LAYTON -- The number of businesses in this city that issue payday loans, cash checks and defer deposits for loans was supposed to go down or at least stay the same but instead is growing.
Despite an ordinance adopted by the city council in March that capped the number of these businesses with the plan of eventually significantly reducing them, the council entered into an agreement with USA Cash Services of Utah to allow the business to open a second location in Layton.
"They applied during a small open window before the ordinance took effect," said Bill Wright, community and economic development director.
Wright said that, in December 2010, city staff started discussions with the planning commission about ways to regulate check-cashing businesses.
Before the city's ordinance took effect, USA Cash Services applied to relocate its location at 13 S. Main St. to 975 N. Main St., Suite 6.
Mr. Money, a similar business, is already located at that address. USA Cash Services, which owns the building at 975 N. Main St., expected to terminate its lease with Mr. Money and replace Mr. Money in the building.
But that did not work out.
"They realized they were having difficulty terminating the lease of Mr. Money," Wright said.
So USA Cash Services made two decisions.
First, the company decided to still move into the building, but in Suite 5. Second, USA Cash Services chose to make the location a new one and to keep its current business at 13 S. Main St. open as well.
Not only does that bring in a new business, which is against the new ordinance, but it violates the 1,500-foot buffer that the ordinance states is needed between these types of businesses.
"It is a temporary thing," said Mayor Steve Curtis. "It's a service that obviously seems to have a need, but the ordinance states there should be a limit to them."
Wright said USA Cash Services hired an attorney to make sure the company could legally open the new location.
After research, city officials felt the best decision was to allow USA Cash Services to open its new location with certain conditions.
"(City Attorney) Gary (Crane) and I determined it is not worth litigation," Wright said. "That would be very costly, and they may have challenged our whole ordinance."
USA Cash Services agreed with the city that by June 30, 2014, either the company will have ended the lease with Mr. Money, forcing Mr. Money to leave the city, or USA Cash Services will close its new location.
The new USA Cash Services should be open by Dec. 31, and that will bring to 20 the number of businesses that issue payday loans, cash checks and defer deposits for loans in the city.
The ordinance states that there will eventually be one such business for every 10,000 residents, which would make seven such businesses.
From now on, the city will not allow any new similar businesses, even if current businesses leave.
"As (the number of businesses) drops and works its way to the cap, they can't be replaced," Wright said. "As our population goes up, our cap will increase."