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SANDY - This southeast Salt Lake Valley suburb all but closed its borders to new payday loan stores Tuesday.
The City Council voted 4-3 Tuesday night to restrict the number of "non-depository" financial institutions - those offering payday loans, check cashing, deferred-deposit advances or car-title loans - to one per 10,000 residents and require at least a mile between outlets.
Sandy currently has 10 payday loan stores. The city plans to include unincorporated islands in its head count when enforcing the new ordinance, boosting its population from 95,000 to 108,000, which means it has room for one more store.
Council members Scott Cowdell and Linda Martinez Saville, who voted against the measure, supported a stricter version that would have only counted population within the city limits and not allowed any new stores. Steve Fairbanks was the only council member who opposed any restrictions on the number of outlets.
In recent years, West Valley City, South Salt Lake, Taylorsville, West Jordan, South Jordan, Draper and Midvale have placed density restrictions on payday loan stores, making Cottonwood Heights Sandy's only neighbor without such limits. Salt Lake County and Salt Lake City are considering similar action.
Tuesday, Sandy City council members worried their city - absent restrictions - would become a haven for check cashing stores.
"I don't believe we should be legislating against specific businesses," Councilman Chris McCandless said. But "we are the course of least resistance, and [the payday loan] business - like water - is going to come to us, naturally, without some restriction."
John Swallow, Check City's corporate counsel, doesn't agree with efforts to limit the industry's growth, but said, after the meeting, that he understands the council's decision.
"It's a snowball thing," said Swallow, a two-time Republican congressional nominee. "Personally, I think the market would dictate the number of stores . . . [But] I can appreciate [the council members'] struggle."
Check City, which submitted the first of two pending applications, is poised to win Sandy's last payday loan spot. The Provo-based chain plans to open a location in a former Hollywood Video store near 10400 South and State Street.
Sandy's planning staff first petitioned for some regulation of the industry due to concerns about the stores' exteriors, which often feature bright colors and neon lights. The council eliminated a provision that would have banned neon lights from the stores.
"You've gotta look beyond just the appearance of these places and think about what happens to their customers, weeks, months and even years after they take out a loan," Sandy resident Art Sutherland said after attending the meeting. Sutherland is a volunteer for Crossroads Urban Center's Coalition of Religious Communities, which has been campaigning for reform of the payday lending industry since 1999.
The group worries the industry's interest rates - upwards of 400 percent annually - trap low-income customers in a downward spiral of debt.
Limiting the number of stores "is all we can do with city ordinances.
What we needed to do was limit their practices" during the legislative session, when a bill that would have placed restrictions on payday loan terms and amounts stalled in a House committee.