CITY COUNCIL WORK SESSION THURSDAY, MARCH 13, :30 P.M. CITY COUNCIL CHAMBER 2401 MARKET STREET BAYTOWN, TEXAS AGENDA

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1 CITY OF BAYTOWN NOTICE OF MEETING CITY COUNCIL WORK SESSION THURSDAY, MARCH 13, :30 P.M. CITY COUNCIL CHAMBER 2401 MARKET STREET BAYTOWN, TEXAS AGENDA CALL TO ORDER AND ANNOUNCEMENT OF QUORUM 1. DISCUSSIONS a. Discuss an ordinance amending Chapter 20 "Businesses" of the Code ofordinances. Baytown. Texas, to add a new article to be numbered and entitled Article II "Credit Access Businesses" to establish registration requirements and credit extension guidelines for credit access businesses. b. Discuss an ordinance amending Chapter 42 "Health and Sanitation," Article III "Smoking" of the Code of Ordinances, Baytown, Texas, to prohibit the sale and possession of electronic cigarettes and liquid nicotine by minors and the smoking of electronic cigarettes in public places. 2. ADJOURN PUBLIC NOTICE IS GIVEN THAT IN ADDITION TO ANY EXECUTIVE SESSION LISTED ABOVE, THE CITY COUNCIL RESERVES THE RIGHT TO ADJOURN INTO EXECUTIVE SESSION AT ANY TIME AS AUTHORIZED BY THE TEXAS GOVERNMENT CODE SECTIONS TO DISCUSS ANY OF THE MATTERS LISTED ABOVE. THE CITY OF BAYTOWN IS COMMITTED TO COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT. REASONABLE ACCOMMODATIONS AND EQUAL ACCESS TO COMMUNICATIONS WILL BE PROVIDED UPON REQUEST. FOR ASSISTANCE PLEASE CALL , FAX , OR CONTACT VIA RELAY TEXAS AT 711 OR FOR TYY SERVICES. FOR MORE INFORMATION CONCERNING RELAY TEXAS, PLEASE VISIT: Robert D. Leiper, City Manager Posted this 7th day of March, 2014, at 5:00 P.M.

2 CITY COUNCIL WORK SESSION 1. a. Meeting Date: 03/13/2014 Subject: Payday Lending Ordinance Prepared for: Bob Leiper, City Management Prepared by: Karen Horner, Legal Information ITEM Discuss an ordinance amending Chapter 20 "Businesses" of the Code of Ordinances, Baytown, Texas, to add a new article to be numbered and entitled Article II "Credit Access Businesses" to establish registration requirements and credit extension guidelines for credit access businesses. PREFACE This proposed ordinance amends Chapter 20 "Businesses" of the Code of Ordinances, Baytown, Texas, to add a new article to be numbered and entitled Article II "Credit Access Businesses" to establish registration requirements and credit extension guidelines for credit access businesses. Essentially, the proposed ordinance is the model ordinance that TML has recommended to municipalities that wish to venture into this realm of regulation. TML reports that six cities in the spring of 2013 adopted ordinances to regulate credit access business "aimed at ending the cycle of debt and helping borrowers to be successful in paying back their loans." Of these original six that adopted ordinances in this regard, five were sued by credit access businesses claiming that municipalities could not enter into this field of regulation. The other suspended its regulations pending the result of the litigation. In the lawsuits, the payday and auto title lenders have asserted that to abide by the "patchwork of regulation" that would result if all Texas cities adopted different regulations would be arduous. However, the ordinances passed are very similar and include the following elements as summarized by TML: A credit access business must apply for and receive a certificate of registration from the city; A credit access business must maintain complete records of all loans made by the business for at least three years and make the records available to the city for inspection upon request; The amount of a payday loan may not exceed 20 percent of the consumer s gross monthly income; The amount of an auto title loan may not exceed the lesser of three percent of the consumer s gross annual income or 70 percent of the retail value of the motor vehicle; Any loan from a credit access business that provides for repayment in installments may not be payable in more than four installments, and the proceeds from each installment must be used to repay at least 25 percent of the principal amount of the loan. No renewals or refinancing of installment-payment loans are permitted; Any loan from a credit access business that provides for a single lump sum repayment may not be refinanced or renewed more than three times, and the proceeds from each refinancing or renewal must be used to repay at least 25 percent of the principal amount of the loan; and Any loan made to a consumer within seven days of a previous loan has been paid by the consumer constitutes a refinancing or renewal. If cities desire to adopt regulations, TML has urged such cities to adopt substantially similar regulations and has cautioned "that adoption of any ordinance regulating credit access businesses will likely cause stakeholders representing the payday and auto title lending industry to file a lawsuit."

