HBA-TYH H.B. 1878 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1878 By: Averitt Financial Institutions 3/11/1999 Introduced BACKGROUND AND PURPOSE The licensing of new pawnshops entails an investigational hearing process by which the consumer credit commissioner determines eligibility for the license. The current license reinstatement time and employee license filing time create delays for both the industry and the regulators. Another problem is that disputes regarding lost or damaged goods have crowded court dockets. 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 time to 180 days and raises the annual fee to $100 plus a $900 reinstatement fee, extends the employee license filing requirement from 30 to 90 days, requires administrative handling of disputes over lost or damaged pledged goods, and clarifies the requirement for the net asset requirement to be met at the time of license issue. 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 371.002, Finance Code, to include the prevention of overburdening of court dockets by requiring administrative handling of disputes over lost or damaged pledged goods as one of the purposes of this chapter (Pawnshops). SECTION 2. Amends Section 371.059, Finance Code, as follows: Sec. 371.059. APPROVAL; ISSUANCE OF LICENSE. (a) Establishes Subsection (b) as an exception to the requirement that the consumer credit commissioner (commissioner) approve the application and issue a pawnshop license if the applicant is eligible for the license. Makes conforming changes. (b) Prohibits the commissioner from approving 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 and that is 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 not been in operation at its current location for at least three years, and the facility where the pawnshop is to be relocated is further than one mile from its existing location and closer than one mile to an existing licensed 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 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. SECTION 3. 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 $100 annual fee plus a reinstatement fee of $900. Requires, the commissioner to send notice of reinstatement rights, after a pawnbroker's license has expired, to the delinquent pawnbroker every 30 days until the earlier of the date on which the reinstatement payment is received by the commissioner or the expiration of the period provided for reinstatement. SECTION 4. 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 in the licence must make application to the commissioner, rather than give notice to the commissioner: (1) at least 30 days before the pawnbroker moves if, at the time of application, the pawnshop has been in operation in the location provided on the licence for at least three years; or (2) at least 60 days before the pawnbroker moves if, at the time of application, the pawnshop has been in operation in the location provided on the licence for less than three years. 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 5. 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 to maintain net assets that are used or readily available for use in the business of each pawnshop of at least the amount required on the date on which the license was originally issued to the pawnbroker. 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)-(e) Redesignated from Subsections (e)-(g), respectively. SECTION 6. 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 90 days after employment begins. SECTION 7. Amends Section 371.167(a), Finance Code, to provide that the replacement for lost pledged goods is the pledgor's sole and exclusive remedy with respect to the lost or damaged pledged goods. SECTION 8.Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 9. Emergency clause.