OCTOBER 2009

Inside this issue:

It’s Tough Remem- 2-4
bering a Time

Who Needs a Bond? 4

The California Self-Storage Repor t
CSSA NEWS 8 California Self Storage Association Volume 3, Issue 4

FBI Notification 10 THE CSSA’S LEGISLATIVE EFFORT TO AMEND THE

CURRENT CALIFORNIA LIEN LAW STATUTE
BY: JIM MCNAMEE, CSSA PRESIDENT
At the risk of boring you all with an update on our lien law reform bill (since we have updated progress at all
our events) I will bring you up to speed with the current status of the bill. As you may recall, at the beginning
of the year, our plan was to include four bill amendments. Those amendments included:

1. The elimination of the declaration of opposition to lien;

2. The reduction of the mailing requirement of the lien notice to a certificate of mailing;
3. An increase in the late fee maximums to $20 or 20% of rent whichever is greater;
4. Drop the newspaper advertisement as a requirement to foreclose and sell the unit.

The bill was introduced in the Assembly in April and made its way through two subcommittees, the Business
and Professions Committee and the Judiciary Committee. Both committees eliminated provisions of the bill
such that we were left with Declaration of Opposition change as well as the lien notice requirement only be-
ing a certificate of mailing. With those two provisions, the bill passed on the Assembly floor unanimously.
The bill was referred to the Senate, and immediately sent to the Judiciary subcommittee of the Senate. We
immediately heard that there were concerns from the Democratic Senators about the Declaration of Oppo-
sition change. The CSSA on behalf of the state industry was unwilling to give up this provision of the bill, and
the Senate Democrats in this committee were unwilling to support the bill without more time to study the
ramifications. Therefore, in August, we pulled the bill from consideration and plan to reintroduce to the Sen-
ate subcommittee in January of 2010.
In the interim, we have planned lobbying meetings with the three Senate Democrats on the Judiciary sub
committee. Our intention is to provide them examples of how other states handle the foreclosure process
with Self Storage, as well as to provide them with data on the futility of the Declaration of Opposition proc-
ess and the amount of wasted time, effort and legal expense with which the provision burdens operators.
We are in the process of scheduling these meetings in late October and November. We expect that these
meetings will successfully remove Democratic opposition to the remaining two provisions of the bill, and that
we will get some form of resolution to the declaration of opposition provision as well as the lien notice
change as part of a bill that is signed into law in 2010.
Our current plan is to get a successful floor vote in January and expedite passage such that the bill becomes
law during the year in 2010. As we get more information, particularly after the meetings in the late fall, we
will certainly be in touch to let you know where we are. Thank you all for your continuing support, I am
sorry that we could not get a more complete bill passed in a more timely manner. Regardless, we expect to
prevail and will keep you posted on our progress.
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It’s Tough Remembering the Time

By Jason Allen—Bancap Self Storage Group

As we approach the end of the 3rd quarter and look towards the 4th, its tough remembering the time when
placing an ad in the Yellow Pages, sending out mass mailers and using other simple marketing techniques, would be all
that you would need to do to compete in your local market place. It’s tough remembering the time when multiple self
storage facilities were selling on a monthly basis, sometimes based solely on a Proforma cap rate. Its tough remember-
ing the time when; well, I think you get the point and I probably don’t I have to tell you that things have dramatically
changed. Although our industry has had a great run, all we can do today is look towards the future, focus, get pro-
active and evaluate what you can do to survive during these trying times. The dynamics of our market have changed
and what was once a fairly easy asset to operate, market, buy and sell has changed. Speaking with owners on a daily
basis throughout the state, four topics seem to always arise during our conversation. What is going on in my market?
What can I do to increase my occupancy? Where are we headed and what is my facility’s value today?

Overall, revenue has dropped in many areas of the state, in some cases as much as 15-20%. The County of Sacramento
for example has over 2,400,000 net rentable square feet still struggling to reach stabilization. The County of Merced,
with an estimated population of only 250,000 people, currently has over 725,000 square feet of new self storage space
still in lease up. These over-served markets combined with our down economy, has literally stopped occupancy and
revenue growth in many of these areas. It will take many years, if not decades, to fill this vacant space in California. Self
storage has always been considered recession resistant, but our industry has seemed to have taken more of hit during
this economic down cycle. Many potential tenants have lost their homes, their jobs and their savings and are not turn-
ing to self storage for obvious reasons. Instead, they are disposing of their personal items on sites like EBay or
Craigslist, since they cannot afford to rent a self storage unit. Storage has gone from being a necessity to a luxury in
many of these markets. This mentality combined with all the new self storage space in lease up has put us in the posi-
tion were we are now in today. How is it even possible to survive in a market like this?

