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30th Street Post Office Credit: Brian Shmerling

A report from the Office of the Inspector General of the U.S. Postal Service reveals that the Postal Service did not act in compliance with several regulations in selling the Postal Lands to the University, but Penn and Postal Service officials say the report will not affect the deal's closing.

According to the report, the Postal Service was required to first offer the property to the General Services Administration, an independent U.S. government organization that helps manage federal agencies, but did not do so.

In addition, the property was not sold on the open market, the report states.

The report also describes conflict of interest issues concerning Keating Development Company, which was hired by the Postal Service as a real-estate advisor, due to the company's multiple business relationships with Penn, the GSA, the Internal Revenue Service and the Postal Service.

Postal Service officials say they have considered the report and addressed its concerns.

"We agreed with the OIG's findings, and we are complying with their recommendations," Postal Service spokesman Bob Anderson said. "The sale will go forward."

University Executive Vice President Craig Carnaroli agreed.

"I have no indication that this will jeopardize the sale," he said.

Postal Service officials said they didn't notify the GSA because they knew the agency did not have the money to purchase the property.

But Keating notified the Postal Service in November 2002, four months before the sales contract was signed with Penn, that the IRS was considering leasing the property through the GSA.

Anderson maintained, however, that GSA was not interested in the property.

"We did approach them, and they did not express an interest," Anderson said. The Postal Service has acknowledged that it did not formally document GSA's lack of interest.

Because the Postal Service did not sell the property on the open market, the OIG report questioned that it "received the best, most competitive price for the property."

Following the report's recommendations, the property was appraised and the terms of sale were evaluated.

Carnaroli said he is not concerned about the property's price.

"I believe the property was sold to us on a fair-market basis," he said.

In response to the conflict-of-interest claims regarding Keating, Anderson said the Postal Service has examined some processes and increased training to make sure that the organization complies with all other protocols.

Carnaroli declined to comment on Keating, because he was not involved in the dealings with the company.

Carnaroli added that, while he viewed the report as a normal part of the Postal Service's review process, he found it "a little surprising" that a critique emerged at such a late point in the dealings.

The transaction is expected to close in the late spring or early summer, Carnaroli said.

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