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Illinois Self-Storage Operators Officially Celebrate: No Service Tax

Article-Illinois Self-Storage Operators Officially Celebrate: No Service Tax

The Illinois 96th General Assembly ended yesterday, putting to rest fears on behalf of self-storage operators that the state would soon attach a service tax to their businesses. In lieu of legislation that would have added a service tax to self-storage and more than 40 other industries, the House and Senate passed Senate Bill 2505, which instead increases corporate and income tax.

The Illinois Self Storage Association (ISSA), with support from the national Self Storage Association and lobby firm Cook-Witter, has battled the issue of sales tax over the past two years, rallying the backing of members and other local facility operators. Previous threats came in the form of House Bill 174, which would have instituted a 6 percent sales tax on self-storage, and the recent amendment proposed for House Bill 1665.

ISSA plans to introduce a new bill in the 97th General Assembly to amend the Self-Service Storage Act. The clean-up language will include lien notification, late fees, validation limits and vehicle removal. The bill is currently at the Legislative Reference Bureau. Once the bill is drafted, the ISSA lobby team will seek bipartisan sponsorship. With a Democrat already lined up, the team hopes to win the support of Republican Senator William Bill Brady Jr.

The ISSA will send regular updates regarding the bills movement and calls for grassroots support.

California Self Storage Association to Host Networking Reception in Irvine, Feb. 16

Article-California Self Storage Association to Host Networking Reception in Irvine, Feb. 16

The California Self Storage Association will host a Local Area Networking Reception in Irvine, Calif., on Feb. 16. The event, open to all CSSA members, will take place at Il Fornaio restaurant on Von Karman Avenue from 5 to 7 p.m. The cost is $35 per person.

Self-storage owners and operators can meet and share info with fellow professionals during this social event. Cocktails and hors doeuvres will be served. In addition, Mark Allec, vice president of operations at Stadium Properties LLC/Dollar Self Storage will lead a discussion on current market trends including quarterly results, occupancy and more.

Reception details can be found at www.californiaselfstorage.org.

23 Self-Storage Units Broken Into at Minnesota Facility

Article-23 Self-Storage Units Broken Into at Minnesota Facility

Thieves recently broke into 23 self-storage units at Turner Mini Storage in Hibbing, Minn.

The facility is one of about a dozen residential and commercial properties to be hit around the same time period, totaling approximately 50 separate burglary cases.

Among the items stolen was fishing gear, clothing and furniture, investigators said. Police suspect the high volume of cases could be connected to organized crime.

Sources:

Woman Found Dead Outside Springfield, Mo., Self-Storage Facility

Article-Woman Found Dead Outside Springfield, Mo., Self-Storage Facility

Police in Springfield, Mo., are investigating the death of a woman found outside a self-storage Monday morning.

The police arent releasing much information about the death of Yvonne L. Lowers, 51, who was discovered just after 8 a.m. by the facility manager. Theyre attempting to piece together the timeline that led to Lowers death.

The initial autopsy doesnt pinpoint an exact cause of death, but hypothermia hasnt been ruled out, police said. Further toxicology results are pending.

Anyone who spoke with or saw Lowers between 1 p.m. Sunday and 8:15 a.m. Monday morning should contact police.

Lowers husband, a truck driver, was on the road when he was notified of his wifes death by police. The couple had been married 37 years.

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Self-Storage Developers in Iowa Receive Initial Approval on Fire-Code Amendment

Article-Self-Storage Developers in Iowa Receive Initial Approval on Fire-Code Amendment

Self-storage developers who requested an amendment to the city's fire code have received initial approval from the Urbandale, Iowa, city council.

Brad Vander Linden and business partner Eric Vander Linden requested the amendment so they wouldnt be required to install an automatic sprinkler system at the proposed site.

Despite opposition from the citys fire chief, the council approved a change to the fire code to allow Hickmans Self-Storage to be built without fire sprinklers. The council approved the first of three readings Tuesday.

In November, a Urbandale Board of Appeals denied the request, recommending the code remain at 6,000 square feet.

The city code was changed in 2007, requiring sprinkler systems for self-storage buildings from 6,000 square feet or greater. Any facilities built before 2007 are not required to add a sprinkler system.

