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2018-023 Credit Access BusinessesDate: March 2, 2018 Report No. 2018-023 INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: Overview and update on the enforcement of the credit access business ordinance. BACKGROUND: Ordinance 2013-073 was passed on March 19, 2013 regarding the regulation of credit access businesses within the City in order to protect the welfare of the citizens from abusive and predatory lending practices. The ordinance established a registration program for credit access businesses and imposes a record keeping requirement. In March 2014, Ordinance 2014-070 was passed amending the prior ordinance to clarify the intent to protect consumers and was never intended to provide for the prosecution of borrowers, and also included language to preclude any possibility of prosecuting borrowers. The ordinance requires that credit access businesses obtain a certificate of registration from the City in order to operate their business. The included registration packet (Attachment 1) outlines the registration program for credit service organizations, restrictions on loans or renewals made by organizations, and established minimum recordkeeping requirements. Registration is required annually and must include a registration fee of $50. Development Services has developed an improved process to track known credit access businesses and compliance with the current ordinance. A report is included as Attachment 2 listing the businesses and compliance status as of February 22, 2018. There are currently 26 businesses being tracked; 5 are compliant, 15 are being investigated, and 6 are non-compliant. If the businesses do not come into compliance, they could be subject to a penalty and fine as prescribed and further clarified in the 2014 ordinance. ATTACHMENTS: 1. Registration Packet 2. Compliance Report 3. Ordinance 2013-073 4. Ordinance 2014-070 STAFF CONTACT: Scott McDonald Director of Development Services Scott.McDonald@cityofdenton.com 940-349-8539 Department of Development Services Building Inspection Division 215 W Hickory St. Denton, Texas 76201 (940) 349-8360 www.CityofDenton.com The City of Denton passed an ordinance on April 9, 2013 regulating Credit Access Businesses. This packet is a courtesy in order to provide you with the necessary information answer questions and to aid in implementing the regulations. The City makes every effort to be good stewards to the community and to assist our business owners in compliance with the municipal code. This is an attempt to provide information to all of the credit access types business we are aware of. However, it is not possible to contact every Credit Access business conducting business in Denton, so please share this with any other persons which may have interest. If you should have any questions please contact Department of Development Services, Building Inspection Division which is located at 215 W. Hickory St., Denton, Texas 76201 or by phone (940) 349-8360, or email Building@cityofdenton.com Information is also available on the Department’s website https://www.cityofdenton.com/en- us/business/permits-licenses Sincerely, Scott A. McDonald Director of Development Services / Chief Building Official Are you prepared for your Annual Registration? Registration Application   To obtain a certificate of registration for a credit access business, a person must submit an application on a form provided for that purpose to the Building Inspection Division. The application must contain the following:  The name, street address, mailing address, fax number, and telephone number of the applicant.  The business or trade name, street address, mailing address, fax number, and telephone number of the credit access business.  The names, street addresses, mailing addresses, and telephone numbers of all owners of the credit access business, and the nature and extent of each person’s interest in the credit access business.  A copy of a current, valid state license held by the credit access business agreeable to Chapter 393, Subchapter G of the Texas Finance Code.  A copy of a current, valid certificate of occupancy showing that the credit access business is in compliance with this City of Denton Municipal Code.  A non-refundable annual application fee of $50.00. This fee is due for both an original application and a renewal.  A certificate of registration may be renewed by making application and payment renewal fee of $50.00 A Registrant shall apply for renewal at least 30 days before the expiration of registration.  