Public Storage 2010 Annual Report Download - page 26

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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
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We have conducted preliminary environmental assessments of most of our properties (and 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 circumstances where our environmental
assessments disclose potential or actual contamination, we may attempt to obtain purchase price adjustments or
indemnifications and, in appropriate circumstances, we obtain limited environmental insurance in connection with
the properties acquired, but we cannot assure you that such protections will be sufficient to cover actual future
liabilities nor that our assessments have identified all such risks. Although we cannot provide any assurance, based
on the preliminary environmental assessments, 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, 2006,
through December 31, 2010, we invested $106 million in development costs with respect to 11 new facilities.
Shurgard Europe has developed and opened 41 facilities since January 1, 2006 at a cost of approximately
$317 million. Development and fill-up of these storage facilities is subject to significant contingencies such as
obtaining appropriate governmental approvals. If we or Shurgard Europe were to commence significant
development of facilities, construction delays due to weather, unforeseen site conditions, the need to obtain
governmental approvals, personnel problems, and other factors, as well as cost overruns, would adversely affect our
profitability. Delays in the rent-up of newly developed storage space as a result of competition, reductions in
storage demand, or other factors, 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 or impose new taxes. 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
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with disabilities. Various state laws impose similar requirements. A failure to comply with the ADA or similar state
laws could lead to government imposed fines on us and/or litigation, which could also involve an award of damages
to individuals affected by the non-compliance. In addition, we must operate our properties in compliance with