Many times when I meet with owners to discuss their local market, property’s’ value and current marketing techniques,
the biggest problem I discover immediately is the lack in marketing. In this changed market, the phone is just not going
to ring on its own as used to. A high percentage of new business many times comes from one of the best marketing
sources; current tenants. Referrals play a big part in bringing new tenants to your facility, so why not offer and pro-
mote a tenant referral program. I don’t just mean putting a black & white flyer on your counter and expect things to
happen. You must get creative. Design and hand mail (have managers hand address every envelope) to every tenant on
a quarterly basis, a color flyer with information about your tenant referral program. Every time someone visits the site
mention your tenant referral program. You can offer say $25 or even $100 off their next month’s rent for each new
referral. Many owners have this system in place but how many actually implement it? To pay $25 or even $100 per
new rental is very inexpensive compared to the cost per lead with say the Yellow Pages. I recently met with an owner
that was paying around $5,000 per month for his double page Yellow Pages ad. During our meeting I had him run a
marketing report to determine where his leads where coming from. For that month, he had only 6 move-ins attributed
to the Yellow Pages. This computes to over $833 per new rental! My advice to him was to cut his ad in half and start
spending some money using the Internet, as the Yellow Page ads were not paying for themselves as they did in the past.

Continued on Page 3
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Volume 3, Issue 4

It’s Tough Remembering a Time

Continued from page 2

The internet is here and it is here to stay. If you as a facility owner do not have a website, you could be losing potential
leads on a daily basis. Setting up a website can be easy and very inexpensive to start. To advertise on the internet using
search engines like Google, Yahoo and MSN is also very inexpensive and easy to setup and track. With GoogleAd-
Words, you can literally setup a cost per click ad in minutes and change the ad anytime you desire. The cost per lead is
dramatically less than the Yellow Pages and you can track your results and activity on a daily basis. With Yellow Pages,
once your ad is placed it’s placed. Can you see how many people have viewed your ad? Can you change your ads posi-
tion on a monthly or even daily basis? Can you change your ad’s look and add specials when needed? Of course the
answer to all of those questions is no. It’s going to be very tough cutting the cord with the Yellow Pages, since they
have played such a huge part in our business in the past. But if the success rate is declining with your ad, it’s time to re-
evaluate.
One other marketing technique I have seen great success with is e-mail drip campaigns, which we have all seen before,
but never in self storage. When you receive emails on a monthly/quarterly/yearly basis automatically from a business,
that’s an e-mail drip campaign. Very few are doing this in our industry and the cost to setup and implement is minimal.
Imagine having a computer, not your managers, email to all your current tenants your tenant referral program on a
quarterly basis automatically. When somebody moves out of your facility you can setup the computer to send an email
on a quarterly basis saying, “We miss your business, how would like 3 months ½ off if you come back.” The great thing
about email is it’s free, it’s quick and again, you can change the ad/specials/design at anytime.
So where are we headed? A few things are for sure. Cap rates for all commercial asset classes are rising and are pre-
dicted to return back to their historical level of 9-11%. Low interest rates combined with the CMBS market, which
opened up the flood gates of inexpensive non-recourse money, played a major role in causing the cap rates to reach
historical lows (5%-7%). It’s highly unlikely we will see cap rates return to this range in the near future. Financing from
Wall Street is basically non-existent and interest rates are predicted to rise. Today, and likely even in the future, financ-
ing will be difficult to obtain. Lenders have become very selective and their methods of underwriting have changed.
Lenders will not just focus on the asset being purchased, but will perform an in-depth analysis on the borrower and all
partners, all assets owned, tax returns and financial statements. This in effect has caused the once large pool of poten-
tial self storage investors to no longer qualify for a loan under these new standards.
I am not saying there are no longer any self storage investors out there because there are. In fact, just recently, we
have once again been experiencing a high demand for self storage properties throughout the state. Investors with capi-
tal are looking for self storage assets, but they are using today’s market value cap rates and giving little to no value for
vacant space. Inventory of self storage properties for sale in California is down and so far there have only been roughly
6 self storage transactions to date; one of which was an REO and another a short sale. The typical cap rate for the year
has been 8.5%, based on the trailing 12 months income and expenses, which a huge jump from just a year ago. Also if
you have a loan coming due in the next few years realize that refinancing may be very difficult, especially if you bought
when cap rates were low and you put high leveraged debt on your facility. You could be in a position of having little to
no equity in the property when the loan is due, if cap rates continue to rise.

