an organic farm.

“It’s a site where you feel like Houston is a really urban place. Standing on it you have a view of downtown, Houston feels so metropolitan,” said Jason Long, a partner with OMA, an international architecture partnership founded by Pritzker Prize-winning architect Rem Koolhaas. The company is designing POST Houston, along with local firm Powers Brown Architecture.

[…]

By repurposing the 57-year-old building, a state historical landmark, Lovett was able to earn federal and state historic tax credits.

“Many residents of Houston have some sort of memory of the Barbara Jordan Post Office while it was in operation. Combining the building’s original Cold War-era design with modern architecture will make the building stand out for generations to come,” Frank Liu said in an email. “We’re breathing new life into an already iconic building and reintroducing it as a vibrant addition to Downtown.

The building was in use as a post office until 2014, when mail processing was consolidated into a north Houston facility. It was named after Barbara Jordan, a Houston native who was the first black woman from the South elected to Congress, and Lovett intends to incorporate some sort of monument to Jordan, who died in 1996, in the new design.

Lovett bought the property in 2015, a year after the city abandoned a bid to buy it as a potential new location for HPD headquarters and the municipal courts. As noted, the site was put up for sale in 2009, as part of a nationwide divestment of properties by the USPS. There’s been a lot of talk about what this place could be, now we’ll finally get to see what it will be. The story has some of those details, but I just want to see it for myself when it’s done.

What’s coming to the Yale Street post office location

Some more news from my neighborhood.

A Houston developer plans to replace a shuttered U.S. Postal Service building in the Heights with a two-story mixed-use development with space for offices, shops and restaurants.

MFT Interests last month scooped up the full-acre property, and the development company is in the planning stages of bringing a low-rise project dubbed Heights Central Station to the corner of Yale and 11th, said Glenn Clements, the development group’s chief financial officer.

The existing 1970s-era structure will be demolished. The project will include a pair of two-story buildings with office space on the upper floors and retail on the ground. The developers hope to attract professionals and fitness studios in the office space and perhaps two restaurants and up to eight shops at ground level.

The building is not historically significant. But because the site is partially in a historic district, the development may need approval from the Houston Archaeological and Historical Commission. Clements said MFT wants the project to have a “retro feeling” to it. The neighborhood was developed roughly between 1900 and 1920, and Clements said MFT hopes the new building would blend in with the older architecture.

“We’re building it in 2016, but it will look like 1916,” he said.

See here for the background. Swamplot reported this a few days earlier, and there’s a lively discussion in the comments about what the parking situation will be like, which ought to be interesting given that both the new Eight Row Flint across the street on Yale and Lola’s on the opposite side of 11th have used the old post office lot as overflow. There’s no street parking on 11th or Yale, and there’s usually not much available on Heights Blvd. Folks who wind up parking offsite are going to need to walk a few blocks, which means that the nearby homeowners are likely going to start complaining. CM Cohen may need to designate a staff member to handle the complaints. Anyway, I look forward to seeing who moves in.

RIP, Yale Street post office

It’s gone.

Clues could have been the overgrown landscaping, multiple notices taped to the doors and, for the keenest observer, the bare pole without a U.S. flag or clanging metal cables.

Headed back to his SUV on Thursday, one man with an envelope threw up his hands and yelled to a lady scurrying to the door with a package: “They moved!”

Indeed, the plan for the Yale Street post office in the Heights at 11th Street to relocate operations has come to pass.

The new station opened this week in a remodeled annex at 1300 W. 19th Street, though the consumer entrance and drive-up drop box is on 18th Street. The location is near where 18th, 19th and 20th streets pitchfork near East T.C. Jester.

[…]

In January 2015, a posted notice on the Yale Street station indicated a pending “disposal action.”

Which I noted at the time. Since then, both of the adjoining locations that were under development have opened. The former Citgo across Yale is now Eight Row Flint, which looks promising, while the large space across 11th at Heights is now one of those walk-in emergency clinics, which I hope to never need. (It’s gotten mixed reviews on the neighborhood chat boards, for what it’s worth.) No idea at this time what the Yale post office location will become, I’m just rooting for something interesting.

As for the new post office on W 19th, I try to avoid that part of town precisely because that three-road “pitchfork” is a pain to deal with. Besides, the location on Cavalcade is a bit closer. Neither is more convenient to me than the old station was, but that’s the way it goes.

Bring back postal banking

I still like this idea.

Postal unions and civil rights groups are among other advocacy organizations, along with the U.S. Postal Service inspector general, pushing USPS to expand into banking. Sen. Bernie Sanders (I-Vt.), a Democratic presidential hopeful, agrees. But USPS, which could use the business, has no interest.

Providing financial services in post offices “could benefit the 68 million underserved Americans who either do not have a bank account or rely on expensive services like payday lending and check cashing,” says an inspector general report issued in May. “The products also could help the Postal Service generate new revenue to continue providing universal service. Because it has a presence in every neighborhood, including many places where there are no longer any bank branches, the Postal Service is well suited to provide such services. In addition, its well-trained workforce is already experienced at handling complex transactions and watching out for related fraud and other risks.”

The push for postal banking received a boost this month with an article by Mehrsa Baradaran in The Atlantic. Baradaran, a University of Georgia School of Law associate professor, advocates a “central bank for the poor,” as an alternative to “the unscrupulous practices of payday lenders.”

