Payday Loan Times

Blue Springs is on its way toward regulating faxless payday loan offices.

The Planning Commission on Monday voted to recommend to the City Council tighter regulations for such businesses under the city’s Unified Development Code, requiring hearings and a conditional-use permit to open. The city also would enforce rules to prevent them from clustering or being to close to homes.

Proposed revisions are for title loans, payday loans and similar businesses, lumped under a category of short-term loan services. It doesn’t include pawn shops.

Current short-term loan shops would not be affected because they would be considered “grandfathered.”

At a City Council workshop, council members said they want to regulate the loan offices because of potential side effects of having so many.

Nearly 10 of the fast payday advance establishments are slung along Missouri 7, a commercial route where the city has been showing success in encouraging redevelopment and beautification.

Brien Starner, president of the Blue Springs Economic Development Corporation, said the problem is common to many cities, from Blue Springs to Raytown to Overland Park, when dealing with third- or fourth-generation use of buildings that are becoming obsolete.

An overabundance of such buildings can result in declining lease rates that attract personal cash loan shops or other businesses that want low overhead. While those businesses serve a need, a concentration of them makes it hard to draw new investors with larger projects that could upgrade entire blocks by remodeling or replacing the buildings.

“There’s a perception that makes them concerned about the economic viability of that corridor and marketplace,” Starner said.

Another frequent criticism of that industry is high fees of $15 to $20 per $100 for only a two-week loan, but City Attorney Bob McDonald said that under Missouri law the city’s legal ability to regulate the businesses is limited to zoning.

He told the commission that a study in Milwaukee found that such businesses have secondary effects on public safety.

Cash advance payday loan offices typically are open late hours, with less security than banks. Because people leave the offices with large amounts of cash, there can be an increase in robberies.

There is a perception that areas with concentrations of such businesses are going downhill, which can hurt property values, McDonald said. Phone calls were made to most Blue Springs short-term loan businesses, but office managers or owners either failed to return calls or declined to comment.

The proposed regulation says such offices could be in general-business or light-industrial zones. The regulation would:

• Set distance buffers, requiring 200 feet between the easy payday loan businesses and a residential lot, and 1,000 feet from a school or parks facility. They could be no closer than 1,000 feet from another loan service, pawn shop or precious-metal or gem dealer.

• Keep such establishments from bunching at the city border by requiring them to be 1,000 feet from the city limit.

• Limit the number of conditional-use permits for the services to one per 4,500 residents.

McDonald said regulations must leave some areas for the providers of payday advances to operate.

With Blue Springs’ population near 53,000, the city is close to the maximum of those businesses allowed. More could be added as the city grows. Before voting, commission members had questions.

Alan Franklin asked whether the city had any statistics that show Blue Springs has more crime because of the businesses.

McDonald said officials were relying on the Milwaukee study and wanted to take action before problems manifest in Blue Springs.

Chairman Ken Billups Jr. asked if the city, as part of the conditional-use permit, could add regulations about security. McDonald said he would be conservative.

“The question is, if you’re stepping out of zoning authority,” McDonald said. “At some point you step over the line.”