3 Fiscal Year: Acct Code: Source of Funds (Operating/Capital/Bonds): Funds Budgeted Y/N: Amount Needed: Fiscal Impact (Additional Information): No fiscal impact. Fiscal Impact Ordinance - Payday Lending Attachments

4 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS, AMENDING CHAPTER 20 BUSINESSES OF THE CODE OF ORDINANCES, BAYTOWN, TEXAS TO ADD A NEW ARTICLE TO BE NUMBERED AND ENTITLED ARTICLE II CREDIT ACCESS BUSINESSES TO SET FORTH REGISTRATION REQUIREMENTS AND CREDIT EXTENSION GUIDELINES FOR CREDIT ACCESS BUSINESSES; PROVIDING A REPEALING CLAUSE; CONTAINING A SAVINGS CLAUSE; PRESCRIBING A MAXIMUM PENALTY OF FIVE HUNDRED AND NO/100 DOLLARS ($500.00); AND PROVIDING FOR THE PUBLICATION AND EFFECTIVE DATE THEREOF. ****************************************************************************** WHEREAS, certain credit access businesses engage in abusive and predatory lending practices, offering easy money to those members of our community who are in a tight spot with onerous terms and fees; and WHEREAS, the practices of certain access businesses cause members of our community to become trapped in a cycle of short term, high interest loans resulting in large debt and huge payments; and WHEREAS, the Pew Charitable Trusts, in their publication entitled Payday Lending in America: Who Borrows, Where they Borrow, and Why (July 2012), wrote that payday loans are sold as two-week credit products that provide fast cash, but borrowers are actually indebted for an average of five months per year. The report further noted that on average, a borrower takes out eight loans of $375 each per year and spends $520 on interest ; and WHEREAS, the Pew Charitable Trusts, in their publication entitled Payday Lending in America: Who Borrows, Where they Borrow, and Why (July 2012), also noted: How much borrowers spend on loans depends heavily on the fees permitted by their state. The same $500 storefront loan would generally cost about $55 in Florida, $75 in Nebraska, $87.50 in Alabama, and $100 in Texas, even if it were provided by the same national company in all those states. Previous research has found that lenders tend to charge the maximum permitted in a state ; and WHEREAS, the Pew Charitable Trusts, in their publication entitled Payday Lending in America: Who Borrows, Where they Borrow, and Why (July 2012), also stated that the vast majority of borrowers use the loans on a long-term basis, not temporary one. Thus it seems that the payday loan industry is selling a product few people use as designed and that imposes debt that is consistently more costly and longer lasting than advertised ; and WHEREAS, the Community Financial Services Association of America (CFSA), the national trade association for companies that offer small dollar, short-term loans or payday advances includes the following in the Member Best Practices as listed on its internet site ( Members shall not allow customers to rollover a payday advance (the extension of an outstanding advance by payment of only a fee) unless expressly authorized by state law, but in such cases where authorized will limit rollovers to four or the state limit, whichever is less. The need for consumer understanding was also outlined on this website: A contract between a member and the customer must fully outline the terms of the payday advance transaction. Members agree to disclose the cost of the service fee both as a dollar amount and as an annual percentage rate ( APR ) ; and 1

