1-1 By: Averitt (Senate Sponsor - Harris) H.B. No. 1878
1-2 (In the Senate - Received from the House April 23, 1999;
1-3 April 26, 1999, read first time and referred to Committee on
1-4 Economic Development; May 14, 1999, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 4, Nays
1-6 0; May 14, 1999, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 1878 By: Madla
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the regulation of pawnbrokers and pawnshop employees.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 371.059, Finance Code, is amended to read
1-13 as follows:
1-14 Sec. 371.059. APPROVAL; ISSUANCE OF LICENSE. (a) Subject
1-15 to Subsection (b), the [The] commissioner shall approve the
1-16 application and issue a license if the commissioner finds that[:]
1-17 [(1)] the applicant is eligible for the license.
1-18 (b) In a county with a population of 250,000 or more, the
1-19 commissioner shall approve[; and]
1-20 [(2) for] an application for:
1-21 (1) an original license to operate a pawnshop at a
1-22 facility that is not an existing licensed pawnshop at the time the
1-23 application is filed if the proposed facility is not located within
1-24 two miles of a licensed pawnshop;
1-25 (2) the relocation of a licensed pawnshop to a
1-26 facility that is not an existing licensed pawnshop at the time the
1-27 application is filed if the facility where the pawnshop is to be
1-28 relocated is not located within one mile of a licensed pawnshop;
1-29 and
1-30 (3) the relocation of a licensed pawnshop if at the
1-31 time the application is filed the pawnshop has been in operation at
1-32 its current location for at least three years, and the facility
1-33 where the pawnshop is to be relocated is either within one mile of
1-34 its existing location or, if in excess of one mile from its
1-35 existing location, not within one mile of another existing
1-36 operating pawnshop.
1-37 (c) Notwithstanding Subsection (b)(3), the commissioner may
1-38 approve an application for the relocation of a licensed pawnshop
1-39 that needs to relocate marginally further than one mile from its
1-40 existing location or that at the time the application is made has
1-41 not been in operation in its current location for at least three
1-42 years if the necessity for relocation was caused by circumstances
1-43 beyond the applicant's control.
1-44 (d) A determination of distance for purposes of this section
1-45 is based on a measurement taken from the front door of a facility
1-46 to the front door of the other facility. For a facility not in
1-47 existence at the time the application is filed, the location of the
1-48 front door of the proposed facility must be indicated on
1-49 architectural drawings or comparable professionally prepared
1-50 drawings depicting the facility and the entire boundary of the lot
1-51 or parcel of land to which the facility is to be attached [in or
1-52 the relocation of a pawnshop to a county with a population of at
1-53 least 250,000:]
1-54 [(A) there is a public need for the proposed
1-55 pawnshop; and]
1-56 [(B) the volume of business in the community in
1-57 which the pawnshop will conduct its business indicates a profitable
1-58 operation is probable].
1-59 SECTION 2. Section 371.064(a), Finance Code, is amended to
1-60 read as follows:
1-61 (a) Not later than December 1, a pawnbroker shall pay to the
1-62 commissioner for each license held an annual fee of $125 [$100] for
1-63 the year beginning the next January 1.
1-64 SECTION 3. Section 371.071, Finance Code, is amended to read
2-1 as follows:
2-2 Sec. 371.071. APPLICATION FOR [NOTICE OF] RELOCATION. [(a)]
2-3 A pawnbroker who wishes to move a pawnshop from the location
2-4 provided on the license must make application to the commissioner[:]
2-5 [(1) give notice to the commissioner] before the 30th
2-6 day preceding the date the pawnbroker moves [if the new location is
2-7 not subject to Section 371.059(2); or]
2-8 [(2) make application to the commissioner before the
2-9 60th day preceding the date the pawnbroker moves if the new
2-10 location is subject to Section 371.059(2).]
2-11 [(b) When the commissioner receives a notice under
2-12 Subsection (a)(1), the commissioner shall amend the license
2-13 accordingly].
2-14 SECTION 4. Section 371.072, Finance Code, is amended to read
2-15 as follows:
2-16 Sec. 371.072. NET ASSETS REQUIREMENT. (a) Except as
2-17 provided by Subsection (b) [this section], a pawnbroker shall
2-18 maintain net assets of at least $150,000 that are used or readily
2-19 available for use in the business of each pawnshop.
2-20 (b) A pawnbroker who held a license under this chapter
2-21 before September 1, 1999, shall maintain net assets that are used
2-22 or readily available for use in the business for that existing
2-23 license of at least the amount required on August 31, 1999. The
2-24 net assets requirement of this subsection remains in effect without
2-25 regard to a change in ownership or relocation of the license [If a
2-26 change in ownership or a relocation from a municipality occurs, the
2-27 net assets requirement for a pawnbroker is an amount equal to the
2-28 sum, rounded to the next higher multiple of $5,000, of:]
2-29 [(1) the pawnbroker's outstanding loans on the date of
2-30 the change of ownership or relocation;]
2-31 [(2) the value of the pawnbroker's inventory on that
2-32 date; and]
2-33 [(3) an amount equal to five percent of the sum of the
2-34 amounts described by Subdivisions (1) and (2).]
