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2009-0962009-96 Resolution Directing Town Attorney to Draft Local Law to Regulate Pawn Shops At a regular meeting of the Town Board of the Town of Wappinger, Dutchess County, New York, held at Town Hall, 20 Middlebush Road, Wappingers Falls, New York, on February 23, 2009. The meeting was called to order by Christopher Colsey, Supervisor, and upon roll being called, the following were present: PRESENT: Supervisor Councilmembers ABSENT: Christopher J. Colsey William H. Beale Vincent F. Bettina Maureen McCarthy Joseph P. Paoloni The following Resolution was introduced by Councilman Bettina and seconded by Councilwoman McCarthy. WHEREAS, the Town of Wappinger does not have any local law or ordinance that provides for the licensing and regulation of pawn shops; and WHEREAS, Article 5 of the General Business Law entitled "Collateral Loan Brokers", and Article 9 of Town Law entitled "Ordinances and Licenses" grants the Town the authority to establish regulations for licensing of collateral loan brokers, commonly known as pawn shops, within the Town of Wappinger; and WHEREAS, certain persons have expressed interest in establishing collateral loan broker locations within the Town; and WHEREAS, New York Law prohibits the Town from excluding collateral loan broker locations from the Town; and WHEREAS, it is in the best interest of the citizens of the Town to establish proper regulations and licensing procedures for said businesses; and WHEREAS, it is appropriate for the Town Board to determine in which zoning districts collateral loan brokers shall be permitted; NOW, THEREFORE, BE IT RESOLVED: 1. The recitations above set forth are incorporated in this Resolution as if fully set forth and adopted herein. 2. The Town Board hereby authorizes and directs Albert P. Roberts, Esq., Attorney to the Town, in consultation with the other consultants to the Town, to draft a Local Law to regulate collateral loan brokers within the Town, and said Local Law shall be presented to the Town Board for its consideration. The foregoing was put to a vote which resulted as follows: CHRISTOPHER COLSEY, SUPERVISOR Voting: AYE WILLIAM H. BEALE, COUNCILMAN Voting: AYE VINCENT F. BETTINA, COUNCILMAN Voting: AYE MAUREEN McCARTHY, COUNCILWOMAN Voting: AYE JOSEPH P. PAOLONI, COUNCILMAN Voting: AYE Dated: Wappingers Falls, New York 2/23/2009 The Resolution is hereby duly declared adopted. Q�C/ �11 VHN-- C. NIASTERSON, TOWN CLERK VERGILIS, STENGER, ROBERTS & DAVIS, LLP ATTORNEYS AND COUNSELORS AT LAW GERALD A. VERGILIS* KENNETH M. STENGER ALBERT R ROBERTS THOMAS R. DAVIS JOAN F. GARRETT** KEVIN T. McDERMOTT ANGEL I. FALCON ANTHONY M. DEFAZIO*** JAMES P. HORAN*** LISA M. COBB *ADMITTED TO PRACTICE IN NY & FLA. **ADMITTED TO PRACTICE IN NY & CONN. *** ADMITTED TO PRACTICE IN NY & NJ February 11, 2009 1136 ROUTE 9 WAPPINGERS FALLS, NEW YORK 12590 (845)298-2000 FAX (845) 298-2842 www.vsrp.com e-mail: info@vsrp.com Hon. Christopher J. Colsey, Supervisor Town of Wappinger 20 Middlebush Road Wappingers Falls, New York 12590 Re: Collateral Loan Brokers Pawn Shops Dear Chris: OF COUNSEL: KAREN MacNISH LEGAL ASSISTANTS: AMY E. DECARLO MARIA L. JONES SANDRA A. OAKLEY CLOSING COORDINATOR: SUSAN E. CAFFINE POUGHKEEPSIE OFFICE 276 MAIN MALL POUGHKEEPSIE, NY 12601 (845)452-1046 NEWBURGH OFFICE 299 N. PLANK ROAD, SUITE 106 NEWBURGH, NY 12550 (845) 567-3783 Supervis'-. _ . ' fice FEB 12 2009 (Receive If you will recall, John Degnan introduced us to a gentleman who was going to open up a Collateral Loan (Pawn Shop) at Degnan's office site. The gentleman inquired how he could get an appropriate license from the Town. Attached please find a research memo which requires the Town to issue a license to this business before it can open. It appears we will have to prepare a Local Law to license Pawn Shops. Please advise if you wish us to begin drafting such a Local Law or await a full Town Board approval? Please advise. Very truly yours, VERGILIS, STENGER, ROBERTS & DAVIS, LLP ALBERT P. ROBERTS APR/jm , 0'6 �r f �1;� MEMO To: Hon Christopher J. Colsey, Supervisor From: Albert P. Roberts and Lisa M. Cobb Date: February 11, 2009 File: Town of Wappinger Re: Collateral Loan Broker Licensing Requirements You asked me to determine whether the Town, which presently does not have a local law regulating collateral loan brokers ("CLB"), a/k/a pawn shops, is required either (a) to issue a license to an individual seeking to operate such a business or (b) to adopt such a local law. In brief, I believe that the Town is obligated to issue the requested license. I do not believe that the Town is obligated to adopt such a local law, although