5 WHEREAS, the Center for Responsible Lending, a non-profit, non-partisan organization, states on its internet site ( that: car title loans are based on the value of a borrower s car - the ability to repay the loans is not [a] factor in the lending decision ; loan rates for a car title are typically times that of rates charged by credit card issuers ; the average car title customer renews their loan 8 times ; and, on a $500 title loan, this average customer will pay back $650 in interest over eight months; the principal borrowed will be in addition; and WHEREAS, lenders hold onto the motor vehicle title and when borrowers cannot continue to pay the fees, they can lose their vehicles, which can drastically affect the borrower s means of transportation for work and other essential household functions; NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section 1: That all matters and facts set forth in the recitals hereinabove are found to be true and such recitals are hereby approved and made a part of this Ordinance for all purposes and are adopted as a part of the judgment and findings by the City Council of the City of Baytown, Texas. Section 2: That Chapter 20 Businesses of the Code of Ordinances, Baytown, Texas, is hereby amended to add a new article to be numbered and entitled Article II Credit Access Businesses, which article shall read as follows:. Sec Short title and purpose. CHAPTER 20. BUSINESSES ARTICLE II. Credit Access Businesses This article may be known and cited as Credit Access Businesses Regulation. (b) The purpose of this article is to protect the welfare of the citizens of the City of Baytown by monitoring credit access businesses in an effort to reduce abusive and predatory lending practices. To this end, this article establishes a registration program for credit access businesses, imposes restrictions on extensions of consumer credit made by credit access businesses, and imposes recordkeeping requirements on credit access businesses. Sec Definitions. The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning: Certificate of registration means a certificate of registration issued by the director under this article to the owner or operator of a credit access business. Consumer means an individual who is solicited to purchase or who purchases the services of a credit access business. 2

6 Consumer s language of preference is the language the consumer understands best. Credit access business has the meaning given that term in V.T.C.A., Finance Code Deferred presentment transaction has the meaning given that term in V.T.C.A., Finance Code Director means the director of the department designated by the city council, city manager, or city council or city manager s designee, to enforce and administer this chapter. Extension of consumer credit has the meaning given that term in V.T.C.A., Finance Code Motor vehicle title loan has the meaning given that term in V.T.C.A., Finance Code Registrant means a person issued a certificate of registration for a credit access business under this chapter and includes all owners and operators of the credit access business identified in the registration application filed under this article. State license means a license to operate a credit access business issued by the Texas Consumer Credit Commissioner under V.T.C.A., Finance Code ch. 393, subch. G. Sec Violations; penalty. (b) (c) (d) A person who violates a provision of this article, or who fails to perform an act required of the person by this article, commits an offense. A person commits a separate offense for each and every violation relating to an extension of consumer credit, and for each day during which a violation is committed, permitted, or continued. An offense under this article is punishable by a fine of not more than $500 per day in accordance with section 1-14 of the code. A culpable mental state is not required for the commission of an offense under this article and need not be proved. The penalties provided for in subsection (b) are in addition to any other remedies that the city may have under city ordinances and state law. Sec Defenses. It is a defense to prosecution under this article that at the time of the alleged offense, the person was not required to be licensed by the state as a credit access business under V.T.C.A., Finance Code ch. 393, subch. G. 3

7 Sec Registration required. A person commits an offense if the person acts, operates, or conducts business as a credit access business without a valid certificate of registration. A certificate of registration is required for each physically separate credit access business. Sec Registration application. To obtain a certificate of registration for a credit access business, a person must submit an application on a form provided for that purpose to the director. The application must contain the following: (1) The name, street address, mailing address, facsimile number, and telephone number of the applicant. (2) The business or trade name, street address, mailing address, facsimile number, and telephone number of the credit access business. (3) The names, street addresses, mailing addresses, and telephone numbers of all owners of the credit access business and other persons with a financial interest in the credit access business 1, and the nature and extent of each person s interest in the credit access business. (4) A copy of a current, valid state license held by the credit access business pursuant to V.T.C.A., Finance Code ch. 393, subch. G. (5) A copy of a current, valid certificate of occupancy showing that the credit access business is in compliance with the code. (6) A non-refundable application fee in the amount of $ (b) An applicant or registrant shall notify the director within 45 days after any material change in the information contained in the application for a certificate of registration, including, but not limited to, any change of address and any change in the status of the state license held by the applicant or registrant. Sec Issuance and display of certificate of registration; presentment upon request. (b) The director shall issue to the applicant a certificate of registration upon receiving a completed application under section A certificate of registration issued under this section must be conspicuously displayed to the public in the credit access business. The certificate of registration must be presented upon request to the director or any peace officer for examination. 1 Not in model ordinance. 4

