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1. Pawn Ordinance DiscussionCITY°F , M� City of Kalispell L-tt Post Office Box 1997 -Kalispell, Montana 59903 ol Kiei�w- rLwi, II AMik Telephone: (406) 758-7701 Fax: (406) 758-7758 MOATTANA ILIaL[1):7_ 119101LVj1 To: Mayor Johnson and City Council From: Doug Russell, City Manager Re: Pawnshop Ordinance Update Meeting Date: January 12, 2015 BACKGROUND: At the previous regular meeting, Council tabled the attached agenda item regarding updating our pawnshop and secondhand dealer ordinance to January 19. The item was tabled to consider potential Council amendments to the proposed ordinance. At the work session on January 12, it is recommended that Council propose and discuss potential amendments to this ordinance in anticipation of the meeting on January 19. r 31-2 2A- Ave, Ea yl- — PO 6&y-,1947 — Kaki,r .(-1-, MT S9 903 T&LP_t (406) 758 -7780 — Fa g, (406) 758 -779 9 &-m,ait _ Striving to Exceed Expectations' REPORT: Doug Russell, City Manage5c_ FROM: Roger Nasset, Chief of Police ' " SUBJECT: Proposed Pawn Shop & Secondhand Store Ordinance MEETING DATE: December 15, 2014 BACKGROUND: The City of Kalispell currently has a pawn shop/secondhand dealer ordinance (municipal code sections 20-1 thru 20-10) which requires those businesses to document and submit records on a daily basis to the police department to aid in the investigation of stolen property. This requirement is authorized under state law (7-21-4207 MCA). The documentation and submittal process identified in the existing ordinance that was drafted in 1947 is problematic for law enforcement and the businesses as the paper intensive recording and tracking system is burdensome and outdated. Changes in technology now allow for more simple and effective reporting compliance. The proposed ordinance would replace the paper system with electronic reporting to a database that quickly identifies stolen items that have been unwittingly acquired by a pawn or second hand business. This will not only aid in the return of stolen items and prosecution of the offenders but will also act as deterrence as it becomes known that these businesses cannot be easily used to fence stolen goods. The police department currently subscribes to, and utilizes the "LeadsOnline" database, which is used by twenty three law enforcement agencies in Montana as well as 2,973 other law enforcement agencies nationwide. Ninety-four businesses in Montana are currently uploading to "LeadsOnLine" which provides a simple computer interface to report the required information on a subscription -free basis to the business. The investment for the business is a computer and internet access. The police department pays a fee once a year to be able to access the "LeadsOnLine" data base. There is no extra fee for each search that is performed. That fee is the same no matter if we do one search or a thousand searches. A meeting was held on October 20 to discuss the proposed pawn ordinance. This meeting was attended by employees from all three in -town pawn shops, a couple of county pawn shops/second hand dealers and Flathead County Sheriff Curry. ROGER NASSET, CHIEF OF POLICE On November 24, we held a Council workshop to review the ordinance. At this meeting we addressed questions related to liability concerns, exemptions to property which is otherwise titled and recorded, and how other operations would be impacted by this ordinance. Modifications to the proposed ordinance that emerged from the work session include adjusting the number of days required to hold inventory, referencing state law where applicable, and cleaning up language items based on these changes and modifications from previous discussions. We have included a clean version of the ordinance and an annotated version referencing changes. FISCAL IMPACTS: The City of Kalispell currently subscribes to "LeadsOnLine" and would not be facing additional fees. ALTERNATIVES: Council can elect not to adopt the recommended ordinance or modify as desired. RECOMMENDATION: It is recommended that Council adopt Ordinance 1749, an ordinance amending Chapter 20 of the Kalispell Municipal Codes relating to pawnbrokers, junk and secondhand dealers. KALISPELL POLICE DEPARTMENT PAGE 2 ORDINANCE NO. 1749 AN ORDINANCE AMENDING CHAPTER 20 OF THE KALISPELL MUNICIPAL CODES RELATING TO PAWNBROKERS, JUNK AND SECONDHAND DEALERS, RESCINDING KMC 20-1 THROUGH 2O-10 AND REPLACING THE RESCINDED PARTS AS SET FORTH, DECLARING AN EFFECTIVE DATE AND AUTHORIZING THE CITY ATTORNEY TO CODIFY THE SAME. WHEREAS, pursuant to Kalispell Municipal Code Chapter 20, the City of Kalispell regulates the business of Pawnbrokers, Junk and Secondhand Dealers, primarily for the purposes of preventing such businesses from being utilized by third parties to sell stolen goods, to assist in the recovery of stolen goods conveyed thereto and to obtain evidence in the investigation of thefts; and WHEREAS, the current code is found to be inadequate to serve the above stated purposes; and WHEREAS, the Kalispell City Council therefore finds that it is in the best interest of the safety and welfare of the City and its residents that Chapter 20 of the Kalispell Municipal Code be amended to update the regulation of Pawnbrokers and Secondhand Dealers. