WATERLOO | When Pat Morrissey campaigned for a City Council seat last fall he made no bones about his desire to crack down on payday lenders.

Just two months into his first term, the new Ward 3 councilman is championing changes in the city zoning ordinance to limit where such businesses can set up shop.

"I'm not here to kick any of those (existing lenders) out," Morrissey said. "But any future expansion needs to be restricted, and this is one way of doing that."

Morrissey and several other opponents of payday lending operations were on hand this week when the Waterloo Planning, Programming and Zoning Commission voted unanimously to endorse the ordinance changes, expected to be considered by the full City Council in early April.

Several neighborhood association members supported the changes, saying payday lenders drag down neighborhoods and take advantage of lower-income residents, who get trapped in an endless cycle of high-interest debt.

"It's just like the liquor stores," said Mary Potter, leader of the Church Row Historic Neighborhood Association. "They get people who do not know a better way to live.

"You don't see them on Prospect Boulevard or in Audubon Heights," she added. "You see them in depressed areas where people don't have any alternatives. … If we don't put this ordinance in, these places are just going to run rampant."

Cities have little recourse in governing how payday lenders conduct business, but many local governments have changed zoning ordinances to limit the areas those operations can locate.

Waterloo's proposed zoning ordinance governing "deferred deposit services" would not allow additional payday lenders or pawn shops to locate in the downtown C-3 zoning district or S-1 shopping center districts. They would only be allowed in the C-2 commercial district or manufacturing zones.

Perhaps even more restrictive, new payday lenders or pawn shops could not open within 600 feet of each other, liquor stores or bars, adult uses or any of the long list of "protected uses" in the city.

Protected uses include residences, day centers, churches, schools, libraries, public parks, recreation centers, museums or cultural centers, civic centers, a hospital or medical facility or any government building.

City Planner Aric Schroeder said the proposed ordinance would "grandfather in" existing payday lenders and pawn shops, which would become legal nonconforming uses. Those businesses could be sold but would lose their legal status if they closed for at least three consecutive months.

There were no objections during a public hearing on the proposed changes. A second hearing will accompany the council's vote on the ordinance.

Morrissey, meanwhile, continues to work with Iowa Citizens for Community Improvement to promote state and federal restrictions on payday lenders. The organization traveled to Washington, D.C. in January to argue their cause with the Consumer Financial Protection Bureau.

Waterloo city reporter for the Courier

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