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City of Toledo Plan
Commission Approves Zoning Regulations for Payday Lenders
By Megan Davis
Sojourner’s Truth Reporter
The Toledo
Plan Commission voted on March 9, 2017, in a unanimous
decision, to approve a change in a zoning ordinance that
will prevent short-term lenders from clustering in the
city’s low to moderate income areas.
The new
zoning proposal was the result of collaboration among a
number of entities: Toledo City Council (led by Councilwoman
Cecelia Adams, PhD); Advocates for Basic Legal Equality
(ABLE); Local Initiatives Support Coalition (LISC) and
United Way of Greater Toledo.
During the
session, several local community leaders, consumers and
representatives of organizations stood before the Plan
Commission to plead the cause for amending the existing
regulations pertaining to short-term lender businesses.
The new
zoning ordinance, if approved by City Council, will prevent
payday lenders from locating within 2,000 feet of an
existing payday lender and will limit the number of such
businesses to one per 30,000 city residents.
The case
for the zoning regulation was opened by George Thomas,
senior attorney for ABLE, who stated that he was surprised
that no regulations have been put in place before now.
Currently
43 businesses in Toledo are classified as short-term
lenders. Thomas told the commissioners that, if the
ordinance is ultimately passed, natural business attrition
will lead to a decrease in the number of lenders since no
new ones will be permitted to open.
The
Village of Ottawa Hills is nestled in the heart of West
Toledo, bordered by Bancroft Street, Central Avenue, Secor
Road and Talmadge Road. This small village in the 43606 zip
code, has a population of approximately 4500 people with a
median income of $116,350.
A person
can drive from Bancroft and Secor, where the immaculate Hope
Lutheran Church welcomes one into the Village of Ottawa
Hills. The scenic route offers a view of sprawling
landscapes, mansions and mature trees.
After
about three minutes, a driver is back in the city of Toledo
limits whose neighboring zip code is 43615. The estimated
population for that zip code is near 40,000 with a median
income of $43,147.
Just 1.4
miles away from the edge of Ottawa Hills, at the corner of
N. Reynolds Road and W. Bancroft Street, there are three
payday or auto title lending businesses: Ohio Auto Loan;
CashSmart which is next door to a check cashing site inside
Stop & Go; and Cashland. All these businesses offer fast
cash with no credit checks as well as extremely high
interest rates.
These
three businesses typify the cluster of predatory lenders, in
and near low-to-moderate-income neighborhoods throughout the
city of Toledo, making loans available to those who have
no-to-bad credit and who are also often unaware of other
opportunities they might have to obtain loans at more
reasonable interest rates.
After
hearing Thomas’s opening salvo, Catherine Hoolahan, Plan
Commission chairman, asked if zoning restrictions is the
right response to the issues presented. She wasn’t sure
about the idea of “driving out businesses,” questioning
whether the issue should be more about reform. She also
suggested that driving out such businesses might limit
access to funds for low-to-moderate income residents.
In support
of the ordinance, Valerie Moffit, program officer for LISC
responded that “zoning is the most powerful resource we have
to reduce the negative impact payday lenders have on the
community.”
State law
limits the authority that cities have to regulate how such
businesses operate. Thomas shared that there had been a
number of zoning ordinances passed in other Ohio cities,
including Xenia, Parma, Cleveland and Cuyahoga Falls, and
those cities reported that there was success with the zoning
changes.
Moffit
also added that the approach that LISC takes is to work with
consumers “caught in the churn” to rebuild their credit by
offering them small-dollar loans for six-12 months with an
interest rate of 15 percent, which is more reasonable than
the 561 percent average interest charged on average by
payday lenders in the state of Ohio.
“I was
charged a lot of fees and interest rates from payday
lenders” Seta Washington told the commission, explaining her
experience as a borrower. “I had to go to the same place to
cash checks for a high fee in order to leave out with less
money,” said Washington. Traditional loans are usually paid
back within a term of six to 12 months. “It takes the same
amount of time to pay back payday lenders,” Washington
added.
Washington
now has a financial coach provided by one of the financial
opportunity centers (FOC) that are offering alternatives and
has no more issues with short-term loans. FOC is a program
managed by LISC and United Way.
Some
speakers noted that obtaining loans from short-term lenders
will not help the borrower build credit. “These businesses
don’t add to the quality of life in our community. Monies
are not being recycled back into our community,” said Greg
Lyons of the Sylvania Avenue Neighbors during the hearing.
Further
refuting the suggestion, offered by Hoolahan, that people
might not have any other options, Veralucia Mendoza-Reno, a
financial coach for Lutheran Social Services, testified
about programs that are available to help improve credit
scores and build wealth instead of debt.
Plan
Commissioner Balsharan Singh Grewal asked how the FOC helps
people get out of payday traps. Mendoza answered that their
organization helps people to increase their income and find
resources for other needs such as food and clothing. Getting
out requires changing how people do things, she added.
Michelle
Wasylecki, director of community services at United North,
said that their organization also has a program to help
people change their financial behavior.
The
proposed ordinance will now go before the City Council
Zoning and Planning Committee, District 1 Councilman Tyrone
Riley, chairman, for a hearing on April 19, then on to the
full Council for a vote. |
