Any discussion in the legislature this session related to the future of the payday loan industry will likely not be whether it stays or goes, “but somewhere in the middle,” Mesa Mayor Scott Smith said Thursday in a city council meeting.
Smith said keeping that in mind, it would be best for Mesa to keep track of what level of discussions in terms of a giveaway or takeaway there might be for the payday industry to remain.
The payday loan industry spent about $14 million in the November election backing the unsuccessful Proposition 200, which would have capped the interest rate on loans to 391 percent from 459, but primarily, it was an effort to do away with the expiration date, also known as the “sunset” clause, which licensed payday loan operators to stay in the state up to July 1, 2010,
“Notwithstanding the overwhelming rejection of Prop. 200, I think the political realities are it would surprise me that the payday loan business completely drifted into the sunset in 2010,” Smith said.
The mayor added that if the industry does survive, local communities would need better control of location of these stores, to deflect a negative impact to neighborhoods.
Distance between stores is a key issue for Mesa, where certain areas have large concentrations of payday loan stores. Critics believe them to cause public safety and blight issues in communities.
There are at least 95 payday lending stores in Mesa. West Mesa ZIP code 85201 is known for having the highest concentration of these businesses, which offer check-cashing services and short-term loans.
If the expiration date holds, payday loan stores could continue to operate in the state, but would have to offer loans at the maximum retail loan of 36 percent.
In an earlier media report, Sen. Russell Pearce (R-Mesa), had suggested that there is likely to be discussion in the legislature on the issue. But an official at Pearce’s office said Thursday that he is not planning to run any legislation on the matter, nor does he have anything to say about it at this point. A payday loan industry spokesman also said last week that there are no plans for now to advocate changes in payday loan businesses.
Meanwhile, a spokesman for a group that actively opposed Prop 200 said they will continue to track any efforts in the legislature to rid the sunset clause.
“Those of us opposed to the payday lending industry are building troops and we will be ready,” said Ken Clark, campaign manager for Arizonans for Responsible Lending.
Clark said a “compromise” would not be on the table.
“A “compromise” is what the industry wants, because they know politicians have a short memory, so they’ll call charging a comparitively lower interest a compromise for now, knowing well that in a few years, they’ll get us right back to 450 percent interest, causing serious problems for families,” Clark said Thursday.
The group’s stance is that 36 percent rate of interest, as charged by regular banks, “is plenty.”
Mesa Councilman Dennis Kavanaugh said in principal the council as a whole signed off on plans to oppose any efforts in the state Legislature to extend or eliminate a 2010 deadline, but that any efforts otherwise would need to be monitored.
Sen. Debbie McCune Davis (D-Phoenix), has been strongly opposed to the payday loan industry’s presence in Arizona. Davis also 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.
