by Kim Kilpatrick
November 3, 2010 3:19 PM
When the state of Idaho got involved in the self-storage business by purchasing and operating Affordable Self Storage in Boise the move was met with a lot of resistance by local activists and community business owners.
Most cited an unfair business advantage since it would not have to pay taxes, and others complained of the tax finds that the local schools would not get. While the activists are correct in that there will be a decrease in funds due to the tax-exempt status that the business will have, they are forgetting about what the state will be doing with profits from the business.
The state did recognize that Ada County, where Affordable Self-Storage is located, will lose approximately $20,000 in taxes that would go towards much needed emergency services and that about $10,000 in funds that would have gone to the schools via taxes are gone as well.
However, what the state wants people to know is that it is taking money that Affordable Self-Storage makes and in turn using that to augment the services that those missing taxes would have covered. For example, instead of getting $10,000 for the local schools via taxes, the business will be contributing more than $20,000 through contributions made to the school endowment fund. According to sources within the state there will be another $208,000, on top of the aforementioned $20,000, in earnings that will be shared amongst schools throughout the state of Idaho.
Over the long term Affordable Self-Storage stands to contribute a substantial amount to the Fund. One estimate has the facility making annual revenue in the range of $500,000 to $1 million.
That has not stopped some people from being against the state running a business in competition with private owners. Along with the competitive edge that tax-status gives Affordable Self-Storage, private owner have to be careful about what they say about it. It is one thing to be concerned about the health of your own business venture, but private owners may find themselves experiencing a lash back if they sound as if they are against schools receiving additional funding.
The State of Idaho has been in the practice of managing land endowments given to it by the federal government since it became a state in 1890. The idea was that the land and funds made from the land could be used to produce a revenue stream that could in turn fund the state’s efforts in areas such as public schools among many other things. Sometimes it means using money that has been made to purchase businesses like Affordable Self-Storage so that a reliable stream of income can be established.
The Idaho State Department of Land Board says that moves such as this have helped them add approximately $2 million to the School Endowment Fund.
Sources Used:
"Boise schools will get more from storage business." Oct 26, 2010; KTVB.com.
Company profile on Manta.com
"Controversy over a state run storage facility." Oct 21, 2010; KTRV Fox 12.
Idaho Department of Lands.
Should State Governments Get Into the Storage Business? Public Reaction to Idaho's New Self Storage Venture is Mixed. Oct 21, 2010; Extraspace.com/news