In August, Eric Vander Linden asked the Urbandale City Council to consider changing that requirement to 12,000 square feet, which is the requirement in nearby Ankeny, Des Moines, Waukee and Windsor Heights.

The Vander Lindens were concerned about the high price tagabout $200,000for installing the sprinkler system. The proposed site plan includes 650 or more units. Under the existing fire code, each unit would be required to have a sprinkler head.

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Celebrity Tattoo Artist Jonathan Shaw Claims Self-Storage Weapons Cache a Historical Collection, Pleads Not Guilty to Criminal Charges

Article-Celebrity Tattoo Artist Jonathan Shaw Claims Self-Storage Weapons Cache a Historical Collection, Pleads Not Guilty to Criminal Charges

Jonathan Shaw, celebrity tattoo artist and son of jazz musician Artie Shaw, pleaded not guilty yesterday to charges of criminal possession in relation to a stash of guns, knives and ammunition he stored at a Manhattan Mini Storage self-storage facility in New York City.

Shaw, 57, was arrested in November after a moving company he hired to transport his belongings to Los Angeles saw the weapons and alerted authorities. He was charged in an 89-count indictment. Shaw claimed he purchased the weapons legally many years ago in the interest of collecting historical artifacts. His lawyers said he had no intention of using the weapons.

According to prosecutors, Shaw has never owned a rifle permit or firearms license in New York. Currently free on a $250,000 bail, he faces up to 15 years in prison if convicted of criminal weapons possession.

The Shaw arsenal included a loaded AK-47 assault rifle, three other guns, 83 knives and more than 2,800 rounds of ammunition.

Shaw is famous for opening the first storefront, public tattoo parlor in New York City and for his tribal tattoo style. Past clients include Johnny Depp, Kate Moss and Marilyn Manson. Shaw was also a founder and managing editor of International Tattoo Art Magazine and has published two books.

Manhattan Mini Storage has 17 locations throughout New York City.

Sources:

ISS Blog

Business and Government Dont Mix The Chilling Conclusion, Part II

Article-Business and Government Dont Mix The Chilling Conclusion, Part II

In November of 2010, it was reported the State of Idaho decided to buy a privately owned self-storage facility. The Idaho Department of Lands is currently operating this facility in competition with private business owners.

This is part two of a blog concerning the states response to an inquiry from the Self Storage Association (SSA). As I wrote in a previous blog the concerns with this type of state can be broken down in to seven main issues:

Tax-free operation : No property taxes will be paid by this state-owned facility, period.

Experience : The state has no experience in the self-storage industry.

Lack of accountability : The rest of us have to be accountable on an individual basis to investors or financial institutions. Whos held accountable for this facility and to whom?

Competition: What will hold the state back from limiting competition to their new self-storage facility?

Bail out: With the government as an investor, a bailout is always possible. No fear of the facility being disposed of through the market if it fails financially.

Consumer backlash: How many people do you know that will not buy a GM vehicle because of government ownership?

Innovation: The government has a horrible record when it comes to innovation.

The following are the remainder of the questions from the SSA along with answers by the state, and my analysis of the states responses:  

SSA: If the state-owned facility does not pay property taxes, how will the state establish rental rates? If these rates are based upon operating expenses that do not include the same property tax expenses as private sector owner/operators, will your pricing be discernibly cheaper, thus undercutting private competing operators?

State of Idaho: State law requires trust managers charge market rates throughout the duration of its leases and contracts. Like all investors, the trust has fixed and variable expenses, even some that private parties do not have, like general governmental overhead. In tough economic times that means profit margins are pinched. We are experiencing that now in some of our other commodity-based asset types that sill necessitate marketing products in the current down economy.

Similar to private REITs [real estate investment trusts], we use local third-party contractors to manage our commercial office/retail/industrial properties. These contractors handle day-to-day operations using their staff (not state employees), and they advise the state on marketing, maintenance and pricing, etc., commensurate with prevailing market conditions. These contractors pay attendant business and income taxes based on their business operations.

