Iowa City looks to limit payday lenders

Ordinance would ban the businesses from being within 1,000 feet of daycares, schools, parks and churches

IOWA CITY – The City Council voted unanimously Tuesday night in favor of the first consideration of an ordinance restricting so-called payday lenders in Iowa City.

Two more readings are necessary for the ordinance to pass. It would ban the businesses from being within 1,000 feet of daycares, schools, parks and churches. Existing lenders would be grandfathered in.

Payday loans often are sought by people with problems accessing traditional financial institutions, like banks.

Supporters say they serve people who otherwise cannot get loans.

Critics say the loans have high interest rates that trap people in a cycle of borrowing.

Jeff Davidson, Iowa City’s director of planning and community development, said the city’s research found payday institutions nationwide are often in low-income areas with crime problems.

Iowa City has five payday loan businesses, all in south and southeast Iowa City.

The 1,000-foot rule is similar to restrictions on adult-themed shops and liquor stores in Iowa City.

Des Moines, West Des Moines, Clive and Ames also regulate payday lenders.

The Iowa City Council took up the matter after hearing concerns from Iowa Citizens for Community Improvement, an organization that speaks up on social-justice issues.

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