2-35 [(c) The net assets requirement of Subsection (b) may not
2-36 be:]
2-37 [(1) less than the amount of net assets required
2-38 immediately before the date of the change of ownership or
2-39 relocation; or]
2-40 [(2) more than $150,000.]
2-41 [(d) Subject to Subsection (b), a pawnbroker shall maintain
2-42 for each pawnshop net assets that are used or readily available for
2-43 use in the business of the pawnshop of at least the amount required
2-44 on:]
2-45 [(1) August 31, 1981, if the pawnbroker held a license
2-46 on that date; or]
2-47 [(2) June 20, 1987, if the pawnbroker held a license
2-48 on that date but did not hold a license on August 31, 1981].
2-49 (c) [(e)] Net assets must be represented by a capital
2-50 investment unencumbered by a lien or other encumbrance and subject
2-51 to a claim by a general creditor.
2-52 (d) [(f)] In this section, "capital investment" means:
2-53 (1) common or preferred shares and capital or earned
2-54 surplus as those terms are defined by the Texas Business
2-55 Corporation Act if the pawnbroker is a corporation; or
2-56 (2) a substantial equivalent of items described by
2-57 Subdivision (1), as determined by generally accepted accounting
2-58 principles, if the pawnbroker is not a corporation.
2-59 (e) Subsection (b) applies [(g) This section does not
2-60 apply] to a change in ownership that is:
2-61 (1) a transaction involving a different owner who had
2-62 a significant family or business relationship with a prior owner
2-63 before the transaction;
2-64 (2) a transaction in which:
2-65 (A) only the number or proportionate ownership
2-66 of owners of a business changes; and
2-67 (B) an individual who was not an owner before
2-68 the transaction is not an owner after the transaction; or
2-69 (3) a change in ownership that occurs by testate or
3-1 intestate disposition.
3-2 SECTION 5. Section 371.101(a), Finance Code, is amended to
3-3 read as follows:
3-4 (a) An individual who begins employment at a pawnshop must
3-5 apply to the commissioner for a pawnshop employee license not later
3-6 than the 75th [30th] day after the date employment begins.
3-7 SECTION 6. Section 371.106(a), Finance Code, is amended to
3-8 read as follows:
3-9 (a) Not later than December 1, a pawnshop employee license
3-10 holder shall pay to the commissioner an annual fee of $15 [$10] for
3-11 the year beginning the next January 1.
3-12 SECTION 7. Section 371.167(a), Finance Code, is amended to
3-13 read as follows:
3-14 (a) A pawnbroker shall replace pledged goods that are lost
3-15 or damaged while in the pawnbroker's possession with like kind
3-16 merchandise. The replacement is subject to approval by the
3-17 commissioner and the pledgor must exhaust this administrative
3-18 remedy with respect to the lost or damaged pledged goods before
3-19 seeking a remedy in court. If the commissioner does not approve a
3-20 replacement before the 91st day after the date on which the
3-21 commissioner receives a complaint from the pledgor concerning the
3-22 lost or damaged goods, or if the pledgor does not accept the
3-23 commissioner's determination, the pledgor may seek a remedy in
3-24 court.
3-25 SECTION 8. Section 371.258, Finance Code, is amended by
3-26 adding Subsection (c) to read as follows:
3-27 (c) The commissioner shall reinstate an expired pawnbroker
3-28 license if, not later than the 180th day after the date on which
3-29 the license expired, the pawnbroker pays the commissioner the
3-30 delinquent $125 annual fee plus a reinstatement fee of $1,000.
3-31 After a pawnbroker's license has expired, the commissioner shall
3-32 promptly send notice of reinstatement rights to the delinquent
3-33 pawnbroker by certified mail.
3-34 SECTION 9. (a) This Act takes effect September 1, 1999.
3-35 The changes in law made by this Act to Sections 371.059 and
3-36 371.071, Finance Code, apply only to applications filed on or after
3-37 the effective date of this Act.
3-38 (b) An application filed before the effective date of this
3-39 Act is covered by the law in effect when the application was
3-40 submitted, and the former law is continued in effect for that
3-41 purpose.
3-42 (c) The net assets requirement under Section 371.072,
3-43 Finance Code, as amended by this Act, for an existing license on
3-44 the effective date of this Act remains in effect as the net assets
3-45 requirement that existed immediately before the effective date of
3-46 this Act.
3-47 SECTION 10. The importance of this legislation and the
3-48 crowded condition of the calendars in both houses create an
3-49 emergency and an imperative public necessity that the
3-50 constitutional rule requiring bills to be read on three several
3-51 days in each house be suspended, and this rule is hereby suspended.
3-52 * * * * *