OGDEN -- The city council during a Tuesday night work session made some minor language changes to a proposed ordinance to limit the number of payday lenders that can operate in Ogden.
No action was taken by the city council on the draft ordinance. The council plans to hold a public hearing on the ordinance during an April 27 work session.
It hasn't been determined when the council may vote on the ordinance, which has been recommended by the Ogden Planning Commission.
The ordinance is an attempt to reduce adverse secondary affects caused by payday or title loan lenders, Mark Stratford, an assistant city attorney, told the city council Tuesday night.
Some businesses refuse to locate in areas where payday loan companies operate, which can have an impact on the local economy, Stratford said. "It (payday lenders) discourages investment in neighborhoods," he said.
Payday lenders also dissuade people from using local banks, which provide consumer and commercial loans that can ultimately benefit the community, Stratford said.
The proposed ordinance would limit the number of payday loan establishments to one per 10,000 residents, which means that, currently, eight would be allowed in the city.
The 21 payday or title loan lenders already in Ogden would be allowed to remain.
However, if any of them close, new payday lenders would not be allowed to replace them until the number operating falls below eight.
The council agreed Tuesday night with a provision in the ordinance that requires lenders to use muted earth-tone color schemes for building exteriors, and prohibits them from buying precious metals, such as gold, because of the risk that the items may be stolen.
The council also determined that the wording of a disclosure sign, which payday lenders would be required to place at the entrance of their establishments in English and Spanish, should be shortened to the following statement: "This business specializes in giving high-interest loans. These loans should not be used as a long-term financial solution."
The council decided earlier proposed language stating the city encourages consumers to consider financial options other than payday loans should not be part of the sign. Stratford said it's possible that statement could draw legal challenges from the payday loan industry.
The draft ordinance also calls for payday loan operations to be at least 660 feet from historic buildings.
Bruce R. Baird, a Salt Lake City attorney who represents the Utah Consumer Lending Association, a coalition of payday lenders, attended the work session but did not participate in the council discussion. He told the Standard-Examiner after the meeting his client hasn't been given an opportunity to offer its opinion about the ordinance to the city council.
Baird also said there are numerous provisions in the ordinance that would not be able to withstand a legal challenge.
However, he declined to identify those provisions.
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