The Colorado Self Storage Association (CoSSA), with financial support from the national Self Storage Association (SSA), introduced a new bill to the Colorado legislature on Jan. 13 to modernize the states self-storage lien law. The first Senate hearing on the bill will take place Jan. 31 in Denver, where both the CoSSA and the SSA will testify.

Senate Bill 11-039, A Bill for an Act Concerning the Consequences of Default in Payments Due for Storage of Personal Property in a Self-Storage Facility, provides self-storage operators with more options for lien-sale notifications and eliminates the newspaper lien-advertising requirement. It also includes an improved vehicle lien law.

Under SB 11-039, self-storage operators in the state could use e-mail and verified mail for lien notification in lieu of the more expensive Certified Mail standard. The bill also allows lien sales to be advertised in a commercially reasonable manner as opposed to in the newspaper.

The bill is sponsored by Senator Lois Tochtrop and House Representative Tom Massey.

CoSSA hired lobbyist firm Colorado Communiqué Inc. to help shepherd the new bill and get it passed. The current self-storage lien law in Colorado, Section 38-21.5, was enacted in the 1980s. CoSSA believes the proposed changes to the law will create a more efficient and less expensive lien-sale process for the states facility operators.

PhoneSmart, a self-storage call center and marketing firm, has launched a Find the Typo contest surrounding its upcoming Un-Conference on the Big Island of Hawaii, June 7-11. The contest winner will receive one free registration to the self-storage networking event, valued at $799.

The Un-Conference, open to self-storage VIPs who want to discuss important industry topics in a relaxing setting, will take place at the Mauni Lani Resort. It will include breakfast networking sessions, educational presentations, group lunches and roundtable discussions. Attendees will also enjoy two evening receptions and a snorkel cruise.

The Find a Typo contest will run until Feb. 25. To enter, participants must find and report one or both of two hidden typo errors on the event website at www.phonesmart-hawaii-unconference.com. They can report the typos by posting to the events Facebook  community page. Reporting both typos means a participant can enter the drawing twice. Correct entries will be used to pick a winner at random.

Entrants must be 18 years or older to win and some restrictions apply. While the free event registration is transferable, the winner is responsible for his own accommodations, travel and personal expenses. PhoneSmart reserves the right to amend the rules or cancel the contest if extraneous circumstances arise.

PhoneSmart provides contact-center services, sales training, secret shopping and customer-service audits for more than 700 self-storage properties across North America.

Self-storage developers in Canada are creating more aesthetically pleasing facilities to ensure their projects get the green light from urban planning boards.

Operators are seeing an increase in demand due to the development of condos in several Canadian cities, including Montreal. Not only has this led to more development, but also an effort to make self-storage facilities more attractive.

Public Storage Canada, one of the largest operators in the country, is working with municipalities to create more attractive buildings. One of its facilities, an eight-story building in Laval, was named the 2008 international facility of the year by an industry trade publication.

Public Storage is also considering its female clientele, a majority of its customer base, by focusing on both aesthetics and security. Public Storage is currently in development on 10 facilities across the country.

Self-storage developers must also appease the city planning commissions. For example, in Pointe Claire, self-storage can be developed in sites in the citys industrial zone, but can only take up a quarter of the total space. Cities are also concerned about the lack of jobs that come with such a large footprint.

After two years of little to no activity in the self-storage financing market, 2011 may be the turnaround year for the industry. With more funds in the pipeline, will we see a resurgence of new development and construction?

In recent years, financing has been a challenge, both for existing self-storage owners looking to refinance their loans as well as those wishing to build new projects. Developers who were ready to build suddenly found their funding resources dry up. In addition, a decade-long rapid-build phase had led to overbuilt markets, giving lenders yet another reason to pull the plug on self-storage lending.

However, there are still underserved markets around the country and available land ripe for self-storage development. Plus, the recession left behind hundreds of empty commercial buildings that are ideal for conversions. This year, lenders are returning their focus to proven borrowers with solid backing, and once again considering loans for an industry that has proven to be resilient.

One of the brightest rays of hope is the industrys new eligibility status for Small Business Administration (SBA) loans. While its too soon to evaluate what affect this will have on the overall market, the announcement alone has the industry buzzing. CMBS (commercial mortgage-backed securities) loans are also creeping back into the self-storage lending arena. Real estate investment trust Extra Space Storage recently obtained an $82.2 million CMBS loan from Bank of America/Merrill Lynch.