An application or registrant shall notify Building Inspection Division within 45 days after any change of the information contained in the application for a Certificate of Registration, including, but not limited to, any change of address and may change in the status of the state license held by the applicant or registrant. Department of Development Services Building Inspection Divison 215 W Hickory St. Denton, Texas 76201 (940) 349-8360 www.cityofdenton.com Department of Development Services Building Inspection Division 215 W Hickory St. Denton, Texas 76201 (940) 349-8360 www.cityofdenton.com The City of Denton Municipal Code has been amended for the purpose of protecting the welfare of citizens of the City by monitoring credit service organizations in an effort to reduce abusive and predatory lending practices. This bulletin:  Outlines the registration program for credit service organizations,  Restricts loans or renewals made by credit service organizations,  Establishes minimum recordkeeping requirements on credit service organizations. Definitions: Consumer: An individual who is solicited to purchase or who purchases the services of a credit access business Registration Application The Department of Building Inspections shall issue a certificate of registration for a credit access business only when an applicant has submitted the following:  A completed Application of Annual Registration form.  A copy of a current, valid state license held by the credit service organization.  A copy of a current, valid certificate of occupancy showing that the organization is in compliance with the Code of Ordinances.  An application fee of $50.00. The Building Inspection Division must be notified within 45 days after any changes are made of the information submitted in the Application of Annual Registration. This includes, but is not limited to, any change of address or any change in the status of the state license held by the applicant. Issuance and Display of Certificate of Registration A certificate of registration for a credit access business must be clearly displayed to the public in the business. Non-transferability A certificate of registration is not transferable to any individual, corporation, organization, partnership, association, financial institution or any other legal entity. Restrictions on Extension of Consumer Credit The cash advanced under a line of credit or an extending of credit that a credit access business obtains for a consumer in the form of a payday loan may not exceed twenty percent (20%) of the consumer’s gross monthly income. The cash advanced under a line of credit or an extending of credit that a credit access business obtains for a consumer in the form of a motor vehicle title loan may not exceed the lesser of:  Three percent (3%) of the consumer’s gross annual income; or  70 percent (70%) of the retail value of the motor vehicle A credit access business shall retain a copy of one or more of the following documents used to determine a consumer’s income:  A paycheck issued to the consumer, or  Other documentation establishing income. A line of credit that allows repayment in installments may not be refinanced or renewed and may not allow payment in more than four installments. Each installment must be used to repay at least 25 percent of the principal amount. A line of credit that provides for a single lump sum repayment may not be refinanced or renewed more than three times. Proceeds from each refinancing or renewal must be used to repay at least 25 percent of the principal amount. A line of credit that is granted to a consumer within seven (7) days after a previous line of credit has been paid will constitute a renewal. Requirement of Consumer Understanding of Agreement Every agreement between the credit access business and a consumer evidencing the making or renewal of any loan, each required notice, disclosure, and other forms must be available at that location. For a consumer who cannot read, these must be read orally to the consumer. Maintenance of Records A credit access business shall maintain a complete set of records of all loans arranged by the business, whether an original transaction, refinancing, and renewal of a loan. Records must include the following information:  The name and address of the consumer.  The principal amount of cash actually advanced.  The length of the line of credit, including the number of installments and renewals.  