Payday lending moratorium extended in Montgomery, Ala.

Payday lending moratorium extended in Montgomery, Ala.

December 5th, 2013 by Associated Press in Local - Breaking News

MONTGOMERY, Ala. - The Montgomery City Council has extended a moratorium on issuing new business licenses for payday lending companies.

Council members voted Tuesday to extend an existing 90-day moratorium by six months. The Montgomery Advertiser reported that Councilman Arch Lee is a lobbyist for the payday lending industry and recused himself from the vote.

Councilman Richard Bollinger said the extension would give city officials time to examine how the businesses impact Montgomery, according to WAKA-TV. City leaders are looking to foster a diverse business climate, Bollinger said, adding that he's unsure of why payday lending businesses are concentrated in specific areas of the city.

Councilman Charles Smith said the companies are likely positioning themselves strategically and could be keeping other types of businesses from opening in areas where they're prevalent, according to the Montgomery Advertiser.

Smith has said many of the businesses are concentrated along Atlanta Highway, which is in his district. Smith has said he's concerned that the businesses are a barrier to economic growth in his area.

"I'm not naive," Smith said. "I realize title pawns follow where they think the business is. But it's not helping when prospective (residents) are looking for a place to live. No one in their right mind would drive down there and think that it's an economically flourishing area."

The six-month moratorium provides exceptions for payday lending business owners looking to renew their licenses or transfer their license to another person or entity.

Short-term lenders have been a contentious issue among Alabama lawmakers for several years. The companies include title loans, payday loans and check-cashing businesses.

The state Department of Banking and Finance plans to launch a database in January to ensure that consumers who already have outstanding loans of $500 or more aren't issued new ones. Several lending companies have sued to try blocking the database from being implemented.

Several Alabama cities, including Athens, Gardendale, Fairhope, Birmingham, Eufaula, Tuscaloosa, Northport, Orange Beach and Gulf Shores, have implemented similar moratoriums or zoning ordinances to try addressing the concentration of payday lending businesses, according to City Planner, Robert Smith.

City officials have asked Smith to review the various ordinances and present council with a recommendation for Montgomery's situation on Dec. 17.

Bollinger said a zoning change that would require the businesses to spread themselves throughout the city could be helpful.