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6 months or a year and a half from now, as you suggest it might be, just what does transpire.

Mr. SNYDER. Does this agreement between GSA and Postal Service include personal property as well as real property?

Mr. KREGER. Yes. The interim agreement includes personal property and real property, and also includes other services that we might provide to the Postal Service. Purchasing of supplies and communication service, and so forth.

Mr. SNYDER. And vice versa.

Mr. KREGER. Right.

Mr. SNYDER. The district office in Covington, Ky., is in a joint building. Quite frankly, I do not know what their status is in your switching them around here, but I know the Post Office furnishes the desks and the file cabinets and GSA is putting in the drapes, and painting the walls.

Now, will you be paying rent on the desks and the file cabinets to the Post Office Department?

Mr. KREGER. I believe that under the terms of the agreement GSA will take over all of the congressional offices. So instead of having two people to go to from now on, you will have only GSA to go to.

Mr. SNYDER. Can I anticipate having my furniture repossed by the Post Office Department and you furnishing me new furniture? Mr. KREGER. No. I believe GSA gave that furniture to the Post Office without reimbursement.

Mr. SNYDER. You did not get much, but that is all right.

Mr. CONSTANDY. Mr. Kreger, you gave them 2,780 buildings, and they gave you back the furniture.

Mr. KREGER. We gave them 64 buildings, and Congress gave them

Mr. CONSTANDY. You gave them buildings-64 of these buildings you people managed, but because of the logic of their being in some cases a 100 percent tenant in the building in the past, they have managed their own building, is that correct?

Sometimes they occupy not 100 percent, but the majority of those buildings, and the same logic of them managing the building in which they are 100 percent tenant, they also managed this building in which they were the majority occupant.

We are talking about title to the property.

Mr. BARTH. Well, title to the property is with the United States. Mr. GRAY. Mr. Chairman, if counsel will yield, as you know, the new Postal Service will be able to sell assets. With these 1,200 buildings, if the Postal Service saw fit, as soon as they obtain title, they can sell property and use those assets any way they see fit, and I think it is very pertinent, if you do not have the information, Mr. Kreger, that it be supplied, as to what the total real estate value is for those 1,200 bulidings, because they are now held in title in the U.S. Government. They will soon be in the title of the Postal Service.

They can call a facility outmoded, and get other facilities, and I think we ought to have a ballpark figure of what these 1,200 buildings are worth.

Mr. KREGER. I think your point is well taken, but in order to get a value of these buildings we or the Postal Service would have to send

an appraiser to look over all 1,200 buildings and make an appraisal to give us a value of it.

Mr. GRAY. Would you not guess at what we are talking about? Mr. CONSTANDY. I think, shortly, Mr. Gray, we will get this. Mr. GROVER. Mr. Chairman, if I could have a followup question to Mr. Gray's question.

What were the criteria for turning over these buildings? Were all of these buildings turned over because they were at that time being used for postal facilities, irrespective of the fact that they might abandon them within the year?

Mr. KREGER. I believe the buildings were turned over, buildings that were under the control of the Post Office Department at the time of the postal

Mr. WRIGHT. Mr. Kreger, is it not true that all buildings were turned over to the Postal Service in which it was determined that at least 55 percent of the space was occupied for postal purposes?

Mr. BARTH. Excuse me, if I could, please. The criteria in the statute required that there be turned over to the Postal Service all real property, 55 percent or more of which is occupied or under the control of the former Post Office Department, immediately prior to the effective date of this section.

Mr. WRIGHT. Mr. Barth, how does that differ from what I just said? Mr. BARTH. I understood you to say occupied by.

Now, I can conceive of where one of these 1,200 buildings, which were under the control of the Post Office may have been occupied less than 55 percent by the Postal Service. I would include in this those situations. It is either under the control of the Postal Service, or occupied. Fifty-five percent of the buildings under the control of, or occupied. Mr. WRIGHT. You mean under the management of the Postal Service?

Mr. BARTH. Yes.