In this second of a three-part series, Inside Self-Storage asked experts in industry finance, construction and development for their insight to todays market. Our panel discusses new lending options, how the economy has impacted construction and development, refinancing, and whats on the horizon. Our experts are:

• Shawn Hill, principal, The BSC Group
• Georgia Ragsdale, CEO, Best American Financial Services LLC
• Christian Sonne, senior managing director, Self Storage Industry Group, Cushman & Wakefield Western Inc.
• Terry Campbell, vice president of sales and marketing, BETCO Inc.
• Amy Fuhlman, director of marketing, Janus International
• Caesar Wright, president, Mako Steel Inc.

Whats the state of todays self-storage financing environment?

Hill: The financing market has improved throughout 2010 and should only continue to improve with time. Lenders are trying to close out their 2010 deals and starting to turn their attention to 2011, and theres excitement and rumblings about new loan programs and capital sources that should be coming (back) into the market over the next year.

A lot of the lenders who came back into the market in 2010 were mainly focused on larger transactions and cleaning up their books. The expectation is that over time, loan amounts will come down and loan-to-value (LTV) will begin to creep up as competition for deals increases.

Theres also a lot of excitement, obviously, about SBA coming into the storage market. We expect to see more meaningful volume in this sector as lenders and the SBA start to figure that out. Were not completely out of the woods yet as there are still bank failures expected in 2011, but things are markedly improved from this time two years and really even one year ago.

Ragsdale: The state of financing for self-storage has stabilized considerably after the deterioration, which continued into the middle of 2009. The state of general availability for funds remains heavily dependent on large and regional commercial banks, and some credit unions. Banks that dont have a strong knowledge of self-storage still tend to shy away from making these loans. Some limited insurance portfolio lending is coming back online, which is attractive to corporate borrowers with stable class-A properties with low leverage.

Banks are still relying upon a global cash flow analysis when they look at a borrower, and favor borrowers with multiple sources of repayment and income. Interest rates remain low and generally attractive despite the lower leverage. Generally, a borrower can expect 65 percent LTV, 20- to 25-year amortization, and interest rates from 6 percent to 7 percent, with some opportunity for lower rates.

Sonne: The lending environment has improved significantly for self-storage in 2010. The year started off with limited capital available and has improved steadily. Now, banks and life insurance companies are lending at some of the lowest rates in years. There are even CMBS lenders back in the game. Interest rates range from 5 percent to 6 percentgreat, low ratesand LTV is typically at 65 percent, up to 72 percent.

However good this is for the industry, it does not universally apply. Sponsorship (or the lender) must be very strong with a solid balance sheet, and this financing mostly applies to properties that have a stable operating history.

How will the new SBA loans change lending for this industry?

Hill: As of the time of this writing in December, the SBA programs for storage are pretty new, and the players involved are mostly trying to get their arms around the nuances of these transactions. The expectation is this will happen in the first half of 2011. At that point, these programs should become a viable source of capital for smaller (less than $5 million) transactions.

By nature, the SBA favors deals where the owner is heavily involved in the business, so this should be a great source of capital for transactions where the business is the borrowers primary source of income. This is an area that has been somewhat undeserved by banks during the recovery because often times the risk in these deals is perceived to be higher.

Finally, in deals where theres strong cash flow, but maybe a bit of an LTV mismatch relative to many lenders stated requirements (i.e.: a maximum 70 percent LTV), the SBA programs should present a good fit as they will allow some flexibility to climb up the leverage ladder.

Ragsdale: SBA loans will have a favorable impact on the smaller borrowers who qualify for this type of funding. The program is just now getting off the ground, so in a few months everyone will know a great deal more about exactly what and what will not be approved for SBA. We can understand the guidelines, but the devil is in the details.

Bankers are also adjusting to this program. Some remain uncomfortable with the property type and dont wish to include storage in their SBA portfolio, while others see this as an opportunity to write solid commercial property loans. This is a great help to smaller regional banks that can write a smaller loan for local storage operators with support from the SBA.

Sonne: It sounds exciting, but until some deals are actually completed, we will not know the impact.

Whats your advice for operators looking to refinance this year or next?

Hill: If you have a near-term refinance coming and don't want any surprises, start the process early and make sure youre well-prepared. By talking to a few lenders or mortgage professionals, you can get a pretty good idea about how things are looking and what reaction you can expect from the market, and still have ample time to make adjustments or alternative arrangements if necessary.

