Secondhand Stores to Council: 'Wait a Second!'

Yesterday, Mayor Pro Tem Sheryl Cole's office confirmed that they would be dropping from next Thursday's City Council agenda a controversial ordinance that would have given the Austin Police Department more tools to recover stolen goods. The ordinance had raised the ire of many secondhand shop owners, who were worried that the law could force them out of the city, or even out of business.

The so-called "pawnshop" ordinance would have repealed the current City Code guidelines regulating pawnshops and secondhand stores and replaced them with rules that essentially put secondhand stores on the same regulatory level as pawn shops – meaning those businesses would be required to become licensed with the city and report the purchase of certain goods that APD says "can be targeted by thieves." That doesn't sound so bad: a little paperwork and a nominal licensing fee that would, according to a memo sent by APD Chief Art Acevedo to the mayor and City Council members in June, fill in large regulatory gaps and enhance "APD's ability to recover stolen goods."

But where APD and city staff saw small changes to city law in the name of big strides in the recovery of stolen merchandise and the punishment of those who did the stealing, many secondhand store proprietors saw onerous regulations that could damage their ability to do business.

"Me and my colleagues are all for helping the police catch bad guys," says Tim Hensley, co-owner of Gamerz, a video game store in Lakeline Mall, and Gamerz Galaxy at Hancock Center. "But it's very scary what this ordinance would require us to do. Some of these measures are quite punitive."

Perhaps the most punitive of the proposed measures, according to Hensley, would have required secondhand shop owners to hold on to all items they purchase for a week. This would presumably give APD the time to track merchandise being bought and sold in the city and cross-reference it with merchandise that's been reported stolen.

The problem for a store owner like Hensley is that every day he holds on to a piece of merchandise is a day he's not making money, a day he's paying for storage, and a day that merchandise could be depreciating in value.

"I run a video game store," Hensley says. "These items depreciate quickly. For example, if I bought a copy of Madden NFL 12 a week before Madden NFL 13 came out, Madden 12 will depreciate by two-thirds the moment 13 comes out, which is when I could legally sell it. I'm going to have to begin forecasting weeks and months in advance of new releases. I've bought something, and that money is gone and I can't recoup for 10 days. That's money tied up in inventory I can't move."

Other stakeholders pointed to the ordinance's proposed record-keeping provisions as the source of their angst. Under the terms of the ordinance, all secondhand dealers would have been required to enter a record of every purchase into a third-party electronic system to which APD would then have access. Those new record-keeping requirements would have a direct financial impact on businesses, according to Steve Wiman, owner of South Austin antique store Uncommon Objects.

"Putting the responsibility on small-business owners to track and report merchandise is so burdensome," Wiman says. "It's not simple to log in and report what you bought that day. I buy thousands of items a week. These requirements will affect our ability to purchase, price, and sell. The bottom line is an ordinance of this sort will have such a massive ripple effect it [would] impact our businesses in radical ways."

Looking for a compromise, the bill's co-sponsors, Cole and Council Members Bill Spelman and Kathie Tovo, made amendments to the original ordinance that would set a price floor of $50 on items requiring registration and set a list of regulated merchandise, but by Wednesday, Cole's office said they had encountered too much resistance from stakeholders and not nearly enough consensus to feel comfortable moving forward with the ordinance.

Wiman and Hensley both believe that much of the last-minute grief city staff faced at stakeholder meetings could have been resolved if APD or the bill's co-sponsors had reached out to secondhand dealers months, rather than weeks, ago.

Before her office announced the withdrawal, Cole still thought the ordinance would meet with stakeholder approval. "We're trying to hit that sweet spot," Cole said. "We're definitely not trying to put anyone out of business, but at the same time, we're trying to get a balance between getting the information we need to recover the goods and also not making business owners do too much work. But we don't think the registration process is going to put too much of a burden. We hear the stakeholders loud and clear, and we're trying to listen to them."

But Hensley remained worried that all that listening would not amount to much. "I'm concerned that this ordinance is going to pass and I'll have no recourse but to accept it and try to stay in business," he said. Apparently his concerns, and those of other business owners, were in the end sufficient to scuttle the ordinance, at least temporarily. "There are parts we didn't think were bad ideas, but they went about it in the wrong way," Hensley added Wednesday. "In the future, we hope they invite us if they decide to look at this again."