Iowa City City Council approves first vote on payday lender ordinance

BY NATE OTJEN | AUGUST 22, 2012 6:30 AM

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The Iowa City City Council unanimously approved the first consideration of an ordinance Tuesday night that would change zoning laws for where payday lenders can set up shop.

A change in the zoning code would require there be a 1,000-foot separation zone between the location of payday lending businesses and churches, daycares, and schools, among other places.

“I’m swayed by the public policy and the research out there appears to be out there,” Mayor Matt Hayek said when voting favorably on the ordinance.

Payday lenders allow people to take out short-term loans between paychecks and pay the business back with interest after they receive their next pay check.

Iowa City would follow suit with several other cities throughout the state to restrict payday lending services. Des Moines, West Des Moines, Clive, and Ames have all recently passed ordinances restricting their services.

Nine community members addressed the council about the ordinance, with citizens falling on both sides of the issue.

“Predatory payday lending causes neighborhood blight, increased rates of crime, traps poor people in a cycle of poverty, and drains our communities of hard earned wealth,” said Misty Rebik, a University of Iowa graduate student in a Iowa Citizens for Community Improvement press release.

“They can also prey on college students. I support this measure because I don’t want to see payday lenders someday setting up shop on the Ped Mall.”

Several members of Citizens for Community Improvement were present at the meeting to speak out against the dangers of payday lenders.

David Goodner, a community organizer with the group, said the members will continue to fight this issue.

“If the City Council votes one way the first time, it’s likely going to vote that way again,” he said.
City Councilor Jim Throgmorton questioned what alternatives people have as opposed to going to a payday lender, and a community member suggested using Veridian Credit Union as an alternative.

“For us to constrain the ability of lenders to charge approximately 400 percent interest rates to people appeals to me,” he said.

Many of the councilors were unsure about how much the ordinance will fix the issue of students utilizing payday lenders’ services. 

“It’s not fixing the problem, it’s just limiting the areas where the problem could be,” City Councilor Michelle Payne said.

City Councilor Connie Champion said she thinks restricting payday lenders would allow different kinds of businesses to grow.

“I think it’s a great opportunity for a nonprofit to open up a better service,” she said.

The Council will vote on the second consideration of the ordinance at its next meeting. An ordinance requires three readings.

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