After getting shelled for stalling, Utah's capital is poised to join its smaller neighbors in a crackdown on payday-loan stores many consider predatory.

But instead of implementing a cap, Salt Lake City leaders are preparing a no-clustering rule. That means by early next year, new check-cashing businesses may be restricted from operating within a half-mile -- or even 600 feet -- of one another.

But the City Council is far from agreed on the details. For instance, the Planning Commission recommended banning the businesses near schools, churches and government buildings.

Given the number of schools and worship houses, many on the council argued this month that the Planning Commission plan makes little sense and may go too far.

"It might make it impossible anywhere in the city to open a payday-loan institution," Councilman Eric Jergensen suggested.

Councilman Van Turner insisted something must be done since Utah has no usury laws. But he too worried about being unduly harsh.

"We're stronger on this than we are on alcohol laws," he lamented. "And I don't know if that's a good place to be."

Critics say the city has been dragging its heels -- nearly two years -- on regulating the payday-lending "epidemic."

In May, the Coalition of Religious Communities accused the capital of making excuses and "loads of buck-passing." That prompted Council Chairwoman Jill Remington Love to blame a dysfunctional planning division -- a charge echoed by freshman Councilman J.T. Martin.

"The time has come," Martin demanded in May.

Now it appears it will be February at the earliest before any rule takes effect.

Criticized for preying on low-income residents, payday lenders offer cash advances without credit checks. But the loans carry interest rates that sometimes exceed 500 percent a year, perpetuating the poverty cycle.

Tim Chambless, a longtime planning commissioner, maintains restrictions are especially timely given the recession. At least eight Salt Lake Valley cities and Salt Lake County have limited the number of lenders or enacted zoning restrictions.

Wendy Gibson, spokeswoman for the Utah Consumer Lending Association, argues the businesses get a bad rap. She notes the industry is regulated by the Department of Financial Institutions and receives "very few" complaints.

"The simple fact is that residents have always needed a source for short-term emergency credit in order to meet the realities of life when living from paycheck to paycheck," Gibson said. "This helps regular Utah families avoid higher-costing alternatives such as bounced-check fees, utility-reconnect fees or just the alternative of not getting a car repaired quickly when it is needed for work."

As more companies offer loans, Gibson insists, payday lenders are in the mainstream of Utah's financial-services industry.

Even so, clustering lenders creates a "vicious cycle," according to capital planners. This fall, the Planning Commission urged a distance restriction of 600 feet or, better still, a half-mile, which might force people to drive and cut down on use. It also called for a restriction near schools, churches and government buildings -- noting the former could teach kids fiscal responsibility.

"If you want to teach kids fiscal responsibility," Councilman Luke Garrott countered, "put one of those stores across the street."

Three council members will huddle with planners over the holiday break to finalize a payday-lending ordinance. It seems unlikely schools and churches will be included.

A recommendation is expected in January.

djensen@sltrib.com