Postal banking, she wrote, could provide short-term loans and “potentially drive out the usurious fringe-lending sector, which profits from Americans’ financial woes.” Her article was adapted from her book “How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy.”

USPS officials regularly trumpet what they are doing to improve the Postal Service’s financial situation, including such things as selling greeting cards. But the officials have rejected postal banking.

“While we currently provide our customers with certain financial services, including money orders, electronic funds transfers, and cashing of U.S. Treasury checks, our core function is not banking,” said David A. Partenheimer, a USPS spokesman. Former Postmaster General Patrick Donahoe was more emphatic during his farewell press conference in January. “The key thing for any successful business is to work within their core,” he said. “We don’t know anything about banking.”

They must have forgotten.

Postal banking, known as the Postal Savings System, began operation in 1911 and officially ended in 1967, though the Post Office stopped accepting deposits a year earlier. Initially, savings earned 2.5 percent interest with a half-percent designated for operation of the system, according to a postal service history. “Although bankers first viewed the Postal Savings System as competition,” the history says, “they later were convinced that the Postal Savings System brought a considerable amount of money out of hiding from mattresses and cookie jars.” Most of the money was redeposited in local banks. The Postal Savings System, however, did not include lending, according to Mehrsa.

I’ve covered this before, and continue to be convinced that it makes sense. That Inspector general report quote above is a big part of it, but just having convenient access to their money without having to pay exorbitant fees or be at the mercy of the failings of unregulated “entrepreneurs” would be a huge book for millions of working people. I truly don’t understand the USPS’s objections to this, given their own history. It would be good for their business as well as good for so many people. Keep up the pressure, y’all.

Downtown post office has a buyer

Redevelopment, here we come.

Photo by Houston In Pics

Lovett Commercial, a Houston-based developer of neighborhood shopping centers and urban redevelopments, is under contract to buy the downtown post office property and potentially turn it into an urban complex of shops, offices, housing and perhaps a hotel.

“It’s extremely rare to find a 16& acre parcel in any major U.S. downtown,” the company said Monday in a statement emailed to the Chronicle by vice president Burdette Huffman.

Conceptual plans are still being devised, but the company said it expects “to attract multiple uses such as retail, creative office, residential and/or a boutique hotel. Tenants that we have visited with are extremely excited about the project, its location and the possibilities.”

Lovett is also exploring ways to reuse portions of the site’s existing buildings, which sit on the northwestern edge of downtown, just north of Buffalo Bayou and across from the Theater District.

[…]

Anne Olson, president of the Buffalo Bayou Partnership, was pleased to hear of the company’s plans.

“I think Frank Liu is a real visionary,” Olson said of Lovett’s president, who also develops urban housing. “I think he’s willing to think outside the box.”

She said the plans are in line with the type of mixed-use development the partnership recommended more than a decade ago in a comprehensive master plan for the bayou.

Olson recalled several years ago during a bayou-related focus group when multiple prominent developers called the downtown post office property “the key site for development along the bayou.”

See here, here, and here for an abridged history of this site. It has always seemed to be destined for some form of mixed-use development, with a bit of speculation about it as a transit hub thrown in for flair. There’s not a whole lot immediately around it, so it will be interesting to see if this project spawns other development, or if this project is executed as something that is intended to be a stand-alone destination. What would you like to see in this space?

Downtown post office set to close

The end of an era approaches.

Photo by Houston In Pics

Thousands gathered at 401 Franklin Street in downtown Houston to celebrate the opening of a new facility trumpeted as an “ultra-modern” marvel, the hub for the mail that would flow in and out of one of America’s fastest growing cities.

Inside the rugged Brutalist building, a lattice-like grid of thin masonry, postal workers were expecting to sort through the millions of pieces of mail that would pass through the facility every year. Engineers touted the building’s efficient heating and cooling system, and employees zipped across the facility on electric buggies. The city’s postmaster said then, in 1962, that the facility “would establish a criterion for other post offices to copy.”

But on Thursday, 53 years after the ballyhooed opening of the Houston Post Office, the lunch hour traffic was sparse – a few police officers mailing Mother’s Day packages home, a lawyer, a family seeking passports and a few others.

On May 15 at 7 p.m., retail operations at the facility will cease permanently, yet another effect of the United States Postal Service’s struggles with rising debt and a sharp decline in business as clients turn to the Internet and private mail couriers.

[…]

Six other post offices were targeted for relocation in Houston in the past, including the Third Ward’s historic Southmore Station, University Station, Greenbriar Station, Julius Melcher Station, Memorial Park Station and Medical Center Station, and cuts have also slowed delivery times. A massive outcry prompted the postal service to halt its plans to shutter the Southmore Station facility, which stands at the address of Houston’s first sit-in demonstration.

But agency critics and Houstonians said Thursday they would be mourning the loss of the building and the move.

“Every time a post office closes, big or small, I think it’s a loss to the community and country,” said Steve Hutkins, creator of Savethepostoffice.com. “If it’s a big one, like the Houston one, it’s clearly a big (loss), and it’s about diminishing quality of postal service in the country.”

