Would You Take Out a Loan with an Interest Rate of 268 Percent?
Public Hearings Coming on Regulating Payday and Car Title Lenders
Sometimes called alternative financial institutions, payday and car title lenders offer quick loans at exorbitantly high interest rates--as high as 268 percent. Not only do these lenders target poor and desperate individuals but they also signal decline in a community and deter other stores, restaurants, and small businesses from moving to these neighborhoods. There's been an explosion of them in Northern Virginia and in 2013, Supervisors Hyland and Gross joined me in directing County zoning staff to research the County's regulatory and land use options for regulating these enterprises.
In 2011, the Virginia General Assembly passed a bill allowing car title lenders to extend credit to out-of-state drivers despite objections from the Board of Supervisors. The result: Virginia has become a magnet for people who need cash but live in the District, Maryland, or other nearby states where interest rates are capped and such businesses are discouraged or prohibited from opening.
Virginia is a Dillon Rule State where Counties cannot pass legislation without state enabling legislation authorizing them to do so. While we cannot legally ban these businesses, we can restrict where they locate. At the September 22 Board of Supervisors meeting, we took the first step in this process by authorizing public hearings on proposed new zoning regulations.
Under current regulations, payday and car title lenders can operate by-right in the same locations as commercial banks, and that means within most commercial and industrial districts. U
nder the proposed regulations, they would be banned from the County's revitalization districts (although there are some areas where they could still locate by-right). However, they would have to be located within shopping centers rather than stand-alone locations. Additionally:
- Only one such lender per shopping center would be allowed.
- Lenders could not locate in any shopping centers next to or across from any public use, house of worship, child care center, private school, or quasi-public athletic field and related facility.
- Hours of operation would be limited to 8 a.m. to 6 p.m.
- Cars could not be stored on the property.
These lenders would also be prohibited from locating in any of the County's commercial revitalization areas: Annandale, Baileys Crossroads/Seven Corners, McLean, Richmond Highway, Springfield, Lake Anne, or Merrifield.
The Planning Commission will hold a public hearing on these regulations on October 21 and the Board of Supervisors has scheduled a public hearing for November 17. These hearings must take place before the new regulations an be adopted.
For information on the Planning Commission and County public hearing process or to sign up to testify, click here and here.