96-585LL
� `_ �� N � � � Council File # _ S�� �0-_s
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Presented By
Referred To
ordinance #
Green Sheet # 3 S �„�
a6
Committee: Date
An ordinance to amend Chapter 344 of the Saint
Paul Legislative Code pertaining to pawn shops;
adding provisions for the City to participate in the
Automated Pawn System (APS) project initiated by
the City ofMinneapolis.
THE COUNCIL OF THE CITY OF SAINT PAUL DOES ORDAIN:
Section 1
Section 34A.00.1. of the Saint Paul Legislative Code is hereby added to read as follows:
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AME�ID�D
'7�'� �qL
ORDINANCE
CITI OF SAINT PAUL, MINNESOTA
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6 Section 2
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8 Section 344.01. of the Saint Paul Legislative Code is hereby amended to read as follows:
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10 "Sec. 344.01. License required.
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12 No person shall exercise, cazry on or be engaged in the trade or business of pawnb:
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13 without a license. �Tti= , b .":;�?�`���:�i��-�t�`�tt�d
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16 Section 3
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18 Section 344.02. of the Saint Paul Legislative Code is hereby amended to read as follows:
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20 "Sec. 344.02. Fees.
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22 a` The fee re uired �sr�a�:�caais�;de�u�iii:�ri�eE>�:�:'"'��:t'�: '::tse°�s[��
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49 collect the required �data via modem, no additional charges � �
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in Saint Paul
is unable to
be assessed
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against the
pawnbroker.
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Section 4
Section 344.03. of the Saint Paul Legislative Code is hereby amended to read as follows:
"Sec. 344.03. License requirements.
(a) Application; investigation, etc. Any person desiring a pawnbroker license shall file with the
license inspector an application containing such information as the license inspector shall require.
The application shall be made under oath and furnishing false information therein shall he a
violation of this chapter in addition to any other laws or ordinances. Before such person shall be
licensed to conduct such business in the c�ity, a copy of the application for such license shall be
delivered to the e�hief , ," . The c�ief or an officer
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i duly detailed by the c�hief for such purpose shall investigate the applicant and report the result
2 . of such invesrigation to the inspector together with the approval or the disapproval of such
3 application by the c�hief; provided, however, that no person shall be licensed under the terms
4 hereof who, at any time prior to the issuance of such license, has been duly convicted in any
5 court of competent jurisdiction of having violated any law relating to theft, burglary, receiving
6 stolen properiy, sale of controlled substance, or of any infraction of the terms and provisions of
7 tlus chapter or o£ any o£ the ordinances of the City of Saint Paul regulating the business of
8 pawnbroldng; further provided, that in denying any license based upon such conviction, the
9 inspector shall follow the procedures in these chapters and in Laws of Mnnesota for 1974,
10 Chapter 298 (Mnnesota Statutes, Chapter 364). The term "convicted" shall include a plea of
11 guflty even though no judgmem of conviction is or has been entered or unposition of sentence
12 has been stayed.
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(b) Bonc1 Before any person sha11 be licensed as a pawnbroker, such applicant shall file a bond in the
amount of five thousand dollars ($5,000.00) with a duly licensed surety company as surety
thereon, such surety bond to be approved as to form by the city attorney, conditioned that such
licensee shall observe the ordinances of said city in relation to the business of pawnbroker and
that such licensee will conduct said business in conformity therewith and will account for and
deliver to any person legally entitled thereto any goods, wares or merchandise, article or thing
which may have come into the possession of such licensee as pawnbroker or in lieu thereof such
licensee shall pay in money to such person or persons the reasonable value thereof."
Section 5
26 Section 344.04. of the Saint Paul Legislative Code is hereby amended to read as follows:
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"Sec. 344.04. Regulations.
(a) Records. Every person engaged and licensed in the business of pawnbroker shall record all
purchases or pawn transactions on a standard three-part form furnished by the Saint Paul Police
Department, hereafter refened to as a pawn or buy form. One (1) copy shall be maintained at the
place of business. The other two (2) shall be delivered to the Saint Paul Police Department
according to section 344.04(b) of the Legislative Code. All pawn tickets shall be completed,
legibly written in ink in the English language, at the time any loan or purchase is made, and will
include the following information:
(1) The date and time that all such loans and/or purchases are made.