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF KALISPELL AS FOLLOWS: SECTION 1. The City of Kalispell Municipal Code is hereby amended as set forth in Exhibit "A", attached hereto and incorporated fully herein by this reference. SECTION 2. The City Attorney is hereby authorized and directed to recodify this Ordinance. SECTION 3. This Ordinance shall take effect thirty (30) days after its final passage. PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE CITY OF KALISPELL THIS DAY OF DECEMBER, 2014. Mark Johnson Mayor ATTEST: Aimee Brunckhorst, CIVIC City Clerk EXHIBIT "A" Chapter 20 PAWNBROKERS, Ti AND SECONDHAND DEALERS 20 1 Definition of Pawnbfeker-. Any pefsen who loans meney an deposit or- pledge of pefsenal pfopef4y or other- valtiable thing of who deals in the pur-ehasing of personal pr-opefty or- other- valuable thing on Am-d-itinon of selling the same baek again at a stipulated pr-iee or- who loans mene�y seeiifed by ehattel mol4gage on personal pr-opefty, taking possession of the pr-opei4y, or my paA thefeef so fnei4gaged, is 20 2 r : . Reqiiifed. moneyEveFy per -son who shall engage in the business of pawnbr-okef of as a dealer- in seeendhand goods of a junk dealef in the City shall, befofe engaging in sueh business, obtain a lieense as r-equi by Chapter- 15 of this Code. 20 3 License; Fee for- Pavmbr-oker-s. Every pawnbroker- shall pay a lieense fee of thifty dollars ($30.00) per- quaftef. 20 4 Bonds Requir-ed. per -son shall r-eeeive a lieense to engage in the business of dealing in seeondhand goods or- itmk, City Clefk a bond, with at least two (2) sureties to be appr-oved by the City Clerk, in the su one thousand dollafs ($1,000.00). Befer-e any lieense shall be issued to any per -son for- doin biisiness as a junk peddler- of junk dealef, ha-ving no established plaee ef business, he of she shall file with the City Cler-k a bond in the sufn of one hundred dollars ($100.00), with at least two-(2-) thereto, and giat he or- she will aeeouat fof and deliver- to any pefson legally entitled ther-eto, a -By lieu theFeof-, will pay in to sueh per -son the reasonable 20 G Booksor- Reeofds; to be Kept; Contents; Availability F inspeetion. Every per -son who shall be engaged in the business of pawnbr-ok-er-s or- dealers in seeondh goods or- junk dealers, shed! keep a book in w-hieh shall be eleafly vffit4en in ink, a4 the time of o ein the English language,of the goeds, affieles or other- things pawned, pledged or- purehased, the amoun4 of money loaned or- paid 20-1 Definitions A. "Pawnbroker" means any person or entity who, within the City, loans moneyposit 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. B. "Secondhand Dealer" means My 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 C. "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. 20-2 Exceptions and Exclusions Comment [RN1]: Added to original proposed draft to clarify that auction houses were not intended to be included in the definition as these are treated elsewhere in state law. Title 30 Chapter 11 MCA. Comment [CH2]: Language added to resolve the unnecessary extra level of scrutiny on titled property which is already well documented by various laws. Comment [RN3]: Suggested amendment Pawnbrokers and secondhand dealers are excluded from uploading �tems� into the selected to original language abase per 20-3 of this ordinance if the jteml meets one or more of the following criteria: Comment [RN4]: suggested amendment to original language 1. The item purchased by the dealer is Lander $50.00 in value except if the items are - Comment [RNs]: The question has been raised by the public whether purchased in a quantity of 25 items or more, such as 25 or more DVDs, CD's etc. or not this is an appropriate minimum value? 2. 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. 3. The property was obtained through a bidding process through a reputable, licensed auction house. 4. The property is brokered with the business. 5. 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. 6. The acquisition for resale or trade of coins or of monetized bullion, or commercial grade ingots of gold, silver or other precious metals including, but not limited to, gold, silver, platinum, which ingot bears a stamp or other marking indicating or reflecting the government, governmental agency, private corporation, or banking institution issuing or producing the ingot. "Commercial grade ingots" is defined herein as 0.99 fine ingots of gold, silver or platinum, or 0.925 fine sterling silver art bars and medallions, provided that the ingots, art bars and medallions are marked by the refiner or fabricators as to their assay fineness. 20-3 Rc igister A. Any operator who engages in the activities set forth in Section 20-1 shall keep a legible register or record of all property purchased or taken under that section, along with; 1. 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 Comment [CH6]: Moved from 20-2 (A) for clarity 2. The customer's name and date of birth and documentation from one or more of the following: A valid state identification card; A valid state driver's license; A military identification card; A valid passport; An alien registration card; An official identification document lawfully issued by a state or federal government. 