(a) This
article may be known and cited as “nondepository financial institutions
regulation.”
(b) The
purpose of this article is to protect the welfare of the citizens
of the city by monitoring nondepository financial institutions in
an effort to reduce abusive and predatory lending practices and concentration
and clustering of businesses engaging in such practices. To this end,
this article establishes a registration program for nondepository
financial institutions, imposes restrictions on extensions of consumer
credit made by nondepository financial institutions, imposes recordkeeping
requirements on nondepository financial institutions, and imposes
restrictions on location of nondepository financial institutions relative
to other nondepository financial institutions, zoning districts, uses
and transportation corridors.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
The following words, terms and phrases, when used in this article,
shall have the meanings ascribed to them, except where the context
clearly indicates a different meaning:
Car title loan business.
An establishment that makes small consumer loans that leverage
the equity value of a car or other vehicle as collateral where the
title to such vehicle is owned free and clear by the loan applicant
and any existing liens on the car or vehicle cancel the application.
Failure to repay the loan or make interest payments to extend the
loan allows the lender to take possession of the car or vehicle.
Certificate of registration.
A certificate of registration issued by the director under
this article to the owner or operator of a nondepository financial
institution.
Check cashing business.
An establishment that provide some or more of the following:
(1)
An amount of money that is equal to the face of the check of
the amount specified in the written authorization for an electronic
transfer of money, less any fee charged for the transaction;
(2)
An agreement not to cash a check or execute an electronic transfer
of money for a specified period of time; or
(3)
The cashing of checks, warrants, drafts, money orders or other
commercial paper for compensation by any person or entity for a fee.
Church.
A church, synagogue, mosque, temple, or building which is
used primarily for religious worship and related religious activities.
Consumer.
An individual who is solicited to purchase or who purchases
the services of a nondepository financial institutions.
Credit access business.
The definition ascribed to that term in section 393.601 of
the Texas Finance Code, as amended.
Director.
The director of the department designated by the city council,
city manager, or city council or city manager’s designee, to
enforce and administer this article.
Nondepository financial institution.
Any check cashing business, payday advance/loan business,
car title or credit access business including such businesses leasing
space within another business to perform such functions, as further
defined herein. Nondepository financial institution excludes: a state
or federally chartered bank, savings and loan association or credit
unit; and a convenience store, supermarket or other retail establishment
directly providing such services where consumer retail sales constitute
at least 75% of the total gross revenue generated on site.
Payday advance/loan business.
An establishment that makes small consumer loans, usually
backed by a postdated check or authorization to make an electronic
debit against an existing financial account, where the check or debit
is held for an agreed-upon term, or until a customer’s next
payday, and then cashed unless the customer repays the loan to reclaim
such person’s check; and such establishments may charge a flat
fee or other service charge and/or fee or interest rate based on the
size of the loan amount.
Person.
Any individual, corporation, organization, partnership, association,
financial institution, or any other legal entity.
Registrant.
A person issued a certificate of registration for a nondepository
financial institution under this article and includes all owners and
operators of the nondepository financial institution identified in
the registration application filed under this article.
Residential district.
A residentially zoned district as defined by the zoning ordinance
of the city, including multiple-family residential.
Residential use.
A single-family, townhouse, duplex, mobile home, or multiple-family
use as defined in the zoning ordinance of the city.
School.
Any public or private educational facility including, but
not limited to, child day-care facilities, nursery schools, preschools,
kindergartens, elementary schools, private schools, intermediate schools,
junior high schools, middle schools, high schools, vocational schools,
secondary schools, special education schools, junior colleges and
universities. This definition includes any building used for home
schools. School includes the entire parcel on which the school facility
is located.
State license.
A license to operate a nondepository financial institutions
issued by the Texas Consumer Credit Commissioner under chapter 393,
subchapter G of the Texas Finance Code.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
(a) A
person who violates a provision of this article, or who fails to perform
an act required of the person by this article, commits an offense.
A person commits a separate offense for each and every violation relating
to an extension of consumer credit, and for each day during which
a violation is committed, permitted, or continued.
(b) A violation of any provision of this article is punishable in accordance with section
1.01.009 of this code.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
It is a defense to prosecution under this article that at the
time of the alleged offense the person was not required to be licensed
by the state under chapter 393, subchapter G, of the Texas Finance
Code.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
A person commits an offense if the person acts, operates, or
conducts businesses as a nondepository financial institution without
a valid certificate of registration. A certificate of registration
is required for each physically separate nondepository financial institutions.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
(a) To
obtain a certificate of registration for a nondepository financial
institutions, 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 nondepository financial institutions.
(3) The names, street addresses, mailing addresses, and telephone numbers
of all owners of the nondepository financial institution, and the
nature and extent of each person’s interest in the nondepository
financial institution.
(4) A copy of a current, valid state license held by the nondepository
financial institution pursuant to chapter 393, subchapter G of the
Texas Finance Code.
(5) A copy of a current, valid certificate of occupancy showing that
the nondepository financial institution is in compliance with this
code.
(6) A nonrefundable application fee for the amount established.
(b) An
applicant 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.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
(a) The director shall issue to the applicant a certificate of registration upon receiving a completed application under section
8.06.006.