(2) An accurate description of any person pawning selling or leaving any type of property on
deposit as a collateral security. Such description shall include, but not be limited to, the
person's full name; date of birth; residence; physical description, including, but not limited
to, sex, height, weight, color of eyes and color of hair; and the identification number from
any of the following forms of identification of the persons pawning or selling the
property: valid driver's license containing a picture or Minnesota identification card.
(3) The full description of all such property purchased by the licensee or property received
on deposit as collateral security, including the manufacturer's serial number or identifying
insignia, if applicable, and the amount of purchase money or the amount loaned.
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(4) All forms shall he signed by such person and 'uutialed by the clerk or agent for the
business.
(5) Entries on such forms shall not be erased, obliterated or defaced in any manner and shall
be, at all reasonable times, open to inspection by the clrief of police or any member of the
police department or license and permit division.
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(b) �� �ireports to police. The licensee or employee of the licensee shall complete a pawn or buy
form, as required and fumished by the pFolice dl�epartment, for each transaction. Two (2)
copies of such pawn or buy form shall be delivered to the c�hief or duly detailed officer by �-66
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(c) Receipts required. The licensee or agent of the licensee shall give to the person negotiating a
loan or selling property a zzz�lzt1�ei�;:-written or printed receipt for the property received for the
loan or purchase. Such receipt shall correspond with the informarion on the pawn or buy forms.
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(d) .�eer�s �;1�i�. The police department shall maintain the records tumed over to them y t e
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pawnshops for no less than one s�'(��`ztt�i�it�. ���ati�gFag�€'s:�ti�;�i��ze�iaii€�l'� �
t�ttiY(u�i1 t��t�1�'t',� (��� £��yS;
(e) Ninety-day redemption period. Any person pledging, pawning or depositing an article for
security shall have a minimum of ninety (90) days from the date when the loan or pledge was
originated or renewed to redeem the same before the same becomes forfeitable. No personal
property pawned or left on deposit with any person licensed under the terms hereof sha11 be
pemutted to be redeemed from the of business for a period of seventy-two (72) hours,
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excludine Sundavs and hohdavs �i��as��.c.�,i�;��a�'l��r� �`(� i����'��'��::� ?��
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(� Property purchased. Property purchased by the licensee sha11 be recorded in the same manner as
items pawned or left on deposit and such property shall not be sold within thirty (30) days
following the date of transaction. Motor vehicles shall be exempt from this requirement.
• �lG- 58S
1 (g) Report of stolen or lost goods. If any goods, articles or things shall be advertised in any public
2 , newspaper of the City of Saint Paul as having been lost or stolen, and such goods, articles or
3 things shall then be or shall thereafter come into the possession of any licensee under the terms
4' hereof such licensee shall, upon actual notice thereof, immediately thereafter notify the c(�hief or
5 duly detailed officer that certain goods, articles or things advertised are in the licensee's
6 possession and shall not thereafter dispose of the same except upon written authority so to do
7 from the c�hief or duly detailed officer. If probable cause exists that specific goods or materials
8 are stolen contraband or have been used in the commission of a crime and a representative of the
9 p�olice d�epartment notifies the licensee of such fact, the licensee shall not sell or permit to be
10 sold, remove or pemut to be removed, such goods and matezials until such time as the licensee is
ll notified by the ehiefafpakee ��� or his or her representative.
