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08/13/2013Cases # 13 -039 -APL 1143 Lee Street August 13, 2013 Page 1 DES PLAINES ZONING BOARD MEETING August 13, 2013 MINUTES The Des Plaines Zoning Board Meeting held its regularly scheduled meeting on Tuesday, August 13, 2013 at 7:30 P.M., in Room 102, City Council Chambers, of the Des Plaines Civic Center. ZONING BOARD Chairman Seegers called the meeting to order at 7:36 P.M. Roll call was conducted. PRESENT: Seegers, Catalano, Szabo, Porada, Hofherr, Schell, Saletnik ABSENT: None Also present was Scott Mangum, Senior Planner with the Community and Economic Development Department, Karl Camillucci, Attorney with Holland and Knight, and Peter Friedman, Attorney with Holland and Knight. A motion was made by Board Member Saletnik, and was seconded by Board Member Catalano to approve the minutes of the July 30, 2013 Zoning Board of Appeals. AYES: Saletnik, Catalano, Szabo, Porada, Seegers, Schell NAYES: None ABSTENTIONS: Hofhen• Board Member Hofherr abstained from voting because he recused himself from one of the cases during the July 30, 2013 ZBA meeting. ***MOTION CARRIED * * * * NEW BUSINESS Address: 1143 Lee Street Case Number: Case #13 -039 -APL Issue: The petitioner is appealing, pursuant to Section 3.9 of the 1998 City of Des Plaines Zoning Ordinance, as amended, a decision of the Zoning Administrator that a Title Loan Operation is not a "Financial Institution" and therefore is not a permitted use in the C-3 Zoning District. Address: 1143 Lee Street PIN: 09 -20 -214 -008 -0000,09-20-214-011-0000,09-20-214-012-0000,09-20-214-013-0000 Cases # 13 -039 -APL 1143 Lee Street August 13, 2013 Page 2 Petitioner: Mark W. Daniel (for TitleMax of Illinois, Inc. Attorney), 136 W. Vallette Street, Suite 3, Elmhurst, IL 60126 Owner(s): MPT Holdings LLC, 1420 Renaissance Drive, #406, Park Ridge, IL 60068 Petitioners Mark W. Daniel (Attorney for TitleMax), Jim Bradley (for TitleMax of Illinois, Inc. Regional Manager) 1075 Chadwick Court Aurora, IL, 60502, and Dave Nelson (for TitleMax of Illinois, Inc.) were sworn in. Petitioner Daniel summarized the appeal request. TitleMax of Illinois has appealed the finding that it is not a financial institution for the purpose of the Zoning Ordinance because it uses the titles of vehicles as collateral for consumer loans, and disagrees with the Zoning Administrator's interpretation that it is not a financial institution. There is no disagreement about the content of the definition, the C-3 zoning district, and the Land Use Table. TitleMax has filed for building permits with the City of Des Plaines and filed for the necessary business regulation certificate. Petitioner Bradley explained he will manage the day to day operations for this location. TitleMax offers small consumer loans to customers based on the value of the vehicle and the title. It is more of a retail operation, customers come to TitleMax locations and only a small amount of advertising is done. The process starts with a short appraisal, customer signs the contract, and the customer pays back on a monthly basis. TitleMax does lend money, however, it does not have cars on site, nor does it take possession of the vehicles. TitleMax locations will see the customers every month when they pay the bill. Mr. Daniel questioned Mr. Bradley if TitleMax operates in any way like a pawn broker, takes in any property or deals with payday loans. Mr. Bradley responded that TitleMax is not like a pawn broker or payday lender. It is understood by all that if TitleMax were to operate in Des Plaines; it is prohibited to act like a pawn broker. Mr. Bradley indicated TitleMax does not act like a pawn broker, and only deals with consumer title loans. TitleMax does understand the laws, and will not operate like a pawn broker. Mr. Bradley stated that TitleMax is subject to all Illinois regulations governing financial institutions and considers it a nonbanking financial institution under those regulations. Senior Planner Mangum summarized the staff report. Issue: The petitioner is appealing, pursuant to Section 3.9 of the 1998 City of Des Plaines Zoning Ordinance, as amended, a decision of the Zoning Administrator that a Title Loan Operation is not a "Financial Institution" and therefore is not a permitted use in the C-3 Zoning District. Analysis: Address: 1143 Lee Street PIN: 09-20-214-008-0000,09-20-214-011-0000,09-20-214-012-0000, 09-20-214-013-0000 Existing Zoning: C-3, General Commercial Zoning District Petitioner: Mark W. Daniel (for TitleMax of Illinois, Inc.), 136 W. Vallette