A proposal under review by Rock Hill officials could result in fewer pawn shops opening in the city.
City Council members have given initial approval to imposing stricter requirements for where pawn shops can be located. The proposal would prevent new pawn shops from opening within 300 feet of churches, homes, schools, and public parks. The businesses also could not open within 1,000 feet of other pawn shops and businesses such as title loan and payday lending, debt collection and other small loan companies.
The local law is temporarily in effect but final approval is pending until Rock Hill’s Planning Commission holds a public hearing and makes a recommendation to the council. The five existing pawn shops in the city will be “grandfathered in” and allowed to stay open even if they do not meet the new separation requirements.
Some pawn shop owners in Rock Hill say the new regulation will likely be effective in keeping their competition out, which is probably good for their business. Still, they aren’t necessarily in support of the city’s grouping of pawn shops with small loan-type businesses because they view their industry as retail.
“The pawn shop is a unique place … it’s kind of like the old general store,” says Diann Teague, of Teague’s Pawn Shop on Cherry Road.
She and her sons Blake and Ryan Teague started the family-owned pawn shop more than 20 years ago in Rock Hill. While they estimate about half of their business involves lending money in exchange for personal items as collateral, the Teagues say they are basically “recyclers” of goods.
They buy and sell used and new items such as musical instruments and sound equipment, guns, electronics, small appliances and jewelry. Their customers, the Teagues say, aren’t exclusively visiting to get a loan – something much different than customers of businesses such as title loan and payday lending places.
City zoning regulations – or development and land use rules – group the following businesses as alternative financial options: check cashing establishments, payday lending businesses, title loan companies and debt collection companies. The city wants to add pawn shops to that group.
Rock Hill officials say they’ve heard frequent complaints from residents and business owners – particularly on Cherry Road – that there seems to be a proliferation of alternative financial services in the city.
City records show 53 businesses classify as alternative financial services. Nearly half of those are congregated on Cherry Road. The records show that there is one small loan business per 2,800 people in Rock Hill. With five pawn shops, Rock Hill has one pawn shop per 14,000 people.
A high concentration of businesses like payday lending and other small loan operations can create the perception that a town’s residents are “economically depressed,” said Leah Youngblood, senior planner for Rock Hill. City officials are sensitive, she said, to the impression Rock Hill makes on its visitors.
Teagues worried about expansion
The new separation requirement for pawn shops arose recently after city officials learned of a few business owners looking to open up shop in Rock Hill. Two of the interested business owners were considering Cherry Road locations. A third was looking at opening a pawn shop on Saluda Street.
Alternative financial establishments are already governed by city zoning separation requirements that prevent those businesses from opening within 1,000 feet of each other and within 300 feet of homes, churches, schools and public parks.
Pawn shops would also only be allowed in “multi-tenant“ shopping areas of 30,000 square feet or more.
While the new regulations are intended to prevent further proliferation of both pawn shops and alternative financial establishments, the Teagues are watching the process closely to figure out whether their plans for a pawn shop expansion are jeopardized.
The Teagues saved money for years and recently bought a small lot beside their pawn shop to expand their business. Before the Teagues closed on the land, a Rock Hill official met with them and stated that there were no laws to hinder their plans.
Now, the Teagues hope city officials will take into account their expansion plans. The nearby land’s zoning classification allows for commercial use but, under the proposed rule change, the Teagues may not be able to build because of the new separation requirements.
Rock Hill officials may look into revising the new rule, Youngblood said, and consider giving existing businesses a time frame in which to complete any expansions before the separation requirements would apply to them.
For another pawn shop owner, Doug Mason of Rock Hill Pawn Shop, the new rules don’t seem too bad.
“There’s plenty in town already,” he said of pawn shops and alternative financial businesses.
Mason runs Rock Hill’s oldest pawn shop and, like the Teagues, says he has customers from “all walks of life,” not just those needing a quick, easy loan. Still, he said, pawn shops serve a vital role: lending money to “help make ends meet” when banks can’t or won’t give someone a loan.
Pawn advocate: New rule isn’t fair
Nationwide, among the nearly 10 million people who do not have a checking or savings account at a bank, 20.5 percent use pawn shops, according to 2011 data from the Federal Deposit Insurance Corp. Additionally, nearly 24 million Americans who do have a checking or savings account choose to use alternative financial business options, such as pawn shops, according to the FDIC.
“Pawn shops exist for folks that have an immediate financial need,” says Taft Matney, spokesman for the South Carolina Pawnbrokers Association, an advocacy group that tries to educate elected officials on the industry. “If there wasn’t a market demand, they wouldn’t exist.”
Like some Rock Hill pawn shop owners, Matney maintains that pawn shops are “retail – first and foremost,” not lending companies.
He takes issue with the new separation requirements and classification of pawn shops in Rock Hill. Citing an “over saturation” of pawn shops or alternative financial businesses in the city is not a good enough reason to impose new, stricter regulations, Matney said.
It sets a “dangerous precedent” for those doing business in the community and seems unfair, he said, if city officials aren’t applying stricter rules for other industries such as grocery stores or pharmacies that may also be frequently popping up.
Before introducing the new pawn shop rule, Rock Hill officials researched how other municipalities classify and regulate the industry. They found a range of regulations, Youngblood said, but many cities and towns seem to group pawn shops with other alternative financial businesses or impose similar restrictions.
Rock Hill officials also found that the businesses tend to locate in areas where lower-income people are living and working. Additionally, Youngblood said, Rock Hill may be seeing a “spillover” of alternative financial businesses because the industry is heavily-regulated by state laws in North Carolina. Being close to the state line, Rock Hill may be attractive to some business owners who can operate more easily in South Carolina.
Planning Commission members are expected to take up the issue of new pawn shop regulations during a public meeting on March 4 at 7 p.m. at Rock Hill City Hall. City Council members may discuss the issue as soon as March 24.
Anna Douglas • 803-329-4068