CR City Council Looks to Impose Restrictions on Payday Lending Stores

By Rick Smith, Reporter

CEDAR RAPIDS, Iowa - A City Council committee has decided to look at regulating where new payday-loan shops can locate in the city and how far from one another they should be.

At the same time, the council's Development Committee put off any discussion about toughening the current city ordinance that prohibits the sale of alcohol and tobacco within 300 feet of a church or school.

The alcohol and tobacco issue has surfaced in recent days as the Cedar Rapids school district has asked the City Council to reject a plan by the Kum & Go convenience store chain from building a store at 1420 Mount Vernon Rd. SE near McKinley Middle School, in part, because it sells alcohol and tobacco. The proposed store spot meets the city ordinance's current separation distance.

In focusing on payday-loan shops, the three-member council committee asked the city's Community Development Department staff to draw up proposed new regulations without having them apply to "pawn shops."

Monica Vernon, the committee's chairwoman, suggested that payday-loan businesses can be "predatory" operations that harm a city's residents. Vernon, owner and president of Vernon Research Group, said she had a young employee in the past who borrowed money from a high-interest payday lender and then had a difficult time paying the loan off.

Committee member Pat Shey said the city ought to try to differentiate between payday lenders and pawn shops, noting that cable TV features three or four shows on pawn shops, but none on payday-loan operations. Pawn shops are akin to secondhand stores, he said.

Committee member Scott Olson, a Realtor with Skogman Commercial, also said longtime local pawn shops like Siegel's weren't the same as payday lenders.

At the same time, Olson cautioned against overly demanding regulations designed to eliminate payday-loan operations from most of the city much like the city has done with adult shops.

Olson suggested that the owners of storefronts in older commercial areas of the city can depend on businesses like tattoo parlors and payday-loan shops to rent their storefronts.

"We need to see where we're going in the long run," he said of any regulations.

Thomas Smith, a planner in the city's Community Development Department, provided the council committee with information on five Iowa cities that have restrictions on payday-lending stores: Des Moines, West Des Moines, Clive, Ames and Iowa City.

Des Moines and West Des Moines don't permit such stores within one-half mile of each other, and Iowa City, Ames and Clive require such stores to be 1,000 feet from residential zones, schools and day cares with Clive and Iowa City also requiring them to be 1,000 feet from churches and parks, Smith said.

In a report to the council committee, Smith states that the five cities have justified the restrictions based on "the link between payday lending and the economic distress of individuals and the neighborhoods located near the establishments."

Olson said one payday lender has an "upscale version" of its stores, and he noted that such a store near Coe College is expanding.

Existing payday lenders will remain in place if new regulations are put in place, though their stores would be subject to the regulations if they are purchased by a new owner.
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