Payday lenders have taken over prime retail spots, killing pedestrian traffic and driving up leasing rates at the expense of other businesses.
Those were the Salt Lake City Council's official reasons for unanimously voting to require a half-mile buffer between check-cashing businesses.
"(But) the elephant in the room is … this is a problem for the poor and the very poor," said Councilman Eric Jergensen.
Over the past four years, city leaders have wrestled on and off with how best to address the proliferation of payday lenders, which some consider "predatory."
The businesses can charge interest rates in excess of 500 percent, causing huge financial burdens for people who use them, said Ted Gurney, of the Coalition of Religious Communities.
"I would rather get rid of them altogether," Gurney said. "They're noxious and toxic."
Councilman S?ren Simonsen said the buffer was a "small step forward in addressing a much larger problem."
There is legal justification for the land-use ordinance, though Simonsen acknowledged the problems addressed by check-cashing opponents.
The city cannot address usury problems, but Jergensen suggested offering some sort of debt- and credit-management education for the community.
Still, Jergensen and other council members said payday lenders ran "legitimate businesses" that caused an array of land-use problems for neighborhoods.
The growing number of payday lenders in the city hurt pedestrian traffic, said Councilman Luke Garrott. And they are so profitable they can overtake retail centers, driving up leasing rates and keeping out other businesses, he said.
The city has seen the number of payday lenders nearly triple since 2007.
"We have been struggling to add retail options in my district," said Council Chairman Carlton Christensen, who represents the northwest portion of the city. "There are only a couple retail centers. The empty slots have quickly filled in with these businesses."
At least nine other cities along the Wasatch Front have similar restrictions. Without an ordinance of its own, Salt Lake City was "leaving itself open to an influx" of payday lenders, officials said.
The council considered an additional restriction that would have allowed for one check-cashing business for every 10,000 residents. That would have meant no new lending business could have opened in the city until its population doubled.
"I'm not sure that's terribly fair," Garrott said.
Councilman Van Turner, who represents much of the city's west side, said his district is seeing new payday lenders pop up, but he worries more will follow.
"You're actually protecting these businesses," Turner said. "You've protected their turf and made their businesses much more profitable. … (But) the spacing is probably the only hope I have for my neighborhood."
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