Cedar Rapids Wrestles with Limits on Payday Lenders

By Rick Smith, Reporter

CEDAR RAPIDS, Iowa — City officials are wrestling with a new ordinance that would limit where payday lending shops with super-high-interest rates can locate in the city and in what concentrations.

The City Council's three-member Development Committee on Tuesday pushed ahead the proposed city ordinance to the full City Council for a May hearing, but not without serious questions.

Council members Pat Shey and Scott Olson both wondered if such an attempt to place restrictions of payday lending shops represented an overreaching City Hall policy of "social engineering."

"We are making decisions about who is a good tenant and who is not a good tenant, who is good for the neighborhood and who isn't," Olson said.

Olson, a commercial Realtor, said tenants like payday lenders fill hard-to-fill commercial storefronts, and he said the interests of those property owners needed to be taken into consideration.

Shey said not everyone living in certain parts of the city can qualify for bank accounts, and so they must depend on lenders like payday to provide them loans.

"Not everybody has all the options we have," said Shey, adding he didn't want to sound like an apologist for the high-interest operations. But he said a mother who needs formula for her baby might need access to a quick loan. Some don't have cars to drive to out-of-the-way places where the city might end up requiring payday lenders to locate, he added.

Council member Monica Vernon, the committee chairwoman, said the proposed city ordinance, which restricts the concentration of payday lenders and limits their visibility in high-traffic areas like First Avenue, is a way to support city neighborhoods.

Vernon noted that some on the City Council in recent weeks have talked about how they don't want certain types of "predatory" businesses in New Bohemia or the emerging Kingston Village area. Scott Crosby, president of the Uptown District and owner of EnCompass, 1420 First Ave. NE in the district, has been among those pushing for the city to regulate payday lenders, she pointed out.

Crosby on Tuesday said he understands that some property owners have bills to pay and so are willing to lease to the likes of payday lenders and tobacco and alcohol sales shops. But one shop like that that opens in a commercial district invites others to follow to the detriment of existing businesses around them, he said.

Crosby said the Uptown District and other neighborhood leaders also hope to push the city to limit the concentration and location of tobacco and alcohol outlets. A third tobacco or alcohol store has opened within two blocks in the Uptown District near Coe College, he said.

Thomas Smith, a planner in the city's Community Development Department, reported to the council committee that the proposed new Cedar Rapids payday lender ordinance mirrors similar ordinances now in place in Iowa City, Des Moines, West Des Moines, Ames and Clive. He said Cedar Rapids now has 13 payday lending shops.

Those existing stores could remain under the proposed new ordinance, but then might not qualify to remain under the restrictions of the proposed new ordinance should the existing stores change ownership.

Council member Olson said he wanted to know if any of the 13 properties could continue to house a payday lender if the existing shop closed. Olson said he also wanted to make sure places in the city still existed for payday lenders under the proposed new ordinance.

The proposed ordinance would restrict payday lenders to less visible commercial districts and require the businesses to obtain a conditional use permit and to not locate within 1,000 feet of similar stores or child care centers, schools, parks or churches.
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