COLUMBIA — If a new payday loan business opens within the next six months in mid-Missouri, it won't be within Columbia city limits.
In a 5-2 decision, the City Council approved an ordinance early Tuesday morning that places a six-month moratorium on new payday loan businesses in Columbia. There are 21 such businesses in the city now.
Fourth Ward Councilman Jerry Wade, who introduced the idea, said that he has no preconceived ideas about what the ultimate action on payday loan businesses will be.
"We should start with study, look at options and see what is best for the community," Wade said.
A report from the city Planning and Development Department said the council could consider zoning ordinances that would prevent payday loan businesses from clustering together, but that idea first would need to be reviewed by the Planning and Zoning Commission.
Fifth Ward Councilwoman Laura Nauser opposed the ordinance, saying she is uncomfortable "investigating" a legal business already regulated by the state. She added that she had received no complaints regarding payday loan businesses in her ward.
Julie Townsend, Missouri state director of Advance America, spoke to the council on behalf of the payday loan company, which she said has 2,600 locations nationwide, 87 in Missouri and two in Columbia.
Townsend told the council that the average payday loan customer has a job, steady income and a checking account. She also added that 91 percent of customers repay their loans in full on or around their next payday. She also discussed the importance of payday loans to some people.
"Payday loans are cheaper than the alternatives when you look at short-term credit options," Townsend said.
Citing studies done by the Federal Deposit Insurance Corp., she said credit-card late fees, bounced-check fees, overdue utility bill fees and overdraft fees average more interest per violation than the average interest on a payday loan.
Townsend also outlined how Advance America is already regulated. She discussed how the company submits annual reports to the Missouri Division of Finance and is a charter member of the Community Financial Services Association of America, which has established best-business practices that focus on responsible lending. Townsend added that Advance America would work with the city if the ordinance passed.
Wade introduced the idea of a moratorium after receiving several complaints from constituents about the impact of payday loan businesses in a down economy. He isn't the only one looking into the issue.
State Rep. Mary Still, D-Columbia, plans to hold a "district hearing" on the matter at 6:30 p.m. Nov. 16 at Columbia Public Library. She said Missouri needs statewide "reform" in the payday loan business.
Still sponsored a bill during the 2009 legislative session that proposed restrictions on interest rates charged by payday loan businesses. She said the bill never came up for discussion, but she hasn't give up.