The downtown post office has been on the block since at least 2009. The city considered putting in a bid for it last year, possibly as a new location for HPD and the municipal courts, but dropped the idea shortly thereafter in the wake of wailing and gnashing of teeth by developers who had been eagerly awaiting its appearance on the market. The Urban Land Institute hosted a design contest for the site in 2012 to generate some ideas about how to use the space – at one point, a transit center was envisioned as an anchor for it – but I rather doubt we’ll get anything other than high-end apartments or condos, possibly with some retail/restaurant space on the bottom, like with the Rice Hotel. But first, it needs to be sold. I’ve no idea when that might happen. Swamplot has more.

Say goodbye to the Yale Street post office

The Heights real estate boom continues apace.

The next hot property to hit the market in the Heights is nearly 1 acre in size, boasts a large shade tree and fronts two busy commercial streets. The current owner is motivated to sell.

On Monday, the U.S. Postal Service confirmed that it intends to sell the brown-brick post office property at 1050 Yale, at 11th Street, and consolidate operations with another station 2.3 miles away.

“Plans are underway to relocate the retail services of the Heights Finance Station to the T.W. House Postal Station,” the service said Monday in a brief statement. “The Heights Finance Station has been placed on the real estate market and will be sold in the near future.”

In a public notice date-marked Friday and posted prominently near the front door of the Heights Finance Station, the agency says the parcel has been determined “excess” and is “no longer necessary” to its mission. If the “disposal action” goes through, the Heights property would join more than 100 other relocation projects announced nationwide as the Postal Service has had to cope with declining revenue in recent years.

Developers will be eager to pounce, said Bill Baldwin of Heights-area real estate firm Boulevard Realty. He said several commercial developments have recently been completed in that area, and more are under construction or on the books.

“The retail people will be vying for it left and right,” said Baldwin, who is also on the Woodland Heights Civic Association board. “That is too valuable of a corner and too much quantity of land. It’s a very desirable location.”

Swamplot first reported this. I should note that the former Citgo station across the street on Yale is set to become a restaurant, and there’s a commercial development going on across Heights at 11th as well, so this immediate area is about to become something very different. I’m not thrilled by losing this post office – I still pay a few bills the old-fashioned way, and we send out homemade-by-the-girls birthday cards to various friends and family, all of which it is most convenient for me to drop in the drive-by mailboxes at this station – but it is what it is. I hope we at least get something interesting out of the sale and transformation of this property, and not another CVS or fast food-oriented strip center.

More on the Postal Service as financial service provider

I still think it’s a good idea, and so do a lot of other people.

The Postal Banking Consumer Survey [PDF] asked more than 1,600 consumers, many of whom do not have access to traditional banking services, whether or not USPS should enter the banking arena.

Most consumers, about 63%, reported that the addition of services, such as bill paying, check cashing, and small-dollar loans, would not matter to them.

However, a majority, about 58%, of consumers support the argument that providing financial services at USPS branches would expand access to safe financial products for low- and middle-income Americans while providing a new sources of revenue for the Postal Service.

Nearly 64% of consumers who identify as using alternative financial services believe the expansion of safe financial services would be beneficial to both consumers and the postal service.

Conversely, only 32% of those surveyed said they believe that providing financial services at Postal Service branches would divert resources from mail delivery and give the government-run Postal Service an unfair advantage over privately-run companies that already offer financial services.

“There is a market here but it’s limited,” Alex Horowitz, research officer for Pew Charitable Trusts, says. “When we look at people who already are using alternative services it changes. There is quite a bit of interest for lower-cost services among those who already use alternative services.”

[…]

Consumers who currently use alternative financial services were more likely to use lower-cost services though their local post office branch.

Nearly 46% would use check-cashing, 27% would purchase prepaid cards, 46% would use bill-pay services and 41% would consider payday loans through the postal service.

See here for the background. We all know that payday lenders are a big issue for a lot of people, but so are things like check cashing services, mostly because of the large fees they charge. The point of this idea is that the Postal Service could be a lower cost provider of conveniences like check cashing and bill paying. Another advantage of using the USPS for this is that there are post offices everywhere.

The USPS Office of Inspector General first made the case for expanding into financial services this January, calling itself “well positioned” to meet the needs of underserved Americans. It didn’t take long for the idea to garner attention from high-profile legislators like Sen. Elizabeth Warren, (D-Mass), who joined other lawmakers and experts at a Pew conference Wednesday to debate the merits and pitfalls.

There’s consensus on the easy part: the problem. Most people agree that an astounding number of Americans live outside the mainstream financial system and this often has a negative impact on their financial lives and futures. In total, they comprise a quarter of US households and spend tens of billions on fees and interest each year. To put this in perspective, Warren likes to point out that these Americans spend as much money on financial services as they do on food, which is to say they spend $2,412 a year per household, or roughly 10% of their income.

Clearly the big question that remains is whether the post office is the right vehicle for delivering change.

Postal services in dozens of other countries, including Japan, Switzerland and the UK, already do it. Many make big money from it. The USPS itself offered a savings program for over fifty years, but discontinued it in 1967.

One thing the post office has going for it is an extensive brick-and-mortar network, with over 30,000 locations in nearly every zip code. While there are three times as many bank branches, they don’t cover as many zip codes. In Montana, as in many rural places, “you can find yourself more than 75 miles from the nearest bank branch,” but close to two or three post offices, says Pew’s Clint Key. There’s a term for this: bank desert. Indeed, Pew found that 10% of census tracts (neighborhoods, essentially) don’t have a bank branch within five miles, but most do have a post office close by.

