BERKELEY -- The United States Postal Service should stop allowing commercial real estate services firm C.B. Richard Ellis from representing both seller and buyer, and lessor and lessee in post office property transactions, according to a Feb. 12 "management alert" issued by a USPS watchdog agency.

"Given the multiple roles CBRE plays within the real estate industry, the Postal Service should take steps to lessen the potential for CBRE to engage in transactions that create conflicts of interest," states the alert by USPS Deputy Inspector General Michael Magalski.

"CBRE conflicts of interest could lead to financial loss to the Postal Service and decrease public trust in the Postal Service's brand," Magalski writes.

A CBRE spokesman responded via email that "dual agency" is standard industry practice. "Indeed, sellers of properties expect this of us," the CBRE statement said. "In any instance, where there is an opportunity for CBRE (through different sales teams) to represent both the seller and the buyer (a dual agency), that fact is disclosed promptly to USPS in advance for their consideration and consent."

Activists working to stop USPS from selling Berkeley's historic downtown post office point to a separate issue with CBRE's 2011 exclusive real estate contract that they contend is also a potential conflict of interest: CBRE Board Chair Richard Blum is married to Sen. Dianne Feinstein, D-Calif.


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While the Feb. 12 alert did not raise concerns about Blum, CBRE's statement addresses the activists' concerns, contending Blum "plays no role in the day-to-day management of CBRE and was not even aware of the contract at the time it was awarded. He has had no involvement with our work for USPS, and derives no direct financial benefit from the contract.

"Mr. Blum's investment firm (Blum Capital) owns approximately 4-1/2 percent of the outstanding shares of CBRE Group, Inc."

Feinstein's office says that the senator isn't involved with her husband's business and that her assets are held in a blind trust.

USPS responded to the alert asserting that dual agency is in the Postal Service's best interest. "By allowing dual agency arrangements, the Postal Service can obtain wider exposure by potential offerors, and thus ensure rigorous competition," wrote Tom Samara, USPS vice president of facilities in comments on the Office of the Inspector General's recommendations.

Responding to Samara, Magalski said that while the OIG considers management's comments "unresponsive," his office would not pursue its recommendation to prohibit the dual agency arrangement, but would continue to evaluate it as part of a current audit of Postal Service real estate transactions.

Jacquelyn McCormick with Citizens to Save the Berkeley Post Office and the National Post Office Collaborate said she appreciates the OIG raising potential conflicts of interest, but fears the alert "had no meat on it" and there will be no consequences.

Steve Hutkins, a New York University literature professor who maintains the "Save the Post Office" website, however, says the alert and the OIG audit in process could pressure USPS to modify CBRE's contract around questions of dual agency.

Representing both buyer and seller may, in fact, have resulted in USPS selling properties for less than their assessed value, Hutkins said, a claim also made by investigative journalist Peter Bryne in his e-book "Going Postal."

The alert also addresses this question, noting that before May 2013, CBRE not only represented buyer and seller, but was charged with subcontracting with property appraisers. In May, USPS relieved CBRE of that responsibility.

"The Postal Service was subject to the risk that CBRE could manipulate transaction prices to favor its clients or business partners when it managed the appraisal and negotiation processes for properties the Postal Service sold or leased," the alert says.

CBRE says claims that it sold properties for less than their value are false. "USPS properties have consistently been sold at or above the appraised value provided by USPS third party appraisers," according to the CBRE statement.

Hutkins said the OIG audit, likely out this month, should resolve the question of whether properties were sold for less than their value and the role that dual agency has played.

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