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Mr. KREGER. About 300, the ones that I mentioned previously. Mr. CONSTANDY. That, in itself, would suggest that you would lose money, would it not? Even recognizing you were a minor tenant?

Mr. KREGER. Again, I believe it depends on the location of the building, the site where it is located, and the amount of space. These 1,200 buildings are mainly in rural areas, where the major activity is the Post Office, and there would be small amounts of space for other agencies, and, also, it would be cheaper rates.

Mr. CONSTANDY. Well, maybe we could get back to the eight projects.

I think we had done Manchester.

Mr. KREGER. Yes; we did.

Mr. CONSTANDY. We are about to do the Bronx.

POST OFFICE DEPARTMENT,

BUREAU OF FACILITIES, Washington, D.C., October 1, 1970.

Mr. ARTHUR F. SAMPSON,

Commissioner, Public Buildings Service,
General Services Administration,

Washington, D.C.

DEAR MR. SAMPSON: This will confirm the decision of the Post Office Department to withdraw from the proposed post office-Federal office building to be located in the Bronx, New York.

As I explained in discussions about this facility with Ray Nixon and Mel Hemmer, the Department's need for a major mail handling facility to serve this part of the New York metropolitan area can be satisfied at much less cost, with greater economic benefit, by a facility of an entirely different type and location than had been planned for the Bronx. Our every extensive studies of the New York metropolitan area show that low cost, commercialtype facilities are more suitable for our purposes and will achieve greater efficiency at less cost than the traditional type of Federal building proposed for the Bronx.

Further, we have found that we can modernize the present Bronx facility at a small fraction of the cost and in much less time than would be required for a completely new structure. This modernization would involve the installation of letter sorting machines, and modification and extension of the present dock faciilties. This action would, in our judgment, render the present Bronx facility adequate for processing the type of mail that we envision will be handled at that location.

For these reasons we have reluctantly decided to withdraw from the project. During the time the proposed Bronx project was in the planning stages, the Department continued to use its Fordham Station, located near the proposed site for the new facility, even though this station was completely inadequate. It was contemplated that this station would no longer be required when the new facility was completed. Our New York regional office has suggested that with the change in plans it will be necessary to provide an adequate Fordham Station and some other facilities in the area.

Accordingly, and pending a final decision on this matter, we are asking that the site now under the control of your Agency for the proposed Bronx facility be retained. We will proceed promptly to analyze the proposal we have from our New York regional office with respect to the utilization of this site and give you a final answer on our need for it at an early date.

Sincerely yours,

HENRY LEHNE, Assistant Postmaster General.

BRONX, NEW YORK-CHARLES A. BUCKLEY POST OFFICE AND FEDERAL OFFICE

BUILDING

Prospectus approved: Senate Aug. 20, 1963. House-July 31, 1963.
Total estimated project cost: $29,547,100.

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Site: Size and location-140,200 sq. ft.; entire block bounded by East Fordham Road, Third Ave., East 189th St. and Washington Ave.

Status of acquisition: Completed Mar. 2, 1965.

Building area: Gross-692,786 sq. ft. Net-549,600 sq. ft. 67% of space for postal use.

Status of design: Completed Mar. 27, 1970.

Date of postal withdrawal: Oct. 1, 1970.

Remarks: Insufficient demand for non-postal space to warrant a separate project.

Mr. KREGER. In the Bronx we had planned a building of 140,200 square feet, an entire block. The acquisition of the site has been completed. It was completed in 1965.

I am sorry. I misspoke. The building has a gross square footage of 692,842 square feet. Six percent of this building-67 percent of this building is for postal use. The design was completed in early 1970.

The Post Office withdrew in late 1970. There was an insufficient demand for nonpostal space to warrant the

Mr. CONSTANDY. If now we could do Williamsport, Pa.

Mr. KREGER. It has a building planned at 194,100 square feet, with 45 percent of the space for postal use. The design has not been started. The Post Office withdrew in 1970. They reduced the prospectus, and revised the prospectus being contemplated, and the prospectus is in the process of being developed.

Mr. WRIGHT. Let me point out with respect to the Bronx, this was a big building. Total estimated project cost for the combined use of the Post Office and other Federal agencies initially was $29,547,000. Mr. KREGER. Yes, sir.

Mr. WRIGHT. The Post Office withdrew on the grounds that it needed other space. Do you know what the Post Office is doing there? Is it building its own building in the Bronx?

Mr. KREGER. They told us in their letter that their study showed that the New York metropolitan area showed that low-cost commercial-type facilities are more suitable for their purposes, and will be better for their costs, and will be better than the building for the Bronx. They have asked us to hold the site, but we have no definite information on their plans.

Mr. GRAY. Would you repeat that, the reason for the Post Office abandoning the Bronx site?

Mr. KREGER. "Our very extensive studies of the New York metropolitan area

Mr. WRIGHT. You are quoting the Post Office?

Mr. KREGER. A letter, signed by Mr. Henry Lehne.

Mr. GRAY. Now, you are talking about the New York metropolitan

area.

Mr. KREGER. That is what he is talking about.

Our very extensive studies of the New York metropolitan area show that lowcost commercial-type facilities are more suitable for our purposes and will achieve greater efficiency at less cost than the traditional cost of the Federal building proposed for the Bronx.

Mr. GRAY. You notice he says "low-cost"?

Mr. KREGER. Right.

Mr. GRAY. I would like the record to show that our committee authorized a $50 million facility to take care of all the New York metropolitan area. That so-called low-cost facility has already catapulted to $120 million, and is still going up. That is more than $80 million more than our committee authorized, and I wanted to show the disparity between the statement they gave to GSA as a reason for abandoning this facility, and what they are actually doing on the site $120 million, plus. If that is low cost, I do not want to be involved.

