The Governing Body members, Planning Commissioners and City staff have conducted a review of several available reports and studies concerning the payday loan and title businesses.
The City Attorney has reviewed court cases regarding the regulation of payday loan and title businesses and any detrimental secondary effects associated with such businesses and has advised the Governing Body as to the rationale for the holdings in such court cases. Among the court cases and research reviewed and relied upon in the enactment of this Article are the following:
A. Legislative determination. The Governing Body hereby declares as a matter of legislative determination that:
1. Pay Day Loan and Title Loan businesses require licensing in order to protect and preserve the health, safety, and welfare of the patrons of such businesses as well as the citizens of Ottawa.
2. Certain loan and title loan practices have proven detrimental to the financial security of individuals and families residing in the city. Some lending practices often have an unreasonably adverse effect upon the elderly, the economically disadvantaged and other residents of the city.
3. Permitting and/or licensing is a legitimate and reasonable means of accountability to ensure that operators of pay day and title loan businesses comply with reasonable regulations.
4. It is important to regulate the placement and location of such businesses to prevent them from clustering together and thereby avoid the negative secondary effects associated with such clustering. These types of business are allowed as a permitted use in certain Commercial Zoning Districts and must conform to the zoning ordinance.
5. Because of increased administrative costs incurred by the City Clerk’s office and the Community Development Department, the license fees for such establishments must be set in a reasonable amount to offset the cost to the City so that as far as reasonably possible the costs incurred are borne by the businesses and not subsidized by the taxpayers.
6. To ensure that such regulation are consistent with the laws of the State of Kansas.
(Code 2015)
For the purpose of this Article, the words and phrases used herein shall have the following meanings, unless otherwise clearly indicated by the context:
Pay Day Loan Business shall refer to any business regulated by K.S.A. § 16a-2-404, as the same may be amended from time to time, except financial institutions, as defined by K.S.A. § 16-117.
Title Loan Business means any business, other than below, that relates to a consumer loan transaction, including a loan made pursuant to K.S.A. 16-706 et seq, and amendments thereto, secured by a vehicle. It shall not include a purchase money consumer loan or a loan made pursuant to subsection (2) of K.S.A. 16a-2-4-1 and amendments thereto.
Vehicle for the purposes of this section means every device in, upon or by which any person or property is or may be transported or drawn upon a public highway and the ownership of which is evidenced by a certificate of title.
(Code 2015)
A. From and after the effective date of this Article, no pay day loan or title loan business shall be operated on property within the jurisdiction of the City of Ottawa unless the owner of the business has obtained a license from the City. Each license shall be valid only from January 1 to December 31 of each calendar year.
B. No license or interest in a license may be assigned, sold, or transferred. Transfer of ownership or control of a pay day loan or title loan business shall automatically and immediately act as a revocation of the license.
C. Any business lawfully in existence on the effective date of this ordinance shall be required to obtain the license required hereunder within 60 days of said effective date.
(Code 2015)
A. Within 1,000 feet of any other pay day loan or title loan business or within 200 feet of any property used primarily as a single-family residence, a two-family residence, a town home or an apartment building. The separation distances shall be measured from the outer wall of the pay day loan or title loan business, and from or to the property line of the property containing the residential use. However, this separation provision shall not apply to any pay day loan or title loan business that can demonstrate to the city that they were in operation at the location requested in the permit application prior to the effective date of this ordinance and that they have operated continuously under the same business name since that time.
(Code 2015)
A. Any person, partnership, or corporation desiring to secure a license to conduct a pay day loan or title loan business shall make verified application in writing. The application shall be filed with and dated by the City Clerk. A copy of the application shall be distributed promptly by the City Clerk to the Ottawa Community Development Department.
