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VII.3. First Reading: Zoning Code Text Amendment Related to Pawnshops, Payday Loan Agencies, Currency Exchanges and Coin Dealers; Lindahl (CR2017-127) November 6, 2017 City Council Report 2017-127 Zoning Code Text Amendment Related to Pawnshops, Payday Loan Agencies, Currency Exchanges and Coin Dealers Proposed Action Staff recommends the following motion: Move to adopt Resolution 2017-069, recommending approving an ordinance amending Sections 515.07 (Definitions) and 535 (Business Districts) of the City Code related to zoning standards for Pawnshops, Payday Loan Agencies, Currency Exchanges and Coin Dealers. Overview This application was initiated by staff to update the City’s zoning regulation for Pawnshops, Payday Loan Agencies, Currency Exchanges and Coin Dealers. This memo reviews the City’s legal authority for this type of application, the proposal’s consistency with the Comprehensive Plan, the proposed zoning standards and potential non-conformity issues. Based on the findings made below, staff recommends approval of this request. Should the City approve the proposed zoning code text amendment, it would: 1. Establish new zoning definitions for “Pawnshops” and “Payday Loan Agencies.” 2. Reorganize Pawnshops, Currency Exchanges and Coin Dealers into more appropriate zoning categories and reclassify Pawnshops and Coin Dealers from permitted to conditional uses. 3. Establish Payday Loan Agencies as a new, distinct use. 4. Revise conditional use standards for Currency Exchanges. 5. Establish new conditional use standards for Pawnshops, Payday Loan Agencies and Coin Dealers. Primary Issues to Consider • Consistency with the Comprehensive Plan • Zoning Standards • Potential Non-Conformity Issues Supporting Documents • Resolution 2017-069 • Ordinance 2017-1125 • Zoning Map _____________________ Jason Lindahl, AICP City Planner Financial Impact: $ N/A Budgeted: Y/N ____ Source: _____________ Related Documents (CIP, ERP, etc.): _________________________________________ Notes: City Council Report 2017-127 Page 2 Background In January 2017, the City Council approved a one-year moratorium on pawnshops, currency exchanges and coin dealers to give City staff sufficient time to study these uses and evaluate various options for regulation. This moratorium was put in place in part because Metro Transit plans to extend the Metro Green Line through Hopkins and, as part of this project, will acquire the City’s only pawnshop. This will likely facilitate this business relocating to another site within the community. As a result, the City believes this is the appropriate time to review the development regulations for these businesses. During their regular May and June meetings, the Planning & Zoning Commission reviewed the zoning and licensing standards for pawnshops, currency exchanges and coin dealers for Hopkins, selected metropolitan communities and the State of Minnesota. During that discussion, staff reviewed each of these regulations and asked the Commission for comments on appropriate zoning districts, classification (permitted vs. conditional use), and standards (separation, number per population, storefront appearance, etc.). Commissioners’ comments included: St. Louis Park provided the best model for zoning and licensing standards; with the possible exception of coin dealers, these uses should be eliminated from the B-2 zoning district and along Mainstreet; change zoning districts where practical or mandate CUP; City licensing standards should address business operation not zoning standards; the City Council should consider whether Hopkins should require a city license for these uses in addition to the state licensing requirements. Based on this discussion, staff prepared draft zoning regulations for these uses and presented them to the City Council during their September 12, 2017, work session. The City Council was generally supportive of the draft regulations, agreed to maintain city licensing for pawnshops but state licensing for the other uses, and suggested the Planning & Zoning Commission consider limiting the number of these uses in Hopkins based on population. The Council then directed staff to hold a public hearing on this item with the Planning & Zoning Commission before bringing it back to the City Council for final action. Planning & Zoning Commission Action The Planning & Zoning Commission held a public hearing to review this item during their regular meeting on October 24, 2017. During the