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Wednesday, Jan. 14, 2009 03:32 pm

Too many payday loan shops drive businesses away

City council to vote again Jan. 21

Alderman Debbie Cimarossa, working in conjunction with the MacArthur Boulevard Business Association (MBBA), last fall introduced an ordinance to the city council that would have required payday lenders to be located at least 1,500 feet (approximately three blocks) apart. It grandfathered existing businesses, but the MBBA felt that the ordinance would have been one means to help prevent the further proliferation of payday lenders on MacArthur.

The Illinois Payday Loan Reform Act of 2005 attempted to place restrictions on what had previously been an essentially unregulated industry, but still allows payday lenders to charge interest rates of up to 429 percent. While the law limits the number of loans that can be active at a given time, lenders often circumvent this restriction by making a loan to another member of the same household. Consumers unable to repay the exorbitant interest rates associated with these loans find themselves in a vicious cycle.

The ordinance was narrowly defeated by a 5 to 4 city council vote, and not coincidentally, the aldermen who voted against the ordinance do not live in parts of the city with payday lenders. Perhaps it is difficult for them to understand the challenges that the MBBA faces when trying to recruit new businesses, who are often discouraged by the overwhelming number of payday lenders located prominently along MacArthur. While MacArthur is bordered by strong neighborhoods and schools that reflect higher than average income levels, one would never guess it by driving down the main thoroughfare.

While some opponents may argue that one type of business is being singled out, the reality is that the city governs zoning all the time, and seeks to insure that businesses locate in appropriate areas. As Mayor Tim Davlin pointed out at the Sept. 16 council meeting, the council voted favorably 14 times to govern zoning immediately prior to this ordinance coming up for a vote. There are restrictions on facilities that serve alcohol, adult entertainment and even drive-thru windows. A fast food restaurant cannot locate in a residential neighborhood, nor an office building in an industrial district. All businesses must comply with regulations. This is merely one way to help insure a diverse mix of businesses that serve surrounding neighborhoods.

The payday loan ordinance has been reintroduced, and will come up for a vote again at the Jan. 21 meeting. We urge the city council to support the passage of this ordinance, as it helps protect both the citizens of Springfield and the quality of business districts and neighborhoods.

Michelle Higginbotham is a Commercial Realtor with Coldwell Banker Commercial Devonshire Realty. She serves as vice-chair of the MacArthur Boulevard Business Association.

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