Date: June 1, 2000

June 1, 2000

Ms. Francia Smith
United States Postal Service Consumer Advocate
475 L'Enfant Plaza SW - Room 5912
Washington, DC 20262-2200

Dear Ms. Smith:

Apartment providers in Tallahassee, Gainesville, Jacksonville, and Orlando, Florida who are members of the National Multi Housing Council/National Apartment Association (NMHC/NAA) report that the United States Postal Service (USPS) North Florida District has recently begun to cut back service by reclassifying certain apartment communities as "dormitories or residence halls" with "single-drop" mail delivery. On behalf of these and other similarly affected Florida housing providers, NMHC/NAA object to this reclassification by USPS.

As you see from the attached correspondence, the Florida Student Association and approximately 60 Florida State Representatives have also objected to the implementation of "single-drop" service at one apartment property. USPS North Florida District personnel have said that the policy is part of a new effort by USPS to expand the application of single-drop delivery. NMHC/NAA object to any policy change that reduces USPS service to apartments, particularly one that may have "national implications," as at least one USPS North Florida representative has claimed.

This letter is addressed to you because we understand an appeal by Campus Development Group (CDG) on the application of this policy in Tallahassee is awaiting your response. Also, a request to "develop a concise policy in regard to this type of delivery" has been made to Mr. Bob Davis, USPS Vice President of Area Operations by Mr. Harold Swinton in a March 22 memorandum. Provided here for your review is a single example of USPS's interaction with Florida housing providers. The ongoing USPS-CDG interaction is an important example, as the Tallahassee property is apparently one of the first to be affected by the new rule. Because the issues raised in the USPS-CDG case affect properties in the markets mentioned above. NMHC/NAA are concerned with the impact of this policy change on Florida apartment communities as a whole.

NMHC/NAA respectfully request that USPS deliver mail to individual boxes in apartment homes where the housing meets the definition of an "apartment home" in Postal Operations Manual (POM) 631.45. Also, we respectfully suggest that USPS meet with Florida housing providers to fashion the "concise policy" requested by Mr. Swinton on March 22 and fully address industry concerns before implementing any such policy in Florida.

History of CDG - USPS Appeal
In 1998, USPS inspected and approved the design of mail kiosks at CDG's Tallahassee property. Some months after mail delivery direct to mailboxes on the property had begun in 1999, N.W. Logeson of the USPS in Tallahassee sent a letter on September 22, 1999 notifying CDG that mail delivery service would be changed to single-drop delivery. Following phone conversations and letters between Mr. Logeson and CDG, Mr. Logeson met with representatives of CDG on November 8 and agreed to continue the established mode of service direct to mailboxes.

On January 5, Mr. Leon Tillman, a USPS branch manager, visited the CDG Tallahassee property to inform CDG that single-drop mail delivery would begin the following Monday. CDG immediately called Mr. Logeson, who agreed not to start single-drop delivery until CDG had the opportunity to appeal the order. Mr. Logeson directed CDG to Mr. Harold Swinton, and CDG sent an inquiry about the appeal process on January 6. In response on January 24, Mr. Swinton said that no appeal process existed and provided an April 3, 1997 letter from the USPS Consumer Advocate concerning a property called Knights. Krossing to "better explain[] the interpretation of the regulation as it applies to the mode of delivery in question." On January 28, CDG responded that the facts of Knights. Krossing described a "different situation" than the CDG Tallahassee property and sought a dialogue with USPS.

A March 22 meeting between Mr. Swinton, the Florida Student Association, and the University of Florida Student Government ended with a memo from Mr. Swinton to Bob Davis, Vice President of Operations for USPS, stating the need to "develop a concise policy in regard to this type of delivery." Also as a result of that meeting, the USPS Law Department sent a fax on April 5 detailing the appeal policy to the USPS Consumer Advocate. CDG filed an appeal to the Consumer Advocate April 7. An April 18 letter from C. Michael Gaspard of USPS Florida confirmed the application of the single-drop rule to the CDG Tallahassee property, but indicated that CDG could appeal the application of the regulation. The CDG appeal, along with Mr. Swinton's request for "concise" policy guidance, is pending.

USPS Should Follow "Apartment Home" Delivery Procedures under the USPS POM
Like other apartment providers affected by the new single-drop policy, CDG has satisfied every written policy "contingency" specified by the USPS Postal Operations Manual (POM) at 631.45 for the delivery of mail to individual boxes in apartment homes on its Tallahassee property:

• Installation and maintenance of mail receptacles has been approved by USPS,
• each apartment has been provided one box, and
• the grouping of boxes for the building is at a single point readily accessible to the carrier.

USPS reviewed and approved the design and construction of mail kiosks by CDG on the Tallahassee property in 1998 and began delivery of mail to individual boxes for a number of months. However, in late 1999, USPS indicated to CDG that it had reclassified these apartment homes as "dormitories or residence halls," even though they met the definition for "apartment homes." In meetings and correspondence with affected providers, USPS North Florida personnel have relied on the definition of "dormitories and residence halls" found in POM 631.52. We believe the record demonstrates these precedents are ambiguous and do not clearly apply to the CDG property and others like it.

Under the POM definition, "a dormitory building or residence hall ordinarily consists of single-room units (or double rooms with connecting bath) and separate centrally located facilities for dining and receiving visitors." (POM 631.52) That definition describes a different structure than the CDG Tallahassee property. The CDG residences, consisting of 2-, 3-, and 4-bedroom units, are the same design as conventional apartments found elsewhere in Gainesville, Tallahassee, Orlando, and other Florida markets. Instead of "single-room units," each bedroom comes equipped with a private bathroom. Instead of "separate centrally located facilities for dining and receiving visitors," living rooms and dining rooms are in the CDG residences that residents lease, along with a full laundry room.