8 Sec Expiration and renewal of certificate of registration. A certificate of registration expires on the earlier of: (1) One year after the date of issuance; or (2) The date of revocation, suspension, surrender, expiration without renewal, or other termination of the registrant s state license. (b) A certificate of registration may be renewed by making application in accordance with section A registrant shall apply for renewal at least 30 days before the expiration of the registration. Sec Non-transferability. A certificate of registration for a credit access business is not transferable. Sec Location of credit access businesses. 2 Any lot containing a credit access business establishment shall be located at least 1,000 feet from any lot containing another credit access business establishment, as measured in a straight line between the nearest points of one lot to the other lot. Sec Maintenance of records. A credit access business shall maintain a complete set of records of all extensions of consumer credit arranged or obtained by the credit access business, which must include the following information: (1) The name and address of the consumer; (2) The principal amount of cash actually advanced; (3) The length of the extension of consumer credit, including the number of installments and renewals; (4) The fees charged by the credit access business to arrange or obtain an extension of consumer credit; and (5) The documentation used to establish a consumer s income under section of this article. (b) A credit access business shall maintain a copy of each written agreement between the credit access business and a consumer evidencing an extension of a consumer credit (including, but not limited to, any refinancing or renewal granted to the consumer). 2 Not in model ordinance. 5

9 (c) (d) A credit access business shall maintain copies of all quarterly reports filed with the Texas Consumer Credit Commissioner under V.T.C.A., Finance Code The records required to be maintained by a credit access business under this section must be retained for at least three years and made available for inspection by the city upon request during the usual and customary business hours of the credit access business. Sec Restriction on Extension of Consumer Credit. (b) The cash advanced under an extension of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining in the form of a deferred presentment transaction may not exceed 20 percent of the consumer s gross monthly income. The cash advanced under an extension of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining in the form of a motor vehicle title loan may not exceed the lesser of: (1) Three percent of the consumer s gross annual income; or (2) 70 percent of the retail value of the motor vehicle. (c) (d) (e) (f) A credit access business shall use a paycheck or other documentation establishing income to determine a consumer s income. An extension of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining and that provides for repayment in installments may not be payable in more than four installments. Proceeds from each installment must be used to repay at least 25 percent of the principal amount of the extension of consumer credit. An extension of consumer credit that provides for repayment in installments many not be refinanced or renewed. An extension of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining and that provides for a single lump sum repayment may not be refinanced or renewed more than three times. Proceeds from each refinancing or renewal must be used to repay at least 25 percent of the principal amount of the original extension of consumer credit. For purposes of this section, an extension of consumer credit that is made to a consumer within seven days after a previous extension of consumer credit has been paid by the consumer will constitute a refinancing or renewal. Sec Requirement of consumer understanding of agreement. Every agreement between the credit access business and a consumer evidencing an extension of consumer credit (including, but not limited to, any refinancing or renewal granted to the consumer), must be written in the consumer s language of preference. Every credit access business location must maintain on its premises, to be available for use by consumers, agreements in the English and Spanish languages. 6

