Wednesday, February 27, 2013

Retailers question new library store

Consignment boutique deemed ‘unfair competition’

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By BRENNAN REGO
Express Staff Writer

     In response to the pending opening of a nonprofit-owned consignment store in Ketchum, several Wood River Valley consignment store owners have voiced concerns about “unfair competition” from the new shop.

     Earlier this month, the Community Library in Ketchum announced it will open on March 21 a consignment store, the Gold Mine Consignment Boutique, on the corner of Walnut Avenue and Fourth Street. It is planned to be an extension of the library’s Gold Mine thrift store in Ketchum.

     Gold Mine Manager Craig Barry, who will also oversee the boutique, said earlier this month that the library is opening the store because some people are now selling their high-end items through consignment stores that have opened across the valley following the national economic crisis. He said the boutique will allow people who want to support the library but don’t want to give valuable items to its thrift store to consign those items and receive some percentage of their sale price.

     However, some valley consignment store owners are not thrilled with the opening of the boutique.

     “Our goal is to strive for a balanced business climate in Ketchum,” said Deborah Burns, owner of Burnsie’s Boutique in Ketchum and chair of the Ketchum Planning and Zoning Commission. “Are we setting ourselves up for failure when we open the door for nonprofit organizations to compete with other retail businesses, when indeed retail businesses annually give a great deal of money to the nonprofits in the valley? Where do we draw the line?”

     Marilee Hansen, owner of Worth Repeating in Ketchum, said she believes in free enterprise and loves the library, but is concerned about nonprofit “gray areas” that the library’s boutique might take unfair advantage of, such as breaks on rent or taxes. She also said people buying items at the boutique should be aware that if an item was indeed consigned, 100 percent of its sale price will not go to the library.

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Gold Mine manager Craig Barry said there is “nothing illegal” about the boutique.

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     “As long as we’re on the same playing field tax-wise and as long as the community knows what percentage goes to the library, there’s no problem,” she said.

     According to Barry, the library will split profits on consigned items 50-50 with consignors. Barry also said the thrift store’s and boutique’s rents are “market value” and both stores must pay state sales tax. He said the boutique will also have to pay federal unrelated business income tax, from which thrift stores selling donated items are exempt.

     “Basically what that means is, if you’re a nonprofit operating a business unrelated to the nonprofit’s mission, the IRS obligates you to pay an income tax on that business,” he said.

     Suzy Hart, owner of Deja Vu in Ketchum, said, “Is it legal? How is this possible?”

     Barry said there is “nothing illegal” about the boutique.

     Linda Badell, co-owner of the Vault in Ketchum and Carol Thielen, owner of Consign Design in Ketchum, said they do not have issues with the boutique.

     Linda Reed, owner of the Trader in Bellevue, said she didn’t think the boutique would compete with her business, but she “feels sorry” for consignment store owners in Ketchum.

     “I don’t think it’s right they’re opening this store,” she said. “How much money does the library need?”

     Barry said the library needs an additional $700,000 on top of what is brought in from the Gold Mine to cover the library’s budget, which includes supporting ever-more-expensive services such as high-speed Internet. The Gold Mine covers 40 percent of the overall budget, he said.

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Brennan Rego: brego@mtexpress.com