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1. Pawn Shop & Secondhand Store Ordinance^ Striving ^o.E'xzeedKxroctationa' REPORT: Doug Russell, City Manager FROM: RogerWasset Chief ofPolice SUBJECT: Proposed Pawn Shop & Secondhand Store Ordinance MEETING DATE: September 22, 2014 The City nfKalispell currently has apawn shop/secondhand dea|er ordinance (municipal code sections 20-1 thru 20-10) which requires operators to document and submit records on a daily basis to the police department in an effort to track stolen property. This requirement isauthorized under State law (7'2l-42U7 MCA). Unfortunately, the method identified in current ordinance is problematic to enforce as it presents a burdensome recording and tracking system for the operations and the department. Changes intechnology have provided mechanisms toallow for easier reporting compliance. The proposed ordinance would require electronic reporting to a database which provides for a more efficient search ofpotential ufstolen items. VVeare currently using the "LeadsOn|ine"database, which is used by over twenty other law enforcement agencies in Montana and provides an easy mechanism for businesses to report the required information on a cost-free basis. At the work session on Monday, we will review the current and proposed ordinance, both of which are attached to this document. ROGER NasgsT.CHIEF opPOLICE ��' 11 161111 ll!illlllil I Fill � 16] 1111,11 ii Any person who loans money on deposit or pledge of personal property or other valuable thing or who deals in the purchasing of personal property or other valuable thing on condition of selling the same back again at a stipulated price or who loans money secured by chattel mortgage on personal property, taking possession of the property, or any part thereof so mortgaged, is hereby defined and declared a pawnbroker. (R.O. 1947 § 830) 20-2 License; Required. Every person who shall engage in the business of pawnbroker or as a dealer in secondhand goods or a junk dealer in the City shall, before engaging in such business, obtain a license as required by Chapter 15 of this Code. (R.O. 1947 § 834) 20-3 License; Fee for Pawnbrokers. Every pawnbroker shall pay a license fee of thirty dollars ($30.00) per quarter. (R.O. 1947 § 854) 20-4 Bonds Required. Before any person shall receive a license for doing business as a pawnbroker and before any person shall receive a license to engage in the business of dealing in secondhand goods or junk, where such person has an established place of business in the City, he or she shall file with the City Clerk a bond, with at least two (2) sureties to be approved by the City Clerk, in the sum of one thousand dollars ($ 1,000.00). Before any license shall be issued to any person for doing business as a junk peddler or junk dealer, having no established place of business, he or she shall file with the City Clerk a bond in the sum of one hundred dollars ($100.00), with at least two (2) sureties to be approved by the City Clerk. Any such bond shall be conditioned so that the principal named therein will observe the ordinances of the City in relation to pawnbrokers, dealers in secondhand goods and junk dealers and conduct his or her business in conformity thereto, and that he or she will account for and deliver to any person legally entitled thereto, any goods, wares or merchandise, article or thing, which may have come into his or her hands through his or her business as such pawnbroker, dealer in secondhand goods or junk dealer, or in lieu thereof, will pay in money to such person the reasonable value thereof. (R.O. 1947 § 835) 20-5 Books or Records; to be Kept; Contents; Availability for Inspection. Every person who shall be engaged in the business of pawnbrokers or dealers in secondhand goods or junk dealers, shall keep a book in which shall be clearly written in ink, at the time of each loan or purchase, an accurate account or description, in the English language, of the goods, articles or other things pawned, pledged or purchased, the amount of money loaned or paid therefor, the time of the receipt of the same, the name, residence and description of the person pawning or pledging or selling the same, which book as well as the articles pawned or purchased shall at all times, be open to the inspection of the Mayor or any member of the police force. (R.O. 1947 § 831) 20-6 Books or Records; Daily Record to be Furnished Chief of Police; Exceptions. It shall be the duty of every pawnbroker, dealer in secondhand goods or junk dealer to make out and deliver to the Chief of Police, every day before the hour of 12:00 noon, a legible and correct copy from the book required in Section 20-5 of