Mr. WRIGHT. All right. So every building in which the Postal Service is the manager of the building, irrespective of how much of the property is being occupied for postal purposes, and every building in which Postal Service personnel occupy as much as 55 percent of the space, has been given by the Government to the Postal Service? Mr. BARTH. Yes, sir.

Mr. WRIGHT. And that comes to a total of 2,783 buildings; does it not?

Mr. KREGER. It was 2,780, I believe.

Mr. WRIGHT. Now, of those 2,780 buildings, title had resided in the Government of the United States. As of July 1, and the confirmation of this transaction, title now resides in the postal corporation; is that correct?

Mr. BARTH. I believe there is a theory of the Attorney General that title remains in the United States, but under the Postal Service reorganization they have the right to secure them for any bonds they issue, and the right to dispose.

Mr. WRIGHT. If we regard these as two different entities, what good is title if the other entity may encumber them or may sell them, or may dispose of them, may borrow against them, or may do other things in that regard?

Mr. BARTH. I think it is a distinction without a difference.

Mr. WRIGHT. So, in effect the postal system has acquired title to 2,780 buildings for which title previously reposed in the Government of the United States.

Mr. BARTH. I think that is a fair statement.

Mr. WRIGHT. Now, Mr. Gray mentioned a point a moment ago that under the broad powers given to the corporation-that it might be able to sell these buildings. Do you find anything in the Postal Reorganization Act, Mr. Barth, which would prohibit that ?

Mr. BARTH. No, sir.

Mr. WRIGHT. I see. So, if the Postal Corporation was to decide to sell on the private market a building in which GSA and GSA tenants were housed, you would have no recourse, would you ?

Mr. BARTH. No direct method of stopping it. No direct way of stopping them from proceeding with the disposal.

Now, under our agreement with the Postal Service, if they decide they no longer have any use for a building, it will be offered to GSA first before they dispose of it on the open market.

Mr. WRIGHT. That is fine.

Now, here is a building that we have constructed, let us say, in the 1940's or the 1950's, and perhaps it has been amortized out to a certain degree, and now it has been given to the Postal Corporation, and let us assume that the Postal Corporation does decide to sell it. It offers it first to you. On what basis is it going to offer you that building, Mr. Barth? Is it going to offer you that building on the basis of book value, amortized, or on a fair market value?

Mr. BARTH. Mr. Chairman, I could not say at this stage of the game. I would say this: As I read the act, the transfer of such property out of the Postal Service into another branch of the Federal Government would probably be covered by 2002 (d), which gives the President the power to make such transfers, and provides, it can be with or without reimbursement.

Mr. CONSTANDY. That is now what your agreement says. Your interim agreement makes it possible for the property to be sold to you or anybody else at fair market value, does it not?

Mr. BARTH. That, again, is an interim agreement.

Mr. CONSTANDY. The point is, the law permits it to be on some other

basis.

Mr. BARTH. The law permits it to be without any reimbursement at all.

Mr. CONSTANDY. Exactly.

Mr. BARTH. I have no problem with that.

Mr. CONSTANDY. The one agreement that the agency and the Post Office has entered into with the agreement that the sale back to you would be at fair market value, would it not?

Mr. BARTH. Well, I would be hopeful that property, whichever way it goes, now that the Postal Service is in being, would go on the same basis. I think this is probably essential

Mr. CONSTANDY. Same basis as what?

Mr. BARTH. Either way. We would pay them fair market value for property which we obtained from the Postal Service, which in turn,

if they wanted property over which GSA had concern for, I would hope that it would be at fair market value also.

Mr. CONSTANDY. You might hope so, but other assets of the U.S. Government can be turned over, but it does not make the provision that if they are turned over by the Post Office to you, it will not be at anything except fair market.

Mr. BARTH. I read "D" going both ways.

Mr. CONSTANDY. Well, "The President is authorized to transfer to the Postal Service, and the Postal Service is authorized to transfer to other departments, agencies, or independent establishments of the Government of the United States, with or without reimbursement, any property of that department, agency, or independent establishment and the Postal Service, respectively, when the public interest would be served by such transfer."