B. The application for a license shall be upon a form provided by the City Clerk. All applications shall be submitted in the name of the person or business entity proposing to conduct or operate the pay day loan or title loan business. An applicant for a license and all interested persons, including any manager, partner or limited partner of a partnership applicant, any officer or director of the corporate applicant, or any other person who is involved in the day to day operation or management of the business shall furnish the following information under oath:
1. Name, including all aliases, address, telephone number, and social security number.
2. Written proof that the individual is at least 18 years of age.
3. All residential addresses of the applicant for the past three years.
4. The business history for three years immediately preceding the date of the application, including any business in any other city, county or state, where the business has had a license revoked or suspended, the reason therefore, and the name of the jurisdiction which revoked or suspended the license.
5. The exact type of loan business being applied for.
6. The address of the loan business to be operated by the applicant.
7. If the applicant is a corporation, the name of the corporation and the date and state of incorporation, the name and address of the resident agent, a certificate from the Kansas Secretary of State that the corporation is in good standing, a copy of the charter of such corporation, and the latest annual report of the corporation, and a copy of all amendments thereto.
8. If the applicant is a partnership or joint venture, the names and addresses of the partners or members of the joint venture, the name and addresses of the managing partner, and a copy of the articles of partnership, or other similar agreements and all amendments thereto. In the case of a limited partnership, the applicant shall submit a copy of the certificate of limited partnership which was filed with the Kansas Secretary of State and all amendments thereto, a copy of the latest annual report, and the name and address of the resident agent, managing partner, and all general partners. A certificate from the Kansas Secretary of State that the partnership or limited partnership is in good standing.
9. Authorization for the City and its agents and employees to seek information and conduct an investigation into the truth of the statements set forth in the application and the qualifications of the applicant for the permit.
C. Within 30 days of the filing of the application, the City Clerk shall notify the applicant of the approval or denial of the application.
D. Whenever an application is denied, the City Clerk shall advise the applicant in writing of the reasons for such action. If the applicant requests a hearing within 10 days of receipt of notification of denial, a public hearing shall be held by the City Manager or his/her designee. Such hearing shall be conducted in accordance with the provisions of the Municipal Code.
E. Any applicant whose application is denied following a public hearing by the City Manager or his/her designee may seek judicial review pursuant to the provisions of Section 11-1214 hereof.
F. Failure or refusal of the applicant to give any information relevant to the investigation of the application or his or her failure to answer all questions on the application or to submit copies of all required documents or his or her refusal or failure to appear at any reasonable time and place for examination under oath regarding said application or his or her refusal to submit to or cooperate with an investigation required by this Article shall constitute an admission by the applicant that he or she is ineligible for such license and shall be grounds for denial thereof by the City.
(Code 2015)
A. To receive a license to operate a pay day loan or title loan business an applicant must meet the following standards:
1. If the applicant is an individual:
a. The applicant shall be at least 18 years of age.
b. The applicant must have not been convicted of or pleaded nolo contendere to any specified criminal act within five years immediately preceding the application if such specified criminal act constitutes a felony, or within two years immediately preceding the application if such specified criminal act constitutes a misdemeanor or city ordinance or county resolution violation.
c. The applicant must not have been subject to a pay day loan or title loan license revocation within two years preceding the current application.
d. The applicant must not have provided false answers in response to any information requested on the application or failed to provide any information or documentation required.
2. In addition to the requirements set forth in subsection (A)(1) above, if the applicant is a corporation or limited liability company:
a. The corporation or limited liability company must be a Kansas corporation or limited liability company or a foreign corporation or limited liability company authorized to do business in Kansas.
b. All officers, directors, and members required to be named and who will take an active part in the management and operation of the business shall be at least 18 years of age.
c. At least one officer, director or member shall be and shall have been a resident of the State of Kansas continuously for 30 days immediately preceding the date of the application for a license.
d. Any officer, director or member required to be named above:
i. Must not have been subject to a business license revocation within two years of the current application.
ii. Must not have provided any false answers in response to any information requested on the application.