this chapter of all personal property or other valuable things received, deposited or purchased during the preceding day, together with the time when received or purchased and a description and name of the person by whom left in pledge or from whom the same was purchased. Provided, that no person shall be required to furnish such description of any property purchased from private residences, manufacturers or wholesale dealers, having an established place of business, or of goods purchased at open sale from any bankrupt stock or from any other person doing business and having an established place of business in the City. But such goods must be accompanied by a bill of sale or other evidence of open or legitimate purchase and must be shown to the Mayor or any member of the police force when demanded. (R.O. 1947 § 832) 20-7 Sale or Redemption of Property Within Forty -Eight Hours After Receipt. A. Prohibited: No personal property received on deposit or purchased by any pawnbroker, dealer in secondhand goods or junk dealer, shall be sold or be permitted to be redeemed from the place of business of such person for a space of forty-eight (48) hours after the copy and statement required to be delivered to the Chief of Police shall have been delivered as required by Section 20-6 of this chapter, B. Notification Not to Sell: Whenever the Chief of Police or any member of the police force designated by the Chief of Police shall notify any such dealer not to sell any property so received on deposit, or purchased by them or permit the same to be redeemed, such property shall not be sold or be permitted to be redeemed until such time as may be determined by such Chief of Police or member of the police force designated by the Chief of Police so requiring them to be held. (R.O. 1947 § 833) 20-10 Purchase From Minors. No pawnbroker, junk dealer or junk peddler, or dealer in secondhand goods, shall purchase any goods, wares or merchandise, article or thing, from minors. (R.O. 1947 § 835) KALISPELL CITY ORDINANCES REGARDING BUSINESS LICENSES GENERALLY Article I IN GENERAL 15-1 Separate License Required for Each Business. Except as otherwise provided by this Code or any other ordinance of the City, it shall be unlawful for any person to own, operate or maintain more than one business, trade or occupation at the same location without first obtaining a separate license and paying the required fee for each separate business, trade or occupation. 15-2 Contents of License; Purpose of Issuance; Execution. Every license issued under the provisions of this chapter shall contain the date of issuance and expiration thereof, name of business, trade or occupation licensed and the amount of fee paid therefor. Every such license shall clearly show on its face the purpose for which it was issued and it shall be signed by the City Clerk and the Mayor. (R.O. 1947 § 872) 15-3 Transferability. No license issued under the provisions of this chapter shall be transferred without the approval of the Mayor, or in case of his or her refusal to approve, by a vote of the City Council by a two-thirds (2/3) vote of all the members elected to the Council. (R.O. 1947 § 848) 15-4 Refusal to Issue; Revocation. A. Authority: The Mayor may refuse to issue or prohibit the issuance of any license applied for under the provisions of this chapter if in his or her judgment the issuance would be liable to provoke a breach of the peace or may be detrimental to public safety, health or welfare of the City. He or she shall also have the right to revoke any license issued under the provisions of this chapter; provided, that the refusal to issue a license or the revocation thereof shall be reported to the City Council at the first meeting of the Council thereafter for its ratification or rejection. B. Fee Forfeited: Whenever a license is revoked or annulled, the amount of money paid therefor shall be deemed forfeited to the City and cannot be refunded. (R.O. 1947 §§ 874, 875) MONTANA LAWS PERTAINING TO PAWNBROKERS 7-21-4201. Regulation of certain activities. (1) The city or town council may license, tax, and regulate: (a) auctioneers, peddlers, pawnbrokers, and secondhand and junk shops; (b) motor vehicles and motor vehicle bodies, except those on commercial property, which are not otherwise taxed; (c) drivers, porters, tenpin alleys, shooting galleries, shows, circuses, street parades, theatrical performances, and places of amusement within the city or town. (2) The power to license, tax, and regulate circuses and shows of like character extends 3 miles beyond the limits of the city or town. (3) The council of any city or town may enact necessary ordinances providing for the licensing, taxation, and regulation of soft drink establishments and all pool and billiard halls. The city or town council may regulate and limit the number of such licenses issued and provide by ordinance that the total number of such licenses may not exceed the number fixed by the city or town council by ordinance. History: (1), (2)En. Subd. 16, Sec. 5039, R.C.M. 1921; amd. Sec. 1, Ch. 115, L. 1925; amd. Sec. 1, Ch. 20, L. 1927; re -en. See. 5039.15, R.C.M. 1935; amd. Sec. 1, Ch. 192, L. 1965; Sec. 11 -918, R.C.M. 1947; (3)En. Sec. 1, Ch. 136, L. 1923, re -en. Sec. 5039.84, R.C.M. 1935; Sec. 11-987, R.C.M. 1947; R.C.M. 1947, 11-918, 11-987; amd. Sec. 12, Ch. 249, L. 1979. 