Is that right? It would seem to suggest that it could go on the same basis, either way. You have to go back to the other part, to read the whole thing. Under "C" the Postal Service and the Administrator of General Services where properties under the jurisdiction of the Administrator are involved, with the approval of the Director of the Office of Management and Budget, shall determine which Federal properties shall be transferred to the Postal Service and which shall remain under the jurisdiction of any other department, agency, or establishment of the Government of the United States in the commencement of operations of the Postal Service.

The transfer shall be accomplished at the time of, or as near as possible to the commencement of operations of the Postal Service and the evaluation of the assets and capital of the Postal Service shall be adjusted accordingly.

Mr. GROVER. May I make a point?

Mr. CONSTANDY. Yes, sir.

Mr. GROVER. If we refer back to the powers of the new Postal Service corporation, 401, five or six are in separate paragraphs. In five, the very, very broad powers of conveying and encumbering, et cetera, all of its properties, and, six, construction operation, maintenance of buildings, facilities, under section 2002, so I think the thing is subject to interpretation, whether these very, very broad powers of disposition do affect the properties required to transfer under section 2002. Mr. BARTH. I have no authority to dispose of property acquired by our transfer. That authority seems to be clear in the Postal Service. If we are talking now after the Postal Service comes into existence, and property moving back and forth between the GSA and Postal Service, you are dealing in effect with an organization here which was set up to be in effect self-sufficient. To be run on basically a businesslike basis.

Mr. CONSTANDY. Theirs or yours?

Mr. BARTH. Theirs. One, it has very many aspects of a wholly-owned Government corporation, and I would think that any property going out of that corporation or service into the Federal Government, they would have to receive payment for.

By the same token, any property moving from the Federal Government into the corporation would have to be paid for.

Mr. CONSTANDY. Let me make a distinction, Mr. Barth.

You are not exactly on equal footing with the Postal Service. I hoped we would develop this piecemeal, and I still hope we will, and the Postal Service has responsibilities to other people you do not have.

Is that true? They intend to float up to $10 billion worth of bonds, and do you not think the indenture is going to require that when the Post Office commits itself to a transaction, that it conserves its assets? Mr. BARTH. It depends upon how those assets are pledged under the bond issue.

Mr. CONSTANDY. Well, have you ever seen one that is not?

Mr. BARTH. Well, that is what the Post Office is going to do with their revenue authority.

Mr. SNYDER. They could be revenue bonds. That would not encumber the

Mr. BARTH. They could be bonds, also, of the Treasury Department which would not encumber the building.

Mr. CONSTANDY. And furthermore, they have the right to call upon the full faith and credit of the Federal Government to sell bonds. Mr. BARTH. Yes, sir.

Mr. CONSTANDY. We are both speculating. I think we have to recognize that that is there. It cannot be treated with indifference, and the more that is true, I think the more reason it is for them to sell off the properties.

As a matter of fact, they are at liberty to reduce the difference between the book value that they carry for a particular property, depreciated from its original cost and its market value. If they are occupying space in the building that they are carrying on their books, prudent business would suggest that they sell the building consistent with their plan to relocate, anyhow, and produce the $8 million in assets. Mr. BARTH. I could sit here and speculate

Mr. CONSTANDY. I think we are in a serious issue, and I think we should focus on it.

Mr. WRIGHT. Let me return to a statement that was made prior to this colloquy by Mr. Barth.

The assumption is that if the Postal Service were to dispose of buildings, and the Government were to acquire them, that the Government would be expected to pay for them. Conversely, if the Government were to dispose of a building, and the Postal Service to acquire it, the Postal Service would be required to pay for it. And yet on these 2,780 buildings the Postal Service did not pay for anything, did it?

Mr. BARTH. That is correct. I consider 2002 (c), and 2002 (d) are different; 2002 (c) were the buildings turned over to the Postal Service at its inception, 2002 (d) speaks of transfers after the Postal Service comes into being.

Mr. WRIGHT. In effect, the Government has given the Postal Service a building, and then, if the Government takes it back over, it has to pay for it?

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