10 (b) (c) For every consumer who cannot read, every agreement between the credit access business and a consumer evidencing an extension of consumer credit (including, but not limited to, any refinancing or renewal granted to the consumer) must be read to the consumer in its entirety in the consumer s language of preference, prior to the consumer s signature. For every consumer who cannot read, every disclosure and notice required by law must be read to the consumer in its entirety in the consumer s language of preference, prior to the consumer s signature. Sec Referral to consumer credit counseling. A credit access business shall provide a form, to be prescribed by the director, to each consumer seeking assistance in obtaining an extension of consumer credit which references nonprofit agencies that provide financial education and training programs and agencies with cash assistance programs. The form will also contain information regarding extensions of consumer credit, and must include the information required by section 20-30(1)-(5) of this article specific to the loan agreement with the consumer. If the director has prescribed a form in the consumer s language of preference, the form must be provided in the consumer s language of preference. Section 3: Any person who fails to comply with any provision of this ordinance shall be guilty of a misdemeanor and, upon conviction, shall be punished by a fine not exceeding FIVE HUNDRED AND NO/100 DOLLARS ($500.00). Each act of violation and each day upon which any such violation shall occur shall constitute a separate offense. In addition to the penalty prescribed above, the city may pursue other remedies such as abatement of nuisances, injunctive relief, administrative adjudication and revocation of licenses or permits. Section 4: All ordinances or parts of ordinances inconsistent with the terms of this ordinance are hereby repealed; provided, however, that such repeal shall be only to the extent of such inconsistency and in all other respects this ordinance shall be cumulative of other ordinances regulating and governing the subject matter covered by this ordinance. Section 5: If any provisions, section, exception, subsection, paragraph, sentence, clause or phrase of this ordinance or the application of same to any person or set of circumstances, shall for any reason be held unconstitutional, void or invalid, such invalidity shall not affect the validity of the remaining provisions of this ordinance or their application to other persons or sets of circumstances and to this end all provisions of this ordinance are declared to be severable. Section 6: This ordinance shall take effect from and after ten (10) days from its passage by the City Council. The City Clerk is hereby directed to give notice hereof by causing the caption of this ordinance to be published in the official newspaper of the City of Baytown at least twice within ten (10) days after passage of this ordinance. 7

11 INTRODUCED, READ and PASSED by the affirmative vote of the City Council of the City of Baytown, this the day of, ATTEST: STEPHEN H. DONCARLOS, Mayor LETICIA BRYSCH, City Clerk APPROVED AS TO FORM: IGNACIO RAMIREZ, SR., City Attorney R:\Karen\Files\City Council\Ordinances\2014\March 13\Payday Lending Word Version Ordinance 4 Worksession.docx 8

12 CITY COUNCIL WORK SESSION 1. b. Meeting Date: 03/13/2014 Subject: Electronic cigarettes Prepared for: Ignacio Ramirez, Legal Prepared by: Karen Horner, Legal Information ITEM Discuss an ordinance amending Chapter 42 "Health and Sanitation," Article III "Smoking" of the Code of Ordinances, Baytown, Texas, to prohibit the sale and possession of electronic cigarettes and liquid nicotine by minors and the smoking of electronic cigarettes in public places. PREFACE This proposed ordinance amends Chapter 42 "Health and Sanitation," Article III "Smoking" of the Code of Ordinances, Baytown, Texas, to prohibit the sale and possession of electronic cigarettes and liquid nicotine by minors and the smoking of electronic cigarettes in public places. Currently, there are no laws or regulations applicable within the City, which prohibit the sale of electronic cigarettes, or liquid nicotine to minors like those that exist for tobacco products. Although the Federal Drug Administration is considering appropriate regulation of e-cigarettes, the City may impose reasonable restrictions on these products until a federal/state regulatory system is implemented. This proposed ordinance prohibits minors from possessing, consuming and purchasing e-cigarettes and liquid nicotine; prohibits the sale of e-cigarettes and liquid nicotine to minors; and prohibits self-service merchandising of these products. This proposed ordinance also expands the definition of smoking to include the use of e-cigarettes so that the regulations in place for tobacco products extend to e-cigarettes and liquid nicotine. Ordinance - E-Cigarettes Attachments