Continued on Page 4
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T h e C a l i fo r n i a S e l f - S t o r ag e R e p o r t
Continued from page 3

As we look towards the future of self storage a few things are certain. Marketing techniques have changed in our indus-
try and its time to get creative. Start tracking where every lead is coming from and evaluate your marketing plan on a
quarterly if not monthly basis. Cap rates are predicted to continue their rise in the coming years and seeing them re-
turn to their historical lows is highly unlikely. Today, there is a shortage of self storage properties for sale in California.
This shortage may help slow down the return back to a 10% cap rate market, but just for a small period of time. Over-
saturated markets are going to continue to struggle and discounting will become the norm in many of these markets.
As the economy begins to recover, we should slowly start seeing self storage becoming once again a necessity not a
just a luxury. Compared to other asset classes of commercial real estate, self storage is holding its own. New construc-
tion of self storage projects in the state is significantly down which should help with the adsorption of vacant space in
many over-built markets. Self storage is unique and even though our market has seen some dramatic changes, we must
look towards the future and not dwell on the past. This is still the best commercial real estate sector there is.
Contact: Jason Allen, Bancap Self Storage Group - Self Storage Sales Specialist
650-508-1585 jallen@bancapselfstorage.com www.BancapSelfStorage.com

Increase in Workers’ Compensation Insurance Premium Rates in California

Lauren R. Ziminsky, Patriot Risk and Insurance Services

Workers’ compensation insurance premium rates in California have been increasing for policies renew-
ing since July 2009. It is important to understand the reasons for this as the circumstances leading to the in-
crease will affect the majority of businesses in California. The Workers’ Compensation Insurance Rating Bu-
reau (WCIRB) recommended an increase in pure premium rates of 23.7% effective July 1, 2009. Pure pre-
mium rates reflect the average projected cost of workers' compensation claims and claims adjustment ex-
penses for specified industry classifications. Although the WCRIB's recommendations are not mandatory,
most insurance companies in California have applied at least a portion of the recommended increase to their
renewal policies due to (1) an increase in medical costs, and, (2) recent adverse decisions by the Workers’
Compensation Appeals Board (WCAB) that increased permanent disability awards, litigation and system
costs. Specifically, the cost increase stems from two recent WCAB decisions: Ogilvie v. City and County of
San Francisco and Almaraz v. Environmental Recovery Services/Guzman v. Milpitas Unified School District.

Please keep this in mind as your renewal nears. The forecast only gets worse as in August, the WCIRB sub-
mitted a recommendation for a further 22.8% increase in pure premium rates with respect to new and re-
newal workers' compensation insurance policies effective January 1, 2010.

Lauren R. Ziminsky is the Program Administrator for the California Self Storage Asso-
ciation’s endorsed workers’ compensation insurance program. Its intent is to use the
purchasing power of its member to obtain workers' compensation insurance at a re-
duced premium. For more information, please email laurenziminsky@patrisk.com or
call (949) 486-7918 or toll free at (888) 853-8521.
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T h e C a l i fo r n i a S e l f - S t o r ag e R e p o r t

Storage Auctions: Who needs a Bond?

By: John Cardoza, CAI, BAS, CES, CAGA & Owner, Storage Auction Experts

Did you know to perform a legal mini-storage auction, the person doing the bid calling must have a auction-
eer’s bond? According to the Civil Code 1812.600, a person who either calls for bids or make offers for the
purchase of goods at an auction, is required by California law to have an auctioneer’s bond. Many acting as
auctioneers believe they can “do” the job, however, history has proven otherwise. These “auctioneers” op-
erate with little or no regard to legal repercussions. A person driving without a license may feel they are
more than adequate to drive. In the same manner, a non-bonded auctioneer may feel he is capable of calling
an auction. In reality, both the unlicensed driver and the non-bonded auctioneer don’t fully comprehend the
perils involved conducting these illegal activities.

Codes pursuant to California Statutes, Business, and Professions Code, Section 21700 and Title 2.95 Section
1812.600-607, is required to obtain an auction bond. Not having an auction bond will create potential law-
suits. Even the most innocent of mistakes can result in huge losses. Cases of non-bonded auctioneers con-
ducting auctions have increased. Lawsuits tie up valuable time and money for the owner/stockholder/
manager, of these storage sites.

