Public Storage 2009 Annual Report Download - page 31

13
development of self-storage facilities may intensify competition among operators of self-storage facilities in the
market areas in which we operate.
We may incur significant environmental costs and liabilities. As an owner and operator of real properties,
under various federal, state and local environmental laws, we are required to clean up spills or other releases of
hazardous or toxic substances on or from our properties. Certain environmental laws impose liability whether or not
the owner knew of, or was responsible for, the presence of the hazardous or toxic substances. In some cases,
liability may not be limited to the value of the property. The presence of these substances, or the failure to properly
remediate any resulting contamination, whether from environmental or microbial issues, also may adversely affect
the owner’s or operator’s ability to sell, lease or operate its property or to borrow using its property as collateral.
We have conducted preliminary environmental assessments of most of our properties (and intend to
conduct these assessments in connection with property acquisitions) to evaluate the environmental condition of, and
potential environmental liabilities associated with, our properties. These assessments generally consist of an
investigation of environmental conditions at the property (not including soil or groundwater sampling or analysis),
as well as a review of available information regarding the site and publicly available data regarding conditions at
other sites in the vicinity. In connection with these property assessments, our operations and recent property
acquisitions, we have become aware that prior operations or activities at some facilities or from nearby locations
have or may have resulted in contamination to the soil or groundwater at these facilities. In this regard, some of our
facilities are or may be the subject of federal or state environmental investigations or remedial actions. We have
obtained, with respect to recent acquisitions, and intend to obtain with respect to pending or future acquisitions,
appropriate purchase price adjustments or indemnifications that we believe are sufficient to cover any related
potential liability. Although we cannot provide any assurance, based on the preliminary environmental assessments,
we believe we have funds available to cover any liability from environmental contamination or potential
contamination and we are not aware of any environmental contamination of our facilities material to our overall
business, financial condition or results of operations.
There has been an increasing number of claims and litigation against owners and managers of rental
properties relating to moisture infiltration, which can result in mold or other property damage. When we receive a
complaint concerning moisture infiltration, condensation or mold problems and/or become aware that an air quality
concern exists, we implement corrective measures in accordance with guidelines and protocols we have developed
with the assistance of outside experts. We seek to work proactively with our tenants to resolve moisture infiltration
and mold-related issues, subject to our contractual limitations on liability for such claims. However, we can give no
assurance that material legal claims relating to moisture infiltration and the presence of, or exposure to, mold will
not arise in the future.
Delays in development and fill-up of our properties would reduce our profitability. From January 1, 2005,
through December 31, 2009, we opened 17 newly developed self-storage facilities in the U.S. at a cost of
approximately $142 million. Shurgard Europe has developed and opened 55 facilities since January 1, 2005 at a
cost of approximately $426 million, and has two development projects under construction with total estimated costs
of $24 million. Delays in the rent-up of newly developed storage space as a result of competition or other factors,
including the slowdown in the general economy which has negatively impacted storage demand, would adversely
impact our profitability. If we or Shurgard Europe were to commence significant development of facilities,
construction delays due to weather, unforeseen site conditions, personnel problems, and other factors, as well as cost
overruns, would adversely affect our profitability.
Property taxes can increase and cause a decline in yields on investments. Each of our properties is
subject to real property taxes. These real property taxes may increase in the future as property tax rates change and
as our properties are assessed or reassessed by tax authorities. Recent local government shortfalls in tax revenue
may cause pressure to increase tax rates or assessment levels. Such increases could adversely impact our
profitability.
We must comply with the Americans with Disabilities Act and fire and safety regulations, which can
require significant expenditures. All our properties must comply with the Americans with Disabilities Act and
with related regulations (the “ADA”). The ADA has separate compliance requirements for “public