Analysis: Again, another answer we need to really pick apart. First, no one cares that the management company for the self-storage facility pays its required taxes, welcome to business. Every management company pays taxes based on the amount of business income it generates. Regardless of whether this facility is privately owned or state owned that tax revenue would still be there as long as the management company was contracted. If a management company wasnt contracted by a private owner then the privately owned self-storage facility would still be responsible for property taxes, which the state-owned self-storage facility is not responsible to pay.

Second, the answer doesnt elaborate on what the state considers market rates. Are market rates considered to be an average of all available rates in a designated radius? Is 5 percent or 10 percent above or below the average rate still considered market rates?  

Third, what are these general governmental overhead expenses that are so much more than the expenses an average private owner is responsible to cover?  I would like to see a list of these line-item expenses listed as overhead. I dont believe for a second that these extra operating expenses are enough to offset the fact that the state doesnt pay the thousands of dollars in property taxes the private owner is responsible to remit to the state annually. You should not be investing in self-storage if you need a state-granted property tax subsidy to cover your operating expenses so that you may be profitable.

SSA: Does the State of Idaho plan on continuing the practice of purchasing private self-storage businesses?

State of Idaho: We are sure you can appreciate that no prudent investor would openly reveal its specific business strategy. That said, the trusts over-arching asset management plan does articulate the desire and need to bring more diversification to the current portfolio.

Analysis: The answer to this question is yes, summed up in the statement desire and need to bring more diversification to the current portfolio. The state is not Gordon Gekko or any other private investor and should be clear about its investment strategy to the people of Idaho. Other industries in the state of Idaho should have a cold chill run down their spine with this response.

As Ive stated before, regardless of what area of the self-storage industry you work in, this issue affects your business. The question really is: What can we do? First, identify Idaho state representatives that support private industry and make them aware of this issue.

Second, a letter-writing campaign, social media, etc., plan needs to be formulated by the citizens of Idaho to let the state know that this expedition into private business is unacceptable.

Last, every self-storage operator in Idaho needs to support and contact the Idaho Self Storage Association and the SSA. I highly recommend you read the states responses as they were released by the SSA and posted on the ISS website. We work in a great industry thats exciting and constantly changing. Private investment keeps costs down and rental rates affordable, lets make sure that continues.  

Matthew Van Horn is vice president of Cutting Edge Self-Storage Management, a full-service management company specializing in management, feasibility studies, consulting and joint ventures within the self-storage industry. To reach him, e-mail mvanhorn@cuttingedgeselfstorage.com . 

UBS Hosts Self-Storage REIT Summit in New York, Jan. 19

Article-UBS Hosts Self-Storage REIT Summit in New York, Jan. 19

On Jan. 19, UBS Investment Bank will host a Self-Storage REIT Summit at its New York City office. Participants include chief executives from self-storage real estate investment trusts, who will speak as part of an international panel; self-storage valuation expert Charles Ray Wilson, providing a keynote presentation; and other well-known industry players. The presenters are:

  • James Gibson, Chief Executive Officer, Big Yellow Group PLC
  • Ron Havner, Chief Executive Officer, Public Storage Inc.
  • Dean Jernigan, Chief Executive Officer, U-Store-It Trust
  • Spencer Kirk, Chief Executive Officer, Extra Space Storage
  • Dave Rogers, Chief Financial Officer, Sovran Self Storage Inc.
  • Ray Wilson, President, Self Storage Data Services Inc.
  • Mike Burnam, Chief Executive Officer, StorageMart
  • Nick Coslov, Chief Executive Officer, Storage Deluxe
  • Matthew Nagel, Chairman, Metro Self Storage

A webcast of the event will be available through the UBS website at www.ibb.ubs.com/conferences.

Headquartered in Zurich and Basel, Switzerland, UBS is a global firm providing financial services to private, corporate and institutional clients. The company has offices in more than 50 countries and employs more than 64,000 people worldwide.

Real Estate Partnership Acquires Six Self-Storage Facilities in California

Article-Real Estate Partnership Acquires Six Self-Storage Facilities in California

Kayne Anderson Real Estate Advisors LLC (KAREA), the private equity real estate practice of Kayne Anderson Capital Advisors investing in specialized real estate sectors, and Flagship Investment Group, a Florida-based developer, owner and operator of commercial property, have together acquired a portfolio of six operating self-storage facilities totaling 3,803 units in California's Central Valley Region.