In the past, not having a bond may have been overlooked. Currently, lack of an auction bond is an open invi-
tation to take you, the owner/manager, to court. Sadly enough, the sole responsibility falls on the storage site
to prove why it acted “recklessly”, by not having a bonded auctioneer that would have recognized the error
immediately. Attempting to conduct auctions without education skills, will invariably result in catastrophe. It
takes years to acquire the skills of a truly qualified and bonded auctioneer. The chances of lawsuits can be
minimized dramatically by simply using the services of a professional auctioneer. A storage auction expert will
focus their attention on drawing the right crowd to insure the units are auctioned for the maximum return
for your establishment. They will under all circumstances maintain total crowd control. If you ever had the
displeasure of being engulfed in an unruly crowd, you immediately understand this alone can justify having
professionals on site. By using a professional, you are assured the work will be done in a timely manner,
within on budget, and above all, properly.

There is an old proverb that says, “a wise man will change”. Hopefully, this article will enlighten those
“auctioneers” who are attempting to work without a bond risking potential violations. Only those who
have been trained and bonded have the ability to avoid these legal pitfalls. It is of the utmost importance you
are fully aware of the responsibility you accept by not being bonded if you are doing your own auctions.

Still not a member? Contact Erin King today for information on membership.

888-887-CSSA or www.cssaweb.com
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Volume 3, Issue 4
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T h e C a l i fo r n i a S e l f - S t o r ag e R e p o r t
TURNING SELF STORAGE GREEN
A New Way to Bring Potential Clients to YOU & become GREEN
By CSSA member BARRY KEYES, CEO COASTAL RECYCLING CENTERS, CA

There is an E-Waste crisis worldwide. Over 50 MILLION TONS of E-WASTE in 2008, or 70 TONS dis-
carded EVERY MINUTE! 20 MILLION of that E-Waste is from the US.

So, what is E-waste? Why should you care where it goes?

Everyone has it. EVERYONE who has ANY electrical items, especially an out-of-date com-
puter, monitor or television has E waste. Normally, people do not know what to do with these
used items. They are restricted from the landfills because of lead and chemical fumes permeat-
ing the ground water. Self Storage sites become a natural GREEN SPOT because there are
long hours and convenience of location. In addition, the recycling of cell phones, ink and toner
cartridges is an added bonus for those who venture in to participate.

Now since these electronic items are purposely made to NOT last forever they will inevitably
fail—usually sooner, than later and you are in a perfect position to take in these items at no
cost to you, and use the time to introduce your neighbors to your facility. Coastal provides all
materials, as well as we get the word out that you are a GREEN SPOT drop-off location. When
they next think of their storage needs your site will come to mind.

GREAT PR, ADDED FOOT TRAFFIC, CLEAN UP THE PLANET = WIN-WIN-WIN

The time is NOW for Self Storage facilities to be more involved in their local community. By
becoming a drop-off GREEN SPOT, you bring in more traffic and potentially more clients and
revenue. It is already working in California with several members of CSSA. The public hears all
the stories about the wrongs of E-Waste, wants to help, but needs guidance, a compass, to lead
them to an EASY and FREE way be part of cleaning-up America starting here in California. In
our Golden State, we are front runners in the recycling world. You, too, can be part of the big-
ger picture. What the public needs is a FREE, LOCAL, CONSTANT, DROP-OFF. Self Storage
facilities are it! Since the proper disposal of E -waste will continue as a constant, how about hav-
ing your site be the constant thought of first.

Still not a member? Contact Erin King today for information on membership.

888-887-CSSA or www.cssaweb.com
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CSSA NEWS
2010 Networking Program
Wayne Roycroft, VP Sales and Marketing, StorMan Inc., has accepted the position with CSSA of Chairman – Dinner
Committee. StorMan has business interests in Australasia, Asia, UK, South Africa, and the USA. Wayne has sold soft-
ware for StorMan since July 2006.

The Committee met last week and has made some exciting decisions regarding our dinner program. The focus has
been placed on delivering an information rich networking event, beginning early in the evening and wrapping up around
7pm, with the option for further networking thereafter at member’s discretion. We look forward, in excited anticipa-
tion, to delivering the value to members these short, punchy, power-packed sessions will provide for both Owner
Members and Vendor Members alike. More information to follow.

