The Starkville Board of Aldermen fought back Tuesday against what they called a “proliferation” of high-interest lending businesses popping up within city limits.
Approximately 20 companies, commonly referred to as “payday loan” businesses, car title loan businesses and check-cashing businesses, operate in Starkville, with a majority of them located on Highway 12, the city”s busiest thoroughfare.
Aldermen Tuesday voted unanimously that these high-interest loan businesses “are to be denied a privilege license and certificate of occupancy for doing business” within city limits for the next 12 months, or until the board adopts a revised comprehensive plan, which would specifically address those types of businesses. A privilege license and certificate of occupancy are required for a lending business to operate in Starkville.
The moratorium does not affect lending businesses already operating within the city. Additionally, upon the cessation of operations of currently existing businesses, for whatever reason, their privilege license and certificate of occupancy will not be valid for renewal or transference to another entity.
Ward 2 Alderwoman Sandra Sistrunk brought the issue to the board”s attention.
“These businesses impact our community economy, frequently taking out more money than they put back into the economy,” Sistrunk said after the meeting. “They do tend to cluster in areas. They will crowd out other businesses because of that. We have our comprehensive plan coming up next year and I”d like to study this aggressively as part of that comprehensive plan rather than doing something in a knee-jerk reaction …”
Former Alderwoman Mary Lee Beal showed her support for the moratorium during the public comment period and shared similar feelings as Sistrunk.
“Payday lenders and those types of businesses cluster in areas with high poverty and take advantage of desperate people,” Beal said. “Well, Starkville is not a center of high poverty, but we do have a sizable segment of population that does reside below the median income, and there must be something going on with all these businesses coming to town.”
According to the resolution adopted Tuesday, “car title loan business” means a business, other than a financial institution, with a primary activity of making small, short-term consumer loans using the equity value of a car or other vehicle as collateral when the title to such vehicle is owned free and clear by the borrower. A financial institution, according to the policy adopted Tuesday, is an establishment open to the public for the deposit, custody, loan, exchange or issue of money, the extension of credit and/or facilitating the transmission of funds, that is licensed by the appropriate federal agency as a bank, savings and loan association, credit union, or stock brokerage.
Check-cashing businesses are businesses other than financial institutions with a primary activity of providing customers with amounts equal to the face value of the check, or those specified in written authorization to electronically transfer money, for a fee.
Payday advance or loan business means a business, other than a financial institution, with a primary activity of making small consumer loans which are usually backed by postdated checks or authorization to make an electronic debit against an existing financial account, with loan repayment typically due when the borrower”s next paycheck is issued in order to reclaim the postdated check or cancel the electronic debit.
During the public comment period Tuesday evening, Starkville resident Brent Deweese spoke out against the moratorium, arguing that businesses do contribute property taxes to the local economy, and the city”s decision to impose a moratorium goes against the principle of free enterprise.
“The industry in this moratorium does provide (property) taxes,” Deweese said. “It provides a service to the people who use it. Nobody is required to come and take out a loan. They”re providing a service. You”re allowed to come and get small enough loans that you wouldn”t be able to get at banks and financial companies.”
“This is America and I believe in free enterprise,” Deweese continued. “As far as imposing a moratorium, that would put a cap on something. I would question that.”
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