Street, Suite 3, Elmhurst, IL 60126 Cases # 13 -039 -APL 1143 Lee Street August 13, 2013 Page 3 Owner(s): MPT Holdings LLC, 1420 Renaissance Drive, #406, Park Ridge, IL 60068 On April 24, 2013 TitleMax applied to the City for a Business Regulation Certificate to operate a title loan business at 1143 Lee Street. TitleMax subsequently applied for a building permit and sign permits at this location. TitleMax makes short-term loans to borrowers who pledge the title to their automobiles as collateral, also known as title loans ("Title Loan Operation"). Upon consideration of the Zoning Certification Form for a Business Regulation Certificate, the Zoning Administrator authorized staff to issue a letter stating that the proposed use is not permitted within the C-3 Zoning District and that petitioner would need to obtain a zoning Text Amendment to operate its business at 1143 Lee Street. The petitioner appeals this decision. The Commercial District Use Matrix (Table 7.3.1 of the Zoning Ordinance) enumerates the permitted and conditional uses in each of the Commercial Zoning Districts. Section 13.2-3 of the Zoning Ordinance (Uses Not Listed or Not Within the Scope of Generic Definitions) states that, "A use that is not specifically listed in a zoning district or does not fall within a generic definition as defined in this Article, or as interpreted by the Zoning Administrator pursuant to Section 3.8, is prohibited." The Zoning Administrator determined that a Title Loan Operation was not a use specifically listed, and was not included within the scope of any generic definition set forth in the Commercial District Use Matrix. Therefore, pursuant to Section 13.2-3, the Zoning Administrator determined that the operation of a Title Loan Operation within the C-3 District is prohibited. Section 13.3 (Definitions) of the Zoning Ordinance provides the following definitions for relevant uses: Financial Institution A building, property or activity, the principal use or purpose of which is the provision of financial services, including, but not limited to, banks, credit unions, savings and loan institutions, and mortgage companies. "Financial Institution" shall not include any use or other type of institution that is otherwise listed specifically in a zoning district as a permitted conditional use. Payday Loan Business or Agencies An establishment that engages in the business of offering payday loans. A "payday loan" is a loan transaction where a post-dated check or other check that the parties agree will be held for a period of time before presentment for payment or deposit is accepted as collateral for the loan. Ord. Z-21-05 In reviewing the Commercial District Use Matrix and Definitions the Zoning Administrator determined that a Title Loan Operation did not fall within the definition of a Financial Institution. Section 13.2-2 (Components of Generic Use Definitions) states that generic definitions of land uses may include examples of uses intended to be included in the definition and examples of uses not intended to be included in the definition. Also, Section 13.1-1 (Undefined Terms) provides that terms not defined in Article 13 should be construed as defined in normal dictionary usage. The following terms, which are examples of uses that are intended to be included in the definition of Financial Institution, are not defined by Article 13: "bank," "credit union," "savings and loan institution," and "mortgage company." Webster's II New College Dictionary, 1995 ed., provides the following definitions for the following terms: Bank: An establishment where money is stored for saving or commercial purposes or is invested, supplied for loans, or exchanged. Credit Union: A cooperative organization that makes loans to its members at relatively low interest rates. Cases # 13 -039 -APL 1143 Lee Street August 13, 2013 Page 4 Savings and Loan Association: A financial institution that holds the funds of its members or clients in interest-bearing accounts and certificates of deposit, invests these funds esp. in home mortgage loans, and may also offer banking services. Webster's II New College Dictionary does not define "mortgage company." However, it does define "finance" as follows: "the science of money management" and "the management of money, banking, investments, and credit." Therefore, "financial services" are services pertaining to the management of money, banking, investments, and credit. The Zoning Administrator determined that a Title Loan Operation is dissimilar from the examples of uses included within the definition of Financial