   |
GOING BY THE RULES
How Regulations Affect Your OperationBy Steve Bergsman
While the various states continue to tweak regulations overseeing the transport of household goods via self storage containers, the federal government has been relatively quiet on the issue after finally wrestling to the mat various definitions and exclusions that created a legal framework for the fast-growing mobile self storage industry.
With mobile self storage, the facility comes to the customer instead of the customer having to drive to the storage center. In simple terms, a self storage company delivers a container to the customer’s home, where it is packed by the customer—and not on an unlimited time basis. Generally, the customer has a designated amount of days to fill the box and then have it picked up and driven back to the self storage venue or another drop off location.
Going back three years ago, Congress began to consider legislation that would provide a limited service exclusion from federal regulations for motor carriers that were solely providing the transportation of household goods packed by the owner of the goods, a shipper, or anyone else but the transporter.
Federal Versus State Regulations
In August 2005, Congress changed the statute defining household goods motor carriers by adding a subsection called the “limited service exclusion,” says Wesley Chused, an attorney and partner with the Boston law firm, Looney& Grossman. “What that legislation did was exclude from the definition of household goods the various items a homeowner, for example, might have packed and placed in a container. By not being classified as household goods, it relieved all the trucking companies and warehousemen of complying with a thick layer of household goods regulations.”
The bill was a can opener for interstate transportation by PODS (Portable On Demand Storage). “Many self storage operators don’t go interstate; they are strictly local, so the limited service exclusion means nothing to them,” says Chused. But for everyone else, the legislation was a big deal. In fact, it applies to a vast number of mobile self storage operators.
“I’m located in St. Louis and half our trade area is in Illinois, so we are, in effect, an interstate carrier because we cross state lines,” says Randy Weissman, president of Storage Banc, a self-defined St. Louis self storage “super center” that offers among other services, mobile storage. Weissman is also board president of the Mobile Self Storage Association, which is also based in St. Louis, Mo.
“Certain areas have free trade zones,” Weissman continues. “The city of St. Louis has a free trade zone that includes the city and eight miles surrounding it. So, I can go into Illinois and East St. Louis, but if I go past that, then I have to have [regulated] authority to do that.”
Although the federal limited service exclusion was far-reaching, sometimes state regulations created exclusions from the exclusions. “I’m in Massachusetts, and our state regulatory agency says ‘thank you very much Congress for your limited service exclusion,” says Chused, “but in Massachusetts, you still need to have a household goods certificate to transport even homeowner-packed containers.”
Obviously, some states follow the federal guidelines and some states don’t—so it’s important for anyone considering mobile self storage to consult the laws of their own state.
Additional Regulations To Consider
The limited exclusion rules lifted some of the regulatory burden in regard to the shipment of household goods, but there are still many others that need to be abided. Most regulations deal with the size of vehicles doing the shipping, licensing of the drivers, insurance, safety regulations in regard to driver hours, and log books.
“In some ways, government is simplifying regulations, but in other ways they are getting more complex,” says Bobby Albert, whose Wichita Falls, Texas, company, Albert Moving & Storage, has been providing storage and transport of goods for 38 years. Almost a decade ago, the company began a mobile self storage service.
“Where I see complexity coming is in the forms and documents the federal and state governments require,” Albert explains. “When you cross that line to provide moving service, it seems that is where the consumer laws come into play; and there is complexity in dealing with consumer laws as there is complexity in dealing with driver and safety requirements.”
Albert cites the log books that drivers must maintain because there are limitations as to how long the driver can be out driving. Strict truck maintenance must be upheld as well.
If you have a truck that is under 26,000 pounds gross vehicle weight, that vehicle escapes federal regulation, says Weissman. Unfortunately, about 99 percent of the trucks in mobile storage exceed that weight, which means a slew of regulations apply such as truck maintenance records, keeping driver files, etc.
Depending on the size and weight of the vehicle, a company may be required to employ a driver with either a commercial drivers’ license (CDL) A, or CDL B, explains Mary Fay Kattman, chief financial officer of Store To Door based in Woburn, Mass., and a board member of the Mobile Self Storage Association. “We tend to hire CDL A drivers even though some of our vehicles only require CDL B because you get a more professional driver with the CDL A.”
Kattman adds, “Within the last two or three years, requirements as to how long the drivers can drive has changed. They can only drive so long and then they need so many hours of rest before they can get back on the road again, so it’s important to keep good records of their time on the road.” Driving logs need to be kept, although some companies use a GPS tracking device. Either way, says Kattman, it’s also important to keep track of how long the truck has been on the road, how miles driven, and which states it has been driven through. Depending on the state, this information can be used in the tabulation of gas taxes.
“For both federal and state gas taxes, we report quarterly,” says Kattman. “We have to say what states we drove in order to pay the proper allocation of the gas tax. That gets paid to the federal government, which then pays the states.”
Kattman, who is by training and education an accountant, says that one of the key changes she has noticed is the institutionalization of the insurance side of business. “You still need all the insurance you needed before, but since the industry has matured, we have found there are more carriers who provide insurance specifically to meet out needs as a mobile self storage operator,” she explains. “In the past, we had a hard time finding providers who understood the business well enough to feel comfortable insuring it. We have since found a couple of insurers who now provide insurance for the mobile self storage industry.”
In addition to all of that, a host of safety programs have to be applied as well. States often require drivers to participate in drug and alcohol awareness programs. In 2003, Michigan required all new motor carriers to go through safety audits, an educational program informing new entrants of requirements such as drug and alcohol testing programs, equipments services and hours of service rules. And this doesn’t even take into account the local regulations that may apply to being able to deliver a container to a residence and how long that container may be allowed to sit there.
As noted, federal regulations governing this industry haven’t changed very much over the past few years, but depending on the state in which the facility is based, new rules and oversights have come fairly quickly.
Operators of mobile self storage services should be operationally efficient, says Weissman, and he offers this suggestion: don’t throw anything away. “The burden of proof is on you, the operator,” he says. “As an example, if your driver gets into an accident and claims his brakes are out, you might have to report and prove through the available records that the vehicle had undergone a post-trip and pre-trip inspection.”
Indeed, it is hard to know what will happen with legislation and local regulations going forward. For now, mobile self storage operators would be wise to keep abreast of what is happening in this arena and be aware of how it could potentially affect their operations.
Steve Bergsman is a freelance writer based in Mesa, Arizona. He is also the author of Maverick Real Estate Investing: The Art of Buying & Selling Properties Like Trump, Zell, Simon and the World’s Greatest Land Owners.
|
|
|