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(i�) Camera surveillance. Licensees shall be required to video tape all transactions and maintain a
dated copy of the recording for thirty (30) days. The video recording shall include a cleaz view
of the customer and sha11 display the date and time of the transaction. The video tape recordings
shall be provided to the police or license inspector upon request. The foregoing requirements
shall become effective as to each licensee, and remain in full force and effect thereafter as to each
such licensee, when during any si�cty-day period more than one (1) percent of all transactions
shall involve stolen property. The term "transaction," for the purposes of this section shall mean
the purchase or redemption of property, issuance of pawn tickets or other similar receipts, and
all other pawn transactions between the licensee and any other person. Multiple transactions by
one (1) member of the public, or transaction involving more than one (1) item of property by one
(1) member of the public occurring on the same or successive days, shall be deemed to be one
(1) transaction. The term "stolen property," for the purposes of this section shall mean and
include any form of tangible property, as to which the owner or possessor of such property has
made oral or written complaint to a law enforcement authority that such property has been
stolen; provided, however, that there need not be proof of the crime of theft or other criminal
offense nor the conviction of any person for theft or other criminal offense in order to establish
that the property is stolen. The license inspector, or his or her successor, shall give notice to a
licensee that the foregoing requirement for camera surveillance has become effective, and such
licensee shall within thirty (30) days after the receipt of such notice begin to comply. Failure to
comply after receipt of such notice shall be grounds for adverse action against such licensee. The
licensee may dispute in any contested case hearing before an independent hearing examiner, on
his or her failure to comply, the factual basis for the imposition of the foregoing camera
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surveillance reawrement. '��:s��� s�� ��`�`�(i��� �`���i���� ��?� � �t��'�f
(ij) Burglar alarm. Licensees shall maintain an electronic burglar alann system for the licensed
premises. Such svstem must be duly licensed by the city and maintained in working order. �3�C}�
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3 Secrion 6
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5 This ordinance shall take force and be in effect thirty (30) days from its passage, approval, and
publication.
PI�AI I.SNFe
JUL 271996
�� r �� n r� Requested by Department of:
Office of L'cense Inspections and
Environmental Protection
By: �t"��L' (_�
Form Approved by City Attorney
By: � By: Y/U,�z�G� �L1 \ZE.v,�x2.2
��� ,�� �
Approved by Mayor: Date // glj Approved by Mayor for Submission to
Council
By: � D` , By: ��� c \��' `�^',�
7
Adopted by Council: Date ����(�
Adoption Certified by Council Secretary
OFFICE OF LIEP Date: 5/1/96 GREEN SHEET
'� N° 35158
Robert Ressler 266-9112 1 EPARTMENT DIRECTOR 4 �Tr cou,vc�r.
2 ITY ATTORNEY ITY CLERK
ust bE ori Council Acfend3 by: �x ninecxox N. fi MGT. SVC. DIR.
SAP 3 YOR (OR PSSISTANT)
OTBL � OF SIGNATIIRS PAGES 1 (CLIP ALL LOCATIONS FOR SIGNATURE)
CTION REQUESTED:
ordinance to amend Chapter 344 0£ the Saint Paul LC pertaining to
awnshops; adding provisions for the City to participate in the Automated Pawn
System (APS) project initiated by the City of Minneapolis.
COiMgNDATIONS: APPROVE (A) OR REJECT (R) ERSONAL SERVICB CONTRACTS D![i5T AlQSWBR THE FOLLONII7G:
PLANNING COMMISSION CZVIL SERVZCE COPff4I55I0N 1. Has the person/firm evez' worked under a contract for this department?
CIB COPAtITTEE A HUSINESS REVIEW COi7NCIL Y£S NO
STAFF � Has this person/firm ever been a City employee7
DISTRICT COURT -- YES NO
3. Does this person/firm possess a skill not normally possessed by any
UPPORTS WHICH COUNCIL OBJECTIVE? Current City employee?
YES NO
lala all Y65 answers oa a sepazate aheet and attach.
INITTATING PROBLEM, ISSUE, OPPORTUNITY (Who, What, When, Where, Why):
he City of Saint Paul Police Department receives an average of 100,000 pawn
ickets per year. The current staff cannot effectively track these items
ithout the aid of a computerized system which Minneapolis is in the process
of developing.
VANTAGES IF APPROVED:
ill help the Police Department track and locate stolen goods.
DISADVANTAGES IF APPROVED:
ill present pawn brokers with added cost in relation to volume of business.
DISADVANTAGES IF NOT APPROVED:
olice recovery processes for stolen goods will continue to be cumbersome,
ineffective and labor intensive in certain cases.