Institution. A Title Loan Operation only makes one type of specific, short-term loan at relatively high interest rates. In contrast, banks, credit unions, and savings and loan associations provide a greater variety of services, including the management of money, the acceptance of deposits, the investment of funds, the exchange of funds, and the issuance of a variety of loans, including mortgage loans, at relatively low interest rates. Additionally, two of the examples of included uses -- credit unions and savings and loan associations -- are distinguishable from a Title Loan Operation because they are membership organizations. These factors, among others, supported the Zoning Administrator's determination that a Title Loan Operation is not a Financial Institution for the purpose of the Zoning Ordinance. Additionally, the Zoning Administrator determined that a Title Loan Operation was not a Payday Loan Business or Agency. The definition of a Payday Loan Business of Agency in Section 13.3 specifically states that a "check" serves as collateral for the loans issued by a Payday Loan Business or Agency. In contrast, a Title Loan Operation holds the title of a vehicle as collateral. Because a Title Loan Institution is neither a Financial Institution nor a Payday Loan Business or Agency for the purpose of the Zoning Ordinance, and is not specifically listed in the Commercial District Use Matrix, the Zoning Administrator determined, in accordance with Section 13.2-3, that a Title Loan Operation was not permitted within the C-3 District. The petitioner was informed that a Text Amendment could be requested to change the Zoning Ordinance. Per Section 3.7 (Amendments) any resident or owner of property in the City may initiate an a Text Amendment to change the text of the Zoning Ordinance. A Text Amendment application would be considered by the Plan Commission at a public hearing. The Plan Commission would forward its recommendation to the City Council, which has final authority over Amendments. Zoning Board of Appeals Procedure Under Section 3.9 of the Zoning Ordinance (Appeals) the Zoning Board of Appeals may affirm or may, reverse, wholly or in part, or modify the order, decision or interpretation of the Zoning administrator. In deciding whether to affirm, reverse, or modify, Section 3.9-1 (Purpose) states that the Zoning Board of Appeals should "give all proper deference to the spirit and intent embodied in the language of this Ordinance and to the reasonable interpretations of that language by those charged with the administration of this Ordinance." Additionally, Section 3.9-2 (Authority) provides that the Zoning Board of Appeals " shall have the same powers and be subject to the same standards and limitations as the Zoning Administrator with respect to any order, decision, or interpretation being appealed." In accordance with the standards set forth in Sections 3.9-1 and 3.9-2, the Zoning Board of Appeals should affirm the decision of the Zoning Administrator unless it determines that the Zoning Administrator's decision was unreasonable. Based on the definitions set forth in the Zoning Ordinance, the common dictionary meaning of Cases # 13 -039 -APL 1143 Lee Street August 13, 2013 Page 5 undefined terms used in the Zoning Ordinance, and the list of permitted uses in the Commercial District Use Matrix, the Zoning Administrator's decision was reasonable, not arbitrary, capricious, or clearly erroneous. Recommendation: Staff recommends that the Zoning Board of Appeals affirm the decision of the Zoning Administrator based on a review of all relevant factors and information, including, without limitation: (1) the application for a business license and supporting materials submitted by the petitioner; (2) the standards for the interpretation of uses not listed in the Commercial District Use Matrix or in a generic use definition set forth in Section 13.2-3; (3) the method for interpreting generic uses set forth in Section 13.2-2; (4) the method for construing undefined terms by referring to their normal dictionary usage set forth in Section 13.1-1; and (5) the standard of review requiring the affirmation of reasonable decisions of the Zoning Administrator made in accordance with the standards and limitations of the Zoning Ordinance set forth in Sections 3.9-1 and 3.9-2. Mr. Mangum summarized the process. Staff does not have any intent to discuss if this is a beneficial operation for the City of Des Plaines or not. Only need to discuss the determination that this use is not a "Financial Institution". The decision is for the