January 20, 2010 10:00:00 AM
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."
SS commented at 1/20/2010 11:33:00 AM:
Ha.. hope they don't do that in Columbus because thats the only new businesses Columbus can get.. that and Dollar stores.
s barnett commented at 1/20/2010 1:04:00 PM:
GOOD FOR YOU! THATS WHAT THEY SHOULD DO EVERYWHERE.
Michekke Nabors commented at 1/20/2010 1:29:00 PM:
Free Enterprises should not prey on the poor. (Notice how they aren't in highend neighborhoods) If you read the fine print in these contract the interest is worse than loan sharks. And, I am speaking from experience I have done the pay day loans & pawn your title. I didn't have a plan back then but now after LIVING on a budget and not spending more than than we make I don't need these places.
JE commented at 1/20/2010 1:31:00 PM:
Good job BOA! Why didn't the old board do this a year ago, before the old Wendy's turned into an eye sore, as well as that hideous green building a half a mile down the road?
SS commented at 1/20/2010 2:25:00 PM:
Thats the thing about these "pay day" businesses.. they all have these hideous colored buildings to get your attention and they are always on the main drag. Just like they have ordinances for signs, dogs, etc. Why don't cities have ordinances to forbid neon building colors where all the tourist drive through?
Starkvegan commented at 1/20/2010 4:23:00 PM:
Hallelujah! During the 12 months,the BoA should draft an ordinance banning them outright. These so-called businesses fleece the citizens who can least afford it.
Let me relay my one and only experience with these loan agencies: An acquaintance of mine, unbeknownst to me, put me down as a personal reference in his loan application at a local loan business. Of course, the interest rates were astronomical and he got behind in his payments.
Now, this loan agency started calling me. Yes, ME, about his delinquency. I told the lady that I didn't even know exactly where my friend lived, but that I just knew him casually from bumping into him at local town events. This loan business kept calling me wanting me to relay messages to him to pay up. After about 6 phone calls, I told the loan business lady, politely but firmly, to never call me again because her agreement was between her agency and my friend. I had nothing to do with it and that she was just wasting her and my time.
Later that night, her husband called me (at home) and told me that he knew where I lived and would come kill me if I ever talked that way to his wife again. Just because I told her to deal with my friend directly and leave me out of it.
Starkville BoA: Ban these loan-sharks and their UGLY store-fronts forever.
George commented at 1/20/2010 5:23:00 PM:
I don't see how you can refuse to give a perfectly legal business a license to operate. I wonder what the courts would do with this ban. No matter how distasteful these places are, they are paying taxes and providing a service just like a tattoo parlor, bowling ally, or bar. Are those businesses next? Be careful what you wish for, your freedom might be next!
slick commented at 1/21/2010 5:43:00 AM:
Legal business? Post-dated checks are illegal,just ask any bank!
Starkvegan commented at 1/21/2010 8:37:00 AM:
George is right! Gov't should not withhold a privilege license to any business that provides a needed service, even if it does so at the expense of others.
I think I will open a new business. I thought next-door to George's house would be the ideal location. Help me decide which one I should start. Since it can't be a check-cashing loan joint, I was thinking either a strip-club or a storage facility for nuclear waste from nuclear power plants. This should make George happy since I am exercising the freedom that he espouses.
George commented at 1/21/2010 9:48:00 AM:
You guys are treating the symptoms not the disease. If laws are being broken by these places then prosecute them with existing codes, no need to make new ones.
Vegan: I doubt my neighborhood is suited for your strip club or nuke storage but if it is and you operate it legally then I say more power to you! Starkville needs the business and the revenue. I will probably be a customer. :-)
Hwy. 12 is zoned commercial and these are legal businesses that have freely operated for years. When you start twisting laws to satisfy this or that special interest, you open a den of snakes that can come back to bite you. It is a very bad precedent to set and makes everybody vunerable.
You need to broaden your thinking folks. These laws that ban freedoms are dangerous.
sz commented at 1/21/2010 9:58:00 AM:
I'll bet the other payday loan places are thrilled with this action. The government just limited their competition!
Dan commented at 1/21/2010 11:44:00 AM:
Slick doesn't know what he is talking about. If those businesses weren't legal and licensed they wouldn't be there. George is right. This is a dangerous step down the wrong path. If you are worried about the colors of the buildings, you can address those with code restrictions. I hope Columbus is smart enough not to limit our commerce during a recession and hurt our real estate values. Starkville is obviously having trouble dealing with the growth of a city. Maybe as the city grows, they will get smarter leadership.