Its advisable to make sure your books are clean and orderly, and any deferred maintenance or other types of issues have been addressed at the property. Also, don't get greedy. If youre presented with a deal that seems reasonable and brings a high level of certainty of execution, then execute and move on.

Ragsdale: Absolutely take a look at refinancing options while the rates are very low. That will have a big impact on cash flow.

Sonne: Make sure your balance sheet is strong. Lenders will look at the trailing 12 months of operating statements benchmarked to the trailing three years. If a sponsor doesnt have a strong relationship with a lender, use a solid mortgage broker experienced in the self-storage asset class. Interest rates are low, but deals are not easy to complete.

Whats your advice for people seeking money for new development? Is it available, and how do they get it?

Hill: With few exceptions, this market remains challenged and the development financing climate is not favorable. There are many distressed opportunities out there that still need to be addressed, and lenders are going to be focused on solving these problems before theyre willing to talk about starting new projects.

The interesting thing about the development dilemma is the problem sort of solves itself. If a proposed transaction and the associated return make sense under an intensive equity scenario, which is essentially what youll need to succeed in this environment, then that deal probably makes sense and can get done. Alternatively, deals that would rely heavily on leveraged debt to make sense probably don't get done today. In that respect, you could say that the capital markets are self-policing the development situation.

Ragsdale: New development remains very challenging. Most banks have stopped making any commercial development loans unless an ironclad credit-tenant is in place to fully lease the property upon certificate of occupancy. Building storage remains especially difficult due to the longer leaseup time for the property. Many areas were overbuilt during the late 2000s and thats still being absorbed.

The old adage holds regarding new development: Cash is king! Have plenty of it and seek a relationship with a local bank.

What does the future hold for self-storage financing?

Hill: The future for self-storage financing is bright and should only continue to improve. Self-storage has performed well throughout the downturn relative to other property types, and as lenders digest the performance, their appetite and willingness to lend in the sector should only grow with time. As more sources of capital come into the market, competition for deals will increase, and past history suggests this will lead to more competitive terms, which is great for borrowers.

Finally, until we see some very meaningful increases in jobs recovery, interest rates should remain low. The combination of these factors should lead to a nice lending window in the near term for borrowers.

Ragsdale: As CMBS loans come back online, albeit with a more practical loan product than we saw just before the financial collapse, it will take some pressure off of commercial lenders. SBA will also take a good deal of pressure off lenders and allow for common sense smaller loans with good rates.

The storage industry continues to improve in its sophistication thanks to the hard-working professionals in the industry, and this will continue to help lenders move funds into self-storage loans.

Sonne: Financing for assets will continue to improve in 2011 if interest rates hold steady. In general, the market for self-storage has improved in 2010 and the worst of the recession is over for this asset class.

Whats the state of self-storage new construction now?

Campbell: Its primarily a financing problem. While there has been a loosening of available financing with the recent SBAs loan program, particularly their SBA 7(a) loans for add-ons or refinancing, which offers 90 percent and up to $5 million, SBA 504 CDC loans for new construction and new sites will remain more difficult to acquire. So, until overall credit loosens, new construction loans will remain problematic. Theres also the factor of occupancies being stagnant or even dropping in some areas.

Fuhlman: Based on several 2010 publications, self-storage construction is estimated to be down 65 percent to 75 percent over the last two years. This lack of new, ground-up construction has been attributable primarily to restricted financing and the dramatic reduction in residential and multi-family development in most markets. There has been an uptick in conversions as a number of infill locations have a significant amount of properly located and zoned vacant existing space available.

Wright: New construction remains quite slow. However, over the past couple of months we have noticed a bit more interest, mostly from potential clients who own their land outright. These folks have a much stronger ability to maneuver through the very difficult task of obtaining financing.

What challenges do developers and builders face?

Campbell: The first challenge is finding the right location on which to build, particularly one that is underserved or has pent-up demand. The next biggest challenge continues to be finding available and adequate financing. Developers and builders still fall under the real estate umbrella and until the economy improves in this area, growth will continue to be stunted. This is why self-storage owners are looking at expansion of existing facilities, conversions and refurbishing as interim strategies until things improve with lending institutions.