Zoning Board is to affirm this determination or not. The Commercial District Use Matrix in Table 7.3.1 was used to see if this was a permitted use and the Zoning Administrator did not find that a title loan business was a use listed in the table. The proposed use did not satisfy the definition of a currency exchange, or a pay day loan use. Additionally, it did not fit in the type of services offered by the illustrative examples of financial institutions within the definition of financial institution. Attorney Camillucci, representing the Zoning Administrator, emphasized that the Zoning Ordinance calls for the decision of the Zoning Administrator to be upheld if it is a reasonable determination. Mr. Daniel stated as the Board heard from Mr. Mangum there is a generic definition of a financial institution in the Zoning Ordinance. Mr. Daniel read and explained further the definitions. This definition is created in the Zoning Ordinance because it is supposed to be expansive, but with exclusions. There is no exception for consumer installment loans with the collateral being a car title. TitleMax is regulated by the Department of Professional and Financial Regulation in Illinois. The financial regulation statute covers banking and non -banking institutions which is used at the State level. Mortgage companies are not banks, but they are financial institutions under state law. Financial institutions perform different functions and services. The Ordinance doesn't make the distinction between banking and non -banking institutions. Cannot forget the term, "including but not limited to" language. Mr. Daniel referred to and discussed definitions relating to financial institutions in the Merriam Webster dictionary set forth in his letter. Mr. Daniel asked that the Zoning Board of Appeals not to set aside the specific wording of the Ordinance, specifically the "including, not limited to" language, because the generic definition was created in lieu of creating a long list of uses that are financial institutions. Board Member Porada questioned Mr. Daniel in regards to Section 3.9 of the Zoning Ordinance that states that this process is to guard against arbitrary or ill-conceived decisions. Mr. Daniel stated that there is a history of properties that are located in the C-3 District and operate as a consumer installment lender. He believes "Financial Institution" definition has been relatively stable over the past years. Board Member Porada noted the last clause in 3.9-1 that this reviewing body should give all proper deference to the Zoning Administrator's findings specifically to the spirit and intent embodied in the language of this Ordinance and to the reasonable interpretations of that language by those charged with the administration of this Ordinance. Cases # 13 -039 -APL 1143 Lee Street August 13, 2013 Page 6 Mr. Daniel indicated that the Zoning Board should look and see how Staff can be correct in their position that TitleMax cannot operate unless the Zoning Ordinance is amended. TitleMax doesn't believe their arguments should be accepted. Board Member Porada asked about the option of seeking a Text Amendment. Mr. Daniel responded that TitleMax did not choose to pursue that option in part because time was of the essence. TitleMax had planned a July 1 occupancy. Also, TitleMax doesn't believe the Ordinance needs to be amended. TitleMax does not want to pursue the Text Amendment process because TitleMax believes its business is a permitted use. Board Member Catalano questioned Staff or Counsel if they are defined as a consumer installment lender that is regulated by the Illinois Department of Finance and Professional Regulation doesn't that make them a financial institution. It seems pretty simple and clear. Mr. Camillucci responded the Zoning Ordinance defines "Financial Institutions" for the purpose of Zoning and State statutes and regulations may define TitleMax another certain way. Nothing in the Zoning Ordinance refers to state regulations or statutes. The way the Zoning Ordinance defines "Financial Institution" is with a generic definition that includes illustrative examples of what is included. The definitions of those things, which are banks, savings and loan institutions, money exchange or currency exchanges, those are not defined either. In order to understand the definition of "Financial Institution" you want to see if the use that is proposed is similar to the examples of uses used in the definitions. The Zoning Ordinance guides one to look at the terms in the dictionary, not how the State defines them. The