Paul commented at 1/21/2010 12:20:00 PM:
Ditto with Dan. These businesses are legal. They have a license hanging on the wall. Post-dated checks? You can check the regulations at the banking department's website. Not a single one of these places in the state uses post-dated checks because, yes, they are illegal. The article was incorrect. And ban commerce because of an ugly building? How about let's put in some requirements on colors instead of outlawing the business? Besides, SS isn't quite correct. Some of these places actually look like banks or nice loan companies. I think if they just cleaned up their look they would catch less heat from the city administration.
dean commented at 1/21/2010 12:49:00 PM:
The last thing I want to do is get a payday loan from a business that doesn't employ people with anything higher than a 6th grade education.
George commented at 1/21/2010 2:16:00 PM:
Good news Dean. You are still free to do (or not do) business wherever you want. Take advantage of that freedom now, because the way we are headiing ... who knows what you will be allowed to do tomorrow.
JJ commented at 1/21/2010 4:10:00 PM:
Payday loans may have high intrest rates, but to those who have little to no credit or bad credit they are sometimes a life saver. If the person taking out the loan feels comfortable enough to take it out and repay it, then thats the consumers choice. I for one dont think you should just take this away when its obviously needed right now and yes for low income people. The reason its not in higher paying communities is because usually... the higher payed does not need a quick fix to pay there outrgeous light bills. You can be on a budget all month long, but getting a $200 light bill versus your normal $130 light bill thats like taking a weeks food away from someone because of a light bill. Leave the companies there... They are actually there to help out in time of need no just take your money. Trying being low income or median income for 6 months, then you will see where its needed.
Mermade commented at 1/21/2010 6:09:00 PM:
Jeff Smith was one of the Reps. behind the legalization of the 300% Interest loan businesses. What needs to be done is to revoke this piece of financial rape on the poor.
Ron Ball commented at 1/22/2010 12:31:00 AM:
As 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." Many people use payday loan to pay late bills or emergency bills like hospital bills or car repair bills.
pickle commented at 1/22/2010 8:32:00 AM:
The buildings are ugly, and they reflect poorly on the city. I wish we didn't have them.
That said, George is right. Payday loan joints or grocery stores, bars or Christian book stores... they have a right to do business within the confines of the law. Creating policy or legislation that targets specific entities or individuals is a slippery slope.
JE commented at 1/22/2010 9:01:00 AM:
This is not a matter of restricting one's right to operate a business; it is a matter of managing the type of growth that we the citizens want for our city. Not all growth is good growth. We, the citizens, elected our aldermen to represent our wishes, and that is what they have done. If you are not happy with the representation you are getting from them, vote for someone else next time. Personally, I would rather see new restaurants come into our city, not check cashing places. I am very happy with the board's decision, and I feel that they did an excellent job representing the wishes of their constituents.
E7 commented at 1/22/2010 9:35:00 AM:
JE, I am all in favor of majority rule but the representatives must govern inside the confines of the Constitution. Discrimination is one of the things the Constitution guards against be it racial, ethnic, or free enterprise. If the majority of citizens want to ban Methodist churches because they are Baptists, would you support that? I doubt it. That is the "slippery slope" laws that discriminate against certain groups or businesses put you on, not to mention making the city a target for expensive lawsuits.
jkursman commented at 1/27/2010 10:53:00 AM:
How does a moratorium and restrictingt competition lead to lower prices....?
Answer: It doesn't. Short-term lenders are supplying a service because a demand for consumer credit exists. And the fees are structured to cover the cost of the loans with an average of 6% profit...significantly less than many product or service retailers.
The number of lenders simply reflects the extent of the need. The majority of these businesses provide a professional, bank-styled atmosphere for the conducting of transactions, supporting the local economy and keeping storefronts occupied.
Payday Lending Rep commented at 1/28/2010 12:34:00 PM:
Payday lenders are located in population centers and convenient locations where customers live, work and shop. While critics of the industry assign labels to payday lending customers in an attempt to further their political agendas, the fact is that we provide services to a broad cross section of Americans because there is widespread demand for the financial service we provide. Our customers represent a large demographic segment and cannot be grouped based on income, race or sex.
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