The problem is getting worse, not better, for America’s underserved families. Since 2008, 93% of bank branch closings have been in zip codes with below-national median household income levels. Meanwhile, banks have been opening branches in areas with median incomes above $100,000.

The post office also touts its trusted brand, saying consumers who walk in to any location would know they were getting safe, simple financial products. A Pew finding shows that 71% of people view the US Postal Service favorably, compared to 9% for payday lenders, 21% for check cashiers and 56% for banks.

“This is an opportunity for the post office to use its space and its employees more efficiently to bring needed services to more Americans,” said Warren.

If the post office were to get into banking, it wouldn’t just be out of the goodness of its heart. It estimates a revenue of $8.9 billion each year. If true, this is a big deal for an agency in crisis. The post office loses money every year. Thanks to the internet, mail volume has plunged 22% over the last five years. Meanwhile, the USPS is struggling with a Congressional edict that it pre-fund employee benefits.

“This is an existential crisis,” said James Gattuso, senior research fellow in regulatory policy at the Heritage Foundation.”The postal service needs a new line of business.”

Sure seems like a good fit all around. Getting into the short-term loans business is another matter, as it’s inherently risky and would require Congressional approval, which these days is nigh impossible to achieve. Still, this has the potential to do a lot of good for a lot of people. It’s worth serious consideration.

Going where the payday lenders are

The most frequent defense I hear of payday lenders it that there’s a demand for the kind of short-term low-dollar loans that they provide that aren’t provided by other financial institutions, and even if they were those institutions don’t exist in the neighborhoods that generate the demand for these loans. That doesn’t come close to justifying the payday lenders’ exorbitant rates and fees or their predatory practices, but I admit that there’s a need that will get fulfilled one way or another. Given that, wouldn’t it be preferable by far to have more reputable financial institutions in the neighborhoods that need these services, operating in a manner that serves the customers rather than preys on them? One such institution is giving that a try in San Antonio.

Select Federal Credit Union (SFCU), an outspoken opponent of the payday lending industry, is trying to fill the gap from two directions: accessibility and availability.

One reason payday lenders were successful is that they were densely present in their target markets. While their clients fall across a range of income brackets, the highest concentration is in low income areas, where many are unbanked.

“We definitely have a proliferation of payday lenders, and bank branches are sparse,” said District 2 Councilwoman Ivy Taylor.

SFCU realized that to be effective, they needed to be in the neighborhood. They needed to find places along people’s pathways. Convenience is an issue for those who take public transit or walk to and from work with their paycheck in their hands.

So SFCU found a home in the middle of their target market: Ella Austin Community Center, affectionately known around the neighborhood simply as “Ella Austin” or “Ella.”

[…]

SFCU seized the moment to set up shop on the campus, giving them access to senior citizens and families who use the services offered at Ella Austin. They also have access to the employees of Ella Austin and the resident businesses. Employed people are statistically just as likely to use payday lenders as those without steady income.

SFCU goes a step further even, as they have the technology to bring banking directly to the homes of those who have trouble accessing in person or online. They are also working on other partnerships with local businesses and institutions to bring virtual or mini-branches to their facilities.

Ella Austin is easily walkable for neighborhood residents, and the branch has a slower, more relational atmosphere.

“We want to dedicate this branch to sitting down and talking with people,” said John Garcia, head of Business Development and Marketing at SFCU.

From their post at Ella Austin, SFCU is poised to offer not only accessible financial services, but also financial education. SFCU is a designated Community Development Financial Institution, one of only two in San Antonio. They keep their footprint small and nimble, with a focus on increasing financial stability for their members.

“We welcome Select Federal Credit Union because they have the flexibility to do more outreach than a traditional bank,” said Taylor.

The basic idea here is simple and well-conceived. Any business wants to be where the potential customers are, and Lord knows there’s plenty of room to compete with payday lenders on price and service. Those are the pillars behind the concepts of allowing post offices and WalMart to act as banks – they exist everywhere, including a lot of places where there are no traditional banks, and they can provide standard services like checking, savings, and low-dollar loans at very reasonable costs. Getting credit unions into the game is even better, as they wouldn’t need to seek regulatory approval to take on this business and they’ve generally been a force for good overall. I will be very interested to see how this plays out – there are no guarantees, of course, but this is a great idea that has real hope of succeeding. I hope their peers in other cities are watching how this goes, too.

City drops bid for downtown post office

So much for that.

Photo by Houston In Pics

The city of Houston has withdrawn from bidding on the downtown post office, Mayor Annise Parker wrote in a letter to City Council members Tuesday.

City officials said they wanted to keep their options open in bidding on the site, saying it could have a number of uses, chief among them as a location for the city’s planned police and courts complex. Parker’s letter also notes the site could give commuter rail an entry point to downtown.

Some developers eager to scoop up the high-profile 16-acre property at Bagby and Franklin just east of Interstate 45 had expressed their displeasure at the city’s interest in the property to council members in recent weeks.

“When we entered the bidding we did not think that the competition with private interests and the concern about us being in that fight would be as strong as they are and, on second thought, we decided it’s probably best if we do pull out,” Parker spokeswoman Janice Evans said Tuesday.

[…]

Central Houston chairman Ric Campo said the site is crucial to improving the theater district and the northwest section of downtown. The city’s interest, he said, generated ample chatter among those active in the central business district.

