A national self-storage lobbying group says Idaho is engaging in unfair competition with the private sector and undermining tax revenue that would otherwise go to local governments, the AP reports, by the state's foray into the self-storage business. The state, as part of its management of the endowment that benefits the state's public schools, paid $2.7 million for Affordable Self-Storage southwest of Boise's downtown in August; the move was part of a continuing effort to increase investment returns on the state's land endowment. Click below to read the full story from AP reporter John Miller.
National group blasts Idaho for storage purchase
By JOHN MILLER, Associated Press
BOISE, Idaho (AP) — An Idaho-managed endowment trust is unfairly taking on the private sector and undermining tax revenue for local governments by buying a storage facility to bolster revenue for the state's public schools, a national self-storage lobbying group said Wednesday.
The trust used $2.7 million in proceeds from previous land sales to buy Affordable Self-Storage southwest of Boise's downtown in August.
Michael Scanlon, president of the Virginia-based Self Storage Association, wrote in a Nov. 5 letter to the state that this puts government in competition with private businesses.
He wants to know, among other things, how Idaho will set rental rates, given the Boise facility — unlike private competitors — isn't burdened with property taxes.
"If I'm not paying property taxes and you are, who do you think is going to win the battle of price? That's what it boils down to," Scanlon told The Associated Press Wednesday. "They've crossed the line, when they go into direct competition with the taxpaying base that supports government."
Scanlon has fought similar government initiatives before.
In 2006, he testified before Congress against allowing Post Exchanges on U.S. military bases to construct self-storage facilities in areas where there were already private businesses offering the same services.
Scanlon urged Idaho to sell the facility, then redirect investments to publicly traded Real Estate Investment Trusts that focus on self-storage businesses, if it wants to benefit from the sector's performance.
The state Department of Land told the AP Wednesday it's drafting a letter in response to Scanlon's criticisms.
But Laurie Boeckel, a board member of Idaho's Children's Land Alliance Supporting Schools, a group focused on making sure endowment lands are managed properly, contends the state doesn't own the business — its endowment trust does.
Endowment trust lands are tracts granted to states when they achieved statehood, and endowment trusts like Idaho's have bought and sold holdings such as the storage business over the years.
According to the Idaho Constitution, the five members of the Idaho Land Board who oversee the trust — Gov. C.L. "Butch" Otter, Attorney General Lawrence Wasden, Controller Donna Jones, Secretary of State Ben Ysursa and public schools chief Tom Luna — must deliver the maximum benefit to beneficiaries, including public schools.
All five voted in August to buy the storage facility.
Scanlon "obviously has an interest for his group, but that is not what the obligation or fiduciary duty is of those managing the trust," Boeckel told the AP. "If we continue to let special interest groups pressure the managers into not adhering to their fiduciary duties, the ones that lose will be Idaho's children."
The self-storage industry appears to be booming, given the American tendency to stock up on expensive toys like boats, RVs and off-road vehicles that need to be stored somewhere.
There are about 50,000 such facilities nationwide, with total sales of more than $22 billion. Nearly one in 10 U.S. households rent a self storage unit, up from one in 17 in 1995, according to Scanlon's group.
Affordable Self-Storage in Boise's suburbs is more than 80 percent occupied.
Its projected annual earnings of nearly $230,000 will be shared by schools statewide. About $20,000 will go to Boise schools, double what they'd been getting from property taxes generated by the facility when it was still in private hands, state officials have said.
But some governments do without: Ada County, Boise and some emergency services providers will forgo about $20,000 in taxes with the storage facility's move to public ownership.
Copyright 2010 The Associated Press.