Fuhlman: Developers continue to at least face the restricted financing and limited market growth issues. In addition, properly zoned and located self-storage vacant land has become more difficult to find. A number of developers have chosen to watch from the sidelines as messages from the federal government and general economy trends have been mixed at best.

Wright: The biggest challenge still remains the ability to obtain financing. That being said, the SBA recently changed its loan guidelines allowing self-storage business as an eligible business type. This has created a buzz in our industry and time will tell what impact it will really have.

Will green building and LEED play a bigger role in the future?

Campbell: No question about it. Most businesses across the board are becoming more aware that improving the environment is good business. For example, there are pre-painted building components that are a part of the Energy Star program, which means theyre covered with cool-metal coatings. In effect, these paints can help reduce energy costs because their surfaces can reflect up to 70 percent of solar heat, as opposed to only 20 percent reflected from surfaces with standard pigmentations and reduce interior temperatures as much as 46 degrees.

Fuhlman: Green building and LEED certification are always a positive aspect of any development. Unfortunately, significant subsidies are still generally required to make the additional expenses pencil out. I would expect green building to play a more significant role in the construction process as the technology improves, subsidies increase or utility costs increase.

What role will conversions play this year? What are the challenges?

Campbell: Once again, the lack of reasonable financing for new construction is forcing owners to look elsewhere to build their storage business. One of the alternatives is converting existing buildings into self-storage. Conversions have advantages that many new construction projects dont have in terms of good retail locations, easy access and, in many cases, a larger customer baseas well as less money needed than with new construction, so long as the property is already acquired.

In some cases, one can get into the business faster by developing a conversion. The challenge is to make sure the upfitting doesnt become cost-prohibitive, as a result of trying to convert a building that requires too many reparations that are too expensive.

Fuhlman: Theres a national trend toward the conversion of vacant infill buildings to self-storage. This trend is expected to continue. The speed of the overall economic recovery and the recovery of the specific asset classes will determine how much conversion activity takes place in the near future.

Wright: Conversions will remain to play a big role in our industry. With so many commercial and industrial building vacancies, conversions of existing buildings may be pencil out to be a good play within the marketplace. Pointing out the obvious, the construction costs in most cases will be less expensivegiven that the slab and shell are already in place. In most cases, fire sprinklers and mechanical equipment also are in place.

What does the future hold for self-storage development this year?

Campbell: Recovery will be sluggish, but probably better than this time last year because other businesses are slowly starting to come back; and the duration of any recession has to do, in large part, with overall confidence on the part of businesses and consumers. Because of the poor economy in recent years, weve had to become more creative with our product line, with our marketing and with our overall approach to remaining competitive and successful. This will help us as well as others in the business going ahead as the economy improves.

Fuhlman: Ground-up development is expected to at least maintain its current pace in 2011. Many industry experts predict a significant increase in conversions as vacancies in many asset classes continue into 2011.

Wright: The future of self-storage still remains healthy. Its safe to say that the market needed a correction, and a correction it got. Many current operators reading this would agree. That being said, self-storage development still continued in these very difficult economic times. Thats quite amazing when you think about it. This industry has proven its resilience, and life conditions dictate that people will continue to use self-storage.

Without a doubt, you need to do proper due diligence when thinking about developing a project. Be smart and consult with industry experts. Construction costs remain low; if you have the right site, this may be your time to take advantage of those low construction costs.

To learn more about the state of the self-storage industry, attend the Inside Self-Storage World Expo in Las Vegas, March 14-16. To register, visit www.insideselfstorageworldexpo.com.

Numerous self-storage operators have reported a huge influx of auction attendees, no doubt thanks to new reality TV shows "Storage Wars" (10:30/9:30 p.m. CT, Wednesdays, A&E) and "Auction Hunters" (7/6 p.m. CT, Tuesdays, SPIKE). Auction buyers come out to the auctions with hopes of buying rare jewels, collectibles, or celebrity belongings, even though the average delinquent unit contains none of these.