“It wasn’t a quiet conversation,” Campo said. “There were voices on both sides. Having the city step aside, there must have been louder voices on the private side. It gets to be a political issue whenever you get something like that.” Should the city be involved or not be involved?”

See here and here for the background. While I’m sure it will be better in the long run for the old post office to become some kind of mixed-use development – this Chron editorial made the point that something other than a government building would be a lot more amenable to the overall plan for Buffalo Bayou – I still don’t quite get the fuss about this. If the process was fair and the city was submitting a fair bid, what’s wrong with that? Be that as it may, the city will look elsewhere for its police and courts complex. That’s fine by me. Houston Public Media has more.

The city and the downtown post office

Not sure what all the fuss about this is about.

Photo by Houston In Pics

Developers eager to purchase the high-profile U.S. Postal Service site downtown – envisioned in recent years as a park, outdoor amphitheater or a development with housing and entertainment venues – are competing for the property with the city of Houston, which is considering putting its new justice complex there.

Some private interests have sought to dissuade city officials from seeking the 16-acre property, at Bagby and Franklin just east of Interstate 45, which went on the market last fall.

Councilwoman Brenda Stardig said she learned the city had bid on the site from developers, and has spoken with Brad Freels of Midway Development about his concerns with the city’s involvement. Freels could not be reached for comment.

Stardig said she is sympathetic, noting the redeveloped site could be a “jewel” for the city, not to mention a boon for city coffers.

“Unless there’s a real need, I’m not very supportive of having the city competing with private developers on prime real estate in the city, from a cost factor and for many other reasons,” she said.

[…]

The city’s interest, said some City Council members and city officials, is driven by a desire to start fresh on the post office site rather than rebuilding at the current cops-and-courts complex at 61 Riesner, where construction crews would have to work around existing facilities. Other officials said the site could have uses other than for the justice complex.

Councilman Jerry Davis said he was told the city could recoup the purchase price of the 16-acre post office site by selling the 18-acre tract on Riesner, which is just west of the post office site.

Any developers stirring dissent about the city’s involvement likely are doing so out of self-interest, Davis said.

“We’re certainly not going to pay more than what it’s worth,” he said. “I do have full faith in our development department – even though I don’t like some things they do – as far as getting an estimated value from outside appraisers.”

The Riesner site is home to five aging facilities, including Houston’s central jail and the main municipal courthouse. A study concluded the buildings need $55 million in repairs.

Police headquarters at 1200 Travis also needs work and is too small, officials have said; it would be sold and consolidated into the new complex. The new facility would not house a jail, thanks to voters’ approval last fall of a joint city-county inmate processing center.

I have no problem with the city bidding a fair market price for this property. They have a purpose in mind for it, and they can recoup much if not all of the purchase price by selling off the properties that would be vacated if they bought and renovated this site. Sure, it would be nice to have some kind of mixed-use development there, and if Metro ever does build an Inner Katy light rail line, this location would be just about perfect to tie it into the existing Harrisburg and Southeast lines, but there’s no guarantee of either of these things happening. If the city’s perfectly legitimate interest in this parcel – and let’s be clear, it may never get past the “interest” stage – forces developers to make more competitive bids, then that’s fine by me. If a private investor winds up buying this property, I feel pretty confident they’ll be able to get a nice return on it.

The CFPB is almost ready to roll out payday lending regulations

I can’t wait to see what they come up with.

Whenever governments start thinking about cracking down on small-dollar, high-interest financial products like payday loans and check cashing services, a shrill cry goes up from the businesses that offer them: You’re just going to hurt the poor folks who need the money! What do you want them to do, start bouncing checks? 

A field hearing held by the Consumer Financial Protection Bureau today was no exception. The young agency has been studying how the industry functions for a couple years and is now very close to issuing new rules to govern it. To start setting the scene, CFPB Director Richard Cordray came to Nashville — the locus of intense payday lending activity recently — to release a report and take testimony from the public.

The report, building on a previous white paper, is fairly damning: It makes the case that “short term” loans are usually not short term at all, but more often renewed again and again as consumers dig themselves into deeper sinkholes of debt. Half of all loans, for example, come as part of sequences of 10 or more renewed loans — and in one out of five loans, borrowers end up paying more in fees than the initial amount they borrowed.

[…]

Passing a rate cap, however, is not the only remedy. In fact, it’s not even possible: The CFPB is barred by statute from doing so.* And actually, the Pew Charitable Trusts — which has been tracking payday lending for years — doesn’t even think it’s the best approach.

“The core problem here is this lump-sum payday loan that takes 36 percent of their paycheck,” says Pew’s Nick Bourke, referring to the average $430 loan size. “The policy response now has to be either eliminate that product altogether, or require it to be a more affordable installment loans.”

Bourke favors the latter option: Require lenders to take into account a borrower’s ability to repay the loan over a longer period of time, with monthly payments not to exceed 5 percent of a customer’s income. That, along with other fixes like making sure that fees are assessed across the life of the loan rather than up front, would decrease the likelihood that borrowers would need to take out new loans just to pay off the old ones.

See here for the background. It’s fine by me if the CFPB takes a different approach than usury caps. States and localities can still do that themselves if they wish, with the CFPB’s rules serving as a regulatory floor. It’s a step forward any way you look at it, with the potential to do a lot more if needed.