3. The current street address, city, state and zip code of the customer's residence. transaction, the purchase price or other monetary amount of the transaction, the date, time and place Comment [RN7]: Public concerns have of the transaction, and an accurate and detailed account and description of each item of tangible been raised about the electronic ]�signature- new language is an personal property involved, including, but not limited to, any and all trademarks, identification attempt to simplify with added language. numbers, serial numbers, model numbers, owner -applied numbers, brand names or other identifying marks on such property. C. Violations. A violation of this section or of any violation of state law regarding the regulation of Pawn Shops at 31-1-401 and 31-1-402 MCA shall be deemed a misdemeanor and punishable in accordance to state law at 31-1-407 MCA. - Comment [CHs]: inserted to clarify the existence and impact of state law regulating the industry. 20-4 Examination All persons keeping records as required in Section 20-3 shall comply with state law at 31-1-402 MCA in regard to the examination of records) All records required to be kept under this article Comment [CH9]: Language changed to must be kept in the English language, in a legible manner and shall be reserved and made maintain consistency with state law h �a �, g h [that may be changed in the future 20-5 Persons from whom articles shall not be taken It shall be unlawful for anY awnbroker or secondhand dealer to receivepurchase or trade an article from a person who 's under the influence of alcohol, under the influence of drugsl, or under the age of 18 years. 20-6 Duration articles must be held A pawnbroker or secondhand dealer shall hold all purchases made through a purchase transaction for a period of seven chi 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. Comment [CH10]: This portion originally located in 20-8 and moved for clarity Comment [RN11]: Public comment questioning the need for this language. Purpose is to ensure that sober judgment is being used in the transaction. Comment [CH12]: The holding period has been adjusted down from 14 days to address concerns expressed by the industry. Comment [CH13]: Some language changes made to the text to clarify its meaning 20-7 Internet subscription Leauirements Every pawnbroker and secondhand dealer shall own, maintain and overate a computer system with internet access. Every pawnbroker or secondhand dealer shall electronically file all records identified in Section 20-3 directly 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 such information from its records by no later than 5:00 PM on Friday of each week. If the transactions have not been entered into an electronic database according to this section, the Police Department shall serve a cease and desist order upon the business from 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 any deadline given. The operator may seek relief from this order through petition to the Kalispell Municipal Court upon a showing that the operator is, in fact, in compliance with this ordinance or is otherwise exempt from its requirements. 20-8 Requirement for �nsRection of property Upon demand of any law enforcement officer or agent, the pawnbroker or secondhand dealer shall produce and show and tangible personal property given to the pawnbroker or secondhand dealer in connection with any contract for purchase or purchase transaction for the purposes of anv criminal investigation pursuant to MCA 46-5-212 and the reauirements of an administrative warrant. 20-9 Declaration of ownership A. The Dawnbroker 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. I . The pawnbroker or secondhand dealer shall require the customer to sign, in their presence, the customer's name on the declaration of ownership. Comment [CH14]: Header changed to reflect inspection of property that is treated separately from inspection of register. Comment [CH15]: warrant requirements pursuant to state law. Comment [RN16]: Public concerns voiced about this language. The purpose is to try to avoid domestic overreaching on marital property or other joint property situations. Comment [RN17]: Public concerns voiced about this language. The purpose is to try to avoid domestic overreaching on marital property or other joint property situations. ORDINANCE NO. 1749 AN ORDINANCE AMENDING CHAPTER 20 OF THE KALISPELL MUNICIPAL CODES RELATING TO PAWNBROKERS, JUNK AND SECONDHAND DEALERS, RESCINDING KMC 20-1 THROUGH 2O-10 AND REPLACING THE RESCINDED PARTS AS SET FORTH, DECLARING AN EFFECTIVE DATE AND AUTHORIZING THE CITY ATTORNEY TO CK17131OklaM:Ix.Y1UIDP WHEREAS, pursuant to Kalispell Municipal Code Chapter 20, the City of Kalispell regulates the business of Pawnbrokers, Junk and Secondhand Dealers, primarily for the purposes of preventing such businesses from being utilized by third parties to sell stolen goods, to assist in the recovery of stolen goods conveyed thereto and to obtain evidence in the investigation of thefts; and WHEREAS, the current code is found to be inadequate to serve the above stated purposes; and WHEREAS, the Kalispell City Council therefore finds that it is in the best interest of the safety and welfare of the City and its residents that Chapter 20 of the Kalispell Municipal Code be amended to update the regulation of Pawnbrokers and Secondhand Dealers. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF KALISPELL AS FOLLOWS: SECTION 1. The City of Kalispell Municipal Code is hereby amended as set forth in Exhibit "A", attached hereto and incorporated fully herein by this reference. SECTION 2. The City Attorney is hereby authorized and directed to recodify this Ordinance. SECTION 3. This Ordinance shall take effect thirty (30) days after its final passage. PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE CITY OF KALISPELL THIS DAY OF DECEMBER, 2014. Mark Johnson Mayor ATTEST: Aimee Brunckhorst, CMC City Clerk EXHIBIT "A" Chapter 20 PAWNBROKERS, FUN AND SECONDHAND DEALERS n�•aeears:��rsa� RM ..... M,- .... • e�e�•�:�:es��ar.