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The Golden Valley City Council took action Aug. 17 to safeguard its community against “predatory lenders” via zoning regulations. An amendment to the city code, which will undergo a second hearing and final round of approvals at an upcoming meeting, will restrict where payday lenders, currency exchanges, pawnshops and precious metal dealers can set up shop.

The new code is the result of a year-long moratorium that prevented new business from the three specialty areas, in an effort to research whether the business types had an effect on crime, safety, and customer health. It restricts the businesses to commercial zones only, and prohibits them from being established within 750 feet of each other. Other parts of the code require visibility of entrances from right-of-way and into store windows.

Crime and necessity

Staff research and discussion with the Planning Commission sought a compromise that would create some regulation without prohibiting the businesses entirely. This is largely to due to the fact that customers of check cashing and payday lenders often have difficulty finding other options.

“There are negative impacts associated with these uses, however they are something of a necessity or necessary role for those that do not have access or do not have a traditional bank account,” City Planner Miles Campbell told the council.

In their research, staff found that Federal Reserve had most recently estimated that 55 million Americans had either no banking account or poor access to banking services.

Campbell said the businesses did have a tendency to be “crime attractors,” largely because their operations require cash on hand. Pawn shop and precious metal collectors could aid in the movement of stolen property, he added, but greater record-keeping allowed some tracking capability.

Campbell warranted that the academic studies staff reviewed to form their conclusions were based on data from large U.S. cities.

“Golden Valley is not Los Angeles or Seattle,” said Campbell.

Changes to licensing in the future?

A resident who spoke during public comment wondered whether the restrictions went far enough. She recommended the council also consider limiting the number of licenses that could be granted in the city for the activities, and capping the interest rates at which the lenders commanded from consumer.

City Councilmember Gillian Rosenquist polled City Attorney Maria Cisneros on the feasibility of those regulations.

“I think the way to address those concerns would be through some license regulations other than zoning regulations,” Cisneros said.

Research would also need to be done to know whether cities would have the authority to approve such regulations and how they could be enforced, she added.

According to a staff summary, several members of the Planning Commission supported exploring license requirements, believing it may be more effective at protecting consumers.

The first reading passed unanimously. Councilmember Kimberly Sanberg, acting as Mayor Pro Tempore at the meeting, called the zoning regulations “an important step in the right direction.” Councilmember Larry Fonnest said he viewed businesses like payday lenders, and pawn and precious metal buyers as “a potential negative influence on the community,” and believe the regulations worked to “maintain the integrity of our own community.”

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