PCG Presentation for the Elevate Pawn Symposium
Tough stance: Memphis City Council denies special-use permit to Summer Avenue pawn shop
By Tom Bailey
The Memphis City Council voted last week to deny zoning for a new pawn shop, perhaps signaling a tougher stance against higher-interest loan businesses that populate more commercial districts.
“I hope so,” said Councilman Jim Strickland, in whose district Best $ Pawn and Jewelry applied for a special-use permit.
The City Council voted last week to deny zoning for Best $ Pawn and Jewelry, which had applied for a special-use permit.
He and some other council members consider pawn shops bad for the community “because they basically prey on the public that’s hurting.”
The interest rates on short-term loans that customers get for handing over their watches, tools and other valuables as collateral “are extraordinarily high,” Strickland said.
The presence of pawn shops also discourages quality businesses from coming to an area, Strickland said.
That the City Council even had authority to block a pawn shop is new.
The Unified Development Code now requires a special-use permit for pawn shops in the newly named Commercial Mixed-use District. Before the UDC took effect Jan. 1, a pawn shop was a use by right in the old “Highway Commercial Districts.”
Council members “are looking at the types of businesses that affect the quality of life in their community,” said Councilman Harold Collins. “… If you remember, this council really cracked down on strip clubs and payday loan companies by establishing an ordinance where strip clubs couldn’t serve and sell alcohol.
“And right after that the council passed an ordinance requiring payday loan businesses to be at least 1,500 feet apart and certain distances from parks and churches.”
Despite the council’s action last week, about the only thing changing at Best $ Pawn and Jewelry, 4362 Summer, is the loss of two words and the labeling of money transaction.
The name and signs are switching to Best $ Jewelry.
And when customers hand over their watch, they are selling it to the shop. They can buy it back later for what the shop paid plus a fee, not interest, said manager John Chan.
The shop that occupies the former InSouth bank building on Summer near Waring has a business license and still has the right to buy, sell and trade, he said
He’s considering returning to City Council to persuade members to reverse the action.
Chan said his pawn business was straightforward: He charged 20 percent interest a month. No fees, no hidden costs.
Customers that handed over a watch for a $100 loan would pay $120 to get it back the next month. There were no fees or other hidden costs, he said.
Instead of being a detriment to the Berclair neighborhood, Best $ Pawn took an empty building, cleaned it up, renovated it, improved the landscaping and has given three people employment, said Chan and a consultant who identified himself only as Lester.
Customers who don’t have the money to keep their power on, feed a crying baby or even make a payroll depend on pawn shops to tide them over until they get money, Chan said.
Banks often won’t loan to them because they don’t have enough assets or have poor credit.
Chan arranged for a reporter to talk to two of his customers, Danny Johnson, 44, and his wife, Cathy Johnson, 53, who live in the Berclair neighborhood. They have their own business cleaning houses and commercial buildings.
Danny Johnson described Best $ Pawn as a fair, more customer-friendly pawn shop than many others he has dealt with the past 14 years.
Most recently, he pawned his gold ring for a $350 loan.
“In our business, there’s no guarantee we’ll work the next day,” Cathy Johnson said. “It’s just a loan: A simple, innocent loan.”
The business is surrounded by Central BBQ, Taco Bell, Howard’s Donuts and a car wash. But within the two or three blocks west there are Advance America Cash Advance, Cash America Pawn, Summer Jewelry Pawn, TitleBucks Title Loan, Cash Flash Check Advance, and Cash Loans Co.
Strickland said he believed council members generally felt the city needs to take a stand on having fewer of the higher-interest businesses, “or at least fewer of them so close to each other.”
But Chan countered that the competition actually works to lower the interest rates or fees the businesses charge.
Commentary from Jerry – AS I have said before, the basic stance that so many communities place on our industry in a time when economies are failing and more, people need more help than ever before, why can’t we just let good businesses thrive! Now that is a CRIME!
Pawn Shop Consulting Group, Inc.