Group says proposed self-storage tax would harm Belleville residents

As current President of the Illinois Self Storage Association, I recently shared the following concerns and information with Mayor Mark Eckert and the Belleville City Council about the proposed 5% sales tax for customers who use a self-storage facility in Belleville.

Living in the Belleville West area for the majority of my life, I realize that the City of Belleville has these goals:

a. Belleville wants to keep current residents and attract new long-term residents.

b. Belleville also wants to keep businesses and attract new businesses.

c. Belleville wants people to shop locally.

d. Belleville wants all the vacant buildings to be filled.

The proposed additional sales tax on self-storage businesses thwarts, derails and negates the very goals you are trying to achieve. Please let me share with you eight reasons why the proposal isn’t good for Belleville, its citizens nor its business community.

1. This proposed tax harms Belleville’s current residents. Many customers of self-storage are using storage out of necessity, such as a divorce, downsizing, dislocation or death of a family member. When these life-events happen, residents normally must use non-discretionary funds to pay for the storage. An additional tax would compound the financial burden placed on residents during these high-stress events.

2. This narrowly-focused tax harms an industry that actually helped the City of Belleville when no other industry or business would. The largest and most obvious instance of this is the former Walmart building on Carlyle Avenue. That property sat vacant for many years. Since 2008, no other industry, company or retailer was willing to invest in the property. Most retailers and businesses want to invest in brand new buildings. Yet, a self-storage owner was willing to put considerable time, effort, manpower and money into turning a vacant eyesore into an outstanding, high-quality, well-designed business. While some city leaders do not want self-storage facilities in the city, self-storage businesses have become the highest and best use for numerous large vacant buildings and shouldn’t be penalized.

3. This proposed tax changes the rules and the “playing field” for the already city-approved self-storage businesses. Self-storage businesses who received city approval for their business based their entry into Belleville upon the city’s good faith approval and their business model which included determined need, competition and expenses. The city knew they would be receiving no sales tax when they approved those projects. The City of Belleville should operate in good faith and not retroactively change the rules that were in place when these businesses were approved. This harms both the current businesses and deters any business who might consider Belleville as a future location.

4. This proposed tax sends a strong message to any new business that may be considering locating within the city limits of Belleville. Their business or industry could be singled out for additional taxes. By driving away future business, the tax would ultimately reduce the value of commercial properties and thus adversely affect the City’s future property tax collections. Belleville wants a reputation among the businesses community as a business-friendly city; not business averse.

5. This proposed tax will also harm fledgling business owners who use self-storage. Entrepreneurs who start a new business start small and sometimes use self-storage to keep their costs low during the early years of their businesses. You can think of it as a business incubator; small businesses use self-storage to store inventory, equipment and supplies. This proposed tax will increase their expenses and harm their chances of succeeding.

6. This proposed sale tax will cause people to not shop locally and will harm businesses within the Belleville city limits. In the past, self-storage customers drove to a close facility and rented a unit. Now, with on-lines prices and on-line rentals available, customers can easily look for the cheapest rates and industry studies tell us they will drive up to three miles to rent a storage unit. This proposed tax increase will cause people to shop outside the city limits. I can name numerous storage facilities right outside the city limits in every direction that will benefit from this proposed tax because they would gain customers and the businesses within the city limits of Belleville will lose business.

7. Self-storage businesses already pay sales tax on merchandise sold and vehicle storage. Self-storage owners sell locks, boxes, packing supplies and moving supplies. We already pay sales tax on those sales. As of Jan. 1, 2020, when Illinois instituted a parking tax, our industry now is required to pay a 9% sales tax on vehicle storage.

8. This proposed tax will be double taxation for city residents who rent a self-storage space to store any type of vehicle. Let me use recreational vehicle (RV) owners as one example. RV owners prefer to park their RVs at a self-storage facility. It gets the RV off the crowded city streets, protects their investments and makes their neighborhoods more attractive. With this proposed tax added onto the new state 9% vehicle parking tax, these residents would be double taxed.

Lastly, let me clear up some misconceptions about our self-storage businesses.

1. Self-storage facilities do not generate massive amounts of traffic nor place additional strain on local streets. The 2017 Self Storage Demand Study showed that only one-quarter of self-storage customers make weekly visits to their storage space; the rest of the customers visit less often. Since many don’t have public restrooms, city sewer services are impacted very little. Police calls are extremely rare because no one lives at the facilities. Other commercial properties such as offices place a much higher burden on municipal services and are not subject to this targeted tax.

2. We do not make boatloads of money from the auctions as the TV “reality show” “Storage Wars” implies. I wish that were the case! In the real reality, we hope someone makes a $10 bid so we don’t have to lose money to pay to dispose of the entire unit full of “items.” In the “reality shows,” they find antiques; in reality we find items left behind like two 85 lb. box of bulk peanut butter! If we actually ever did receive more money from the auction than the customer owes, we must by state law hold that money for the owner of the items sold.

3. Our industry has employees, pays workers’ compensation and hires independent contractors and vendors. While we may not have a lot of employees, when you compare a storage facility to a business with the same number of employees, our properties fill vacant buildings and pay much more in property taxes which helps the city and the schools.

I ask you to Vote No on this proposal.

Very sincerely,

Joni Schaefer, Belleville

President of the Illinois Self Storage Association

This story was originally published September 3, 2020 at 5:57 PM.