7-21-4207. Authority to require records for pawn, secondhand, and junk shops. The city or town council has power to require the owners and keepers of pawn, secondhand, and junk shops to keep a record of all articles purchased or pawned to them. The record and the articles purchased or pawned are subject to the inspection of all police officers of the city or town. History: En. Subd. 17, See. 5039, R.C.M. 1921; amd. Sec. 1, Ch. 115, L. 1925; amd. Sec. 1, Ch. 20, L. 1927; re - en. Sees. 5039.16, R.C.M. 1935; R.C.M. 1947,14-919. 7-21-4208. Regulation of purchases from minors by pawn, secondhand, and junk shops. The city or town council has power to prevent the keepers of pawn, secondhand, and junk shops from the purchasing of any article from a minor without the written consent of the parent or guardian of such minor. History: En. Subd. 18, Sec. 5039, R.C.M. 1921; amd. Sec. 1, Ch. 115, L. 1925; amd. Sec. 1, Ch. 20, L. 1927; re - en. Sec. 5039.17, R.C.M. 1935; R.C.M. 1947,11-920. 31-1-401. Interest pawnbrokers may receive -- civil enforcement -- prohibited activities. (1) A person may not carry on the business of pawnbroker or junk dealer by receiving goods pawned or in pledge for loans at any rate of interest above 10% a year without first obtaining a license. A pawnbroker or junk dealer or the pawnbroker's or junk dealer's employees or agents may not charge a fee of more than 25% of the amount of the loan for a 30-day period. The fee for extending a pawn agreement for 30 days may not exceed 25% of the amount of the loan. For purposes of this section, a fee includes all costs or fees charged, including but not limited to interest, commission, discount, storage, care of property, and purchase option. (2) The taking, receiving, reserving, or charging of a fee greater than that allowed under subsection (1) is considered a forfeiture of a sum double the amount of the fee for storage or caring that was agreed to be paid. (3) (a) When a rate or charge greater than that provided for in subsection (1) has been paid, the person by whom it has been paid may recover from the pawnbroker or junk dealer reasonable attorney fees and an amount double the amount of the fee paid. (b) An action under this subsection (3) must be brought within 2 years after the payment of the fee. Before a suit may be brought, the party bringing suit shall make written demand for return of the fee paid. (4) Unless licensed as a consumer loan licensee or a deferred deposit loan licensee, a pawnbroker or junk dealer may not: (a) cash or advance money for a postdated or deferred presentment check in exchange for a fee or finance charge; (b) use a check, authorization for electronic access, or other method of access to a deposit account, savings account, or other financial or asset account as a condition of or security for an extension of credit; (c) receive the title to a motor vehicle for the purpose of a pawn transaction or in pledge for a loan; or (d) engage in any device or subterfuge intended to evade the requirements of this chapter, including assisting a borrower to obtain a loan at a rate of interest prohibited by Montana law, making loans disguised as personal property sales and leaseback transactions, or disguising loan proceeds as cash rebates for the pretextual installment sale of goods or services. (5) In addition to other penalties provided by law, a violation of subsection (4) is a violation of Title 30, chapter 14, part 1. History: En. Sees. I to 8, pp. 206-207, L. 1889; amd. Sec. 3310, Pol. C. 1895; Sec. 2105, Rev. C. 1907; re -en. Sec. 4186, R.C.M. 192 1; re -en. Sec. 4186, R.C.M. 1935; amd. Sec. 12, Ch. 185, L. 1977; R.C.M. 1947, 66-1601; amd. See. I., Ch. 258, L. 1993; amd. Sec. 5, I.M. No. 164, approved Nov. 2, 2010; amd. Sec. 4, Ch. 278, L. 2013. 