Payday Loans May Be Regulated In Cedar Rapids
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UPDATED: Oct 2, 2012
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In Cedar Rapids, Iowa, the city council is evaluating whether to regulate the zoning of new payday loan businesses, according to KCRG.
A three-member city council committee has requested that the Community Development Department create possible new regulations for the payday loan industry that will not apply to pawn shops within city limits.
The committee chairwoman, Monica Vernon, cautioned that payday loan businesses can be “predatory” operations that harm city residents. An entrepreneur herself, Vernon owns Vernon Research Group. She claims that an employee at her business borrowed a high-interest payday loan and subsequently had trouble paying it off.
Hoping to differentiate between separate businesses, Pat Shey, a committee member, recommended that the city exempt pawn shop businesses since they are essentially secondhand stores. He also added credence to his statement by saying that cable television features several shows on pawn shops while none on payday loan businesses.
Supportive of his fellow councilmember, Scott Olson, a realtor for Skogman Commercial, said that longtime and local pawn shops were not the same as payday lenders.
Olson did caution against overly oppressive regulations that would eliminate short-term lending from the city just as the city had used regulation to eradicate adult shops.
“We need to see where we’re going in the long run,” said Olson regarding any future regulations, in an interview with KCRG.
Thomas Smith, a planner in the Community Development Department, presented the committee with information on nearby Iowa cities that had imposed payday regulation. These cities were Des Moines, West Des Moines, Clive, Ames, and Iowa City.
Smith’s research shows that Des Moines and West Des Moines do not permit cash advance businesses within a certain amount of miles of each other. Iowa City, Ames, and Clive prohibit payday lenders from being within close proximity of residential zones, schools, and day care centers.
Smith stated that his research findings show that these five Iowa cities justified their regulations based upon, “the link between payday lending and the economic distress of individuals and the neighborhoods located near the establishments.”