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AMENDMENT OF STOCKTON MUNICIPAL CODE CHAPTER 5.28 PAWNBROKERS, SECONDHAND DEALERS, AND JUNK DEALERS
RECOMMENDATION
It is recommended the City Council adopt an ordinance amending Stockton Municipal Code Chapter 5.28 "Pawnbrokers, Secondhand Dealers, and Junk Dealers," in order to comply with State law, restructure and clarify the code provisions, provide a more comprehensive application process and include a penalty provision for violations.
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Summary
Over the past few years, the price of gold has increased significantly. As the price of gold has increased, cities across the nation (including Stockton) have experienced an increase in street robberies targeting individuals with gold chains and/or other gold jewelry. The stolen items are then sold to pawnbrokers and like establishments.
The Stockton Police Department made several efforts to combat the increase in street robberies including targeted investigations, which showed that the perpetrators were taking the stolen items to pawnbrokers and secondhand dealers and exchanging them for cash. Police then undertook a proactive approach to dealing with this issue by performing routine checks of Pawnbroker and secondhand dealer businesses to ensure compliance with existing state and local regulations. While performing these checks, the police discovered that portions of the City's existing municipal code relating to the regulation of such businesses were outdated and/or not in sync with current state law and were not as effective as they might otherwise be. The proposed amendments will update the City's existing municipal code, bring it current with state law, and give the police another tool to combat the gold theft/street robbery epidemic.
The proposed changes include an expanded and more stringent application process for new businesses, the inclusion of cash for gold stores and exchange dealers, updated recordkeeping requirements which comply with state law, and added penalty provisions for violations.
DISCUSSION
Background
For over 50 years, the City of Stockton's municipal code has regulated pawnbroker and secondhand dealer businesses. The most recent amendment to the code took place in June 2007 in response to a serious increase in metal theft. At that time, an entire section was added for the regulation of junk dealers.
Present Situation
Although the City currently has a provision within its municipal code which regulates Pawnbrokers and Secondhand Dealers, the existing provisions are inadequate to deal effectively with the increase in gold theft and issues related to the subsequent resale of stolen goods. Specifically, the existing code contains provisions which are inconsistent with state law and/or which fail to regulate similar businesses such as cash for gold stores, which have recently spread throughout the city at a rapid pace. Although the City must be careful to avoid preemption issues with existing state law, there are still areas where the City may improve the existing code without fear of preemption.
The proposed amendments (Attachment A - Redline Version of Ordinance) will accomplish the following:
1. Add a purpose and intent section to specify the purpose of the amendments.
2. Revise the existing code structure to include additional articles and a more orderly and cohesive grouping of the provisions.
3. Regulate cash for gold stores and exchange dealers.
4. Expand the application process for new businesses with more stringent requirements including grounds for denial.
5. Bring the recordkeeping requirements consistent with existing state regulations.
6. Expand operational regulations regarding location and compliance.
7. Allow the police to impose hold orders on property for up to 90 days.
8. Add renewal, suspension, and revocation sections to ensure annual compliance and provide grounds for terminating a non-compliant business.
9. Add penalty provisions for violations which are consistent with the general penalty provisions of the Stockton Municipal Code.
The amendments are modeled in large part after the ordinance currently in effect in the City of Oakland. Both Oakland Police Department's Major Crimes Division and the Oakland City Attorney's Office were helpful in providing information about how effective the ordinance has been in Oakland. Both agree that the ordinance allows better enforcement of current state regulations and more local control by the municipality. However, both departments also noted that gold theft had not decreased since the adoption of the ordinance due to the following: 1) severe staffing issues which prevented adequate manpower to enforce the new requirements; 2) the Ordinance only applied to new businesses; and 3) the inability to determine which of the businesses subject to the new requirements were following them.
Similar to Oakland's situation, Stockton is still facing challenges with regard to staffing and until the department is fully staffed, Stockton may experience similar issues with regard to enforcement. However, with regard to application and compliance tracking, Stockton will have an advantage in that the proposed amendments are structured so that the operational and penalty provisions are applicable to both existing and new businesses alike. In short, while the proposed amendments are responsive to the issues experienced in Oakland, may prove a deterrent of sorts with regard to resale, and will allow the police a better method of enforcement, they are not a guaranteed solution to the gold theft issue.
In August 2013, the proposed amendments were brought before the Legislative Committee for discussion. At that time, the Committee voted to have this matter brought before the full Council for review. Although the committee also directed staff to conduct additional research into the possibility of creating separate regulations for coin dealers, further research revealed that Stockton does not have any existing businesses whose sole trade is dealing in coins. Therefore, because there are no such businesses to regulate and because other businesses which carry on another trade and also deal in coins are already covered under the broad definitions of the proposed amendments, such regulation is not necessary at this time.
FINANCIAL SUMMARY
There is no impact to the City's general fund or any other unrestricted fund as a result of taking the recommended actions. There is the potential to generate additional revenue through application fees, renewal fees and penalties, however an estimate of how much additional revenue there may be cannot be determined at this time. There is an existing fee in place for the Permit in the Police Department Narcotics section of the current City-wide Fee Schedule. The title of the fee is currently "Secondhand Dealer Permit" which will be modified to also specify "Pawnbrokers and Junk Dealers" the next time the Fee Schedule is updated. All penalty amounts are pursuant to existing municipal code provisions.
Attachment A - Ordinance re: Pawnbrokers, Cash for Gold Stores, etc. (Redline Version)