Politics & Government

Ames Council Essentially Outlaws Payday Lenders

A new ordinance makes it almost impossible for a new payday lending business to open in Ames.

The City of Ames approved an ordinance last week that essentially zoned payday lending out of town.

The new rule states that all payday lenders must be 1,000 feet from schools, child care centers, parks and land zoned for residential purposes, the highway-oriented commercial or Gateway overlay zones, other payday lenders and any arterial street.

Existing businesses would be grandfathered in as would their licenses if the businesses are sold, but the new law makes it so they cannot expand business at all, said Steve Schainker, Ames City Manager.

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“We can't outlaw (businesses) per say, but we can establish where the use is allowed,” Schainker said.

Ames is the first city in Iowa to approve such a restriction in 2012 according to Iowa Citizens for Community Improvement, the Des Moines Register reported. A City of Ames staff report said that West Des Moines, Clive and Des Moines places restrictions on payday lenders in 2010. Those restrictions included operating near other lenders, residential zones and parks.

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The city began discussing how Ames could restrict last fall.

At the time, a staff report to council said that current zoning codes would allow “delayed deposit” lenders in more than 1,600 Ames commercial units and on almost 800 parcels of land, because it was considered an office use. Council asked city staff to draft an ordinance that would restrict the lenders as much as legally possible. There are seven such lenders when the city began crafting the ordinance and Schainker said he didn't think that number had changed.

Schainker said council members were concerned about the impact that those businesses have on Ames residents.

Since payday lending is not constitutionally protected, it's legal for the city to choose how and where lenders can do business even if the series of laws essentially make it so that it cannot be done anywhere, a staff report said. The city just has to be able to prove that each rule is tied to an impact on the public's health safety and welfare, a staff report said.

An article published in Criminology & Public Policy showed that payday lenders are associated with neighborhood crime spikes and depress local property values, staff wrote.

Council approved the third and final reading May 8. Schainker said he's only received one question on the new law so far. Someone called and asked whether a payday lender can be sold to a new owner, Schainker said, and the answer is yes. 


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