The fees charged by the business to arrange line of credit; and  The documentation used to establish a consumer’s income. A credit access business shall maintain a copy of each written agreement between the business and a consumer evidencing an extension of consumer credit. A business shall maintain copies of all quarterly reports filed with the Texas Consumer Credit Commissioner. The records required to be maintained by a business must be retained for at least three years after the date an extension of credit expires, terminates, or is cancelled. Such records shall be made available for inspection upon request during regular business hours at the business location. Referral to Consumer Credit Counseling The credit access business should provide a form, established by the Building Inspection Division, to each consumer seeking assistance in obtaining a line of credit or renewal, which references non-profit organizations that provide financial education, training programs, and cash assistance programs. Department of Development Services Building Inspection Division 215 W Hickory St. Denton, Texas 76201 (940) 349-8360 www.CityofDenton.com Please read the information on this form. This information will enable you to become familiar with selected sections of the City of Denton Municipal Code concerning Credit Access Businesses. Additionally, this form provides a listing of local non-profit agencies who provide FREE financial education and training programs and agencies with cash assistance programs. Credit Access Businesses are encouraged to provide this informational form to those seeking assistance in obtaining an extension of consumer credit. Maintenance of Records, a) A credit access business shall maintain a complete set of records of all extensions of consumer credit arranged or obtained by the credit access business, whether an original transaction or refinancing or renewal of an extension of consumer credit which must include the following information: (1) The name and address of the consumer. (2) The principal amount of cash actually advanced. (3) The documentation used to establish a consumer’s income under Section 11. b) A credit access business shall maintain a copy of each written agreement between credit access business and a consumer evidencing an extension of consumer credit (including, but not limited to, any refinancing or renewal granted to the consumer). c) A credit access business shall maintain copies of all quarterly reports filed with the Texas Consumer Credit Commissioner under Section 393.627 of the Texas Finance Code, as amended d) The records required to be maintained by a credit access business under this section must be retained for at least three years and made available for inspection by the city upon request during the usual and customary business hours of the credit access business. Restrictions on Extension of Consumer Credit. a) The cash advanced under an extension of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining in the form of a deferred presentment transaction may not exceed twenty percent (20%) of the consumer's gross monthly income. b) The cash advanced under an extension of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining in the form of a motor vehicle title loan may not exceed the lesser of: (1) Three percent (3%) of the consumer's gross annual income: or (2) 70 percent (70%) of the retail value of the motor vehicle. c) A credit access business shall use a paycheck or other documentation establishing income to determine a consumer’s income. d) An extension of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining and that provides for repayment in installments may not be payable in more than four installments. Proceeds from each installment must be used to repay at least 25 percent of the principal amount of the extension of consumer credit. An extension of consumer credit that provides for repayment in installments many not be refinanced or renewed. e) An extension of consumer credit that a credit access business obtains for a consumer or Page 2 of 2 assists a consumer in obtaining and that provides for a single lump sum repayment may not be refinanced or renewed more than three times. Proceeds from each refinancing or renewal must be used to repay at least 25 percent of the principal amount of the original extension of consumer credit. f) For purposes of this section, an extension of consumer credit that is made to a consumer within seven days after a previous extension of consumer credit has been paid by the consumer will constitute are financing or renewal. CONSUMER CREDIT INFORMATION THIS FORM IS FOR INFORMATION PURPOSES ONLY AND IS NOT INTENDED TO BE AN ENDORSEMENT OF ANY PROGRAM OR ENTITY. EDUCATION