State-run Self Storage: Bad for Private Business?

CJ Moore | Nov 12, 2010 @ 12:24 PM

A self storage business in Idaho has the attention of the self storage industry nationwide.

Affordable Self Storage is a state-run operation set up as an endowment to support public schools. Idaho paid $2.7 million in August for the business, a 400-plus-unit facility in a suburb southwest of Boise.

The facility will be in direct competition with other private self storage facilities in the area, and National Self Storage Association President Michael Scanlon believes Affordable Self Storage has an unfair competitive advantage and the state should sell the facility.

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

The Associated Press reported that according to state officials, the facility’s projected annual earnings is close to $230,000 with $20,000 going to Boise schools, which is double what schools were getting from property taxes when the facility was privately owned.

Other areas of government will suffer from not getting property tax money. Ada County in Boise and some emergency services providers will miss out on $20,000 in taxes.

If Idaho is successful in producing funds for its public schools, it would not be surprising to see other states follow.

Budget cuts in public schools are commonplace. According to an AOL story this summer, California’s education budget has been cut $17 billion the last two years and another $2.4 billion will be cut this year.

I live in Kansas City, Mo., and every day I drive by vacant schools. Almost half the public schools in the area were closed in the last year, and now the buildings sit empty and the grass goes uncut. Even in the affluent suburbs on the Kansas side where I grew up, schools are being closed.

So, yes, states need to find a way to provide more funding, but should it be at the expense of private businesses?

What do you think Idaho should do with Affordable Self Storage? Please share your thoughts in the comments’ section.