Eminent Domain Case Hits Facility

Jim Chiswell Comments
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Saying I told you so doesn’t make me feel any better. Four months ago, I wrote about potential problems for the storage industry with the Supreme Court’s decision on eminent domain. I concluded by saying, “I’ll climb down off my soapbox now, but I can’t remain silent in the face of such a looming crisis for real estate owners.”

There is no way I could have known that one month later, the city of Arcadia, Calif., would take its first step to seize Arcadia Self Storage, an established four-story, self-storage business on Huntington Drive, for the expansion of the local Mercedes Benz dealership.

The dealership’s owners had threatened the community with a not-too-subtle message: “If we can’t expand, we will be forced to move.” The city council voted unanimously to move on the first of five properties, the self-storage business. The city’s underlying financial motivation is clear: Mercedes Benz customers pay sales tax, while California self-storage customers do not. The dealership already accounts for 10 percent or more of the city’s total sales tax revenue, according to its manager.

California law requires the owners of eminent-domain condemned properties be paid a fair market value for their land and relocation expenses. Most eminent domain cases across the country typically produce a negotiated settlement. However, the potential for a major court case does seem possible.

At this point, storage building owners Gary and Dan Braun seem to be taking a wait-and-see attitude. In a local newspaper story, their attorney explained it could be “easier for his clients to negotiate with the city after a so-called resolution of necessity is adopted.”

The California legislature is already considering both legislation and constitutional amendments to limit the power to seize property. One unique feature being proposed is property would have to be sold back to its prior owners if the land isn’t used for the reason it was acquired. State Sen. Tom McClintock, one of the sponsors, stated in a local newspaper, “There are 6,000 public agencies in California that now have the power to seize your home, pay you pennies on the dollar for it, and then give it to somebody else for their own personal gain and profit.”

McClintock’s district includes the northwest corner of Los Angeles County, including the cities of Stevenson Ranch and Santa Clarita. The Ventura County portion of the 19th Senate District encompasses the cities of Thousand Oaks, Simi Valley, Moorpark, Camarillo, Ventura and Ojai. Santa Barbara County was recently added too.

I urge all California self-storage store owners and their employees to let Sen. McClintock and other elected representatives know they want legislation passed to protect private landowners from potential abuses by local units of government who will use the Supreme Court’s misguided decision to run rough-shod over private property rights.

The Institute for Justice, a civil liberties law firm started in 1991, has launched a website dedicated to fighting the eminent domain issue. If you should find yourself or your company facing a possible challenge, visit for information on obtaining assistance at www.castlecoalition.org

The city of Arcadia is just one example. Don’t sit back and just hope you won’t be impacted. Get on the Internet and send a message to your state and federal legislators demanding they take action to protect us all.

SSA Market Research

The Self Storage Association released another major piece of industry research at its Chicago national meeting in March. “Self-Storage: Analyzing the Competitive Landscape—A Market Inventory Study” is based on data developed and tested for the association by PAC-COMM and Fusion Analytics LLC over the last 19 months. A great deal of research data is in the report and I plan to use it in my consulting practice in advising clients about building and buying facilities.

The study shows that self-storage space in the nation now totals 17.2 square feet per household or 6.7 square feet per person. These figures represent a significant increase over various past reports of 4.5 to 5 square feet per person. Data also indicated:

  • More than 1.99 billion gross square feet of self-storage space was in the United States as of Nov. 1, 2005.
  • The average primary self-storage facility encompasses approximately 44,000 gross square feet of space.
  • Individual primary facilities range from less than 20,000 square feet to as much as 1 million square feet.
  • The nation has 45,365 facilities reporting self-storage as their primary revenue business, verified by the U.S. Commerce Department SIC/NAISC classification system. These facilities were the main focus of the SSA research.

Copies of the new Market Inventory Study are available at the SSA website, www.selfstorage.org

There has been a great deal of discussion over the past six months on the issue of building self-storage facilities on military bases. The action of organizations like the New York Self Storage Association and the SSA, along with a host of dedicated owners, appears to have once again beaten back these efforts. I want to make sure everyone realizes these “build on the base” efforts are in no way being driven by the men and women of our armed services.

Across the country, military customers and their families have a significant positive impact on the success of many existing stores. I hope each of us is doing all we can to continue to support these dedicated individuals. Americans in uniform are owed a debt that this nation, over its history, has never been able to fully repay for all of their sacrifices.

The first and easiest way to help is to make sure you don’t auction the belongings of someone on active duty. The Service-member’s Civil Relief Act of 2004 made it the law, but it goes beyond that to an attitude of support. I know several owners who don’t charge late fees to active military or their families. Others are hosting military appreciation days at their stores and many are flying flags and banners announcing their support for the troops. Several are providing a military discount for active duty and National Guard members.

Another thing all of us can do is to make a donation to one of the many legitimate charities providing loving support to disabled troops and families—The Armed Forces Foundation, Fisher House or even the USO. There is a long list and many are based locally in your own communities. You can do a quick check on an existing charity at www.charitynavigator.org

Finally, one other idea to keep in mind is our ability to hire veterans, especially those who are disabled, to work behind the counter. Consider giving priority status to all applicants with a military background.

We are a very large industry across America and by working together we can have a positive impact for our men and women in uniform and our veterans. 

Jim Chiswell is the owner of Chiswell & Associates LLC. Since 1990, his firm has provided feasibility studies, acquisition due diligence and customized manager training for the self-storage industry. A longtime member of the Inside Self- Storage Editorial Advisory Board, he is co-founder of the new Self Storage Education Network (www.selfstorageeducation.net), providing online based manager and owner education. For more information, call 434.589.4446; visit www.selfstorageconsulting.com

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