13 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS, AMENDING CHAPTER 42 HEALTH AND SANITATION, ARTICLE III SMOKING, SECTION DEFINITIONS AND SECTION WHERE SMOKING NOT REGULATED OF THE CODE OF ORDINANCES, BAYTOWN, TEXAS; AMENDING CHAPTER 42 HEALTH AND SANITATION, ARTICLE III SMOKING, TO ADD SECTION POSSESSION OF ELECTRONIC CIGARETTES, E-CIGARETTES OR LIQUID NICOTINE BY A MINOR ; SECTION SALE OF ELECTRONIC CIGARETTES, E-CIGARETTES, OR LIQUID NICOTINE TO A MINOR ; SECTION VENDOR ASSISTED SALES REQUIRED; SELF-SERVICE MERCHANDISING PROHIBITED ; TO PROHIBIT THE POSSESSION AND PURCHASE OF ELECTRONIC CIGARETTES, E- CIGARETTES, AND LIQUID NICOTINE BY MINORS; TO PROHIBIT THE SALE OF ELECTRONIC CIGARETTES, E-CIGARETTES, AND LIQUID NICOTINE TO MINORS; AND TO PROHIBIT SELF-SERVICE MERCHANDISING OF ELECTRONIC CIGARETTES, E-CIGARETTES, AND LIQUID NICOTINE; PROVIDING A REPEALING CLAUSE; CONTAINING A SAVINGS CLAUSE; PRESCRIBING A CRIMINAL PENALTY; AND PROVIDING FOR THE PUBLICATION AND EFFECTIVE DATE THEREOF. ****************************************************************************** [INSERT RECITALS] BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section 1: That all matters and facts set forth in the recitals hereinabove are found to be true and such recitals are hereby approved and made a part of this Ordinance for all purposes and are adopted as a part of the judgment and findings by the City Council of the City of Baytown, Texas. Section 2: That Chapter 42 Health and Sanitation, Article III Smoking, Section Definitions of the Code of Ordinances, Baytown, Texas, is hereby amended to amend the definition of smoking ; to repeal the definition of retail tobacco store ; and to add definitions of electronic cigarette or e-cigarette, liquid nicotine, minor, open display unit, possess, possessing or possession, retail tobacco store, and self-service merchandising, which definitions shall read as follows: CHAPTER 42. HEALTH AND SANITATION ARTICLE III. SMOKING

14 Sec Definitions. The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:... Electronic cigarette or e-cigarette means any electronically powered or battery-powered device that provides, or is manufactured or intended to provide, a vapor of liquid nicotine and/or other substances mixed with propylene glycol and/or other substances delivered or deliverable to the user to simulate the smoking of tobacco, cigarettes, pipes or cigars. This term shall include every version and type of such device whether manufactured or marketed as electronic cigarettes, e-cigarettes, electronic cigars, e-cigars, electronic pipes, e-pipes or under any other product name or description.... Liquid nicotine as used herein shall mean any liquid product composed either in whole or in part of pure nicotine and propylene glycol and/or any other substance and manufactured for use with electronic cigarettes or e-cigarettes. Minor as used herein means a person younger than eighteen (18) years of age. Open display unit as used herein shall mean, in the context of the retail sale of electronic cigarettes, e-cigarettes or liquid nicotine, any device, furniture or furnishing within or upon which electronic cigarettes, e-cigarettes or liquid nicotine are displayed to customers, and includes, but is not limited to, any case, rack, shelf, counter, table, desk, kiosk, booth, stand, vending machine and other surface.... Possess, possessing or possession means actual care, custody, control or management.... Retail smoke store means a retail store utilized primarily for the sale of electronic cigarettes, e-cigarettes, liquid nicotine, tobacco products and related accessories and in which the sale of other products is merely incidental. A store shall be deemed as utilized primarily for the sale of electronic cigarettes, e-cigarettes, liquid nicotine, tobacco products and related accessories if at least 75 percent of the gross revenue of the store derives from electronic cigarettes, e-cigarettes, liquid nicotine, tobacco products and related accessories. Self-service merchandising means, in the context of the retail sale of electronic cigarettes, e-cigarettes or liquid nicotine, the open display, including, without limitation, the use of an open display unit of electronic cigarettes, e-cigarettes or liquid nicotine, whether packaged or otherwise, for direct retail customer access and handling prior to purchase without the intervention of assistance of the retailer or the retailer s owner, employee or agent.... Smoking means the carrying, possessing or holding of any cigar, cigarette, pipe, tobacco product, electronic cigarette or e-cigarette or liquid nicotine of any kind, which is burning or emitting a vapor. 2