public hearing, the Commission heard a summary presentation from staff and no comments from the public. Staff noted the proposed zoning changes were provided to Pawn America and they have not provided comment. Overall, the proposed zoning changes will bring most of the existing businesses closer to compliance. After some discussion, the Commission decided to not add a provision limiting the number of these businesses based on population. The Commission then voted unanimously to recommend the City Council approve this item. Primary Issues to Consider Legal Authority. Zoning Code amendments are legislative actions in that the City is creating new standards to regulate the development of certain types of uses and/or structures. Under the law, the City has wide flexibility to create standards that will ensure the type of development it desires; however, zoning regulations must be reasonable and supported by a rational basis relating to promoting the public health, safety and welfare. Consistency with the Comprehensive Plan. The proposed zoning ordinance text City Council Report 2017-127 Page 3 amendment would update the City’s zoning regulation for Pawnshops, Payday Loan Agencies, Currency Exchanges and Coin Dealers. Staff finds the proposed changes consistent with the applicable goals and implementation strategies from the Comprehensive Plan. The applicable goals or implementation strategies from the Comprehensive plan, along with staff’s findings for each, are detailed below. 1. Protect and Enhance Downtown Hopkins Findings: The Comprehensive Plan identifies eight primary goals to guide future development in Hopkins. The most applicable goal to this application is to “protect and enhance downtown Hopkins.” The proposed zoning changes would meet this goal by prohibiting Pawnshops, Payday Loan Agencies, Currency Exchanges or Coin Dealers in the B-2, Central Business district, or on properties in the B-3 district along Mainstreet. Overall, the proposed zoning changes move these uses to more compatible areas in the B-3 and B-4 districts where there are larger commercial areas along higher capacity roads. 2. Review and Update Zoning and Subdivision Regulations Findings: In addition to the eight primary goals, the Comprehensive Plan identifies strategies to implement these goals. Specifically, the Comprehensive Plan identifies the implementation strategy to review and update the City’s zoning and subdivision regulations. Updating the zoning regulations for Pawnshops, Payday Loan Agencies, Currency Exchanges or Coin Dealers will detail the specific standards necessary to implement the City’s goal to protect and enhance downtown. Zoning Standards. The proposed zoning ordinance text amendment would make five changes to the zoning standards for Pawnshops, Payday Loan Agencies, Currency Exchanges and Coin Dealers. These changes are consistent with the goals and implementation strategies of the Comprehensive Plan and will protect the health, safety and general welfare of the community by clarifying definitions, reorganizing and reclassifying these uses, updating conditions for Currency Exchanges and establishing new conditions for Pawnshops, Payday Loan Agencies and Coin Dealers. Each of the five proposed changes is detailed below. 1. Establish new zoning definition for Pawnshops and Payday Loan Agencies. Currently, the zoning ordinance does not define either of these uses. In addition, staff found there is often confusion between these uses and Currency Exchanges. Staff recommends establishing the following definitions for these uses which are consistent with the definitions used in state licensing statutes and surrounding communities. Pawnshop: A facility where money is loaned based on the value of goods deposited at the facility by the borrower of the money, which goods are held by the lender of the money occupying the facility as collateral for the loan. Items held by the lender which are not redeemed by a borrower may be put up for sale at the facility to the general public. The term pawnshop includes a facility where all or any part of the pawnshop activities are conducted. Payday Loan Agency: Any business that has as its primary activity the providing of short- term loans for the borrower's own personal, family, or household purpose which are usually for a period of forty-five (45) days or less. Payday loan agencies do not include banks. City Council Report 2017-127 Page 4 2. Reorganize Pawnshops, Currency Exchanges and Coin Dealers into more appropriate zoning