3. In addition to the information requests in subsection (A)(1) above, if the applicant is a partnership, joint venture, or any other type of organization where two or more persons have a financial interest:
a. All persons having a financial interest in the partnership, venture, or other type of organization shall be at least 18 years of age.
b. At least one person having a financial interest in the partnership, venture, or other type of organization shall be and shall have been a resident of the State of Kansas continuously for 30 days immediately preceding the date of the application for a license.
c. Any partner, manager, limited partner, or other interested party required to be named:
i. Must not have been subject to a business license revocation within two years of the current application.
ii. Must not have provided any false answers in response to any information requested on the application.
B. No license shall be issued if:
1. The correct license fee has not been tendered to the City Clerk and, in the case of a check or bank draft, honored with payment upon presentation;
2. The applicant, if an individual; any of the officers or directors, if the applicant is a corporation; or any members, if the applicant is a limited liability company; or any of the partners, including limited partners, if the applicant is a partnership; or the manager or other person principally in charge of the operation of the business, has been convicted of any crime which would make any person ineligible to receive a license hereunder.
3. The applicant has knowingly made any false, misleading, or fraudulent statement of fact in the permit application or in any document required by the City in conjunction therewith;
4. The applicant has had a pay day loan or title loan business or other similar permit or license denied, revoked, or suspended by the City or any other state or local agency within two years preceding the date of the application; or
5. The applicant, if an individual; or any of the officers or directors, if the applicant is a corporation; or any members, if the applicant is a limited liability company; or any of the partners, including limited partners, if the applicant is a partnership; or any persons required to be named under Section 11-1004(b) in any other type of organization; and the manager or other person principally in charge of the operation of the business:
a. Is not over the age of 18 years; and
b. Would be ineligible to receive a license under the provisions of this Article.
(Code 2015)
The business license shall be displayed in a conspicuous public place in the pay day loan or title loan business.
(Code 2015)
Whenever a licensee shall propose to change the place of business to another location within the city and such place of business conforms with the provisions of Section 11-1004 as confirmed by the Community Development Department, the licensee shall immediately give written notice thereof to the City Clerk who then shall issue a duplicate license which shall show, in addition to all of the information appearing on the old license, a record of the change of location and the date thereof, which new license shall be authority for the operation of such business under such license at such location. The licensee shall return the old license to the City Clerk as soon as the new license is available.
(Code 2015)
If a pay day or title loan business shall not conduct said business for a period of ninety (90) days, the license shall be null and void.
(Code 2015)
License fees shall be set by resolution.
(Code 2015)
Every permit or license issued pursuant to this Article will terminate at the expiration of one year from the date of issuance, unless sooner revoked, and every permit or license will terminate and must be renewed before operation is allowed in the following year. The application for renewal must be filed no later than 30 days before expiration. The procedure, application, fees, and requirements for a renewal shall be the same as for the original license or permit. In addition, a late charge of $50.00 for a license and $25.00 for a permit will be assessed if the application is filed less than 30 days prior to expiration of the current license or permit.
(Code 2015)
A. The City Clerk shall revoke a business license for any of the following reasons:
1. False or misleading information or data was given on any application or material facts were omitted from any application.
2. The licensee or permittee violates any provision of this Article or any rule or regulation adopted by the City pursuant to this Article.
3. The licensee or permittee becomes ineligible to obtain a license or permit.
4. Any cost or fee required has to be paid by this Article is not paid.
5. The licensed premises have become a public nuisance or currently does not comply with the fire, health, and safety codes of the City.
6. The licensed premises must comply with all other applicable City Codes including zoning regulations providing for storing and parking of vehicles, signs, and any other regulations adopted by the Governing Body.
B. The City Clerk, before revoking or suspending any business license shall give the licensee or permittee notice of the grounds for revocation or suspension and an opportunity for a public hearing. Any such hearing shall be conducted in accordance with the provisions of Section 11-1213.
C. The attempted transfer, sale, or assignment of a license or permit or any interest in a permit or license or use of a license or permit by other than the person to whom such license or permit was issued shall automatically and immediately revoked.
