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Pawn Shop Restrictions
by Ron Davis

Shopping centers and pawn shops are like oil and water. They just don’t mix. At least that’s what city officials of Raleigh, NC, apparently believe.

But that belief has been tested time and again over the past five years. During that period, members of Raleigh’s City Council have heard from opposing forces on the controversial issue of allowing pawn shops to open for business in areas zoned for shopping centers. And the dispute finally made its way to North Carolina’s appellate court.

There, the judges heard both sides present their case. And proponents of allowing pawn shops to coexist with other businesses in certain local districts gave a strong argument. But before that, Raleigh’s City Council had already decided that pawn shops could no longer locate in zones set aside for shopping centers. Those pawn shops already in those districts, however, could remain there.

That decision by City Council had met with stiff resistance. Pawn-shop owners concluded that the decision by City Council was “arbitrary and capricious.” They pointed out that pawn shops are beneficial to the community by providing cash advances to those persons in need. Also, pawn-shop advocates noted, their businesses purchase goods from persons who have a sudden need for money.

Explained the pawn-shop owners, “Retaining the existing regulations would result in no negative impacts, as current regulations require City Council to review a pawn-shop application and determine that the business location is not detrimental to the neighborhood prior to the issuance of a license.”

The opposition countered that argument by claiming that, among other reasons, adjacent property values can be affected adversely by pawn shops and that pawn shops attract criminals who need cash for goods they have stolen.

Moreover, the opponents noted, they are not alone in resisting the influx of pawn shops in certain areas. They explained that other towns and cities in the United States have adopted similar restrictions.

The North Carolina Court of Appeals, in upholding a lower-court decision that allowed the zoning restrictions against pawn shops, explained, “Allegations that the City Council’s decision was unreasonable or arbitrary and capricious does not create a factual dispute. The material facts are not in dispute in this case; rather the controversy is as to the legal significance of those facts.

“In sum,” the judges concluded, “we hold that the undisputed facts establish that a plausible basis exists for enacting the restrictions and that City Council did not abuse its legislative authority arbitrarily or capriciously.”

(Beck v. City of Raleigh, 2011 WL 904246 [N.C.App.])

Decision: March 2011
Published: March 2011



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