categories and reclassify Pawnshops and Coin Dealers from permitted to conditional uses. Pawnshops are currently a permitted use in the B-2 and B-3 districts; however, the only existing pawnshop in Hopkins (Pawn America located at 168 Blake Road North) is located in the B-4 district. Similarly, Currency Exchanges are currently a conditional use in the B-2 district, but the two existing uses (Casablanca Market at 716 - 11th Avenue South and the US Grocery & Tobacco store at 520 Blake Road North) are both located in the B-3 district. Therefore, reorganizing Pawnshops from a permitted use in the B-2 and B-3 districts to a conditional use in the B-3 and B-4 districts and moving Currency Exchanges from conditional use in the B-2 district to a conditional use in the B-3 and B-4 districts will make these existing uses conforming. There are no existing commercial Coin Dealers in Hopkins (only one that operates as a home occupation), so reorganizing Coin Dealers from a permitted use in the B-1 and B-2 districts to a conditional use in the B-3 and B-4 districts will not impact an existing business. Reorganizing these uses will also help achieve the City’s goal to protect and enhance Downtown Hopkins while allowing these uses in zoning districts more consistent with their business needs and separating them from other incompatible land uses. 3. Establish Payday Loan Agencies as a new, distinct use. Currently, the zoning ordinance does not address this use. This use is becoming more common and has both similar and different characteristics to both Pawnshops and Currency Exchanges. Based on its characteristics, staff finds Payday Loan Agencies should be classified as a conditional use in the B-3 and B-4 districts. 4. Revise conditional use standards for Currency Exchanges. Changes to these standards are necessary to bring the existing currency exchange uses closer to compliance with the zoning ordinance while still maintaining the City regulatory goals. The proposed zoning changes are detailed in the attached draft ordinance and include: • Prohibiting this use on properties in the B-3 district that abut Mainstreet. • Removing separation requirements from both residential and off-sale liquor uses. The two existing currency exchange uses do not meet these standards, and staff believes they are not necessary. • Revising window transparency standards. • Prohibiting outdoor storage, display or sales. • Requiring these businesses to obtain and maintain a State of Minnesota license. 5. Establish new conditional use standards for Pawnshops, Payday Loan Agencies and Coin Dealers. Reclassifying Pawnshops and Coin Dealers from permitted to conditional uses and establishing Payday Loan Agencies as a conditional use requires establishment of specific conditional use standards. As previously directed by the Planning & Zoning Commission and City Council, staff drafted these standards based on the City’s standards for Currency Exchanges as well as those standards used by the City of St. Louis Park. These standards are detailed in the attached draft ordinance and require these uses: • Are at least one thousand (1,000) feet from another pawnshop, payday loan agency, or coin dealer. • Are at least two hundred (200) feet from any residential or institutional use or district. City Council Report 2017-127 Page 5 • Are at least three hundred fifty (350) feet from an off-sale liquor establishment. • Are prohibited in the B-3, General Business District, along Mainstreet. • Do not have back-lighted signs, back-lighted awnings, portable signs, temporary signs or freestanding signs. • Have clear, transparent glass, free of obstruction for at least three feet into the store. • Do not cover more than 30 percent of the window area. • Do not have bars, chains or similar security devices that are visible from a public street or sidewalk. • Take place completely within an enclosed building. Outdoor storage, display or sales are prohibited. • Obtain and maintain a City of Hopkins and/or State of Minnesota license. Nonconformities. As with any change to the City’s regulations, this zoning ordinance text amendment has the potential to create sites that are non-conforming or do not meet the new proposed standard. According to Minnesota Statute 462.357, Subdivision 1e., legal nonconformities generally have a statutory right to continue through repair, replacement, restoration, maintenance, or improvement, but not through expansion. These rights run with the land and are not limited to a particular landowner. If