The "dormitory" definition in POM 631.52 is also inapplicable because CDG and its property have no affiliation with any school. At "dormitories or residence halls," POM 631.52 explicitly calls for bulk delivery to "a designated representative of the school," contemplating a different type of housing than CDG provides. Because these apartments have no affiliation with any school nor is residency limited to students, we believe the apartment home definition should govern.

USPS's characterization of apartment homes as "dormitories" denies direct-to-mailbox delivery to the non-students that live there. Treating the CDG residences as apartment homes would also allow USPS to meet its obligation to deliver directly to the mailboxes of married student residents who live there, as USPS is supposed to do according to POM 631.53.

Because the Florida housing in question clearly meets the POM requirements for "apartment homes," but not the POM "dormitory" definition, USPS should be obliged to follow the "apartment home" definition in its own POM and deliver mail to individual boxes.

Interactive Discussion By Florida Housing Providers and USPS Would Develop Best Policy
In its rationale for deciding not to follow the POM and thus deny delivery to some "apartment homes" meeting the POM definition, USPS North Florida representatives have stated that students who live in "multi-lease apartments" have unique "delivery characteristics." As Mr. Gaspard articulated this rationale in his April 18 letter:

"By regulations, based on delivery characteristics of the resident population, certain types of facilities only qualify for single point drop delivery. The determination is based on whether a particular resident population falls within a group identifiable by its delivery characteristics. The designation of multi-lease apartments, housing a predominantly student population, as a drop delivery is consistent with Section 631.52 of the Postal Operations Manual (POM) because it aligns with the delivery characteristics of the resident population. Some similar facilities have been "grandfathered in" as a result of postal regulations governing correction of improper mode of delivery (POM Section 631.7), however, any new ones that fall within the criterion set forth in Section 631.52 will be designated as single drop delivery."

A similar rationale was cited in a letter from the USPS Consumer Advocate on April 3, 1997 concerning Knights. Krossing. "Renting individual bedrooms to individual students, in the manner of traditionally defined 'dormitory or residence hall' student housing, is the important factor for delivery purposes," wrote the USPS Consumer Advocate in finding that Knight's Krossings. lease arrangements with individual residents made Knights. Krossing a dormitory. (Emphasis added) (Unlike the CDG Tallahassee property, Knights. Krossing was designed with multiple mailboxes for each apartment home. Such a design runs against USPS policy, according to the Consumer Advocate's letter, and fails the POM test of an apartment home under 631.45.)

However, neither the Gaspard letter nor the Consumer Advocate's April 3, 1997 letter provides evidence to support the interpretation that "multi-lease apartments, housing a predominantly student population" are a "group identifiable by its delivery characteristics." Departing from the POM standard for apartment homes, the Gaspard standard defines a delivery group based on a business practice (i.e., lease agreement) that is not related to either "delivery characteristics" or any other aspect of the mail delivery process (e.g., mail kiosks). In doing so, it relies on but does not substantiate the view that mail forwarding rates for individuals in multi-lease apartments are significantly higher than for married students or apartment residents, both of whom receive direct-to-mailbox delivery under the POM. In the experience of Florida housing providers, mail forwarding rates bear little or no relation to the nature of the lease arrangement.

What USPS calls the "multi-lease" arrangement has proven a prudent business practice in the industry. It is the preference of responsible renters of all types, especially in markets with many students, to be individually responsible rather than jointly and severally responsible on the lease. In the experience of CDG and other Florida housing providers, requiring a renter to be individually responsible for his/her own lease is a prudent business practice whose effect is to help reduce the frequency of resident turnover (and thus mail forwarding and unclaimed mail) by making it more difficult for residents to leave the unit before lease expiration and "skip" payment.

Because resident turnover is a key part of business operations, Florida housing providers have substantial experience with mail forwarding. In the experience of industry providers, close monitoring of lease turnover and maintaining accurate records of forwarding addresses at the site level have proven successful in reducing the time and expense related to pursuing mail forwarding. In devising a "concise" new policy that is clear and reliable, USPS would benefit from learning about these and other business practices of Florida housing providers and how existing industry practices could be integrated with USPS operations for maximum efficiency.

Before any new policy for single-drop delivery is imposed, NMHC/NAA propose a meeting in Florida in the next 30 days between affected Florida housing providers and appropriate USPS representatives responsible for the development of this new policy concerning the following issues:

• language of the proposed new policy and scope of its application in Florida, including "grandfathered" properties,
• how apartment property architecture, lease management techniques, and other business practices in apartments serving student populations might be adjusted to better accommodate USPS concerns without reducing service,
• clear standards for the application of the "predominantly student population" test in Florida,
• liability and training concerns for apartment providers now responsible for "single-drop" mail delivery, and
• USPS findings concerning the relevance of the "multi-lease" requirement to student groups who experience higher rates of mail forwarding.

We look forward to opportunity for a mutually beneficial dialogue. I can be reached directly at (202) 974-2344 with regard to this matter.

Sincerely,

James W. Harris
Vice President of Property Management
NMHC/NAA Joint Legislative Program

cc: C. Michael Gaspard, Manager, Operations Programs Support, USPS North Florida District
Harold Swinton, District Manager, Customer Sales and Service, USPS North Florida District
N.W. Logeson, Officer in Charge, USPS, Officer in Charge - Customer Sales and Service
Annemarie Gildea, USPS Delivery Policies and Programs
Christine Taylor, USPS Office of General Counsel

NMHC Contact Information:
Jay Harris
Vice President of Property Management
202/974-2344
jharris@nmhc.org