OTAL AMOUNT OF TRANSACTION S COST/REVENUE BUDGETED YES NO
FUNDING SOURCE ACTIVITY NUMBER
FINANCIAL INFORMATION: (EXPLAII3)
r�,-,.., ,; : -. - ,... �
�,�,..< �..-- ,:.._,,,,
Councilmember � `� S�
Dan Bostrom OFFICE OF LICENSE, INSPECTIONS AND
ENVIItONMMENTAL YROTECITON
WB,id 6 RobeR Kessler, Director
THE CITY OF SAINT PAUL
Norm Caleman, Mayor
May 7, 1996
To:
Fr:
Re:
City Councilmembers
Robert Kessler, LIEP Director
Automated Pawn System
LOWRYPROFESSIONAL BUILDING
Suite 300
350 St Peter Sbeet
Saint Paul, Minneso[a 55102-I510
��
Telephane: 6/2-266-9090
Fpcsimile: 612-266-9D99
6I2-266-9124
This memo is meant to oudine changes to the Pawn Shop ordinance which the Office of
License, Inspections and Environmental Protection (LIEP) and the Saint Paul Police
Department aze recommending for your approval. Through meetings with industry
representatives, Minneapolis license officials, and the Business Review Council (BRC),
we have discussed and revised the proposal to administer the mandatory use of an
Automated Pawn 5ystem (APS) to help law enforcement officials to track and recover
stolen properry.
We understand that less than 1% of registered stolen goods aze discovered in pawn shops
and rehuned to their owners, but we feel that it is our inability to properly document and
regulate pawn transactions which restricts us from becoming effective in this area of crime
control. Our present system is archaic, cuxnbersome and completely manual. The APS
will allow for:
Uniform records control;
Improved identification of items pawned; and
Quick and accurate retrieval of data.
With the success of this system, we hope that it will expand to encompass the Second
Hand and Precious Meta1 dealers, as well as attracting other cities in the seven county
metro azea to our "Pawn Netwark."
If there are any questions or concerns, please do not hesitate to call me at 266-9112 or Ted
Koeppl at 266-9123. Thank you for your consideration.
c: Mark Shields, Chief of StafF
Ted Koeppl, LIEP
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Bzll�le-�.rsiizsaet;oi;=
Section 2
Section 344.01_ of the Saint Paul LegisIative Code is hereby amended to read as follows:
"Sec. 344.01. License required.
l�TO person sh�tl e
without a license.
#�s�perst�ii;��
on or be enoa�ed in
or business
Section 3
�
Section 344.02. of the Saint Paui Legislative Code is hereby amended to read as follows:
"5ec. 344.02. Fees.
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LARKIN, HOFFMAN, DALY & LINDGREN, LTD.
ATTORNEYS AT LAW
15DD NORVJEST FlNANCIAL CENTER
7900XERXESAVENUESOUTH
BLOOMINGTON, MINNESOTA 55431-1744
TELEPHONE (6�2) 8353800
FAX (672) 896-3333
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June 26, 1996
Robert Kessler, LIEP Director
CITY OF SA1NT PAUL VIA FACSIMILE AND U.S. MAIL
350 St. Peter Street, Suite 300
Saint Paul, Minnesota 55102-1510
Re: Automated Pawn System; Our File No 20,390-00
Dear Mr. Kessler:
We represent National Pawnbrokers, Inc. which operates a licensed pawnshop at 136 Tenth Street,
St. Paul, Minnesota ("National Pawnborkers") This letter is written in opposition to the proposed
ordinance amending Chapter 344 of the Saint Paul Legislative Code to provide for the Automated Pawn
System (APS). Based upon our review of the proposed amendments, Minnesota law, and the license and
regulatory programs of similar cities, we are of the opinion that the City of St. Paul (the City) does not
haue the authority to adopt the new fee requirements and 'unpose APS on pawnbrokers. The basis for this
opinion is set out below:
A License Fee That Exceeds Reasonable Expenses is a TaY in Disguise.
Where a license fee so far exceeds the reasonable expenses incurred for police power purposes, it
will be held a tax in disguise and therefore invalid. InvesYment Co. Institute v. Hatch, 477 N. W.2d 747,
749 (Minn. App. 1991) (citations omitted); State v. Northern Racewa,�Cor� 381 N.W.2d at 528;
Minnea�olis Street Ry v City of Minneagolis, 52 N.W.2d 120, 125 (Minn. 1952), ap�eal dismissed, 339
U.S. 907 (1959). A licensing fee that is reasonable is one that is exacted to reimburse the ciTy for the
reasonable cost of issuing the license and of inspecting, supervising, and regulating the use which has
been authorized. Dunham's v. City of West St. Paul, 526 N. W.2d 413, 415 (Minn. Ct. App. 1995) (ci "n
Lvons v. City of Minneapolis, 63 N.W.2d 585, 588 (1954)); Northern Raceway Cor�, 381 N.W.2d at 528
(stating "a reasonable license fee should be intended to cover the expense of issuing it, the services of
officers, and other expenses directly or indirectly unposed.") (citina Citv of Mankato v. Fowler, 20 N.W.
