After more than an hour of debate, the Birmingham City Council approved a six-month moratorium on payday and title loan shops in the city. The moratorium, which was approved by all but two councilors at the council’s regular Tuesday meeting, will allow existing payday loan businesses to continue operating and to change locations, but bars new facilities.
Payday loan shops offer customers cash advances until their next payday for a fee some say is expensive or predatory. In Alabama, such stores can charge fees up to $17.50 per 14-day, $100 loan, which is an annual percentage rate of 456.25 percent, according to the Consumer Federation of America, a non-profit consumer advocacy group.
The moratorium is meant to allow the city time to research the impact of payday loan shops and develop zoning measures to deal with the facilities.
According to Councilor Lashunda Scales, who spearheaded the drive for the moratorium, there are 93 payday loan facilities in Birmingham—more than any other city in Alabama. “It is the leading product, at this point, that we have,” Scales said. “It supersedes any grocery stores, any main retailers that our citizens are asking for, and that’s in every single district.
An earlier version of the proposed ordinance called for the moratorium to end after a year or whenever the Birmingham Comprehensive Plan — which is currently being developed — is completed. But that language was amended over the hour-long process.
Councilor Carole Smitherman suggested that, during the six-month moratorium, Operation New Birmingham, or ONB, be asked to help develop a permanent policy solution to the proliferation of payday and title-loan facilities in Birmingham. ONB is a non-profit public-private partnership that works to promote economic development in Birmingham.
“As a city council body, we have tons of issues that we’re working on, and if we sit as a body to try and determine these things, then, without having outside resources, then I think it’s not going to end well because the law department is already overtaxed,” Smitherman said.
Councilor Valerie Abbott asked if the city’s office of economic development could take the place of ONB, and the council agreed.
Council President Roderick Royal and Councilor Jay Roberson voted against the moratorium, which passed 7-2. Councilors Johnathan Austin, Steven Hoyt, Maxine Parker, Kim Rafferty, Abbott, Smitherman and Scales approved the measure.