Payday-loan controls nixed

May 6, 2006 - Phoenix, Arizona

The Ahwatukee Foothills Village Planning Committee has given the thumbs-down to a Phoenix plan to limit the number of payday-loan centers in the city.

The committee voted against a city proposal to change the zoning ordinance to space the businesses out, even though the number of payday-loan centers in Ahwatukee can be counted on one hand with fingers to spare.

Members said they felt the zoning code was an inappropriate place for the city to address its concerns about the centers, and that Phoenix had not worked hard enough to compromise with the industry.

"I think we're using the wrong tools to deal with a concern," Vice Chairman Mel Hannah said before last week's unanimous vote.

In late 2005, Phoenix launched an initiative to restrict the number of payday-loan and check-cashing businesses. Planners want to require 1,320 feet between such establishments, and 500 feet between the businesses and residential districts.

Several Arizona cities, including Tempe and Tucson, have recently passed similar ordinances.

Phoenix has been shopping the plan to village planning committees in the past few weeks. About 10 have voted in favor of the change and two, including Ahwatukee's, voted against it, said Richard Clewis of the Phoenix planning department.

The ordinance change goes before the City Council in late June.

Phoenix claims the businesses take advantage of a largely low-income clientele by charging interest rates up to 550 percent and engaging in collection activities that are "rife with fraud," Clewis told the Ahwatukee committee.

Members of the committee, however, were reluctant to change zoning based on a particular industry.

"Why don't we start limiting the Circle K's because they sell a lot of fatty food?" Laurel Arndt said. "It's a slippery slope."

Check-cashing businesses and payday-loan centers are a rarity in Ahwatukee. Although some Phoenix ZIP codes have more than a dozen such sites, Ahwatukee only has two.

"They don't have the same problems (with payday-loan centers) that other parts of the city have," said Councilman Dave Siebert, whose district includes a strip of Bell Road notorious for an abundance of check-cashing ventures.

Chairman Doug Cole said the city had not tried to accommodate some stipulations that the industry had requested, such as measuring the 1,320 feet from door to door instead of lot line to lot line, and lifting the spacing requirement in some circumstances.

The Arizona Community Financial Services Association, a trade group that represents the industry, is trying to strike a compromise with the city on the wording of the ordinance. Lee Miller, an attorney for the association, said the businesses will phase themselves out if the marketplace is left alone.

He noted that many of the same storefronts that now house payday-loan centers used to be mom-and-pop video rentals or cellphone stores, both stamped out by national chains.

"The same thing's going to happen to payday (loan centers), if folks will just be patient," Miller said. "There will be fewer stores next year than there were this year."

Loan Mart, a payday-loan center at 4645 E. Chandler Blvd., was empty of customers Thursday.

Employees there referred questions to a representative at a main office in British Columbia, Canada, who did not return phone calls.

News Source

The Arizona Republic, Corinne Purtill, Reporter

Related Stories - Arizona

• Payday lenders, state reach deal on curbing fees [March 18, 2007]
• Hot line helps Tucsonans avoid predatory lenders [November 4, 2006]
• Credit union to offer cheaper alternative to payday loans [October 24, 2006]
• Limit need, not loan shops [October 14, 2006]
• Payday lenders target young military families [September 5, 2006]
• Mesa plan to restrict payday loan stores cited as racism [August 18, 2006]
• Payday-loan controls nixed [May 6, 2006]
• Payday-lending reform bill is next to useless [May 5, 2006]
• Payday loan survey raises questions [March 17, 2006]
• Cash advance to computer upgrades [February 1, 2006]
• Payday loan customers getting older [January 26, 2006]
• Arizona payday loan stores face restrictions [December 22, 2005]

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