Vote Delayed on Utah Payday Loan Stores
By Paul RizzoPayday Loan Writer
Only one more Utah payday loan store might be allowed in Sandy if the suburb decides to shut its door to such businesses.
The City Council has postponed for two weeks a vote on whether to limit non-depository financial institutions - those offering payday loans, check cashing, deferred-deposit advances or car-title loans - to one per 10,000 residents and to require at least a mile between such stores.
That would leave room for only one more store in Sandy, which currently has 10 outlets after three moved in last year. Four more companies hope to open instant cash loan stores in Sandy, but their applications are on hold until the council decides whether to limit the operations.
Councilman Scott Cowdell, who supports restrictions, asked city staffers to study whether such stores have a history of attracting crime.
But his council colleague Steve Fairbanks said the issue has been clouded by “emotional reactions” to the industry’s high interest rates, which typically start at 400 percent a year. He also disputed the notion of any correlation between bad credit payday loans and drug-related crimes.
Fairbanks would prefer to let the market decide how many stores locate in Sandy. Without competition, he argued, the outlets would have no incentive to consider lowering their rates.
“We’re hurting the people we think we’re saving,” Fairbanks said.
Salt Lake City and Salt Lake County also are considering density restrictions on payday cash advance lenders. South Salt Lake, West Valley City, Taylorsville, West Jordan, South Jordan, Draper and Midvale already have them.
At a public hearing this week, three people who work for Check City, including general counsel John Swallow, told council members the check cash advance industry provides an emergency cash source for low- and middle-income consumers when banks won’t help.
Check City has an application pending for a new Sandy store.
But Sandy resident Art Sutherland, a volunteer with the Coalition of Religious Communities, said the personal cash loan lenders entrap people in desperate financial circumstances and then pursue them with “brutal” collection tactics.
The proposed code change also would prohibit neon signs in windows and require earth-tone facades with at least 25 percent glass at street level.
Swallow, who expects Check City to be the last store allowed in Sandy if the measure passes, urged the council to be “evenhanded” in dictating store appearances.
SOURCE: The Salt Lake Tribune