AND TRAINING OFFICE OF THE CONSUMER CREDIT COMMISSIONER / CONSUMER HELPLINE Phone: (800) 538-1579 http://www.occc.state.tx.us/pages/consumer/Index.html NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION (NEFE) www.nefe.org US DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) www.feedthepig.org TEXAS ATTORNEY GENERAL – CONSUMER PROTECTION DIVISION PO Box 12548 Austin, TX 78711-2548 https://www.texasattorneygeneral.gov/consumer/complain.shtml TEXAS OFFICE OF THE CONSUMER CREDIT COMMISSIONER 2601 N. Lamar Blvd. Austin, TX 78705 Consumer Helpline (800) 538-1579 www.occc.state.tx.us 211 TEXAS (Provides free information and referral assistance 24 hours a day, seven days a week) https://www.211texas.org/cms/ If you need additional information or have questions, Visit: Department of Development Services Building Inspection Division 215 W. Hickory St Denton, TX 76201 Email: building@cityofdenton.com Call: (940) 349-8360 (Monday-Friday, 8:00 AM- 5:00 PM) Website: https://www.cityofdenton.com/en-us/business/permits-licenses CREDIT ACCESS BUSINESS SECTION I. APPLICANT AND BUSINESS INFORMATION BUSINESS OR TRADE NAME: _ _ BUSINESS STREET ADDRESS: _ _______________________________ MAILING ADDRESS FOR BUSINESS: _ CONTACT NAME: _ _ FAX NUMBER: _ ___________________PHONE NUMBER: EMAIL: _ APPLICANT NAME: _ ___________________________ _______________________________________________________ STREET ADDRESS: _ __ MAILING ADDRESS FOR BUSINESS: _ ________________________________________________________________________ FAX NUMBER: _ ___________________________ PHONE NUMBER: _____ SECTION II. REGISTRANT BUSINESS OWNER(S): Includes all owners of the credit access business and other persons with financial interest in the credit access business and the nature and extent of each person’s interest in the credit access business (use more sheets as needed) A) BUISNESS OWNER INFORMATION BUSINESS OWNER NAME: _ TELEPHONE: _ TITLE: _ NATURE & EXTENT OF INTEREST: _ STREET ADDRESS: _ MAILING ADDRESS: FAX NUMBER: _ _ EMAIL: _ City of Denton Application for Annual Certificate of Registration B) BUSINESS OWNER INFORMATION BUSINESS OWNER NAME: _ TELEPHONE: _ _ STREET ADDRESS: _ MAILING ADDRESS: C) BUSINESS OWNER INFORMATION BUSINESS OWNER NAME: _ TELEPHONE: _ _ STREET ADDRESS: _ MAILING ADDRESS: D) BUSINESS OWNER INFORMATION BUSINESS OWNER NAME: _ TELEPHONE: _ _ STREET ADDRESS: _ MAILING ADDRESS: SECTION III. APPLICANT APPLICANT: I HEREBY CERTIFY AS THE OWNER OR OWNERS’ AUTHORIZED AGENT TO MAKE THIS APPLICATION, AND I AGREE TO CONFORM TO ALL APPLICABLE LAWS OF THE STATE OF TEXAS AND THE CITY OF DENTON. ALL INFROMATION SUBMITTED ON THIS APPLICATION IS ACCURATE TO THE BEST OF MY KNOWLEDGE. APPLICANT IS RESPONSIBLE FOR THE PAYMENT OF ALL FEES AND CHARGES APPLICABLE TO THIS APPLICATION. THE ANNUAL REGISTRATION FEE REQUIREMENT FOR A CREDIT ACCESS BUSINESS IS FIFTY DOLLARS ($50.00). THE APPLICABLE CERTIFICATE OF REGISTRATION FEE, PAYABLE TO THE CITY OF DENTON, TEXAS, MUST BE REMITTED WITH SUBMISSION OF THIS APPLICATION ALONG WITH (1) A COPY OF THE CURRENT VALID STATE CREDIT ACCESS BUSINESS LICENSE FOR THE NAMED LOCATION; AND (2) A COPY OF A CURRENT, VALID CERTIFICATE OF OCCUPANCY SHOWING THAT THE CREDIT ACCESS BUSINESS IS IN COMPLIANCE WITH THE DENTON MUNICIPAL CODE A REGISTRANT/APPLICANT SHALL APPLY FOR RENEWAL AT LEAST 30 DAYS BEFORE THE EXPIRATION OF THE REGISTRATION. AN APPLICANT OR REGISTRANT SHALL NOTIFY BUILDING INSPECTIONS WITHIN 45 DAYS AFTER ANY MARTERIAL CHANGE IN THE INFORMATION CONTAINED IN THE APPLICATION FOR A CERTIFICATE OF REGISTRATION, INCLUDING, BUT NOT LIMITED TO, ANY CHANGE OF ADDRESS AND ANY CHANGE IN THE STATUS OF THE STATE LICENSE HELD BY THE APPLICANT. THE ABOVE INFORMATION SUBMITTED IS TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE. NON-REFUNDALBLE APPLICATION FEE $ 50.00 SIGNATURE AND DATE RETURN APPLICATION AND LICENSE FEE TO: CITY OF DENTON BUILDING INSPECTIONS 215 W Hickory St. DENTON, TX 76201 Phone (940) 349-8360 Email Building@cityofdenton.com Fax 940-349-7208 DATE FILED: PERMIT #: BUSINESS NAMEADDRESSCO INFO.CAB PERMIT Status ACE CASH EXPRESS836 W. UNIVERSITY DR. (R34507)1305‐0438 1305‐0433 (EXP)ADVANTAGE AMERICA CASH ADVANCE 1400 S. LOOP 288, STE. 114 (R37586) 0311‐0078 1304‐0366 (EXP 12/18)DRAKE FINANCE dba B & F FINANCE318 E. OAK #140 (R106193)1110‐0071Status BIG STATE PAWN1321 TEASLEY (R33146)1310‐0580 1304‐0466 (EXP 9/14))Compliant 5CASH AMERICA1018 FORT WORTH DR. (R114204)0509‐0406 1304‐0457 (EXP 12/14)CASH MAX411 W. UNIVERSITY DR. (R76395)0704‐0614 1406‐0933 (EXP 12/18)Investigating 15CASH