I believe that it would be advisable for the Town to do so. Applicable Statutory Provisions It is clear from the statutes that a license is required before one may operate as a CLB. See Gen. Bus. Law § 40 ("No person ... shall hereafter carry on the business of collateral loan broker, without having first obtained from ... the licensing authority of the local governing body where the business is to be carried on a license ....") Section 41 of the GBL authorizes the local governing body ("LGB") to obtain "satisfactory evidence of [the proposed licensee's] good character." It also mandates that the license set forth the location of the proposed business. Id. The fee for such license shall not exceed $250 annually. Id. Every person receiving such a license shall file with the LGB a bond, executed by the licensee and two sureties, "in the penal sum of ten thousand dollars." Every license expires annually but may be renewed. Section 53 of the GBL requires that the person seeking the license also file with the State Comptroller a "Collateral Loan Broker's Registration Statement." The license must be obtained before the Statement may be filed. The Statement is required to include the date on which the CLB obtained a license from the LGB and the name of such LGB. O:\Wappingeffown Board\1-GeneralTB\2009\2-11-09 memo to Colsey pawn shop licensing.doc Most of the regulations use permissive language, "may" enact an ordinance, etc. The only regulation that uses mandatory language is Town Law § 137, which provides that the Town "shall establish" uniform fees for the issuance of licenses, when such licenses are required before a business may operate. Analysis The case law on this topic is sparse. No Attorney General Opinions were found that deal with pawn shops or CLBs. No cases were found that mandated that a Town or other LGBs adopt such ordinances. The few cases that were found dealt with ordinances that were discriminatory or too restrictive (a regulation that proscribes a business is of "doubtful validity"). Only one State Comptroller Opinion was found on the topic. It provides: "A license must be obtained from the local government in order to cant' on the business of collateral loan broker. In addition, a licensed collateral loan broker must file a registration statement with the State Comptroller in order to cavy on the business .... the licensing of collateral loan brokers [ ] is exclusively a power of local government." Opns St Comp, 1989 No. 89- 37. In an informal Attorney General Opinion from 2003, the AG analyzed certain wagering regulations, which provided that an application for a simulcast license for an Off Track Betting establishment must include a copy of the resolution from the LGB approving the proposed application and requesting that the license be issued. The AG concluded that, because of this requirement, the LGB could prohibit the establishment within its borders by refusing to enact the required regulation. The AG wrote: This statutory [wagering] framework suggests that the Legislature intended that a local governing body would make the determination of whether to support the location of a simulcast theater within its boundaries in the context of a specific licensing application. We are of the opinion, therefore, that a village zoning ordinance may not prospectively prohibit all Simulcast theaters in all zoning districts within the village. 2003 N.Y. Op. Atty. Gen. (Inf.)1055, Informal Opinion No. 2003-10. Since the statute concerning CLBs does not contain similar provisions, I believe that the Town is not free to prohibit CLBs within its borders. I base my conclusion that the Town must issue the license on a Court of Appeals case. Concerning a license to conduct pari-mutuel betting on horses, the Court wrote: "A 'license' is permission to exercise a pre-existing right or privilege which has been subjected to the regulation in interest of the public welfare." Madden v. Queens County Jockey Club, 296 N.Y. 249, 72 N.E.2d 697 (N.Y. 1947). The Court distinguished 0 Page 2 franchises, as follows: "A `franchise' is a special privilege, conferred by the state on an individual, which does not belong to the individual as a matter of common right, and creates a privilege where none existed before; its primary object being to promote the public welfare." Therefore, I believe that the Town must issue the license but should enact an ordinance to regulate same. Section 136 of Town Law provides that the Town Board may provide by ordinance for the licensing or other regulation of CLBs. Included in the ordinance should be a statement concerning in which zoning districts such establishments should be permitted. 0 Page 3