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News from the industry

October 11, 2010
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Carwash lawsuit sparks sports scandal
Former professional baseball player and current carwash owner Lenny Dykstra has been accused in a civil lawsuit of steroid use and illegal gambling to later cover the cost of doing business.

Currently, Dykstra is the owner of Lenny Dykstra's Car Wash Corp., Corona, CA. He retired from professional baseball in 1996 after a 12-year career with the Philadelphia Phillies and the New York Mets.

Lindsay Jones, Dykstra's former partner in the business, alleges in the suit that Dykstra advised him to bet thousands of dollars on selected Phillies games in 1993.

Dykstra's lawyer, Daniel Petrocelli, said that the three-time All-Star "absolutely denies" the gambling allegation, calling it "unsubstantiated" and "a fabricated story from a disgruntled partner."

Jones, seeking to regain interest in the carwash business, said in a sworn statement that the baseball wagers were a form of payment to him, made "on the basis that Lenny would cover all losses, and I would use the winnings to live on."

In his lawsuit, Jones cites Dykstra's alleged steroid use and gambling involvement as evidence of financial irresponsibility that endangers the carwash business, which paid Jones $167,000 in 2003.

Dykstra fired Jones in September 2003, but Jones contends he still has a financial interest in the business.

Carwash owners hope for end to death tax
Many business owners and car-care professionals are pressing lawmakers and lobbyists in Washington to influence a vote from the Senate that would terminate the federal estate tax.

The issue now shifts to the Senate after House representatives voted to repeal the tax until 2010.

The estate tax, commonly known as the "death tax," became a major political issue for the carwash industry during last year's election season, since the majority of American washes are family-owned.

The tax represents a burden for small businesses, such as carwashes, because it often forces families to liquidate overall assets in order to pass the business along to the next generation, according to Professional Carwashing & Detailing magazine's March 2004 issued titled Carwash decision '04.

The House recently voted 272-162 to repeal the federal estate tax in 2010 and beyond. The legislation would prevent the estate tax from re-emerging after its scheduled elimination, but the issue will proceed now to the Senate.

Bush talks small business, fuel future
Speaking to small business leaders at the SBA Expo, President Bush said he was powerless to cut gas prices, which have hurt profits for a number of car-care fuel providers this year.

The event was sponsored by the Small Business Association and the President's discussion of the matter took place at the Washington Hilton Hotel, where he expressed a need for alternative fuels, such as ethanol, in order to decrease US dependency on foreign fuel supplies.

"A growing economy causes us to consume more energy," Bush said. "And, yet, we're not producing energy here at home, which means we're reliant upon foreign nations."

In other small business news, carwash and car-care business owners may benefit from the actions of Colorado Congresswoman Marilyn Musgrave, who is working to extend a tax break for small businesses.

The proposed legislation would allow car-care operators to deduct property and equipment expenses for the year the equipment is put in service. The tax break is set to expire in 2008, but Musgrave's bill would allow for a 2010 extension.

Her bill, H.R. 1678, extends capital and equipment expensing relief provided by Section 179 of the Internal Revenue Code.

Currently in her second term, Musgrave is chairman of the House Small Business Subcommittee on Workforce, Empowerment, and Government Programs.

Express carwash chain looks toward growth
Bill Dahm, owner of a successful carwash chain that operates 31 sites expects to significantly grow that number within the next seven years.

Dahm, president of Mike's Express Carwash, which cleans about 5 million vehicles a year, recently opened two more Hamilton County washes in Carmel and Noblesville, noting that the company is geared to open several more each year in Indiana and Ohio.

Each new carwash site costs nearly $4 million. Mike's has become a national leader in the industry and (according to the 2004 Power Inc's Top 50 report) the fifth-largest conveyorized carwash company in the nation by emphasizing employee training, the newest technology and impeccable, friendly service.

Carwash OEM investors to purchase retailer
Goldner Hawn Johnson & Morrison (GHJ&M), the Minneapolis-based private equity investment firm that bought carwash manufacturer Mark VII in 1996, has agreed to buy publicly traded ShopKo for $24 a share, or about $715 million for 2.98 million shares.

The deal is intriguing because it brings, for the first time, a major retailer and a major carwash equipment OEM under the same corporate umbrella.

Carwash industry experts have long speculated that retailers may increasingly try their hand at carwashing, although ShopKo has not previously shown any ambitions in the car-care sector.

With the addition of $330 million in debt, GHJ&M will assume the deal is worth $1 billion. The sale is expected to close by the end of July.

So far this year, Mark VII has advanced its offerings for carwash operators, and has seen a shift in its internal corporate structure.

ShopKo, which opened its first store in Green Bay in 1962 and now operates 140 stores, has struggled for the past five years to thrive in a world dominated by Wal-Mart Inc. and Target Corp. While many regional retailers have failed to stay in business, ShopKo has managed to hang on.

"We are investing in what we think of as a successful company," Mike Sweeney, managing partner of GHJ&M, said. "No significant changes are planned."

Texas water tax may affect carwashing
A bill introduced by a bipartisan group of senators is designed to promote statewide water conservation, but may force Texas carwash owners to keep a closer eye on their fresh water use.

The tap-water tax, which would be levied on retail water sales above 5,000 gallons a month, is estimated to cost Texans about $125 million a year, and would support the construction of new water systems and updates to outdated systems.

Landowners and businesses that take water from private wells would not be taxed, but the bill also modifies the century-old "rule of capture," which allows landowners living outside of groundwater conservation districts to pump as much water as they choose.

The new bill introduced would create legal protections for landowners who are hurt by their neighbor's pumping, but could hinder business for high water users, such as carwash owners.

The water consumption tax would be levied at a rate of about 13 cents per 1,000 gallons used above the 5,000 gallon limit.

The statewide average water use for households and small businesses is about 170 gallons per day, or about 5,100 gallons a month.