(b) A
certificate of registration issued under this section must be conspicuously
displayed to the public in the nondepository financial institutions.
The certificate of registration must be presented upon request to
the director or any peace officer for examination.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
(a) A
certificate of registration expires on the earliest of:
(1) One year after the date of issuance; or
(2) The date of revocation, suspension, surrender, expiration without
renewal, or other termination of the registrant’s state license.
(b) A certificate of registration may be renewed by making application in accordance with section
8.06.006. A registrant shall apply for renewal at least 30 days before the expiration of the registration.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
A certificate of registration for a nondepository financial
institutions is not transferable.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
(a) A
nondepository financial institution shall maintain a complete set
of records of all extensions of consumer credit arranged or obtained
by the nondepository financial institution on-site, which must include
the following information:
(1) The name and address of the consumer;
(2) The principal amount of cash actually advanced;
(3) The length of the extension of consumer credit, including the number
of installments and renewals;
(4) The fees charged by the nondepository financial institution to arrange
or obtain an extension of consumer credit; and
(5) The documentation used to establish a consumer’s income under section
8.06.011.
(6) All business records, including but not limited to all documents
related to title acquisition and title transfer of vehicle titles
to or from any loan, make of vehicle, model of vehicle, vehicle identification
number, date of acquisition and date of sale.
(b) A
nondepository financial institution shall maintain a copy of each
written agreement between the nondepository financial institution
and a consumer on-site evidencing an extension of a consumer credit
(including, but not limited to, any refinancing or renewal granted
to the consumer).
(c) A
nondepository financial institution shall maintain copies on-site
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 nondepository financial institution
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 nondepository financial institution.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
(a) The
cash advanced under an extension of consumer credit that a nondepository
financial institution 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 nondepository
financial institution 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 of the motor vehicle.
(c) A
nondepository financial institution shall use a paycheck, bank statement,
IRS Form W-2 from the previous tax year, the previous year’s
tax return, a signed letter from an employer, or other documentation
establishing income to determine a consumer’s income.
(d) An
extension of consumer credit that a nondepository financial institution
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 nondepository financial institution
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.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
(a) Every
agreement between the nondepository financial institution and a consumer
evidencing an extension of consumer credit (including, but not limited
to, any refinancing or renewal granted to the consumer), must be written
in the consumer’s language of preference. Every nondepository
financial institution location must maintain on its premises, to be
available for use by consumers, agreements in the English and Spanish
languages.
(b) For
every consumer who cannot read, every agreement between the nondepository
financial institution and a consumer evidencing an extension of consumer
credit (including, but not limited to, any refinancing or renewal
granted to the consumer) must be read to the consumer in its entirety
in the consumer’s language of preference, prior to the consumer’s
signature.
(c) For
every consumer who cannot read, every disclosure and notice required
by law must be read to the consumers in its entirety in the consumer’s
language of preference, prior to the consumer’s signature.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
A nondepository financial institution shall provide a form,
to be prescribed by the director, to each consumer seeking assistance
in obtaining an extension of consumer credit which references nonprofit
agencies that provide financial education and training programs and
agencies with cash assistance programs. The form will also contain
information regarding extensions of consumer credit, and must include
the information required by section 8.06.010(a)(1)–(5) of this
article specific to the loan agreement with the consumer. If the director
has prescribed a form in the consumer’s language of preference,
the form must be provided in the consumer’s language of preference.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
(a) No
more than one nondepository financial institution establishment shall
be located on a single lot.
(b) Any
lot containing a nondepository financial institution establishment
shall be located at least one thousand feet (1,000') from any lot
containing another nondepository financial institution establishment,
as measured in a straight line between the nearest points of one lot
to the other lot.
(c) Any
lot containing a nondepository financial institution establishment
shall be located at least seven hundred fifty feet (750') from a residential
district or residential use, school, church, or public or private
park as measured in a straight line between the nearest points of
the boundary of the applicable zoning district or property line of
the aforementioned uses to the property line of the nondepository
financial institution.
(d) Any
lot containing a nondepository financial institution establishment
shall be located at least five hundred feet (500') from the right-of-way
of any roadway identified as a highway, parkway or arterial in the
city’s transportation master plan, as amended, as measured in
a straight line between the nearest points of the right-of-way line
to the property line of the nondepository financial institution.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)
(a) A
nondepository financial institution that does not conform to these
standards and that existing lawfully on the date the use commenced
shall be deemed a nonconforming use. A nonconforming use may be continued,
so long as it does not increase its level of nonconformity as set
forth in the city’s unified development code.
(b) If
a nondepository financial institution ceases operations at a particular
location, a new certificate of occupancy shall not be issued for a
new nondepository financial institution at that location without first
complying with all the requirements of this article.
(c) Sale
of items used as loan collateral, including but not limited to vehicles
taken under ownership of the nondepository financial institution upon
loan default and displayed for sale to the public, shall be subject
to development and use regulations as established in the city’s
unified development code and other applicable development codes, as
amended, in addition to the requirements of this article.
(Ordinance 2014-09, sec. 1, adopted 3/18/14)