Mr. WRIGHT. They were going to abandon this $29 million project in order to achieve, by their own words, this project at less cost.

Mr. GRAY. We will get testimony from Mr. Lehne this afternoon, Mr. Chairman, and the last figures I had were in excess of $120 million. Mr. WRIGHT. A very significant point.

Mr. GRAY. Thank you, Mr. Chairman.

Mr. CONSTANDY. Since we are talking about the Bronx, and we had been talking about the relationship between the two entities, the transfer of property, I would like to get into this later, but if you could turn to your interim agreement, to the last page.

Now, this is the agreement that was entered into on an interim basis between the GSA and the Postal Service to provide for the problems that you could foresee arising in the transfer of properties, and the fact that you have interwoven relationships in some of them. Number 14 says:

Any or all of the following sites may, if the Postal Service agrees, subject to the approval of the President, be transferred to the Postal Service under 39 U.S.C.2002 (d), with or without reimbursement.

The third item is Bronx, N.Y., a city block bordered by Fordham Road, East 138th Street, and, if I understand this correctly, the Post Office has withdrawn from your proposed project in the Bronx, stat ing that they do not have need for it, and yet the interim agreement would seem to make interim agreement for this land to be turned over to the Post Office.

Mr. BARTH. If I could talk to that point, the provision of paragraph 14 recognizes basically two things.

It recognizes that the Postal Service is under no obligation to take that site, which is the phrase, "if the Post Office agrees."

And, it also recognizes the fact that we could not, either GSA could not, by virtue of this agreement, usurp the authority which is under the President under 2002 (d).

Mr. CONSTANDY. You knew you could not usurp the powers of the President anyway, did you not?

Mr. BARTH. Yes, sir.

Mr. CONSTANDY. That is superfluous, is it not?

Mr. BARTH. No, sir; I think the agreement points out that whatever happens to those sites, the Bronx site, or any other sites, if the Post Office wants them, it is up to the President to say when they will go, and at what price.

Mr. KREGER. If I may, Mr. Constandy, let me read a letter from Mr. Lehne on November 13, 1970, relating to this site.

Mr. CONSTANDY. All right.

Mr. KREGER. This is to Mr. Sampson.

Thank you for your letter of October 23, 1970, from Acting Commissioner Sanders. In his letter, Mr. Sanders said that the proposed site for the proposed Post Office and Federal Office Building in the Bronx, New York City, would be retained by GSA for possible use by the Postal Service.

He said that he would appreciate receiving a decision within 30 days because of the intense Congressional and public interest in the Bronx project and in the use of the site.

We have given this matter careful consideration both in our New York Regional Office and here at headquarters. It is our conclusion that the Postal Service will require this site for one or more Postal facilities. It is not certain at this time just what type of facility or facilities will be constructed on this site. Currently under consideration is a new Fordham station to replace the existing Fordham station now located at 420 East 189th Street, a vehicle maintenance facility, and a central nonpreferential mail facility.

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Our final decision could involve one or more of the possible uses. We are proceeding to complete our study as rapidly as possible, and will advise you when it has been completed.

Sincerely,

HENRY LEHNE, Assistant Postmaster General, Mr. CONSTANDY. That came around in a complete circle. You began with the prospect of putting up a building that you were going to fund and build, in which they would occupy 67 percent of the space. They write you and say they do not need that kind of space any more, and they are withdrawing from it, and yet the provision is made for the transfer of the property and the land from GSA to the Postal Service, and the letter would suggest that they had firm plans to go ahead with some project there.

Does not this raise the problem where you address your statement, where your interest is avoiding putting up two buildings in a city instead of one?

Mr. KREGER. Well, their scope and size of their buildings changes just as GSA does, but they now may have a use for two buildings which would be utilized.

Mr. WRIGHT. The Postal Service is going to take this property in the Bronx?

Mr. KREGER. They have indicated to us that they would like to have us hold it for them in the possibility that they could use it for one of three uses, as indicated in the letter.

Mr. WRIGHT. What will happen if the Postal Service decides it wants this land? Will you sell the land to the Postal Service, or will you give the land to the Postal Service?

Mr. KREGER. I think, according to this agreement here, it says, subject to the President's approval, it will be transferred to the Postal Service under 39 U.S.C. 2002 (d) with or without reimbursement." Mr. WRIGHT. With or without?

Mr. KREGER. Yes, sir.

Mr. WRIGHT. Who decides whether it is with or without?

Mr. KREGER. This is what the law requires of the President.

Mr. WRIGHT. Well, I think I have to return to the comment earlier, that with considerably greater negotiating flexibility that seems to reside in the Postal Service, you are, to a large extent, at their mercy in any of these transactions.

Mr. KREGER. No; it says the President decides this issue.

Mr. WRIGHT. The President decides what the Postal Service pays the Government for the land, or whether it will be given to the Postal Service?

Mr. KREGER. Right

Mr. WRIGHT. Now, this is still another category, distinct from those we have earlier discussed. We have discussed the estimated $1.6 billion worth of buildings, 2,780 of them, which have been given to the Postal Service by the Government, and we have discussed what will happen in the future when the Postal Service will purchase buildings from the Government. And whether there would be reimbursement to the Government, we do not know.

Mr. BARTH. I think your last two categories are in the same. Any real property would go from the Federal Government to the Postal Service. In the future it would have to go with the President's ruling under 2002 (d).

Mr. WRIGHT. With or without?

Mr. BARTH. Yes; and we have received no decision at this time. Mr. WRIGHT. Is it possible for the Postal Service to acquire buildings without reimbursement?

Mr. BARTH. The language of the section is clear. It could be read, I think, and the proper way to read it would be it is the Postal Service's decision to transfer to other Federal agencies

Mr. WRIGHT. So the decision comes under the Postal Service, right?

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