Hopkins city officials are considering a moratorium on new pawnshops, currency exchanges and coin dealerships as they look to toughen regulation on those businesses in the future.
The City Council on Tuesday is expected to approve a yearlong ban of new and current applications for these types of businesses. If approved, the moratorium would go into effect Jan. 12.
Officials say the proposed extension of the new light-rail line from downtown Minneapolis through Hopkins to Eden Prairie led them to review the regulations of these businesses. City officials want to spend the year conducing a study of the effect they would have on small cities.
“The city has concerns regarding the potential for these businesses to develop into nuisance properties and create problems for law enforcement,” according to a city document laying out the reasoning for a moratorium.
The city contends these businesses have the potential to carry stolen goods and engage in questionable lending practices.
“Moreover, the city is aware of various business practices … that can take advantage of individuals who are vulnerable,” the ordinance language says.
“Moratoriums are fairly standard planning practice for many cities,” Kersten Elverum, the director of planning and development for the city, said at a council meeting in late December.
She cited temporary bans enacted by Hopkins on single-family home demolitions and the sale and distribution of medical marijuana.
“It really is an opportunity for us to take a pause on a particular issue and do a little bit of an in-depth study on it,” Elverum said.
Hopkins Mayor Molly Cummings could not be reached for comment Monday.
Other cities in the country and state, including St. Louis Park and St. Paul, have placed moratoriums on pawnshops and currency exchanges in the past.
The major pawnshop in Hopkins is a Pawn America branch, located near Blake Road N. and Excelsior Boulevard. A spokesman for the business dismissed the notion that reputable pawnshops aren’t already highly regulated.
“Anybody that brings an item in through Pawn [America] … a police report is filed,” said consultant Mike Erlandson. “If you’re somebody that is trying to front stolen goods, the biggest mistake you could make is to bring it to a pawn dealer.”
Pawn America sued St. Louis Park in 2007 after it imposed a nine-month moratorium, claiming it was done to prevent one of their branches from opening in the city. That lawsuit was dismissed.
Dana Golden, the owner of Golden Coin Co. in Hopkins, said she was not aware of any coin dealer storefronts in the city. Instead, her company is a licensed firm that works with clients across the country.
“I think [the city] is being proactive to an industry that is riddled with shenanigans,” she said. “I certainly understand why they’d want to have a study.”
Minnesota passed a law a couple of years ago requiring all coin dealers to be licensed. This led many out of business and some to move their operations to Wisconsin, she said.
“There are a lot of really shady coin dealers that are no longer practicing … in Minnesota,” Golden said. The state law “has been great for us coin dealers that are trying to do the right thing.”
She said she is interested to see whether the results of the study would affect her Hopkins firm in any way.