(Code 2015)
A. Any person, partnership, or corporation who violates any provision of this Article may be prosecuted in the Ottawa, Kansas Municipal Court.
B. The penalty for violation of any provision of this Article shall be fixed by the court and shall not exceed a sum of $2,000.
(Code 2015)
A. Whenever a hearing is required by the terms of this Article, the following procedures shall be followed.
B. Any notice or letter issued under this Article for the consideration of approval/disapproval, renewal/nonrenewal, suspension, or revocation of a license under this Article shall be in writing, shall be addressed to the applicant or licensee, shall set forth the grounds therefore, and shall be delivered by personal delivery, or by certified mail. The notification shall be directed to the most current business address or other mailing address for the licensee that is on file with the City. Any notice shall be delivered or mailed at least thirteen (13) days in advance of the date of the hearing.
C. Upon institution of any proceedings, the City Manager or his/her designee or his/her designee shall notify the respondent in writing of the hearing date on respondent’s approval/disapproval, renewal/nonrenewal, suspension, or revocation proceeding. Within 30 days of the institution of proceedings, the City Manager, or his/her designee, in the case of a permit, shall conduct a hearing at which respondent shall have the opportunity to present all of respondent’s arguments and to be represented by counsel, and present evidence and witnesses on his, her or its behalf. The City may also be represented by counsel, and shall bear the burden of proving by a preponderance of evidence the grounds for disapproving, nonrenewing, suspending, or revoking the license.
D. The City Clerk may administer oaths, request attendance of witnesses and the production of books, papers, accounts and documents, and examine witnesses and receive testimony at any hearing under this section. If any respondent fails to comply with a request for attendance issued by the City Manager or his/her designee or his/her designee, or if any respondent refuses to testify in any matter regarding which he/she/it may be lawfully interrogated, such failure or refusal shall constitute grounds for disapproval, nonrenewal, suspension or revocation of the license.
E. If a respondent who has been notified of a hearing under this section does not appear, the hearing may proceed without him/her/it, and the City Manager or his/her designee may consider and dispose of the case, but in all cases the City Manager or his/her designee upon its/his/her own motion, may grant continuances from time to time. If the continuance is granted to a fixed future date by written consent or in the presence of the respondent or his/her/its counsel, no further notice of the hearing date need be given. In all other cases the same notice of hearing as in original hearings shall be given.
F. In determining cases involving the denial of a business license by the City Clerk upon appeal, or the suspension or revocation of licenses or permits, the City Manager or his/her designee shall issue a decision on the issue before it within 21 days after the conclusion of the hearing. The failure of the City Manager or his/her designee to act within such time period shall result in no suspension or revocation; provided, however, that new proceedings may be initiated.
G. In hearings before the City Manager or his/her designee that result in the withholding of the issuance of a license or permit or in the suspending or revoking of a license or permit, the City Manager or his/her designee may assess the costs of the hearing to the respondent.
(Code 2015))
Following the entry of an order by the City Manager or his/her designee, suspending or revoking a license or permit issued pursuant to this Article, or denying an application for a license or permit, or the renewal thereof, such licensee or permittee may seek judicial review of the suspension, revocation, denial or non-renewal by appeal pursuant to K.S.A. 60-2101(d), or any amendment thereto, an action for declaratory judgment or injunction, or by any other available procedure that will assure a prompt judicial decision. Except in cases where the City’s action was to deny an initial application for a pay day loan or title loan business license, enforcement of any such order shall be stayed pending a judicial decision and a temporary license or permit shall be issued pending judicial review in the District Court. If the District Court upholds the City’s decision to deny, suspend or revoke a license or permit, any temporary license or permit shall be revoked unless otherwise directed by the District Court or the Kansas Court of Appeals. No temporary license shall be issued for a pay day loan or title loan business that has not previously been licensed.
(Code 2015)