By Betsy Dolan
Missouri City is the latest municipality in Texas to consider measures that impose stricter zoning and other measures on payday lenders and pawn shops.
In the first of two readings, the City Council voted to approve amendments for two separate city ordinances–one dealing with pawn shops and the other with payday lenders.
Missouri City’s Planning and Zoning Commission had already approved both measures.
Under the amended ordinances, pawn shops and payday lenders would not be allowed in residential retail areas. In addition, payday lenders would need a special use permit and would not be allowed within 1,000 feet of another payday lender.
“What we have found, is that they tend to cluster in a certain area”, said Jennifer Thomas, Senior Planner. “So this regulation seeks to remove that possibility”.
In the City’s previous ordinance, payday lenders were included with banks and other financial institutions and were allowed in LC-2 zoning districts which are typically in residential areas.
Now payday lenders and pawn shops will be limited to areas zoned LC-3, which are along major thoroughfares and include gas stations, hotels and bars. The LC-3 designation also allows for payday lenders and pawn shops to be zoned for LC-4, Business Park and Industrial.
Missouri City City Manager Edward Broussard said other Texas cities have taken a more aggressive approach in trying to regulate how payday lenders do business which have resulted in lawsuits.
“While these issues are being challenged in the court system, our perspective is to try and regulate zoning first and then see how the court action comes out,” Broussard said. “if bigger cities win, then we will be able to follow their models.”
Challenges to zoning regulations in other cities have not materialized and the zoning restrictions have been effective in limiting new businesses from moving into the community, Thomas told the council.
Cities in Texas have had to take steps to reign in payday lenders because the state legislature has failed to impose any meaningful restrictions. Payday lenders, known as “credit service organizations” by a loophole in state law, allow them to bypass limitations on interest rates. As a result, there are no regulatory agencies in Texas that are tracking the amount of fees that are charged.
Last month, Houston became the fifth major Texas city to take steps restricting payday lenders. The proposed Houston ordinance is similar to those passed in Austin, Dallas, El Paso and San Antonio. Of Texas’ six largest cities, only Fort Worth still lacks any regulations on payday and auto-title lending.