Idaho Saga Involving State Owned Self Storage Continues

Posted on Nov 23 2010 - 2:26pm by Kim Kilpatrick

When the State of Idaho purchased Affordable Self Storage for $2.7million it was done with the same reasons in mind that any person has when it comes to investing, making money. Self storage facilities are a solid investment after all, something that will always be in need. Little did they realize the trouble that would ensue from this simple business transaction.

Almost immediately, the state’s move was hit with a lot of negative reactions from local activists and community business owners. Many of them felt that the state’s involvement in what is normally a private enterprise would be detrimental to private competition. Since the state-owned business was exempt from local taxes it gave them a smaller overhead and the ability to undercut the competition when it came to prices.

Since making the purchase, the Idaho Department of Lands has come under a lot of flack from state and national self storage associations. Michael Scanlon, president of the Virginia-based Self Storage Association, wrote to express his concern over the government being in direct competition with the people.

“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. “They’ve crossed the line, when they go into direct competition with the taxpaying base that supports government.”

Scanlon went on to ask the state of Idaho to refrain from purchasing any other self storage facilities in the future. Recently, he got a letter from George B. Bacon, director of the Idaho Department of Lands who is in charge of the endowment that purchased the self storage facility in question.

Bacon did state that there are no plans for the state to further diversify their investment portfolio, but did not say that the state would not do so again in the future. While passively conceding that point, the state stood fast when it came to their decision to purchase the self storage facility.

In his letter Bacon described the reasoning and logic behind the decision to purchase the facility. The idea was not to go into private business and make money at the expense of the individual, private businessperson; nor was it to take tax money ear marked for the schools and other public services away from the community. The idea behind it is to use money that the state already has set aside to purchase businesses like Affordable Self Storage and use the revenue to help fund school programs and whatever else may benefit the local community.

He went on to mention that the state has been in the practice of buying jobs and using revenue to fund state programs. At the time the State Board of Land Commissioners had about $3 billion in assets that generate around $46 million a year. That money is used to fund school programs among other things across the state. That money is also $46 million a year that the people do not need to pay in taxes. So while the immediate funds from taxes will disappear, they will be replaced and then some from revenue made through the endowment.

Bacon finished up by telling Scanlon that the rights of private citizens were protected in the purchase of the facility. He also put the fear to rest that the government would undercut the competition; the state is mandated to charge whatever the current market rates are/

Sources used:

Letter from George Bacon, Director of the Idaho Department of Lands to Michael Scanlon, President and CEO of the Self Storage Association.

Idaho Responds to Self-Storage Associations Regarding State Purchase of Facility

State Owned Self Storage Business Helping Fund Schools

Storage group blasts Idaho for warehouse purchase