Now, the installment loan plan wouldn’t leave the industry untouched. When Colorado mandated something similar, Pew found that half of the storefront payday lenders closed up shop. But actual lending didn’t decrease that much, since most people found alternative locations. That illustrates a really important point about the small dollar loan industry: As a Fed study last year showed, barriers to entry have been so low that new shops have flooded the market, scraping by issuing an average of 15 loans per day. They have to charge high interest rates because they have to maintain the high fixed costs of brick and mortar locations — according to Pew, 60 percent of their revenue goes into overhead, and only 16 percent to profit (still quite a healthy margin). If they were forced to consolidate, they could offer safer products and still make tons of money.

Meanwhile, there’s another player in the mix here: Regular banks, which got out of the payday lending business a few months ago in response to guidance from other regulators. With the benefits of diversification and scale, they’re able to offer small-dollar loans at lower rates, and so are better equipped to compete in the market under whatever conditions the CFPB might impose.

Actually, there are two other potential players here as well: Post offices and WalMart stores, both of which could do a lot to streamline this industry by aggressively competing on price. If that happens to drive a lot of small, inefficient players out of the market, too bad for them. These options would unfortunately require an act of Congress to become reality, and the odds of that are vanishingly small. But the point is that those options exist, and if the regs that the CFPB does put forth winds up squeezing a lot of the existing players, the demand will be there for bigger dogs to come in. In most cases that would be bad, but this is the exception. We’ll see how it goes. And whatever does eventually happen, let’s not forget that if we had less poverty, we’d have less demand for payday lending. Consider that yet another argument for raising the minimum wage.

Another way to squeeze the payday lenders

I wholeheartedly approve of this.

The Postal Service (USPS) could spare the most economically vulnerable Americans from dealing with predatory financial companies under a proposal endorsed over the weekend by Sen. Elizabeth Warren (D-MA).

“USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods,” Warren wrote in a Huffington Post op-ed on Saturday. The op-ed picked up on a report from the USPS’s Inspector General that proposed using the agency’s extensive physical infrastructure to extend basics like debit cards and small-dollar loans to the same communities that the banking industry has generally ignored. The report found that 68 million Americans don’t have bank accounts and spent $89 billion in 2012 on interest and fees for the kinds of basic financial services that USPS could begin offering. The average un-banked household spent more than $2,400, or about 10 percent of its income, just to access its own money through things like check cashing and payday lending stores. USPS would generate savings for those families and revenue for itself by stepping in to replace those non-bank financial services companies.

[…]

But while ending triple-digit interest rates and fine-print tricks is a good thing for consumers, it doesn’t reduce the demand for those financial services. The USPS could slide into that space and meet that need without preying upon those communities. “Instead of partnering with predatory lenders,” David Dayen writes in The New Republic, “banks could partner with the USPS on a public option, not beholden to shareholder demands, which would treat customers more fairly.” America’s post offices are an ideal physical infrastructure for furnishing these services to communities currently neglected by banks. Roughly six in 10 post offices nationwide are in what the USPS report calls “bank deserts” — zip codes with either one or zero bank branches.

I noted that David Dayen story in a previous linkdump. I like this idea for the same reason why I like the idea of letting Wal-Mart open banks: It would provide low-cost banking and financial services, including short-term, low-dollar loans, to a large class of people whose only current options are high-cost predatory lenders. Anything that puts downward pressure on the price of these services and makes savings and checking accounts available to people who don’t have them is a win in my book. This idea should especially appeal to people who don’t care for having cities step in to regulate payday lenders, since it would reduce barriers to competition and allow for real customer-friendly innovation in a highly non-customer-friendly market. What’s not to like?

Pluto stamp petition

It’s the least we can do.

The proposed stamp, designed by Dan Durda

Two decades ago, the Postal Service issued a series of stamps depicting Earth, its moon, and the spacecraft sent to explore each of the other planets in the solar system.

The 10th stamp, featuring tiny, distant Pluto, was the only one to read “not yet explored.”

Those three words have annoyed Alan Stern ever since. Stern, an associate vice president and scientist at Southwest Research Institute, was making plans at the time for what would become the New Horizons mission to Pluto, which launched in 2006.

Now Stern, principal investigator of the mission, along with astronomer and artist Dan Durda, is trying to set the record straight. The scientists have designed a new stamp for Pluto, and they have launched a petition drive to get the post office to issue it when New Horizons reaches the dwarf planet in 2015.

And the old stamp? It has provided a little motivation for the whole enterprise.

“We took one of those old stamps that said “not yet explored,” and we put it on our spacecraft and are flying it to Pluto, as kind of an ‘in your face’ thing,” Stern said.

See here for some background, as well as a picture of the 1990 “not yet explored” stamp. Here’s the SWRI page about their quest, and here’s the petition. “Dwarf planet” or not, this deserves to be commemorated. They want to turn in the signatures by March 13, which is the 82nd anniversary of Pluto’s discovery by Clyde Tombaugh. Show Pluto a little love, won’t you?

What’s to become of the downtown post office?

Lisa Gray writes about the future of the downtown post office on Franklin.