�. �:efeersr . PUMP ON I • ... . . . . . .. 0 .. .. . . .. 1 I . W 11111...MINIM. . .. 1 � \ I opi • \ \------ -- - Mill jm�l III NIMMOM I the be, have his her- heense him her- fef inspeefieft as ease by the may and shall also er- wr-44en in business. with of proper- atithefities when so efigaged No > > shall ptit:ehase any ge asp wares er-merehandise, ftiele erthi„g, rr 20-1 Definitions A. "Pawnbroker" means any person or entity who, within the City, loans moneyposit or pledgee of personal property 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 an. o�purpose. B. "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 anyperson 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, or to auction houses or to the transaction of any property that is titled and of record with a state or the federal government. C. "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. 20-2 Exceptions and Exclusions A. Pawnbrokers and secondhand dealers are excluded from unloadine items into the selected database per 20-3 of this ordinance if the item meets one or more of the following criteria: 1. 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. 2. 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. 3. The property was obtained through a bidding process through a reputable, licensed auction house. 4. The property is brokered with the business. 5. 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. 6. The acquisition for resale or trade of coins or of monetized bullion, or commercial grade ingots of gold, silver or other precious metals including, but not limited to, gold, silver, platinum, which ingot bears a stamp or other marking indicating or reflecting the government, governmental agency, private corporation, or banking institution issuing or producing the ingot. "Commercial grade ingots" is defined herein as 0.99 fine ingots of gold, silver or platinum, or 0.925 fine sterling silver art bars and medallions, provided that the ingots, art bars and medallions are marked by the refiner or fabricators as to their assay fineness. 20-3 Register A. Any operator who engages in the activities set forth in Section 20-1 shall keep a legible register or record of all property purchased or taken under that section, along with; 1. 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 and design of precious and semi-precious metals or stones. Jewelry shall be photographed and the photographs maintained by the purchaser for a period of one year and/or the photo uploaded to the database. 2. The customer's name and date of birth and documentation from one or more of the following: A valid state identification card; A valid state driver's license; A military identification card; A valid passport; An alien registration card; An official identification document lawfully issued by a state or federal govel 3. The current street address, city, state and zip code of the customer's residence. B. All transactions shall be kept in a numerical register in the order in which they occur, which register shall clearly document the pawnbroker, secondhand dealer or agent conducting the transaction, 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_ C. Violations . A violation of this section or of any violation of state law regarding the regulation of Pawn Shops at 31-1-401 and 31-1-402 MCA shall be deemed a misdemeanor and punishable in accordance to state law at 31-1-407 MCA. 20-4 Examination All persons keeping records as required in Section 20-3 shall comply with state law at 31-1-402 MCA in regard to the examination of records. 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_ 20-5 Persons from whom articles shall not be taken 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 , ears. 20-6 Duration articles must be held A pawnbroker or secondhand dealer shall hold all purchases made through a purchase transaction for a period of seven (7) dqys, during which time the property shall not be disposed of or altered from the form in which it was received. The holdingperiodshall begin on the day the purchase transaction is uploaded into the law enforcement designated database. 20-7 Internet subscription requirements Every pawnbroker and secondhand dealer shall own, maintain and operate a computer system with internet access. Every pawnbroker or secondhand dealer shall electronically file all records identified in Section 20-3 directly 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 such information from its records by no later than 5:00 PM on Friday of each week. If the transactions have not been entered into an electronic database accordingto o this section, the Police Department shall serve a cease and desist order upon the business from 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 any deadline given. The operator may seek relief from this order through petition to the Kalispell Municipal Court upon a showing that the operator is, in fact, in compliance with this ordinance or is otherwise exempt from its requirements. 20-8 Requirement for inspection of property 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 for the purposes of any criminal investigation pursuant to MCA 46-5-212 and the requirements of an administrative warrant. 20-9 Declaration of ownership A. 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_ B. The pawnbroker or secondhand dealer shall require the customer to sign, in their presence, the customer's name on the declaration of ownership.