the benefited property is sold, the new owner will have the same rights as the previous owner. As mentioned above, many of the proposed changes will bring these uses closer to compliance while still maintaining the City’s regulatory goals. Alternatives 1. Approve the proposed Zoning Code text amendment related to Pawnshops, Payday Loan Agencies, Currency Exchanges and Coin Dealers. By recommending approval, the City Council will approve new zoning standards for these uses. 2. Deny the proposed Zoning Code text amendment related Pawnshops, Payday Loan Agencies, Currency Exchanges and Coin Dealers. By denying this request, the existing standards for these uses will remain in effect. If the City Council considers this option, findings will have to be identified that support this alternative. 3. Continue for further information. If the City Council indicates that further information is needed, the item should be continued. CITY OF HOPKINS Hennepin County, Minnesota RESOLUTION NO. 2017-069 A RESOLUTION APPROVING ORDINANCE 2017-1125 AMENDING SECTIONS 515.07 AND 535 OF THE CITY CODE RELATED TO PAWNSHOPS, PAYDAY LOAN AGENCIES, CURRENCY EXCHANGES AND COIN DEALERS WHEREAS, the City of Hopkins initiated an application to amend Sections 515.07 and 535 of the City Code related to zoning standards for Pawnshops, Payday Loan Agencies, Currency Exchanges and Coin Dealers; WHEREAS, the procedural history of the application is as follows: 1. That the City Council adopted a moratorium regarding the regulation of Pawnshops, Currency Exchanges and Coin Dealerships on January 3, 2017; 2. That an application to amend Sections 515.07 and 535 of the City Code related to zoning standards for these uses was initiated by the City of Hopkins on April 21, 2017; 3. That the Hopkins Zoning and Planning Commission reviewed and discussed this item during their regular May 23 and June 27, 2017, meetings; 4. That the Hopkins City Council reviewed and discussed this item during their September 12, 2017, work session; 5. That the Hopkins Planning & Zoning Commission, pursuant to published notice, held a public hearing on the application and reviewed such application on October 24, 2017: all persons present were given an opportunity to be heard; and, 6. That the written comments and analysis of City staff were considered; and 7. That the Hopkins Planning & Zoning Commission voted unanimously that the City Council approve this item. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Hopkins hereby approves Ordinance 2017-1125 amending Sections 515.07 and 535 of the City Code related to Pawnshops, Payday Loan Agencies, Currency Exchanges and Coin Dealers based on the findings detailed in City Council Report 2017-127. Adopted this 6th day of November 2017. _______________________ Molly Cummings, Mayor ATTEST: ______________________ Amy Domeier, City Clerk CITY OF HOPKINS Hennepin County, Minnesota ORDINANCE NO. 2017-1125 AN ORDINANCE AMENDING SECTIONS 515.07 AND 535 OF THE CITY CODE RELATED TO PAWNSHOPS, PAYDAY LOAN AGENCIES, CURRENCY EXCHANGE AND COIN DEALERS THE COUNCIL OF THE CITY OF HOPKINS DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Section 515.7, Definitions, is hereby amended to add the following: Pawnshop: A facility where money is loaned based on the value of goods deposited at the facility by the borrower of the money, which goods are held by the lender of the money occupying the facility as collateral for the loan. Items held by the lender which are not redeemed by a borrower may be put up for sale at the facility to the general public. The term pawnshop includes a facility where all or any part of the pawnshop activities are conducted. Payday Loan Agency: Any business that has as its primary activity the providing of short-term loans for the borrower's own personal, family, or household purpose which are usually for a period of forty-five (45) days or less. Payday loan agencies do not include banks. SECTION 2. 535 Subdivision 3, Permitted Uses, is hereby amended to add the following: Permitted Uses B-1 B-2 B-3 B-4 5. Antiques-Used Goods X X 34. Coin Dealer & Stamp X X (2)XKK (2)XKK 37. Currency Exchange (2)XEE (2)XEE (2)XEE 83. Pawnshops – Antiques-Used Goods X X (2)XKK (2)XKK 84. Payday Loan Agencies (2)XKK (2)XKK SECTION 3. 535 Subdivision 3, Conditional Use Requirements, is hereby amended as follows: EE) Currency Exchange provided: 1. The use shall be located at least one thousand (1,000) feet from all existing currency exchanges, secondhand goods stores, pawnshops and missions; 2. Within the B-3, General Business District, no such use shall be located on a property that has frontage on or abuts Mainstreet. 