The acquisition consists of bank-owned assets, which acquired the properties through foreclosure. KAREA, which focuses on recession-resistant, specialized, fragmented real estate sectors, primarily invests in off-campus student housing. Through its partnership with Flagship, KAREA is able to expand upon its niche market strategy to take advantage of opportunistic situations in the self-storage sector and other non-core real estate sectors.

"This acquisition builds on our strategic partnership with Flagship and leverages our combined expertise with carefully evaluated market conditions, to add value in a well-rounded portfolio of niche real estate to investors," said Al Rabil, managing partner.

The properties are all located in the cities of Ceres, Elk Grove, Escalon, Riverbank, Soulsbyville and Stockton.  "There are a number of key areas where Flagship will initiate operational improvements, including revamped marketing initiatives and updated security systems," said CEO Ted Bolin.

KAREA and Flagship first teamed up in October 2010 to purchase a 375,097-square-foot five-property self-storage portfolio in greater Orlando and Jacksonville, Fla.

Industrys Top Legal Threats Explored at Inside Self-Storage World Expo in Las Vegas

Article-Industrys Top Legal Threats Explored at Inside Self-Storage World Expo in Las Vegas

Between lien sales, wrongful sales, tenant bankruptcy and changes in state legislation, self-storage operators face more legal risks than ever before. To help facility owners and managers navigate the murky legal waters, the Inside Self-Storage World Expo at the Paris Hotel & Resort in Las Vegas is offering a four-hour Legal Learning Live workshop, taught by industry expert Jeffrey Greenberger, as well as legal-focused seminars as part of the its standard Education Package.

On March 15, 10 a.m. to 2 p.m., Greenberger will explore the most critical legal issues affecting self-storage operators today. Attendees will learn in detail about the self-storage lien-sale process including steps to follow in the event of a sale-related lawsuit. They'll also learn best practices for handling customers' personal information, strategies for dealing with abandonment, and proper procedures for vehicle storage. The workshop includes a comprehensive workbook and a series of sample forms attendees can directly reference in their self-storage operation, including a complete lien-sale checklist, sale rules, a release for sale participants, a mutual-settlement agreement, vehicle-storage lease clauses, and forms to collect information for vehicles in storage.

Greenberger will also teach a seminar on Revising Your Self-Storage Rental Agreement: Important Changes for 2011. Included with the standard Education Package, this seminar will teach the most common problems with self-storage rental agreements, the most common mistakes that make agreements unenforceable, the best "new" clauses to add, and changes you may need to make if your state laws have changed. The seminar will take place March 14 at 11 a.m.

In addition, attorney Scott Zucker will present a seminar titled Lien Sales: Understanding a Self-Storage Facilitys Legal Liabilities on March 14 at 1 p.m. Hell cover the dos and donts of handling self-storage lien sales and ways a facility operator can protect himself from mistakes. Attendees will learn current updates to lien laws around the country, strategies for avoiding lien sales, common mistakes made in the sale process and more.

A partner with Katz, Greenberger & Norton LLP in Cincinnati, Greenberger works with facility operators nationwide and represents several state self-storage associations. He is a regular contributor to Inside Self-Storage magazine, the ISS Expo, the Self-Storage Training Institute and Self-Storage Talk, the industrys largest and most active online community.

Zucker is a partner in the law firm Weissmann Zucker Euster Morochnik P.C. in Atlanta, where he specializes in business litigation with an emphasis on real estate, landlord-tenant and construction law. Zucker is a frequent lecturer at national conventions and the author of Legal Topics in Self Storage: A Sourcebook for Owners and Managers.

The Inside Self-Storage World Expo will feature more 36 education seminars, an exhibit hall with more than 100 of the self-storage industrys top suppliers, five networking events and more. Details about the industrys largest conference and tradeshow can be found at Insideselfstorageworldexpo.com. Registration can be completed online, by calling 800.230.2311, or on site during the show.

 

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