Towns are getting ideas ... Scary sales tax!
As much as we've all willed it into non-existence, the reality is now pretty clear: Self-storage sales tax could very well be coming to a city or state near you. The facility operators of Morton Grove, Ill., are learning that hard lesson just now, on the cusp of a March 10 meeting set to decide their fate.
With only three storage facilities in the village, the community still anticipates an additional $50,000 per year in revenue through the proposed 5% tax. But at least one owner says the tax could force him out of business. I don't know how Morton Grove thinks it will benefit from a storage tax if it drives all of its operators out of town. But it's not the first jurisdiction—nor will it be the last—to see this trend developing throughout the country and get dollars signs in its eyes.
I posted a news item regarding this scenario to the ISS newsfeed earlier in the week. Not long after it went live, we received a comment from a reader who says Needles, Calif., is attempting to put into place a 10 percent self-storage sales tax. He was told that a prospective developer of 900 units pulled the plug on his project because the additional cost would make it unworkable.
I know what a few of you are wondering: If the levy is a sales tax to be paid by consumers, why do these operators feel it will cost them? If you think tenants are going to stand by and accept a substantial increase to their monthly rent, guess again. Your occupancies will suffer, or you will have to absorb some or all of this cost on their behalf. And nevermind trying to follow a course of prescribed rental-rate management and increases! That just won't happen after consumers get slapped with the tax.
So ... several things are now extremely, extremely important:
1. Make sure you are keeping well-informed of nationwide news regarding self-storage tax struggles in the individual states. Do not make the mistake of assuming that something happening half way across the country won't make its way to your doorstep overnight.
2. Support your state association. Seriously, folks ... This is not a plug to boost association membership. The fact is a well-supported and organized state association is your absolute best defense against a potential sales tax in your area. Your association needs financial and human resources to protect you, so pitch your dollar in the coffer and cover your assets.
3. Be prepared to make a stand. Participate in local and state legislative meetings. You'd be surprised what fates may be decided by a small group of locals eating donuts around a fold-up table in a community center somewhere. Do not underestimate the power of your voice and presence! Be around, be heard and be safe.
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