31-1-402. Pawnbroker to keep register. (1) Every pawnbroker or junk dealer shall keep a register, in which must be entered a description of every article pawned to or purchased by the pawnbroker or junk dealer, with: (a) the date of the pawning or purchasing; (b) date when the article must be redeemed; (c) the name of the person by whom the article was pawned or by whom purchased; and (d) the amount loaned on or paid for the article. (2) In case of the sale of any article pawned or pledged, the pawnbroker or junk dealer shall enter upon the register: (a) the name of the purchaser; (b) the time of the sale; and (c) the price paid for the article. (3) The register must always be open to inspection and examination of any peace officer or other persons. History: En. Sees. I to 8, pp. 206-207, L. 1889; amd. See. 3315, Pol. C. 1895; re -en. Sec. 2110, Rev. C. 1907; re-eii. Sec. 4191, R.C.M. 1921; re -en. Sec. 4191, R.C.M. 1935; R.C.M. 1947,66-1606; amd. Sec. 979, Ch, 56, L. 2009. PROPOSED PAWNBROKER ORDINANCE TO REPLACE THE EXISTING KALISPELL CITY ORDINANCES Article L Definitions Section 1.01 "Pawnbroker" means any person or entity who, within the City, loans money on deposit or pledge of personal property or any valuable thing, or who deals in the purchasing of personal property or valuable things on condition of selling the same back at a stipulated price, whether he does the same for himself or as an agent of some person or firm or corporation, who by any means, method or device loans money for personal property when the same is deposited for security or is deposited for any other purpose. Section 1.02 "Secondhand Dealer" means any person or entity who, within the City, as a business, engages in the purchase, sale, trade, barter, recycling or exchange of secondhand goods, wares or merchandise; or any person who keeps any store, shop, room or place where secondhand goods, wares or merchandise of any kind or description, are bought, sold, traded, bartered, recycled or exchanged is defined as a secondhand dealer within the meaning of this chapter; provided however, that this chapter shall not apply to bona fide trade or turn -ins of secondhand goods, wares or merchandise or other goods where no cash is transferred or paid by the merchant. Section 1.03 "Customer" means any person or entity who, within the City, deposits, pledges, sells, trades, barters, or exchanges personal property, secondhand good, wares, merchandise or other valuable things to an operator as set forth in this chapter. Article II. Exceptions and Exclusions Section 2.01 Pawnbrokers and secondhand dealers are excluded from uploading information into the selected database per Article III of this ordinance if the dealer meets one or more of the following criteria: (a) The item purchased by the dealer is under $50.00 in value except if the items are purchased in a quantity of 25 items or more, such as 25 or more DVDs, CD's etc. Jewelry (unless scrap) shall be photographed and the photographs maintained by the purchaser for a period of one year and/or the photo uploaded to the database. (b) The item is used adult or used children's apparel. (c) The seller is a known customer of the dealer and had contracted with the business prior to the property being presented for sale such as estate sale purchase. The exception does not include over-the-counter contracted purchases. (d) The property was obtained through a bidding process through a reputable, licensed auction house. (e) The property is brokered with the business. (f) The acquisition for resale of any goods by a nonprofit corporation or nonprofit association recognized as such by the Internal Revenue Service or by a bona fide fraternal or bona fide religious organization or association. (g) The acquisition for resale of an ingot of precious metal including, but not limited to, gold, silver, platinum, which ingot bears a stamp or other marking indicating or reflecting: (i) The government, governmental agency, private corporation, or banking institution issuing or producing the ingot. Article III. Register Section 3.01 Any operator who engages in the activities set forth in Article 1 shall keep a legible register or record of all property purchased or taken under that section, along with (a) A description of each article, including, but not limited to, identification number, serial number, model number, brand name or other identification marks on such article; and a description by weight and design of precious and semi-precious metals or stones. (b) The customer's name and date of birth and documentation from one or more of the following: (i) A valid state identification card; (ii) A valid state driver's license; (iii) A military identification card; (iv) A valid passport; (v) An alien registration card; (vi) An official identification document lawfully issued by a state or federal government. (c) The current street address, city, state and zip code of