COLUMBIA — An ordinance that would impose a six-month moratorium on new payday-loan businesses is on the agenda for the Columbia City Council on Monday night.
Fourth Ward Councilman Jerry Wade said he introduced the idea after several constituents complained about the potential impact of payday-loan businesses in a financial crisis. Wade also said, however, that he has, "no preconceived agenda on what we should do."
"I've had enough people ask me the question, and maybe we need to just stop a minute and take a look at them and see what we have and ask ourselves if there is anything we should do," Wade said.
City staff has assembled a report on the matter for the council. It said Columbia has 21 state-licensed payday-loan businesses. It said the council also has other options, including zoning restrictions that would prevent payday lenders from clustering together and an ordinance that would limit the number of business licenses, based on population, that could be issued to such businesses.
If the City Council decides to explore whether zoning restrictions on payday-loan businesses are desirable, it would have to refer the matter to the Planning and Zoning Commission.
The city report also includes a January 2009 memo from Deputy Commissioner of Finance Richard Weaver to Gov. Jay Nixon and the Missouri General Assembly about a survey of payday lenders. Weaver wrote that the state issued 1,315 payday-loan licenses in 2008 and that the average loan was $290.29 with an average interest rate of 430.68 percent.
State Rep. Mary Still, D-Columbia, said that interest rate is too high.
"I think we need to have some reform in Missouri. We have an average interest rate of 430 percent, and Missouri also allows six loan renewals," Still said. "I feel like this results in the financially unsophisticated falling into a spiral of debt."
Still sponsored a bill during the last legislative session that aimed to limit the fees and interest that payday lenders could charge. It also would have prohibited repeated loan renewals that allow lenders to get around interest restrictions. Weaver's report shows that each of the states neighboring Missouri forbids loan renewals. It also shows that, other than Tennessee, Missouri has far more payday-loan businesses than any of its neighbors.
Still said her bill never came before the House for debate. It wasn't even assigned a hearing until the session's last day.
Still is holding a "district hearing" on Nov. 16 to learn more about the issue. She said she has a lot of questions about how payday loans operate, the best way to limit interest rates and how other states are dealing with the issue.
"It will be an opportunity to get good input so that maybe this year I'll have a hearing, and the speaker will assign me a time so I can get the information I need to work out a law we can live with in Missouri that would help protect poor, working people that often just get trapped," Still said. "These are people that work; they just don't have a lot of money, and sometimes do need an extension."
Still said the Catholic Conference and AARP are among the organizations that support her legislation and plan to be part of the meeting. Wade said he plans to attend as well.