15 Section 3: That Chapter 42 Health and Sanitation, Article III Smoking, Section Where smoking not regulated, subsection (4) of the Code of Ordinances, Baytown, Texas, is hereby amended to read as follows: Sec Where smoking not regulated. CHAPTER 42. HEALTH AND SANITATION ARTICLE III. SMOKING Notwithstanding any other provision of this article to the contrary, the following areas shall be exempt from the provisions of sections and 42-99:... (4) Retail smoke stores; provided that smoke from these places does not infiltrate into areas where smoking is prohibited under the provisions of this Article. Section 4: That Chapter 42 Health and Sanitation, Article III Smoking, of the Code of Ordinances, Baytown, Texas, is hereby amended to add a new section to be numbered and entitled Section Possession of electronic cigarettes, e-cigarettes or liquid nicotine by a minor, which section shall read as follows: CHAPTER 42. HEALTH AND SANITATION ARTICLE III. SMOKING Sec Possession of electronic cigarettes, e-cigarettes or liquid nicotine by a minor. Offenses. A minor commits an offense if the minor: (1) possesses, purchases, consumes or accepts an electronic cigarette, e-cigarette, or liquid nicotine; or (2) falsely represents himself or herself to be 18 years of age or older by displaying proof of age that is false, fraudulent, or not actually proof of the individual's own age in order to obtain possession of, purchase, or receive an electronic cigarette, e-cigarette, or liquid nicotine. (b) Defenses. (1) It shall be a defense to prosecution of a violation of this section if the minor possessed the electronic cigarette, e-cigarette or liquid nicotine in the presence of: a. An employer of the minor, if possession or receipt of the electronic cigarette, e-cigarette or liquid nicotine is required in the performance of the employee's duties as an employee; or 3

16 b. an adult parent, a guardian, or a spouse of the minor. (2) It shall be a defense to prosecution of a violation of this section if the minor was participating in an inspection or test of compliance in conjunction with local law enforcement. (c) Penalties. An offense under this section is punishable by a fine not to exceed $250. Each act of violation and each day upon which any such violation shall occur shall constitute a separate offense. (d) Enforcement. This section shall be enforced by the chief of police. Section 5: That Chapter 42 Health and Sanitation, Article III Smoking, of the Code of Ordinances, Baytown, Texas, is hereby amended to add a new section to be numbered and entitled Section Sale of electronic cigarettes, e-cigarettes or liquid nicotine by a minor, which section shall read as follows: CHAPTER 42. HEALTH AND SANITATION ARTICLE III. SMOKING Sec Sale of electronic cigarettes, e-cigarettes, or liquid nicotine to a minor. Offense. A person commits an offense if the person, with criminal negligence: (1) sells, gives, or causes to be sold or given an electronic cigarette, e-cigarette, or liquid nicotine to a minor; or (2) sells, gives, or causes to be sold or given an electronic cigarette, e-cigarette, or liquid nicotine to another person who intends to deliver it to someone who is a minor. (b) (c) (d) Responsibility. If an offense under this section occurs in connection with a sale by an employee of the owner of a store in which electronic cigarettes, e-cigarettes, or liquid nicotine are sold at retail, the employee is criminally responsible for the offense and is subject to prosecution. Defense. It is a defense to prosecution under Subsection (1) that the person to whom the electronic cigarette, e-cigarette, or liquid nicotine was sold or given presented to the defendant apparently valid proof of identification. Proof of identification. A proof of identification satisfies the requirements of Subsection (c) if it contains a physical description and photograph consistent with the person's appearance, purports to establish that the person is 18 years of age or older, and was issued by a governmental agency. The proof of identification may include a driver's 4

