Competing With Your Own State Goverment?
Copyright 2014 by Virgo Publishing.
By: Teri Lanza
Posted on: 11/23/2010



 

Many of you have been following the situation that’s developed in the state of Idaho, where the Department of Lands has purchased a self-storage facility as an investment toward an education endowment fund. In August, the state bought Affordable Self Storage in a Boise suburb for $2.7 million. The national and Idaho Self Storage Associations quickly responded to the acquisition, expressing concern about the state competing with private businesses and the unfair competitive advantage the state could have over local storage operators.

A letter of response was delivered to the SSA last week from George B. Bacon, director of the Idaho Department of Lands (IDL). Bacon clearly upholds the state’s decision to invest in our industry and implies that the state may even make additional such purchases.

Do facility operators share the associations’ concerns? Recent response to a thread on Self-Storage Talk indicates a resounding yes. Member SSMSIs asks the question of how self-storage operators are supposed to compete with government businesses when the government-owned facility operates tax-exempt. “If they can do it with storage, what’s next?” the member asks. Others question whether the acquisition is even legal.

Forum member and industry expert Tom Litton seems less concerned, pointing out that government enterprise seems to fall short of the mark when competing with the private sector. “Every time government attempts to compete in private business, they seem to do it poorly and private business seems to prevail, even though government has the advantage,” he writes. He still says the acquisition is wrong.

The issue of unfair competition aside―and it’s a difficult one to evade considering its import―consider for a moment the potential ramifications for unsuspecting customers and the trickle-down effect of that PR nightmare. MusicCity Gal articulates it best: “Do you REALLY want to store your personal belongings in a government-owned self-storage facility? Doesn't Big Brother know enough about us already??”

Let me know your thoughts: Are you worried about the slippery slope created by this state purchase of a storage facility? Does the advantage afforded to the state operator in regard to property taxes make it significantly more difficult for independent operators to compete? Or do you agree with Tom that the state is liable to botch the job? Post your comments to the blog or jump on the forum thread described above.

For more background info on the state of affairs in Idaho, read the letter from SSA President Michael T. Scanlon Jr. as well as Bacon’s response. Also read the news stories on the ISS website:

In the meantime, facility operators in states other than Idaho should count among their blessings this week their freedom (thus far) from this type of government infringement. Competition is steep enough without adding Uncle Sam to the list.

Have a wonderful Thanksgiving holiday.