Mesa officials: Payday lenders need to scram - East Valley Tribune: News

Mesa officials: Payday lenders need to scram

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Posted: Tuesday, February 16, 2010 6:08 pm | Updated: 3:28 am, Sat Oct 8, 2011.

Mesa wants one of its most visible industries to vanish in one fell swoop. Despite payday lenders' efforts to stay alive in the state, Mesa is pushing for its 83 payday loan stores to go away as of July 1 and take away their neon signs, flashing lights and people waving banners and signs at passing traffic.

Mesa wants one of its most visible industries to vanish in one fell swoop.

Despite payday lenders' efforts to stay alive in the state, Mesa is pushing for its 83 payday loan stores to go away as of July 1 and take away their neon signs, flashing lights and people waving banners and signs at passing traffic.

The stores give the community a low-end image, Mesa's elected officials say, especially when they dominate so many major intersections.

The stores have hobbled efforts to get what Councilman Dave Richins considers legitimate businesses in west Mesa. Their in-your-face signs make it more difficult for him to stomach them, he said.

"If they were one business in a single strip center and they looked like any other business in a strip center, I don't think most people would bat an eye. But they go out of their way to be obnoxious," Richins said. "It's like come on, guys. They cannot help themselves."

More than a dozen west Mesa corners have at least two stores, while University Drive and Alma School Road has five nearby.

The Arizona Legislature opened the doors to payday loans a decade ago, with a provision that the authorization would expire July 1. The industry is fighting to stay alive, but Mesa's City Council wants lawmakers to block any of those attempts.

"This issue is a vampire," Councilman Dennis Kavanaugh said. "We need to put a stake in it."

The businesses aren't good corporate citizens, he said, as they haven't joined the Chamber of Commerce, given to the arts or contributed in other ways, Kavanaugh said.

The industry placed an initiative on the 2008 ballot that would have let the businesses operate indefinitely, but 59 percent of voters rejected that despite the industry spending more than $11 million on its campaign.

The industry floated one plan, HB2161, at the Legislature this year that would let the stores continue to operate.

The measure stalled in a committee when it became clear supporters didn't have enough votes, said state Sen. Debbie McCune Davis, D-Phoenix. She is also a co-chairwoman of Arizonans for Responsible Lending, which opposed the 2008 ballot proposition.

The election showed strong opposition, McCune Davis said, and has played a role in the lack of support the industry now has at the Legislature. But payday loan operators are still trying, she said.

"The industry continues to be present at the Legislature, and they continue to be present in the community, trying to convince folks that their services have high value and that the voters' sentiment should be ignored," McCune Davis said.

A lobbyist for the industry did not return a call for comment.

Before 2000, Arizona limited interest rates to 36 percent a year, but lawmakers created an exemption for payday lenders, which can charge rates of more than 450 percent.

Critics say the practice amounts to loan-sharking, but the industry argues the two-week loans are a fast and popular way to get a loan for unexpected expenses.

Mesa's City Council recently agreed to oppose any bill that would let the stores operate past this summer, regardless of what reforms are offered. Mayor Scott Smith said he doubted the intention of any changes, and Councilwoman Dina Higgins said elected officials would be defying voters if they allowed the stores to continue operating.

Mesa tried to reduce store clustering in 2007 by prohibiting them from opening within 1,200 feet of one another. But at least a dozen west Mesa areas had stores within that distance by the time the City Council approved the restriction, and existing stores were grandfathered.

Since the restriction, no new shops have applied to open in Mesa, said Gordon Sheffield, the city's zoning administrator.

The industry has argued its demise would create a problem for Mesa by emptying a large number of storefronts, Richins said. He said new stores would fill the void, saying shoppers would find a better mix of stores in the city.

"I want diversity in our retail," he said.

McCune Davis also wants to reduce the number of stores but said even if they lose their ability to operate, the shops will still have a large presence. Many of them also offer auto loans, check cashing and other services, she said.

"There's no question that it will have some impact on commercial property, but it's nowhere near what they're suggesting in terms of impact," she said.

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