STORE1601 S. LOOP 288, STE. 103 (R182828) 0805‐0236 1308‐0872 (EXP 12/18)CHECKS CASHED214 W. UNIVERSITY DR. (R34116) 1306‐0194 (Archive)Not Compliant 6CHECK 'N GO1507 S. LOOP 288, STE. 204 (R244734) 0303‐0232 1304‐0873 (EXP 12/18)CITY FINANCE1005 W. UNIVERSITY DR. (R177482) 1102‐0226CLIFF'S CHECK CASHING718 FORT WORTH DR. (R27180) CO'd 04‐19‐90CONTINENTAL CREDIT605 SUNSET ST. (R32671)0505‐0338COVINGTON CREDIT316 E. OAK ST., STE. 102 (R106193) CO'd 04‐19‐99 1305‐0558: RefundedECONO LOAN$ & INSURANCE326 E. McKINNEY ST. (R32769)CO'd 10‐04‐91GOLDSTAR FINANCE911 SUNSET ST. (R32653)0609‐0224JUSTICE FINANCE CO.318 E. OAK #150 (R106193)CO'd 03‐02‐00LENDMARK FINANCIAL2215 S. LOOP 288, STE. 327 (R81590) 1604‐0580ONEMAIN FINANCIAL, INC.2430 S. I‐35E, STE. 182 (R128441)1105‐0467REGIONAL FINANCE601 SUNSET ST. (R32671)1506‐0385SPEEDY CASH400 W. UNIVERSITY DR. (R32469)1205‐0691 1304‐0472 (EXP 12/18)TEXAN CREDIT CORP.617 SUNSET ST. (R32671)1003‐0085TITLE MAX501 N. I‐35E (R301840)1010‐0243 1304‐0471 (EXP 12/17)TITLE MAX1701 W. UNIVERSITY DR. (R33816) 1103‐0366 1304‐0473 (EXP 12/17)TOLEDO FINANCE316 E. OAK ST., STE. 106 (R106193) 1506‐0022WORLD FINANCE CORP.711 SUNSET ST. (R32671)1006‐0245WORLD FINANCE CORP.1610 TEASLEY LN., STE. 104 (R121316) 1309‐0526KEYListing of potential Credit Access Businesses ‐ February 22, 2018Credit Access Business Report s:\legal\our documents\ordinances\13\credit access businesses. doc ORDINANCE NO. 2013-073 AN ORDINANCE OF THE CITY OF DENTON, TEXAS, REQUIRING REGISTRATION OF CREDIT ACCESS BUSINESSES; DEFINING TERMS; ESTABLISHING A REGISTRATION FEE; IMPOSING RESTRICTIONS ON EXTENSIONS OF CONSUMER CREDIT MADE BY CREDIT ACCESS BUSINESSES; PROVIDING RECORDKEEPING REQUIREMENTS; PROVIDING DEFENSES; PROVIDING A PENALTY NOT TO EXCEED $500; PROVIDING A SAVINGS CLAUSE; PROVIDING A SEVERABILITY CLAUSE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: Credit Access Businesses SECTION 1. Purpose of Ordinance. The purpose of this ordinance is to protect the welfare of the citizens of the city of Denton by monitoring credit access businesses in an effort to reduce abusive and predatory lending practices. To this end, this ordinance establishes a registration program for credit access businesses, and imposes recordkeeping requirements on credit access businesses. SECTION 2. Definitions. In this ordinance: 1) Certificate of Registration means a certificate of registration issued by the director under this ordinance to the owner or operator of a credit access business. 2) Consumer means an individual who is solicited to purchase or who purchases the services of a credit access business. 3) Credit Access Business has the meaning given that term in Section 393.601 of the Texas Finance Code, as amended. 4) Deferred Presentment Transaction has the meaning given that term in Section 393.601 of the Texas Finance Code, as amended. 5) Director means the director of the department designated by the City Manager to enforce and administer this ordinance and includes any representatives, agents, or department employees designated by the director. 6) Extension of Consumer Credit has the meaning given that term in Section 393.001 of the Texas Finance Code, as amended. 7) Motor Vehicle Title Loan has the meaning given that term in Section 393.601 of the Texas Finance Code, as amended. s:\legal\our documents\ordinances\13\credit access businesses. doc 8) Person means any individual, corporation, organization, partnership, association, financial institution, or any other legal entity. 9) Registrant means a person issued a certificate of registration for a credit access business under this ordinance and includes all owners and operators of the credit access business identified in the registration application filed under this ordinance. 1 0) State License means a license to operate a credit access business issued by the Texas Consumer Credit Commissioner under Chapter 393, Subchapter G of the Texas Finance Code, as amended. SECTION 3. Violations; Penalty. a) A person who knowingly violates a provision of this ordinance, or who fails to perform an act required of the person by this ordinance, commits an offense. A person commits a separate offense each day or portion of a day during which a violation is committed, permitted, or continued. b) An offense under this ordinance is punishable by a fine of not more than $500. c) The penalties provided for in Subsection (b) are in addition to any other enforcement remedies that the city may have under city ordinances and state law. SECTION 4. Defense. It is a defense to prosecution under this