17 license issued by this state or another state, a passport, or an identification card issued by a state or the federal government. (e) Penalties. (1) If an offense under this section occurs in connection with a sale of a tobacco product or e-cigarette to a minor by a person who owns, manages, operates, or otherwise controls a public place or place of employment in violation of this section, that person shall be guilty of an offense, punishable by: a. A fine not exceeding $ for a first violation; b. A fine not exceeding $ for a second violation within a period of 12 consecutive months; or c. A fine not exceeding $ for each additional violation within a period of 12 consecutive months. Each act of violation and each day upon which any such violation shall occur shall constitute a separate offense. (2) A person who violates this section not in connection with ownership, management, operation, or other control of a public place or place of employment shall be guilty of an offense, punishable by a fine as provided in section 1-14 of this Code. (f) (g) Public nuisance. Violation of this section is hereby declared to be a public nuisance, which may be abated by the director of health by restraining order, preliminary and permanent injunction, or other means provided for by law, and the city may take action to recover the costs of the nuisance abatement. Enforcement. This section shall be enforced by the chief of police. Section 6: That Chapter 42 Health and Sanitation, Article III Smoking, of the Code of Ordinances, Baytown, Texas, is hereby amended to add a new section to be numbered and entitled Section Vendor assisted sales required; self-service merchandising prohibited, which section shall read as follows: CHAPTER 42. HEALTH AND SANITATION ARTICLE III. SMOKING Sec Vendor assisted sales required; self-service merchandising prohibited. Offenses. Except as provided by Subsection (b), a retailer or other person may not: 5

18 (1) offer electronic cigarettes, e-cigarettes or liquid nicotine for sale in a manner that permits a customer direct access to the electronic cigarettes, e-cigarettes or liquid nicotine; (2) offer for sale or display for sale electronic cigarettes, e-cigarettes or liquid nicotine by means of self-service merchandising; or (3) Install or maintain an open display unit containing electronic cigarettes, e- cigarettes or liquid nicotine. (b) Defenses. It is a defense to prosecution under subsection if: (1) A facility or business is not open to minors at any time; (2) A facility or business is a premises for which a person holds a package store permit issued under the Alcoholic Beverage Code; or (3) An open display unit is located in an area that is inaccessible to customers. (c) (h) Public nuisance. Violation of this section is hereby declared to be a public nuisance, which may be abated by the director of health by restraining order, preliminary and permanent injunction, or other means provided for by law, and the city may take action to recover the costs of the nuisance abatement. Enforcement. This section shall be enforced by the chief of police. Section 6: Unless provided elsewhere in this ordinance, any person who fails to comply with any provision of this ordinance shall be guilty of a misdemeanor and, upon conviction, shall be punished by a fine not exceeding TWO THOUSAND AND NO/100 DOLLARS ($2,000.00). Each act of violation and each day upon which any such violation shall occur shall constitute a separate offense. In addition to the penalty prescribed above, the city may pursue other remedies such as abatement of nuisances, injunctive relief, administrative adjudication and revocation of licenses or permits. Section 7: All ordinances or parts of ordinances inconsistent with the terms of this ordinance are hereby repealed; provided, however, that such repeal shall be only to the extent of such inconsistency and in all other respects this ordinance shall be cumulative of other ordinances regulating and governing the subject matter covered by this ordinance. Section 8: If any provision, section, exception, subsection, paragraph, sentence, clause or phrase of this ordinance or the application of same to any person or set of circumstances, shall for any reason be held unconstitutional, void or invalid, such invalidity shall not affect the validity of the remaining provisions of this ordinance or their application to other 6

19 persons or sets of circumstances and to this end all provisions of this ordinance are declared to be severable. Section 9: This ordinance shall take effect from and after ten (10) days from its passage by the City Council. The City Clerk is hereby directed to give notice hereof by causing the caption of this ordinance to be published in the official newspaper of the City of Baytown at least twice within ten (10) days after passage of this ordinance. INTRODUCED, READ and PASSED by the affirmative vote of the City Council of the City of Baytown, this the day of, ATTEST: STEPHEN H. DONCARLOS, Mayor LETICIA BRYSCH, City Clerk APPROVED AS TO FORM: IGNACIO RAMIREZ, SR., City Attorney R:\Karen\Files\City Council\Ordinances\2014\Draft\Proposed Youth Smoking Ordinance (3) Clean.docx 7