HBA-ATS, TYH H.B. 1878 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 1878 By: Averitt Financial Institutions 7/7/1999 Enrolled BACKGROUND AND PURPOSE The licensing of new pawnshops entails an investigational hearing process by which the consumer credit commissioner determines eligibility for the license. Prior to the 76th Legislature, the license reinstatement and employee license filing periods created delays for both the industry and the regulators. Disputes regarding lost or damaged goods that crowded court dockets was another problem prior to the 76th Legislature. H.B. 1878 sets a distance requirement for applications for new pawnshops or relocation of pawnshops and makes this section applicable statewide rather than only to the 11 counties with population over 250,000. This bill also extends the license reinstatement period to 180 days and raises the annual fee to $125 plus a $1,000 reinstatement fee, extends the employee license filing requirement from 30 to 75 days, provides an administrative procedure for disputes over lost or damaged pledged goods, and clarifies the requirement for the net asset requirement to be met at the time of licensure. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 371.059, Finance Code, as follows: Sec. 371.059. APPROVAL; ISSUANCE OF LICENSE. (a) Requires the consumer credit commissioner (commissioner), subject to Subsection (b), to approve the application and issue a license if the commissioner finds that the applicant is eligible for the license. (b) Requires the commissioner, in a county with a population of 250,000 or more, to approve an application for: (1) an original license to operate a pawnshop at a facility that is not an existing licensed pawnshop at the time the application is filed, if the proposed facility is located within two miles of a licensed pawnshop; (2) the relocation of a licensed pawnshop to a facility that is not an existing licensed pawnshop at the time the application is filed if the facility where the pawnshop is to be relocated is not located within one mile of a licensed pawnshop; and (3) the relocation of a licensed pawnshop if at the time the application is filed the pawnshop has been in operation at its current location for at least three years, and the facility where the pawnshop is to be relocated is either within one mile of its existing location or, if in excess of one mile from its existing location, not within one mile of an existing operating pawnshop. Makes conforming changes. (c) Authorizes the commissioner, notwithstanding Subsection (b)(3), to approve an application for the relocation of a licensed pawnshop that needs to relocate marginally further than one mile from its current location or that at the time the application is made has not been in operation in its current location for at least three years if the necessity for relocation was caused by circumstances beyond the applicant's control. (d) Provides that a determination of distance for purposes of this section is based on a measurement taken from the front door of a facility to the front door of the other facility. Provides that for a facility not in existence at the time the application is filed, the location of the front door of the proposed facility must be indicated on architectural drawings or comparable professionally prepared drawings depicting the facility and the entire boundary of the lot or parcel of land to which the facility is to be attached. Deletes text regarding the relocation of a pawnshop to a county with a population of at least 250,000. Makes conforming changes. SECTION 2. Amends Section 371.064(a), Finance Code, to require a pawnbroker, not later than December 1, to pay to the commissioner for each license held an annual fee of $125, rather than $100, for the year beginning the next January 1. SECTION 3. Amends Section 371.071, Finance Code, as follows: Sec. 371.071. New title: APPLICATION FOR RELOCATION. Provides that a pawnbroker who wishes to move a pawnshop from the location provided on the license must make application to the commissioner, rather than give notice to the commissioner before the 30th day preceding the date the pawnbroker moves. Deletes the references to the new location's subjectivity to Section 371.059(2) (Approval; Issuance of License). Deletes the requirement for the commissioner to amend the license when the commissioner receives a notice under Subsection (a)(1). Makes conforming changes. SECTION 4. Amends Section 371.072, Finance Code, as follows: Sec. 371.072. NET ASSETS REQUIREMENT. (a) Establishes Subsection (b), rather than this section, as an exception to the requirement that a pawnbroker maintain net assets of at least $150,000 for use in the business of each pawnshop. (b) Requires a pawnbroker who held a license under the Texas Pawnshop Act prior to September 1, 1999, to maintain net assets used or readily available for use in the business for that existing license in an amount of at least the net assets requirement associated with the license as the requirement on August 31, 1999. Provides that the net assets requirement of this subsection remains in effect without regard to a change in ownership or relocation of the license. Deletes text setting the amount of net assets needed if a change in ownership or location takes place and the time by which the pawnbroker needs to have the net assets. (c)-(d) Redesignated from Subsections (e)-(f), respectively. (e) Requires Subsection (b) to apply, rather than provides that this section does not apply, to specified changes in ownership. SECTION 5. Amends Section 371.101(a), Finance Code, to increase the time limit for a newly hired pawnshop employee to apply for a pawnshop employee licence from 30 days to 75 days after employment begins. SECTION 6. Amends Section 371.106(a), Finance Code, to require a pawnshop employee license holder, not later than December 1, to pay the commissioner an annual fee of $15, rather than $10, for the year beginning the next January 1. SECTION 7. Amends Section 371.167(a), Finance Code, to provide that the pledgor must exhaust the specified administrative remedy (commissioner-approved replacement of the lost or damaged pledged goods) before seeking redress in court. Authorizes the pledgor to seek court remedy if the commissioner does not approve a replacement before the 91st day after the date on which the commissioner receives a complaint from the pledgor concerning the lost or damaged goods or if the pledgor does not accept the commissioner's determination. SECTION 8. Amends Section 371.258, Finance Code, by adding Subsection (c), as follows: (c) Requires the commissioner to reinstate an expired pawnbroker license if, within 180 days of expiration, the pawnbroker pays the commissioner the delinquent $125 annual fee plus a reinstatement fee of $1,000. Requires the commissioner to send notice of reinstatement rights, after a pawnbroker's license has expired, to the delinquent pawnbroker via certified mail promptly upon expiration of the license. SECTION 9.(a) Effective date: September 1, 1999. (b) Makes application of this Act prospective. (c) Provides that the net assets requirement under Section 371.072, Finance Code, for an existing license on the effective date of this Act remains in effect as the net assets requirement that existed immediately before the effective date of this Act. SECTION 10. Emergency clause.