If you would like to contact Wayne and find out more information, his details are here below. Ditto if you would like
to offer your opinions on any of the following:

 Interest in those wishing to nominate presenter’s/speakers/employees/Outside Industry Speaker for considera-

tion by the Committee.
 Problems/issues being faced by industry where more information and analysis is sought.
 If we presented (at these events) a regular survey(s), what industry aspects would you like these to cover?
 Visit Wayne’s blog page at www.storman.com find out more about him and his company

2010 Board of Directors

Recently the CSSA asked our membership for nominations for our 2010-2012 Board of Directors. Thank you to all our
members for their nominations. We expect to announce our 2010 Board of Directors roster in late October 2009.
Please contact Erin King at (888) 887-CSSA to learn more about our nominations or to volunteer for a 2010 commit-
tee project.

2010 WEBSITE UPGRADE

The CSSA is very happy to announce that we have selected a new website management solution and plan to launch our
brand new website to our membership in mid to late December 2009. The CSSA has awarded the contract to Your-
membership.com. With YourMembership.com, the CSSA will now be able to collect dues, track member status, pro-
mote and sell tickets to events and conferences and manage the site's entire content in real time. For our members, it
will provide a comprehensive online community in which we can network with each other, build, maintain and manage
your CSSA membership profile, access industry information and so much more. Keep an eye out for additional infor-
mation surrounding this project.

MANAGER EDUCATION DAY with Carlos Kaslow

The CSSA is excited to announce that our Manager Education Day is coming to Walnut Creek on November 12, 2009.
Join the CSSA and special guest speaker, Carlos Kaslow of the Self Storage Legal Review Network, for our
California Lien and Auction Procedure Seminar. Register today by visiting our website - www.cssaweb.com.
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Volume 3, Issue 4

Industry Press Release

Red, White and Blue Goes Green!

In this challenging business climate, A-American Self Storage is offering their clients and communities more,
not less. With a true desire to be a part of the solution, A-American has added eWaste Recycling Centers
to over 70 California locations, making them the biggest network of eWaste recycling sites in the state. Ac-
cess to electronics recycling had previously been limited to the residential and small business consumer.
Now the public can drop off a variety of electronics that have ended their useful life at no cost to them. This
includes all types of electronics from old TVs, monitors, cell phones, cables, fax machines, printers and VCRs.

A-American Self Storage has partnered with Direct Computer Disposal, a local California company, who en-
sures socially and environmentally responsible recycling by holding the highly regarded international BAN*
certification.

“We are serving the environment, our tenants and our neighborhoods. The banners have barely gone
up and already the response has been wonderful!” says Craig Olson, President of A-American Storage
Management Company, Inc.

With a variety of colorful marketing pieces, the company is targeting small businesses, residents and schools
in their neighborhoods. For easy access, a special eWaste Recycling Center hotline and website have been
set up where the public can find locations, hours and other detailed information. In addition, there are
eleven eWaste events called “Roundups” in the works for the fall. These one-day events are held onsite at
the storage facility, benefiting the participating church, charity, school or non-profit organization.

The eWaste Program enables Managers to connect directly with people in their community by offering this
sought-after service. It is easy to see how “going green” is turning into green for A-American Self Storage.

* BAN (ban.org) or Basil Action Network is the world's only organization focused on confronting the global environ-
mental injustice and economic inefficiency of toxic trade (toxic wastes, products and technologies) and its devastating
impacts. BAN is a 501(c)3 charitable organization

Still not a member? Contact Erin King today for information on membership.

888-887-CSSA or www.cssaweb.com
Page 10 The California Self-Storage Report
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Volume 3, Issue 4

3780 Kilroy Airport Way
Suite 200
Long Beach, CA 90806
Phone: 562.304.2864
Fax: 562.304.2865
E-mail: erin.king@cssaweb.com
US!
JOIN
Working Better Together
The California Self Storage Association is managed by the Executive Director, un-
der the guidance of the all volunteer Board of Directors who all are actively in-
volved in the industry as owners, managers and vendors. The Board of Directors
represents the interests of the large multi-site operators as well as smaller, single
site operators.
Our Mission:
The mission of the CSSA is the promotion of a high standard of professionalism which is ad-
hered to by all of its members, to provide a unified voice for the Self Storage Industry for the
State of California and to enhance the performance and quality of the services our industry has
to offer.
Still not a member? Contact Erin King today for information on membership.
888-887-CSSA or www.cssaweb.com