Self-storage operators these days need to take a big step back and examine the claims they make about their rental spaces. The biggest issue I see revolves around a phrase we, as an industry, made up: climate control. I can’t find it formally defined anywhere, can you?
The claim of providing climate-controlled space is coming more into question. Jeffrey Greenberger, one of the self-storage industry’s most recognized attorneys, has long urged us to clearly define, in our rental agreements, what climate control means. Are we controlling humidity? Temperature? Within what range?
This has become such an issue in Nevada that advertising claims of climate-controlled units is now specifically regulated under the language in Nevada Revised Statute 597.890, a provision that outlines related requirements, penalties and civil liabilities. It reads:
1. The owner of a facility for the storage of personal property or a person acting on his or her behalf shall not advertise that the facility is “climate controlled” unless the advertisement specifies the range of the minimum and maximum temperature and humidity within which the facility is maintained.
2. If an owner or a person acting on his or her behalf fails to indicate the range of temperature and humidity of a facility in any advertisement that refers to it as being “climate controlled” or fails to maintain the temperature and humidity of the facility within the advertised range, the owner is guilty of a misdemeanor and is liable to the occupant for any damages that are caused to the occupant’s personal property as a result of extremes in temperature or humidity, notwithstanding any contrary provision in the rental agreement.
Nevada’s legislature felt the meaning of “climate control” to be so critical to customers’ understanding of our product that it made it a criminal penalty to not properly disclose it. But there are not many operators I know outside of Nevada who have taken the admonition to heart. Most don’t include the phrase in their rental agreements. Is it clearly referenced on your website or Yellow Pages ad?
Another set of claims that gets us into hot water are those revolving around unit size. Are all of your 10-by-10s really 100 square feet, and your 10-by-20s 200 square feet? I really doubt it. If the actual space you rent is smaller than what is claimed on your rental agreement, it could open you to possible litigation.
Here’s area where many of us have missed the disclosure boat—our websites. Often, the “unit reservations” page of a facility website is driven by the content of the software database, not manually inputted by the facility owner or manager. That means the page automatically populates with generic unit sizes.
It’s a simple fix. Your rental agreement and website should include a clear statement regarding unit size: “All sizes are approximate and for comparison purposes only.”
Small-Business Employee Health Insurance
What does the new healthcare reform mean to small-business owners? Prior to the enactment of this legislation, roughly 46 percent of businesses with fewer than 50 employees provided healthcare to their employees. If you’re a self-storage owner with paid staff, it’s important that you understand how the legislation will affect you.
You can find an excellent summary and a link to the complete legislation on the website of the National Federation of Independent Business at NFIB.com. (Choose “Issues & Elections” from the top menu.)
There will be some adjustments ahead for us if the legislation stands as it’s currently written. For example, starting in 2012, one provision requires you to issue a 1099 at the end of the year for every business-to-business transaction of $600 or more; and the threshold appears to be cumulative. It may mean that if you have businesses or professionals renting units at your facility for a year at more than $50 per month, your accountant will need to get busy preparing those 1099s. Sounds like more fun for the small-business owner in the years ahead.
Despite the potential road blocks, the self-storage owner who perseveres and offer his employees health coverage will benefit in the long run by being able to hire and retain a superior work force than the one who simply lets employees fight for themselves. I remain optimistic that this is not the last we’ve heard about healthcare and small business before many of these provisions go into effect.
Jim Chiswell is the owner of Chiswell & Associates LLC, a provider of feasibility studies, acquisition due diligence and customized manager training for the self-storage industry. He has served for a number of years on the Inside Self-Storage Editorial Advisory Board and is a moderator for SelfStorageTalk.com, the industry’s largest online community. He can be reached at 434.589.4446; e-mail [email protected]; visit www.selfstorageconsulting.com.