Mesa to fight efforts to revive payday loans

MESA — Mesa will oppose any efforts in the Legislature to extend or eliminate a 2010 deadline that will end licensing of the payday-lending industry.

A City Council subcommittee supported that recommendation from Mesa's government relations director, Scott Butler, who told the group Thursday that despite a failed ballot initiative in November that would have kept the industry alive after 2010, the payday backers may not be done.

They're trying to get rid of what's known as the sunset clause, which would end their licenses in the state by July 1, 2010, he said.

Butler said it's possible that legislation could be introduced this session to increase the shelf life of the industry.

A payday-loan industry spokesman, however, said later Thursday that there are no plans to advocate changes in payday-loan businesses in this legislative session.

In 2000, Arizona allowed payday lenders to set up shop in the state for 10 years. With more than 95 payday-lending stores, Mesa is at the forefront of this issue. West Mesa is particularly chock-full of these stores, which offer check-cashing services and short-term loans with annual interest rates that can be as high as 459 percent on what was originally a two-week loan. In fact, the city's 85201 ZIP code has the highest concentration of these businesses in the state.

Vice Mayor Kyle Jones and Councilmen Dennis Kavanaugh and Alex Finter agreed that the city should fight any attempts to keep the industry in business. Payday lending costs Arizona families nearly $149 million each year, according to a Mesa report. Critics view these lending services as predatory, targeting low-income families that at times turn to quick-fix measures to get through times when money is short.

The payday-loan industry, which backed Proposition 200, spent $14 million promoting the initiative, which would have limited interest rates to as much as 391 percent.

Proponents say these short-term loans can be the only recourse for some people in times of hardship. Additionally, other financial entities, such as credit card companies, also charge interest year-round until a bill is paid.

Source:
http://www.azstarnet.com/metro/276523