Payday Loan Moratorium in Place in Wauwatosa
By J.J. CameronPayday Loan Writer
Having seen what other Wisconsin cities, such as Racine, have done about payday loans, the city of Wausatoas has placed a one-year moratorium on the businesses. During that time, it will consider measures that restrict cash advance stores to particular areas in the community.
Tuesday's vote by the Common Council blocks EZ Corp., based in Austin, Texas, from opening an EZ Money Payday Loan Store at 6502 W. North Ave. in the East Town Business District.
EZ Corp.'s local attorney, Harvey Goldstein, who had threatened litigation if the moratorium passed, declined to comment Wednesday. But a spokeswoman for the state agency that regulates fast cash loan companies applauded Wauwatosa and other communities that have such restrictions.
"It's exciting to see these communities take this into their own hands," said Carrie Templeton, of the state Department of Financial Institutions. "We need some momentum to get the Legislature to enact reasonable protections for consumers."
According to Templeton, companies typically charge $20 for each $100 borrowed - and the fees mount as customers who are unable to make that payment extend the bad credit payday loan.
"The effective interest rate can be well over 500 percent," she said.
Wauwatosa's moratorium is in response to neighbors' complaints that the W. North Ave. store would attract crime and lower property values. The measure prohibits for up to one year check cashing, payday loan and similar businesses from locating within 300 feet of residentially zoned parcels and within 1,500 feet of a similar business.
During this period, officials will decide whether they ought to restrict such businesses permanently and to amend its trade district zoning ordinance to keep them out of its boutique business areas, such as East Town and the Historic Village.
A public hearing on the trade district ordinance has been set for 7:30 p.m. Oct. 17 at City Hall.
The current language restricts "check cashing businesses" in those business districts; therefore, Goldstein has argued that that term does not cover EZ Money stores and their payday cash advances.
"The council's intent was clearly that they didn't want any of these kinds of businesses," Community Development Director Nancy Welch said. "But check cashing stores was the operative expression at the time."
Wauwatosa is among a handful of Wisconsin communities that have imposed restrictions in recent months on an industry that's grown exponentially over the last decade. According to Templeton, there were 64 short-term loan businesses in Wisconsin in 1996. Today there are 470, 30 of which opened in the last nine months.
