Smith: Payday loan issue could be 'somewhere in the middle' - East Valley Tribune: East Valley Local News

Smith: Payday loan issue could be 'somewhere in the middle'

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Posted: Thursday, January 22, 2009 5:26 pm | Updated: 1:45 am, Sat Oct 8, 2011.

Mesa remains opposed to extending or eliminating an upcoming deadline that will end licensing of the payday lending industry.

However, Mayor Scott Smith said Thursday that if a compromise is struck in the Legislature, communities should get better control over where the businesses can be located.

In November, Arizona voters rejected Proposition 200, an unsuccessful initiative backed by the payday loan industry that was seen largely as an effort to do away with the industry’s expiration date of July 1, 2010.

The sunset clause, as it’s known, allowed the payday loan industry to operate in Arizona for 10 years. If the date holds, payday loan stores could continue to operate in the state, but would have to offer loans at the maximum retail loan rate of 36 percent. The industry currently has a cap of 459 percent.

But Smith said it’s unlikely that the industry will sit tight.

“Notwithstanding the overwhelming rejection of Prop. 200, I think the political realities are it would surprise me if the payday loan business completely drifted into the sunset in 2010,” Smith said.

Smith said that if the industry does snag a compromise in the Legislature, local communities would need better control over where these stores can be located. That would help mitigate their negative impact on neighborhoods, Smith said. Critics believe payday lending stores cause public safety and blight issues.

Distance between stores is a key issue for Mesa, where certain areas have large concentrations of payday loan stores.

There are at least 95 payday lending stores in Mesa. ZIP code 85201 in west Mesa is known for having the highest concentration of these businesses, which offer check-cashing services and short-term loans.

Sen. Russell Pearce, R-Mesa, has said that the Legislature is likely to discuss the issue. Amid speculation that Pearce may sponsor a related bill this session, a Pearce representative said Thursday that the senator has no such plans.

A payday loan industry spokesman told the Tribune last week that there are no plans to advocate changes in payday loan businesses.

Sen. Debbie McCune Davis, D-Phoenix, a strong critic of the payday loan industry, said she’s not interested in any form of a compromise.

“I’m not interested in talking about anything other than the 36 percent cap. That’s the only position I’m willing to discuss,” Davis said.

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