Franklin Street Post Office

In the past couple of years, there have been rumblings that the U.S. Postal Service plans to leave 401 Franklin and sell the 16-acre complex – a prospect that sets developers, architects and planners atremble. It’s not just that the parcel of land is large enough to form its own downtown district. It’s also that the land is a place where many things could converge: Buffalo Bayou, Houston’s light-rail line, bike paths, even Amtrak and proposed commuter-rail lines. Done right, that post-office complex could become a major hub of activity – a symbol of sweet progress, at a time when we no longer count on it.

The Urban Land Institute, a national group that promotes good development, last month picked the complex as the project for its 2012 Gerald D. Hines Student Urban Design Competition. Graduate-student teams from across the country will dream up new uses for the old post-office site in hopes of winning the $50,000 prize.

The competition is hypothetical; there’s no plan to build the winner’s idea. But even so, the competition alarmed Houston preservationists, who worry that in describing the site, the contest organizers seem to encourage razing it and starting with a clean slate. In Houston, such hypothetical ideas have a way of becoming realities.

Stephen Fox, Houston’s best-known architectural historian, emailed other preservationists to alert them to the whispered threat. The post office, he noted, won a Design Award from the Texas Society of Architects in 1963. It is, he wrote, “an outstanding work of mid-century civic architecture,” and as of this year, would be eligible for listing in the National Register of Historic Places.

Fox thinks interesting things could be done not just with the “alabaster beauty” office building (now sadly in need of TLC), but also with the enormous low-slung industrial building where mail was once sorted.

“Can you imagine a green roof there?” he asks. “There’s lots of room for plantings.”

Ramona Davis, head of the Greater Houston Preservation Alliance, suggests that the five-story office building should be repurposed in part as an Amtrak station. Houston’s current one – an unassuming little building a block away – is “an embarrassment,” she wrote.

Here’s more about the design competition. That location has been up for sale, at least potentially, for awhile now. I’ve heard rumblings about it being turned into some kind of mixed-use, transit-oriented development for nearly as long. If and when there’s ever an Inner Katy line, that would be a nice location to tie it into an extension of the Harrisburg and Southeast lines. The possibilities are endless, and I’m sure we’ll see a few ideas emerge from this competition. We’ll see what happens from there.

The check will be in the mail a little longer

The hard times keep coming for the Postal Service.

The U.S. Postal Service said a plan to save $2.1 billion a year and fend off possible bankruptcy would effectively put an end to almost all overnight delivery of first-class letters and postcards. Delivery would take at least two to three business days.

The postal service’s decision to relax delivery standards for first-class mail follows its determination in September to close 252 mail processing plants, about half its total. Altogether, about 28,000 employees would lose their jobs.

David Williams, a postal service vice president, said Monday that the agency has little choice but to take drastic steps to reduce operating costs by $20 billion by 2015 in a bid to become profitable. It doesn’t receive taxpayer funding, though it is subject to federal regulations and oversight.

The proposed changes to service standards would allow for “significant consolidation” of facilities, processing equipment, vehicles and the workforce, he said.

The USPS has two big problems: The Internet, and a law requiring them to pre-fund health benefits of future retirees, which the story notes adds an annual cost of about $5.5 billion. Congress could do something about the latter, but they haven’t. As for the former, it seems to me we once invested a lot of money bringing infrastructure to rural areas, which included heavily subsidizing postal service. Maybe we need to do another round of investment, this time in building out Internet bandwidth in these remote areas, so that we can dial back on the postal subsidies. That ought to be a better deal for everyone. Of course, that would take action from Congress as well. Good luck with that.

You can see a list of Texas-based mail distribution centers that will be affected by this here. And to tie things back to the title of this post, here’s a little classic Weird Al:

Don’t ever change, you know what I mean?

Start stocking up on those forever stamps

They’re about to be a bargain.

Fighting to survive a deepening financial crisis, the Postal Service said Tuesday it wants to increase the price of first-class stamps by 2 cents — to 46 cents — starting in January. Other postage costs would rise as well.

[…]

While the cost of a first-class stamp would go up, people who bought Forever stamps at the current 44 cents or at lower prices would still be able to use them without paying the difference.

Officials also said they plan a new design for Forever stamps, which currently have am image of the Liberty Bell. New Forever stamps will have images of evergreen trees. All Forever stamps would remain valid.

Forever stamps are pretty much all we buy these days, so we’ll be prepared for when this happens. I figure the rate goes up two cents every couple of years, so this is no big deal. What struck me was this:

Post office finances are complicated by a requirement that the agency make annual payments of more than $5 billion to fund future health benefits for retirees, something not required of other government agencies. The post office avoided financial disaster last year only after Congress allowed it to delay $4 billion of that payment.

The postal inspector general also contends that the Postal Service has been overcharged billions of dollars for retirement benefits for employees who worked for the old Post Office Department before it was converted to the Postal Service in 1970.

I probably should have known about these things, but if I did I’d forgotten them. The latter seems like lawsuit material; the former, I hope, will eventually be ameliorated by health care reform. Hope they can hold on till that happens.

Your post office may close

Look out.

The Postal Service may register a loss of nearly $7 billion this fiscal year in spite of a 2-cent increase in the price of stamps in May, cuts in staff and removal of collection boxes.

Post officials sent a list of nearly 700 potential candidates for closing or consolidation to the independent Postal Regulatory Commission for review. More may be added.

