Tucson, AZ — The city council voted unanimously yesterday to have city staffers draw up zoning regulations that would set minimum distances between payday loan and check cashing stores.

Councilwoman Kathleen Dunbar said she would like to see restrictions on how close a payday cash advance store could locate to a residential area and a limit to how many such stores would be allowed per 10,000 residents. She said she hopes to prevent any more from opening within the city.

A draft ordinance is scheduled to come back to the council for a vote September 20.

Back in early March, the Federal Deposit Insurance Corp. issued new guidelines for payday lenders that offered loans via a relationship with a third-party bank. These laws squashed payday lending in many states, the most important being Texas.

With so much money on the line, these payday lenders found a way around the new FDIC guidelines. The lenders would form wholly owned subsidiaries called credit services organizations (CSOs).

Now when a borrower goes to a payday loan company, they fill out the paperwork with the CSO, but actually borrow the money from an unregistered lender under Texas law. This unregistered lender is set up as an LLC (limited liability corporation) and is completely seperate from the CSO.

At the time of signing three fees are collected. A referral fee, an application fee, and an interest charged below the state's legal requirements. That can lead to steep cost for fast cash advance seekers. Be careful if you are considering this!