Goodwill's property-tax bill wiped out
By Treena Shapiro
Advertiser Staff Writer
There's good news for the folks at Goodwill, but the Salvation Army is still waiting.
Goodwill Industries Hawai'i, one of the thrift stores granted a real property tax exemption after next year by the City Council, will get relief even earlier thanks to the Zoning Board of Appeals.
The board's decision means Goodwill will be spared the $92,000 payment for this year's tax bill, even though the exemption from the council would not have taken effect until 2004.
Salvation Army is still waiting to hear the outcome of its appeal of a $58,000 tax bill. Capt. Anthony Markiewicz said he thought the Salvation Army would have to pay taxes in 2003 and 2004 if the appeals board did not grant the exemption.
According to the city, applying for an exemption is what led to the companies' being billed. "Thrift stores were not targeted," said Gary Kurokawa, administrator of the real property tax division. "The appraiser did a site visit to update the property records and questioned the validity of the exemption."
When Goodwill and the Salvation Army protested the bills before the City Council, members responded by passing a bill that would exempt nonprofit thrift shops from property taxes if their proceeds are used for job training or substance-abuse rehabilitation.
Kurokawa said the city will not be financially affected as a result of the new law because the tax bills were under appeal and not included in projected revenues.
"If any nonprofit is operating contrary to (city ordinance) and comes to the attention of the assessment office, all will be treated equally," Kurokawa said.
The issue is a complicated one. For the most part, Salvation Army and Goodwill are nonprofit organizations that are therefore tax-exempt. However, the city determined the thrift stores connected to the organizations are considered commercial properties.
Under city ordinance, if any portion of the nonprofit's property is used to generate income — even if the income is used to further tax-exempt purposes — that section of the property will be taxed.
However, Goodwill convinced the Zoning Board of Appeals that it was not a regular retailer, according to Goodwill spokeswoman Laura Kay Rand.
For a retailer, making a profit is the goal. "That is not the case for us," she said. "The (55) positions in the stores are work opportunities and training opportunities for people with disabilities."
As an example, she pointed out that items for sale are not sorted by value to maximize profits. Rather than individually pricing clothing items according to designer or other criteria, Goodwill lumps them all into one category, such as "blouses," she said.
"Many of our operational processes are simplified," she said.
Goodwill assisted 4,467 people last year, helping place 1,200 in jobs within the community. A $92,000 bill "impacts an awful lot of training and work opportunities for people," Rand said.
"We're very pleased with the results (of the appeal) and that we're going to be able to maintain our focus on training and providing those work opportunities," Rand said.
Markiewicz said the Salvation Army's $58,000 bill will affect its adult drug rehabilitation programs. The five thrift stores bring in about $3 million annually. "It funds our substance abuse rehabilitation program," he said.
The six-month rehab program for men has 73 beds. Since many do not finish the whole cycle, the program serves about 250 men a year.
Although he has yet to hear the appeal board's decision, "They already have indicated that it would be less than the original assessment," Markiewicz said.