3. The use shall be located at least two hundred (200) feet from a residential or institutional district; 4. The use shall be located at least three hundred fifty (350) feet from an off-sale liquor establishment; 3. Back-lighted signs, back-lighted awnings, portable signs, temporary signs and freestanding signs shall be prohibited; 4. The window and door area of any existing first floor façade that faces a public street or sidewalk shall not be reduced, nor shall changes be made to such windows or doors that block views into the building at eye level; 4. Windows must be of clear, transparent glass and be free of obstruction for at least three (3) feet into the store. Products may be displayed in the window provided the display, including signage, does not occupy more than 30 percent of the window area. 5. For new construction, at least thirty (30) percent of the first floor facade that faces a public street or sidewalk shall be windows or doors of clear or lightly tinted glass that allows views into and out of the building at eye level; 5. The use of bars, chains or similar security devices that are visible from a public street or sidewalk shall be prohibited. 6. The use shall take place completely within an enclosed building. Outdoor storage, display or sales are prohibited. 7. Conformance of all applicable licensing requirements from the State of Minnesota. In any instance where the zoning regulations and the applicable licensing requirements conflict, the more restrictive shall apply. KK. Pawnshop, Payday Loan Agency or Coin Dealer provided: 1. The use shall be located at least one thousand (1,000) feet from another pawnshop, payday loan agency, or coin dealer. 2. The use shall be located at least two hundred (200) feet from any residential or institutional use or district. 3. The use shall be located at least three hundred fifty (350) feet from an off-sale liquor establishment. 4. Within the B-3, General Business District, no such use shall be located on a property that has frontage on or abuts Mainstreet. 5. Back-lighted signs, back-lighted awnings, portable signs, temporary signs and freestanding signs shall be prohibited. 6. Windows must be of clear, transparent glass and be free of obstruction for at least three feet into the store. Products may be displayed in the window, provided the display, including signage, does not occupy more than 30 percent of the window area. 7. The use of bars, chains or similar security devices that are visible from a public street or sidewalk shall be prohibited. 8. The use shall take place completely within an enclosed building. Outdoor storage, display or sales are prohibited. 9. Conformance of all applicable licensing requirements from the City of Hopkins and the State of Minnesota. In any instance where the zoning regulations and the applicable licensing requirements conflict, the more restrictive shall apply. SECTION 4. This ordinance shall take effect and be in force upon its publication, in accordance with Section 3.07 of the City Charter. First Reading: November 6, 2017 Second Reading: November 21, 2017 Date of Publication: November 30, 2017 Date Ordinance Takes Effect: November 30, 2017 ______________________ Molly Cummings, Mayor ATTEST: _______________________ Amy Domeier, City Clerk R-2 R-1-D R-1-E INS R-1-C BP BP B-1 R-6 R-4 PUD BP I-2 I-2 I-1 I-2 BP R-1-B INS INS R-1-D R-1-C R-1-D I-1 R-4 R-5 B-4 I-2 R-2 R-1-A R-1-A INS I-2 R-!-B B-3 R-1-A R-4 R-4 I-2 I-2 I-1 INS INSB-2 R-1-C R-3 R-4 B-4 R-3 R-1-D INS R-1-A B-1 R-2 B-3 B-3 R-2 R-4 PUD B-3 B-4 R-4 R-1-C R-4 B-3 R-1-C R-4 B-3 R-1-A I-2 R-4 R-4 R-3B-3 B-3B-3 B-3 R-5 I-1 I-1 R-1-A R-4 B-2 B-3 B-3 B-3 R-4 R-3 R-1-C R-1-CR-2 R-2 B-3 B-3 B-3 R-4 R-4 B-1 I-2 B-1 R-5R-5 R-4 R-3 R-1-C B-4 TextR-2 Closed Landfill Restricted BP BP City of Hopkins Zoning Map ³ ZONING DISTRICTS R-1-A Single and Two Family High Density R-1-B Single Family High Density R-1-C Single Family Medium Density R-1-D Single Family Low Density R-1-E Single Family Low Density R-2 Low Density Multiple Family R-3 Medium Density Multiple Family R-4 Medium High Density Multiple Family R-4 PUD R-5 High Density Multiple Family R-6 Medium Density Multiple Family B-1 Limited Business B-2 Central Business B-3 General Business B-4 Neighborhood Business Business Park Institutional I-1 Industrial I-2 General Industrial Mixed Use Closed Landfill Restricted (CLR)