Nonetheless, the run of busy lien sales will last for a while, and though its staying power is uncertain, there may be opportunities for self-storage facilities to capitalize on the rush. A discussion of money-making ideas has begun on a thread titled "Monetizing Auctions: Capitalizing on the Influx" on Self-Storage Talk, the self-storage industry's largest online community. The obvious benefit of crowded auctions is operators can feel comfortable they'll recoup their losses from the delinquent units. But most state laws allow facilities to collect only up to what they are owed; any additional revenue from the sale must be returned to the tenant. Therefore, if operators want to capitalize, they'll need to be creative. Here are some ideas being discussed on the forum:

• Concession sales
• Lock sales
• One-day-only discount on units to auction attendees
• Truck rentalbecause buyers have to load up their "big finds" somehow
• On-site cleaning and repair of items
• LED flashlight sales or rentals

On the other hand, some operators insist they're in the business of renting space, not selling items, and they don't intend to hype their lien sales. They also fear too much distraction might affect auctions' legal protocol, which must be followed to letter. Yet there is still a strong group of operators who see their auctions as an ancillary profit opportunity.

Where do you stand, and what ideas do you have? Have you implemented some profit-making ideas at a recent auction? If so, how did it go? Post responses on the thread. Only registered members can post, but registration is free, and can be done at www.selfstoragetalk.com/register.php.

Live and growing since 2008, Self-Storage Talk is the official forum of Inside Self-Storage, a dynamic services company that provides publications, events and educational resources for the self-storage industry. SST has approximately 3,960 members, 23 different topical forums, 3,945 discussion threads and 34,500 posts.

A self-storage company will cancelled the lien sale of an alleged pedophile's unit at a Delaware facility, instead opting to turn over the unit's contents to the state.

The lien sale at Secure Self Storage in the town of Rehoboth Beach in Sussex County was planned for Tuesday morning. The delinquent tenant is Earl B. Bradley, a pediatrician who will stand trial next month for alleged rape and abuse of more than 100 children over 10 years.

The public has been urging Secure Self Storage not to host the auction because it might reopen emotional wounds for the alleged victims. Attorney General Beau Biden thanked Secure Self Storage in a public statement for agreeing to cancel the sale. Biden also wrote that the state will pay $1 for the contents of the unit and will dispose of them at a later date.

According to a legal notice referenced by the source, other contents of the unit included figurines of Buzz Lightyear from the Toy Story movies, crane-style arcade games, electronics, household items, business and kitchen equipment, artwork, building supplies, and boxes.

Secure Self Storage has three locations in Delaware and 16 locations across Connecticut, Massachusetts, New Jersey, New York, Washington, D.C., and Ontario, Canada.

A man with a gunshot wound to the head was found dead Saturday in a self-storage unit in Pilesgrove Township, N.J.

Police identified that man as Davis Schwenker, 55, of Woodstown, N.J. He lived about a mile from Woodstown Mini Storage.

Salem County Prosecutor John T. Lenahan said Schwenkers death has not yet been ruled a suicide or homicide, and the investigation is ongoing. A handgun was also found in the storage unit. An autopsy was scheduled for Sunday.

Schwenkers family contacted police to report him missing. The family and a Woodstown police officer found Schwenkers body inside the self-storage unit just before noon. Police did not release what led them to the self-storage unit, or how long Schwenkers body may have been in the unit.

ONeil Software, a provider of records-management hardware and software, is marking its 30^th anniversary serving the self-storage industry.

The companys software is installed in more than 1,000 facilities in more than 75 countries from start-ups to multi-nationals.

The more complex the records storage and management industry gets, the more valuable our companys software and hardware solutions become, said Tim ONeil, founder and president. Our products drive our customers competitive advantage, as well as our leadership position in the industry and marketplace.

ONeil software manages and tracks multiple types of data, including storage boxes, file folders, documents and tapes. The companys flagship product is RS-SQL.

Pete Williams, a 21-year veteran of the self-storage industry and former founder and CEO of Premier Storage Solutions, has joined commercial real estate firm Grubb & Ellis Memphis as executive vice president, investment group. Williams will focus exclusively on providing real estate services to the self-storage industry. He will be working with Steve Mellon, senior vice president and director of the companys self-storage practice group, in growing the companys self-storage investment platform.

Founded by Williams in 1997, Premier developed, acquired, operated and sold self-storage facilities throughout the United States.  Prior to Premier, Williams was the vice president/director of acquisitions for Storage USA and a principal and senior vice president/director of acquisitions with Extra Space Storage. In these roles, he directly oversaw the acquisition, development and disposition of more than $1 billion in transactions in 35 states.

Williams is also a member of the advisory board of U-Store-It Trust Inc., a publicly traded real estate investment trust based in Wayne, Pa.  He earned his bachelors degree at Union University.