the customer's residence. Section 3.02 All transactions shall be kept in a numerical register in the order in which they occur, which register shall show the printed name and written or electronic signature of the pawnbroker, secondhand dealer or agent, the purchase price or other monetary amount of the transaction, the date, time and place of the transaction, and an accurate and detailed account and description of each item of tangible personal property involved, including, but not limited to, any and all trademarks, identification numbers, serial numbers, model numbers, owner -applied numbers, brand names or other identifying marks on such property. Article IV. Examination Section 4.01 No person keeping records as required in Section 2 shall fail, neglect, or refuse to exhibit the same to any law enforcement officer or other person, when requested to do so, or refuse to permit any law enforcement officer or other person, to inspect any such article purchased or received. Article V. Persons from whom articles shall not be taken Section 5.01 It shall be unlawful for any pawnbroker or secondhand dealer to receive, purchase or trade any article from a person who is under the influence of alcohol, under the influence of drugs, or under the age of 18 years. Article VI. Duration articles must be held Section 6.01 A pawnbroker or secondhand dealer shall hold all purchases made through a purchase transaction for a period of fourteen (14) days, during which time the property shall not be disposed of or altered from the form in which it was received. The holding period shall begin on the day the purchase transaction is uploaded into the law enforcement designated database. Article VIL Internet subscription requirements Section 7.01 Every pawnbroker and secondhand dealer shall own, maintain and operate a computer system with internet access. Every pawnbroker or secondhand dealer shall file all records electronically directly to the police department and/or to an internet subscription service designated as an agent of the police department as prescribed by the Chief of Police. The pawnbroker or secondhand dealer shall enter and upload all information from its database of records regarding contract for purchase, pledges, and purchase transactions by no later than 5:00 PM on Friday of each week. Every operator shall file, upload or record all registers or record of transactions, to an electronic database as designated by the Chief of Police or agent of the police department. If the transactions have not been entered into electronic database according to this section, the Police Department shall stop any further transactions by the operator, until the operator is in compliance. The Chief of Police may for good cause shown grant an operator a written extension to the deadline. Article VIIL Requirement for records Section 8.01 All records required to be kept under this article must be kept in the English language, in a legible manner and shall be preserved and made accessible for inspection for a period of three years after the date of redemption or forfeiture and sale of the property. Section 8.02 Upon demand of any law enforcement officer or agent, the pawnbroker or secondhand dealer shall produce and show any tangible personal property given to the pawnbroker or secondhand dealer in connection with any contract for purchase or purchase transaction. The pawnbroker's and secondhand dealer's database shall list the date of the pawning or purchasing, date on which each contract for purchase was canceled, whether it was redeemed, or forfeited or sold, the name of the person by whom the article was pawned or by whom purchased, and the amount loaned on or paid for the article. In the case of the sale of any article pawned or pledged, the pawnbroker or secondhand dealer shall enter upon the register, the name of the purchaser, the time of the sale and the price paid for the article. Such records shall be made available to any law enforcement officer or agent upon request. Article IX. Declaration of ownership Section 9.01 The pawnbroker and secondhand dealer shall, at the time of making the loan contract for purchase or purchase transaction, obtain a written declaration of ownership from the customer stating whether the property that is the subject of the transaction is solely owned by the customer and, if not solely owned by the customer, the customer shall attach a power of attorney from all co -owners of the property authorizing the customer to sell or otherwise dispose of the property. Section 9.02 The pawnbroker or secondhand dealer shall require the customer to sign, in their presence, the customer's name on the declaration of ownership.