361, 362 (Minn. 1884)).
Robert Kessler
June 26, 1996
Page 2
LARKIN, HOFFMAN, DALY & LINDGREN, LTD.
�c�-sgs
In this case, the City is seeking to impose a fee increase of more than 1000 percent. That in itself
will be flagged and scrutinized by a reviewing court. Finally, in Dunham's v. City of West St. Paul, from
1980 through 1992 the City chazged an annual fee of $2,500 for on-sale liquor stores. In 1992, the City
passed an ordinance that set a new fee schedule for the next six yeazs. The annual fee would increase by
$250 each year for six yeazs until the annual fee was $4,000. At issue in the suit was only the first $25Q
increase. The court of appeals concluded that the $250 increase was "sufficiently correlated" to "the
projected issuance and enforcement costs." 526 N.W.2d at 415.
In dicta, however, the court noted that:
We recognized that a different issue might be presented if the increase
was by leaps and bounds and unsupported by any evidenee. Had the
schedule for fee increases shown a jump of $2,000 or $3,000 per year for
five consecutive years, our decision might be different, but that is not our
issue. Her the increase was modest when compared to prior and unobjected
to annual fees. The $250 increase appears reasonable based on the common
sense assumption that law enforcement costs tend to slightly increase each
year rather than decrease. (Emphasis added.)
526 N.W2d at 415-16. Thus, an increase that is disproportionately large, that does not seem to reflect
"common sense" assumptions in relation to inflation azguably is an indication that a licensing fee is
unreasonable and is therefore, a"tax in disguise."
2. Alternative Systems for Recordkee�� and Crime Solving aze Less Intrusive and Lesc CostlX.
The City is proposing to mandate the use of APS has means of ensuring "uniform records control;
improved identification of items pawned; and quick and accurate retrieval of data." However, the
objecuves of this computerized system, which costs over $137,000 to "turn on," can be satisfied by
installing soflwaze at a cost of $569 per copy. The software can be installed in exisfing police department
and licensing computers. The City of Duluth utilizes a system known as"Law Master" which allows
pawnbzokers who use "Pawn Master" software to download transacrions data directly to police computers
each evening. The data includes information on each pawn transaction, including property identification
numbers, drivers' license numbers, name, date, amount of transaction, etc. Duluth has not instituted a
1000 percent fee increase to pay for such reporting.
The City of Bloomington modified internal software to receive pawnbrokers data via computer
disk. Each week, police officers obtain transaction data by computer disk. This data is quickly analyzed
by clerical staff . Serial numbers aze run against information maintained by the Narional Crime
Informa6on Center (NCIC) computers. This records review has been handled efficiently and cost-
effectively for at least the last three yeazs.
��
LARKIN, HOFFMAN, DALY & LINDGREN, LTD.
Robert Kessler
June 26, 1996
Page 2
��� 585
CONCLIJSION
The pawnbroking indusCry cooperates with police officials azound the metropolitan azea in solving
crime. This has been demonstrated in St. Paul, and other cities tune and time again. Despite this
cooperation, cities have instituted strict regulations and steep fee increases under the guise of cost
recovery. Unless there is a proportionate increase in the regulatory activity, the fee increase is nothing
more than an authorized taY.
We request that the City Council act to continue this matter to allow representative of the industry
and software companies serving the industry to demonstrate alternatives which provide the same record
keeping and data retrieval at a fraction of the cost.
Please include this letter in the official record of decision in this matter.
Si erely,
G��'� • ����� C�
William C. Cmffith, Jr., for
LARKIN, HOFFMAN, DAL & LINDGREN, Ltd.
cc: Mayor Norm Coleman
Honorable City Council Members
Daryl Shiber, National Pawnbrokers, Inc.
oz2osza.oi
,