Monday, Nov. 16, 2009

Council may delay payday lending vote

Cash advance businesses would not be able to open near each other in Columbia

A year ago, a majority of Columbia City Council members supported a change in the city's zoning laws that would ban payday lenders from opening stores within a half-mile of each other.

But a change in state law over the summer - and some lobbying by the payday lending industry - is causing some council members to hesitate about enacting the controversial zoning change, scheduled to be discussed in a public hearing Wednesday at City Hall.

"What effect would (the law change) have? That's something we don't know yet," City Councilman E.W. Cromartie said. "I need to get that information before I make a decision."

The payday lending industry, led by Spartanburg-based Advance America Cash Advance, argues the changes in state law - restricting borrowers to one loan at a time and establishing an industry-maintained database to keep track of loans - takes care of the city's concerns, making the zoning changes unnecessary.

"We've seen similar legislation passed in other states where a great number of providers of payday advance products closed their doors," said Jamie Fulmer, spokesman for Advance America.

But supporters of the change - led by the city's Code Enforcement Task Force, a panel of Columbians tasked with overhauling the city's codes - say the tendency of payday lenders to concentrate in poor areas is evidence the industry is breaking its own rules.

"We don't want people to be able to stagger from store to store rolling over their loans," said Kathryn Fenner, a task force member. "We want to make it difficult for people to break the law."

Council members said they will hold the public hearing Wednesday, as scheduled. But council members could vote to stretch out, or "continue" the hearing, which would give them 180 days to vote on the zoning change. During the 180 days, the zoning change would be in effect.

"Council is open to opening the hearing and continuing it," Councilwoman Tameika Isaac Devine said. "It ... buys us some time to look at all of the legal issues surrounding it."

That would give council members until May 11, 2010, to give the zoning change the required two votes for it to become law.

Critics say that would put the vote after the April elections, in which voters will decide on four council seats, including mayor. Mayoral candidate Steve Benjamin, who is on the board of Advance America, said he does not support the zoning change.

Delaying "is just pretty much what ... you can expect them to do - not wanting to make a decision that could be very political and, perhaps, could even affect the outcome of an election," said Bob Amundson, a Rosewood community leader and member of the codes task force.

Council also could delay the vote to give the industry time to meet and negotiate with the Code Enforcement Task Force. But Advance America's Fulmer already has declined such a meeting.

Payday lenders loan people money against their next paycheck. If a customer borrows $100, for example, he would owe the lender $115 by his next paycheck - the equivalent of a 391.07 percent interest rate annually.

Critics say payday loans prey on the poor, who go from lender to lender, amassing a huge debt that they cannot escape. The clustering of the lenders - such as the ones surrounding the intersection of Fort Jackson Boulevard and Garners Ferry Road - exacerbates the problems, they say.

City Council cannot regulate how payday lenders loan money, but they can regulate where they operate. For years, Columbia's zoning laws considered payday lenders a "permitted use," meaning they could open in any commercial area with little paperwork.

In 2003, Cromartie pushed through a change giving payday lenders a "special exception" designation, meaning they had to be approved at a public hearing before the city's Board of Zoning Appeals before they could open.

Council members Wednesday will consider giving payday lenders a "conditional use" designation, meaning they again can open in most commercial areas - if they meet two conditions:

- They are in a building larger than 30,000 square feet

- They are not within 3,000 feet - a little more than a half-mile - of another payday lender.

Advance America's Fulmer said the zoning changes are another attempt to ban payday lending in South Carolina.

"What they're really telling you is that they're not pleased with the fact the state didn't ban this product, and they are trying to do it through zoning restrictions," Fulmer said. "This is a form of credit that should be available to consumers in a responsible manner."

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