dictionary definitions suggest that "Financial Institutions" provide a greater variety of services than TitleMax. The conclusion of the Zoning Administrator is reasonable and the Zoning Administrator followed the process in the Ordinance. Mr. Mangum indicated that all the uses were considered. The reason that Staff did not classify TitleMax as a pay day loan business is because they accept the vehicle title as collateral and not a check. The Zoning Ordinance states that if the use is not listed, then it is prohibited. There are other institutions that are in the C-3 Zoning District, most were approved before the 1998 Ordinance. Also, many of those institutions were established prior to the 2005 Ordinance classifying Pay Day Loans. Board Member Saletnik inquired about the process and authority of the City in regulating uses through Zoning. Mr. Camillucci answered that authority to regulate land is given to the City by the State Constitution and the City has adopted a Zoning Ordinance and Map, and the Zoning Ordinance gives the authority to the Zoning Administrator to interpret the Ordinance through a specific process which was followed. Mr. Daniel responded with discussion of Article 13 with reference to generic definitions, which are intended to be inclusive of various uses. The examples in the generic definition are not intended to be all inclusive. Discussion ensued while Mr. Daniel questioned Mr. Mangum about other consumer loan businesses in Des Plaines in the C-3 District. Some of these businesses were established prior to the 1998 Zoning Ordinance. The prior ordinance did not have a definition of "Financial Institution." Other of the businesses were established prior to 2005, when the pay day loan use category was created. There are some consumer lending institutions that were established since 1998, but they offer a different mix of services than TitleMax. Mr. Daniel stated that the TitleMax application stated that TitleMax would offer consumer installment loans. Chairman Seegers asked if there was anyone in the audience in favor or in opposition to the proposal. There were none. Board Member Porada stated Mr. Daniel went through applications of other consumer financial businesses in the City of Des Plaines that had been approved noting that just like the other businesses, TitleMax filled out an Cases # 13 -039 -APL 1143 Lee Street August 13, 2013 Page 7 application that stated the proposed use was consumer lending. Board Member Porada noted that the descriptions of the businesses were subjective and provided by the applicants. Mr. Daniel did not discover any findings that Staff had stated exactly what the actual business functions were. Mr. Daniel stated that he didn't think distinctions should be made based on type of collateral. Mr. Daniel stated TitleMax does indicate through its signage that they offer title loans. TitleMax is not denying that title loans are the trade mark. If the business changes its use, the necessary paper work would be updated. But, TitleMax is a consumer installment lender. Board Member Saletnik asked whether the single service provided by TitleMax versus the broad range of services provided by other financial uses was involved in the Zoning Administrator's decision. Mr. Mangum confirmed that this was a factor. Mr. Daniel summarized his position that the decision of the Zoning Administrator was not reasonable. Mr. Mangum stated that City Staff and the Zoning Administrator did go through the steps set forth in the Zoning Ordinance to identify if the TitleMax use was permitted. The Zoning Administrator determined that a Title Loan Operation was not a use specifically listed, and was not included within the scope of any generic definition set forth in the Commercial District Use Matrix. Therefore, pursuant to Section 13.2-3, the Zoning Administrator determined that the operation of a Title Loan Operation within the C-3 District is prohibited. Board Member Szabo indicated that while both sides made strong arguments, as this is a new type of lending the proper route for this case would be to go through the Text Amendment process. Chairman Seegers asked if there was anyone from the public that wished to speak on this issue. There were none. Board Member Saletnik made a motion, seconded by Board Member Szabo, to affirm the decision made by the Zoning Administrator to deny the request for TitleMax to operate at 1143 Lee Street. AYES: Szabo, Saletnik, Hofherr, Porada, Schell, Seegers NAYES: Catalano ***MOTION CARRIED**** The meeting was ended by a unanimous voice vote at 9:13pm.