ordinance that at the time of the alleged offense the person was not required to be licensed by the state as a credit access business under Chapter 393, Subchapter G of the Texas Finance Code, as amended. SECTION 5. Registration Required. A person commits an offense if the person acts, operates, or conducts business as a credit access business without a valid certificate of registration. A certificate of registration is r~quired for each physically separate credit access business. SECTION 6. Registration Application. a) To obtain a certificate of registration for a credit access business, a person must submit an application on a form provided for that purpose to the director. The application must contain the following. 1) The name, street address, mailing address, facsimile number, and telephone number of the applicant. 2) The business or trade name, street address, mailing address, facsimile number, and telephone number of the credit access business. 2 s:\legal\our documents\ordinances\13\credit access businesses. doc 3) The names, street addresses, mailing addresses, and telephone numbers of all owners of the credit access business and other persons with a financial interest in the credit access business, and the nature and extent of each person's interest in the credit access business. 4) A copy of a current, valid state license held by the credit access business. 5) A copy of a current, valid certificate of occupancy showing that the credit access business is in compliance with the Denton Development Code. 6) A non-refundable application fee of $50. b) An application or registrant shall notify the director within 45 days after any material change in the information contained in the application for a certificate of registration, including, but not limited to, any change of address and any change in the status of the state license held by the applicant or registrant. SECTION 7. Issuance and Display of Certificate of Registration; Presentment Upon Request. a) The director shall issue to the applicant a certificate of registration upon receiving a completed application pursuant to Section 6 hereof. b) A certificate of registration issued under this section must be conspicuously displayed to the· public in the credit access business. The certificate of registration must be presented upon request to the director or any peace officer for examination .. SECTION 8. Expiration and Renewal of Certificate of Registration. a) A certificate of registration expires on the earlier of: 1) one year after date of issuance; or 2) the date of expiration, revocation, or other termination of the registrant's state license. b) A certificate of registration may be renewed by making application in accordance with Section 6. A registrant shall apply for renewal at least 30 days before the expiration of the registration. SECTION 9. Nontransferability. A certificate of registration for a credit access business is not transferable. 3 s:\legal\our documents\ordinances\13\credit access businesses.doc SECTION 10. Maintenance of Records. a) A credit access business shall maintain a complete set of records of all extensions of consumer credit made by the credit access business, which must include the following information: 1) The name and address of the consumer. 2) The principal amount of cash actually advanced. 3) The documentation used to establish a consumer's income under Section 11. b) A credit access business shall maintain a copy of each written agreement between the credit access business and a consumer evidencing an extension of consumer credit (including, but not limited to, any refinancing or renewal granted to the consumer). c) A credit access business shall maintain copies of all quarterly reports filed with the Texas Consumer Credit Commissioner under Section 393.627 of the Texas Finance Code, as amended. d) The records required to be maintained by a credit access business under this section must be retained for at least three years and made available for inspection by the city upon request during the usual and customary business hours of the credit access business. SECTION 11. Restrictions on Extensions of Consumer Credit. a) The cash advanced under an extension of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining in the form of a deferred presentment transaction may not exceed 20 percent of the consumer's gross monthly income. b) The cash advanced under an extension of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining in the form of a motor vehicle title loan may not exceed the lesser of: 1) three percent of