With concerns about high interest rates and neighborhood aesthetics, Waukesha could enact an ordinance that would prevent payday loan stores from clustering.
Alderwoman Joan Francoeur was recommending prohibiting payday lenders from locating within 3,000 feet of another payday lender and within 500 feet of any residential district. The Ordinance and License Committee on Monday gave unanimous conceptual approval for the city’s attorney’s office to draft an ordinance that would later come back to the committee and ultimately the Common Council for approval.
The issue first came up about a year ago when a payday loan store wished to locate into the City of Waukesha. There was little the Plan Commission or the Common Council could do from allowing it to locate in The Shoppes at Fox River because the city had not adopted any ordinances. State law prohibits payday loan stores from being within 1,500 feet of other stores.
“In essence the applicant was complying with state statutes and regulations,” Francoeur said.
The proposed city regulations, according to a document Francoeur with the assistance of city staff, would limit the city to approving between two and four additional payday loan stores. The density would be one store to every 5,000 to 6,000 residents, according to the document.
“I want to make it very clear that enacting this type of ordinance in the city is a benefit to the city and to the city’s residents,” Francoeur said. “The intent is not to prohibit these businesses from locating in our city, but rather to give us a basis to manage their locations.”
The city currently has 10 payday lenders in Waukesha. Proposed changes would mean seven of the payday lending stores would be non-compliant; however, those stores would be grandfathered into the ordinances.
“The fact that we already have 10 in the city, I think that is more than enough to serve the need,” said Alderman Paul Ybarra.
Payday loan stores receive high criticism for high interests rates on loans given to conceivably the most vulnerable borrowers. About 70 percent of payday loan borrowers use the loans to pay monthly bills, according to the Huffington Post.
The immediate access to cash is attractive to some borrowers strapped for money. But the average borrow spent $900 in fees, interest and principal for a $375 loan in 2011, according to the Huffington Post.
Some states have implemented legislation to limit the short-term loans. Changes in Colorado saved residents there $100 million in 2011 by extending the minimum term from two weeks to six months, according to the Associated Press.
A State of Wisconsin document warns borrowers that annual interest rates can reach 500 percent of the loan. Wisconsin has limits on the loans that include capping interest charges after a loan meets maturity.