In the Houston area, officials are targeting four locations: Addicks Barker, 16830 Barker Springs; Genoa, 10935 Almeda Genoa; Westchase Finance, 3836 S Gessner and Nassau Bay, 18214 Upper Bay.

“Of the four, it looks like only one will go on for further study,” said Dionne Montague, a USPS spokeswoman in Houston.
She declined to say which one is most likely to be closed.

No mention of the locations that are reportedly for sale, including the downtown post office on Franklin, and the ones on West Gray at Dunlavy and Timmons near Alabama. I’m not sure if that’s a separate effort, or if the idea has been shelved, or if there just wasn’t anything to say about them.

Downtown post office for sale

We know that the Postal Service is looking to sell some of its properties around town. Now they have announced that the downtown location on Franklin Street is one of them.

Real estate experts and downtown boosters envision the property being redeveloped into a number of uses. They include a public park that would reduce floodwater impact on the bayous and downtown; an outdoor amphitheater for festivals and performances; and a mixed-use development with housing, a hotel and entertainment venues.

It would be iconic for the city,” said Mark Cover, an executive vice president with Houston-based Hines, a real estate firm.

But the process by which the postal service is marketing the site comes with conditions.

The downtown operation at 401 Franklin processes all incoming and outgoing mail for the city of Houston.

Whoever buys the property would have to provide the postal service with another processing, distribution and administrative facility within the boundaries of the city.

The buyer also would have to provide a replacement retail and post office box location near the downtown site where consumers can mail packages and buy stamps.

“This is a project that, at its heart, is about improving efficiencies and having a more attractive retail location for our lobby customers,” said regional spokesman Dave Lewin.

[…]

The agency’s Southwest Area Facilities Service Office, which announced the plan, said it has not put a price tag on the property. And if it doesn’t receive an offer that meets its requirements, it will continue to occupy the site indefinitely, Lewin said.

“We’ve had several unsolicited offers for the property, so we know that there’s interest,” he said.

I remain concerned about them selling while at the bottom of the market, but I can believe there’d be interest in this location. I don’t know how realistic any of the visions for that site are given current conditions, but you never know. Of course, this being Houston, there’s another concern.

And any move to tear down the building could rattle preservationists who say Houston has lost too many of its historical or architecturally significant buildings.

Stephen Fox, a Houston architectural historian and fellow of the Anchorage Foundation of Texas, called the downtown post office a “distinguished work of 1960s modern architecture by an important Houston architecture firm.”

That firm, Wilson, Morris, Crain & Anderson, designed or had a hand in downtown skyscrapers, the former Houston Post building on the Southwest Freeway and even the Astrodome. The post office was one of the firm’s first big public commissions in Houston, Fox said.

When it was built in 1962, it replaced the Southern Pacific railroad’s main passenger station, an art deco building that opened in 1934, according to Fox. It replaced a station that dated back to 1886.

So in other words, it’s a historic building that replaced two earlier buildings that would now be even more historic had they not been torn down first. That’s our city in a nutshell, isn’t it?

How much would you pay for that post office?

The US Postal Service would like to make you a deal.

The U.S. Postal Service is unloading as many as 200 facilities in an effort to offset some of its huge financial losses.

In Houston, just two properties have been put up for sale. But another four could go on the market soon.

[…]

The postal service, which lost $2.8 billion last year delivering 9 billion fewer pieces of mail, asked lawmakers this week to lift the rule requiring mail delivery six days a week.

Because mail volume has declined so dramatically, the service is adjusting carrier routes and employees’ work hours within its mail processing plants and consolidating operations.

“This consolidation is going to leave us with excess properties we no longer require,” said national spokeswoman Sue Brennan.

The two properties for sale in Houston are at 1900 West Gray at Dunlavy and 2802 Timmons, near West Alabama. They are classified as “stations,” meaning they have both retail and delivery operations.

[…]

Before the commercial real estate market began to falter, the post office on West Gray might have sold for between $100 and $125 per square foot. Today, it could be worth much less.

“Is the West Gray site worth $125 per square foot? I don’t know. Is it worth $50? I don’t know, because there’s nothing to measure it against,” said David Cook of Cushman & Wakefield, a commercial real estate firm.

Back when new developments were being readily financed, the Houston post offices might have swiftly sold to developers for apartments, condominiums, retail centers or office buildings.
Prime location

The West Gray site is particularly well-suited for retail space, Cook said, as it is surrounded by high-end neighborhoods, restaurants and shops. The building is about 18,000 square feet and sits on a 2.5-acre parcel. The Timmons office is just over 14,000 square feet on about 2.6 acres of land.

Here’s a look at the USPS annual report. They actually did better in 2008 than in 2007 – revenues were up a hair, and expenses were down; as such, their loss was much greater in 2007. But they’re now in the red on net capital, so I presume that’s why they’re looking at selling properties. For what it’s worth, the drop in mail volume was only 4.5%; it’s not clear to me that things won’t improve along with the economy. Longer term, maybe they need to scale down. But I don’t think it’s necessarily as bad as all that.

I think you’d have to be pretty desperate to try to unload the sites on Gray and Timmons unless you could be sure you were getting top dollar for them. If I were them, I’d want to hold on and try to capitalize in a stronger market. I realize everyone and his sister is asking for a bailout these days, but the Postal Service is a pretty critical part of the economy. Surely we can do something in the short term to keep them from having to make sub-optimal decisions like this.