Payday lenders are not welcome in Salt Lake County.
Well, at least for a few months.
The Salt Lake County Council on Tuesday enacted a six-month ban on all new check-cashing businesses on unincorporated county land. The ban is a short-term fix while county officials continue to wrestle whether to interfere with the free market or step in and place some restrictions on the "morally questionable" business.
"It's a predatory business," said Councilman Joe Hatch, who has been working for more than a year to pass an ordinance that would limit payday lending establishments by population and distance. "They take advantage of the fact there is no regulation."
A 2005 Deseret Morning News series found payday loans here averaged a whopping 521 percent interest, and car title loans averaged 300 percent.
Payday lending businesses often are highly concentrated in one area, causing blight and higher crime, as customers carry out large amounts of cash, Hatch said. He said zoning laws are the only way local government can rein in the growing problem, since the state has neglected to do so so far.
Hatch's ordinance was presented to the council a year ago, and has been a work in progress ever since. The ordinance limits new check-cashing businesses to one per 15,000 county residents. It also scatters the lenders across the county by spacing each payday loan shop by 600 feet.
At least four Republicans on the council aren't ready to pass an ordinance but were comfortable with the six-month moratorium.
Councilman Michael Jensen said he likes the 600-foot spacing but can't support a cap based on population.
"I don't like the idea of a cap, it gives a monopoly to those who are there and cements them in," Jensen said. "I'm more of a free-market guy."
He said the six-month moratorium will give the county time to lobby the Legislature to tighten regulations on the industry.
The county lobbied for restrictions last year, but nothing happened. That led Hatch to push his ordinance again this year. "I'm not optimistic of the Legislature wanting to act on this," Hatch said.
But Jensen said lobbying for payday lending regulations will be a "higher priority this year."
Several cities in Salt Lake County have already clamped down on payday lenders. Officials in West Valley City, South Salt Lake, Taylorsville, West Jordan, South Jordan, Draper, Sandy and Midvale have all passed city ordinances restricting the industry.
Councilman Randy Horiuchi said passing restrictions on payday lenders is a "prudent move," and other municipalities will likely follow suit."The ordinance we're working on is a good one to make certain we are able to manage these businesses, since there is so little oversight at the state level," Horiuchi said. "Something needs to be done."
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