If a pawn shop planned for the business center at the intersection of Longhill and Olde Towne Roads receives court approval, it would be the first pawn shop to hit James City County — a prospect the Planning Commission Policy Committee thinks could negatively affect surrounding businesses and the community.
James City County Code outlines the process a pawnbroker must go through in order to open a pawn shop: The pawnbroker must get a statement from the zoning administrator, a statement from the chief of police about the applicant’s criminal convictions, if any, and an order of authorization from a circuit court judge. Once these three items are obtained, the commissioner of the revenue issues a pawnbroker license.
The pawnbroker, Joseph K. Epstein, received a zoning approval and is in the process of getting authorization issued from a judge, said Paul Holt, planning director for James City County.
Because there are no specific zoning ordinances related to pawnshops, the James City County Planning Commission Policy Committee met Jan. 17 to discuss the ordinances and whether future pawn shops and pay day lenders should be allowed in the county at all.
Prior to the meeting, county staff compiled a report with information from York County, the City of Hampton and the City of Newport News. Staff looked at regulations for pawn shops and talked to the police departments to find out about crime associated with the shops.
Staff reported to the committee only anecdotal evidence about the relation of pawn shops to crime, saying the shops located in areas with crime could have crime at the shops but more crime does not necessarily arise because of pawn shops.
Currently, no specific language in James City County’s zoning ordinances about pawn shops exists; in the staff’s memo to the committee, staff wrote pawn shops are “consistent with ‘retail and service stores’” for zoning ordinances.
Stonehouse District Planning Commission member Richard Krapf said he did not like the idea of lumping pawn shops and consumer service businesses under the same umbrella, instead favoring to single out pawn shops in the ordinances.
Reputation of Pawn Shops
“When pawn shops come into shopping centers, this is just my opinion, it has a tendency to drive away other businesses because you’re taking away revenue opportunities,” said Tim O’Connor, who fills an at-large position on the Planning Commission. He said a friend told him that pawn shops, Chinese restaurants and coin laundromats go hand-in-hand.
At its Tuesday meeting, the James City County Board of Supervisors passed a resolution asking the Planning Commission to consider amendments to zoning ordinances related to pawn shops, pay day lenders, and title loan organizations.
County Attorney Leo Rogers said this resolution would allow for definitions of the organizations and where they can locate in the county; the process was already started with the Planning Commission Policy Committee.
“This is a land use consideration, much more than how they conduct their business,” he said.
Emmett Murphy, a spokesperson for the National Pawnbrokers Association based in Texas, said pawn shops have unfairly developed a bad reputation.
“On a national average, less than one-tenth of one percent of any item that’s ever in a pawn store is reported as stolen. This idea that pawn stores have stolen merchandise doesn’t make any sense,” Murphy said.
The misconception is that pawn, pay day lenders and check cashing are the same but pawn shops have a different business model, Murphy said. Pawn shops do not perform credit checks, and the loans they offer do not affect credit scores.
“Over 85 percent of people across the country actually come back and pay for that loan … It’s an important financial tool for people who don’t have traditional relationships with banks,” Murphy said.
In 2011, the Federal Deposit Insurance Corporation sponsored a National Survey of Unbanked and Underbanked Households through the U.S. Census Bureau. The survey revealed 8.2 percent of U.S. households are unbanked, or don’t have a bank account. The survey also revealed 20.1 percent of U.S. households are underbanked, meaning they have checking or savings accounts but have needed to use alternative financial services providers, which includes pawn shops. Also according to the survey, 29.3 percent do not have a savings account while 10 percent do not have a checking account.
Of approximately 3 million households in Virginia, almost 200,000 were unbanked and 503,000 were underbanked.
Pawn shops provide “a safety net loan,” Murphy said, continuing, pawn is a collateral loan with no negative credit and no credit report. “They’re not selling money like a check cashing place or a pay day loan place.”
People who pawn items might need to pay a bill or just need a little bit of money before they receive their next paycheck, Murphy said.
The committee discussed pawn shops, pay day lenders and title lenders as similar businesses. Tattoo parlors were also mentioned but staff said it would be hard to lump tattoo parlors into the same category.
Krapf said he wants to see specific language about pawn shops and lenders to regulate their existence in the county.
“They prey on people who don’t have money … It’s a suck-you-in type of business and they end up paying far more than they ever got,” said Jamestown District Planning Commission member Robin Bledsoe of payday lenders.
Existing Pawn Shop Regulations
Currently, there are no pawn shops, pay day lenders, title lenders or tattoo parlors in James City County. The closest pay day lenders to James City County are on Merrimac Trail in York County.
The committee discussed which business districts would and would not be acceptable for pawn shops to open; it also discussed whether a special-use permit should be required for any pawn shop regardless of the district.
Members did not want to see pawn shops in limited business districts, general business districts or in general industrial districts. The committee talked about allowing the shops in limited business and industrial districts but wanted more information about where the districts were located and the types of establishments surrounding them.
Staff told the committee one of the limited business and industrial districts was located near New Town.
“No. Absolutely not … that’s the backyard of New Town,” Bledsoe said.
Krapf supported Bledsoe’s opinion and said if pawn shops were allowed in that district, the county would have to require special-use permits to regulate the exact locations.
Staff said the special-use permit would require a higher initial investment for the application and supporting documents.
O’Connor mentioned York County’s ordinances stipulate how close the pawn shops can be to other businesses, such as schools and churches. Staff offered to create a map showing the limited business and industrial districts with a half-mile buffer to check for schools, day care, mental hospitals, New Town, residences and churches.
“Do we want pawn shops in our community, period? I don’t think we do,” Bledsoe said.
Ultimately the committee decided to do a little more research before making a final decision. The members want to know whether they can say pawn shops are not allowed in any district of the county or if they have to allow them in at least one district. They also want to know if they can put a cap on the number of pawn shops and payday lenders allowed in the county.
Virginia Code gives local governments the right to limit the number of pawn shops in ordinances and regulates the interest rates pawn shops can charge: no more than 10 percent on items less than $25; no more than 7 percent on items valued between $25 and $100; no more than 5 percent for items worth more than $100. Pawn shops are also prohibited from selling a pawned item within 45 days.
The General Assembly is currently considering legislation (HB 1649) that would require pawn shops to maintain digital copies of identification used in pawn shop transactions. The bill passed a committee vote Thursday in the House of Representatives. HB 1649 would also prevent pawnbrokers from accepting items with damaged or removed serial numbers.
Currently, pawn shops are required to maintain the full name, address, phone number, ID number, and a description including height, weight, date of birth, race, gender, hair and eye color and other identifying marks of the person pawning an item.
“There is a lot of misinformation about pawn that is out there…it’s a political home run to say ‘We’ve taken this kind of business out of our community’” because people don’t understand what the businesses are, Murphy said.
The next Planning Commission Policy Committee meeting will be at 2 p.m. Feb. 15.