the consumer's gross annual income; or 2) 70 percent of the retail value ofthe motor vehicle. c) A credit access business shall use a paycheck or other documentation establishing income to determine a consumer's income. d) An extension of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining and that provides for repayment in installments may not be payable in more than four installments. Proceeds from each installment must be used to repay at least 25 percent of the principal amount of the extension of consumer credit. An 4 l I ,,., s;\legal\our documents\ordinances\13\credit access businesses.doc extension of consumer credit that provides for repayment in installments may not be refinanced or renewed. e) An extension of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining and that provides for a single lump sum repayment may not be refinanced or renewed more than three times. Proceeds from each refinancing or renewal must be used to repay at least 25 percent of the principal amount of the original extension of consumer credit. f) For purposes of this section, an extension of consumer credit that is made to a consumer within seven days after a previous extension of consumer credit has been paid by the consumer will constitute a refinancing or renewal. SECTION 12. This ordinance shall become effective twenty-one (21) days from the date of its passage and approval. PASS ED AND APPROVED this the / tJfft day of tl(alt/u '2013. ATTEST: JENNIFER WALTERS, CITY SECRETARY B~Jt ~u1Lfu.L~ APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY 5 cod ad\departmentsVegal\our documents\ordinances\14\credit access business amendmcnt.doc MFAWE AN ORDINANCE CLARIFYING BY AMENDMENT THE PENALTY PROVISIONS • ORDINANCE NO. 2013-073, RELATING TO CREDIT ACCESS BUSINESSES; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE FOR THE AMENDED ORDINANCE. WHEREAS, the City Council of the City of Denton, Texas passed Ordinance No. 2013- 073 on March 19, 2013 regarding credit access businesses; and WHEREAS, a question has arisen about whether the penalty clause in Section 3 of Ordinance 2013-073 could be read to authorize prosecution of borrowers, contrary to intent; and WHEREAS, the Council of the City of Denton, Texas wishes to clarify Ordinance 2013- 073 by amendment, to preclude any possibility of prosecuting borrowers, as this ordinance was clearly intended to protect consumers from predatory lending practices, and was never intended to provide for the prosecution of such borrowers; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: ARTICLE 1. Section 3 "Violations; Penalty" of Ordinance No. 2013-073 is hereby amended to read as follows: SECTION 3. Violations; Penalty. a) A Person, other than a Consumer, who knowingly violates a provision of this ordinance, or who fails to perform an act required of such Person, other than a Consumer, by this ordinance, commits an offense. A Person, other than a Consumer, commits a separate offense each day or portion of a day during which a violation is committed, permitted, or continued. b) An offense under this ordinance is punishable by a fine of not more than $500, ifJ- committed by a Person other than a Consumer. c) The penalties provide for in Subsection (b) are in addition to any other enforcement remedies that the City may have under City ordinances and state law. ARTICLE 2. This Ordinance amends Ordinance No. 2013-073 and repeals any provision of that ordinance, or any other, in conflict herewith, as of its effective date. All other provisions not explicitly amended herein shall continue in force and effect. ARTICLE 3. If any section, subsection, paragraph, sentence, clause, phrase, or word in this ordinance; in Ordinance 2013-073, as herein amended; or if any application thereof to any person or circumstances is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this ordinance, or Ordinance 2013-073 as herein amended, and the City Council of the City of Denton, Texas hereby declares that it would have enacted such remaining portions despite any such invalidity. ARTICLE 4. This penal Ordinance, as herein amended, shall become effective fourteen 14) days from the date of its passage, and the City Secretary is hereby directed to cause the caption of this ordinance to be published twice in the Denton Record-Chronicle, the official newspaper of the City of Denton, Texas, within ten (10) days of the date of its passage. PASSED AND APPROVED this the 4 61— day of . ...... - MAkK A\,13tJR-ROQ'G,1"IS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM:- ANITA BURGESS, CITY ATTORNt"Y"