After years of considering short-term lending practices, Springfield City Council on May 4 unanimously approved an ordinance aimed at regulating payday loan companies in the area.
The code requires companies to apply for and obtain an annual permit from the city within 60 days of council’s approval of the ordinance. Additionally, subject to voter approval in August, the city would collect an annual permit fee of $5,000, or $2,500 if there is less than six months remaining in the calendar year when the permit is issued, according to bill documents. The city cannot start collecting the fee until 60 days after voter approval.
Effective immediately, payday loan business owners also must post information on-site for customers to review, such as interest rates and fees, and provide borrowers with payoff disclosures.
Those found noncompliant with the new code could face penalties or fines, jail time or both, according to the bill documents.
Council members recognized in their videoconference meeting that additional reform will need to be made by state legislators.
“It’s been a long road for us to get to tonight’s vote,” said Councilman Andrew Lear. “We know that any true reform will require action at the state level, but I believe this bill sends that message. And I’m confident that come August, the citizens of Springfield will send that same message when they go to the polls or, hopefully, mail in or drop off their ballots.”
Mayor Ken McClure agreed that “the only real solution” is interest rate legislation at the state level.
Rep. Steve Helms, R-Springfield, proposed legislation this session to limit accumulated interest and fees for borrowers to 35% from 75% of the loan amount. The bill has not made it to the Missouri House of Representatives floor, and it’s unlikely to pass as state legislators have said their main focus now is passing a balanced budget after delays in session from the COVID-19 pandemic.
Missouri’s 1,950% maximum annual percentage rate is the highest nationwide for a 14-day $100 loan, according to the nonprofit Consumer Federation of America. The next closest max interest rate is 780%, in Louisiana and Wyoming.
Councilman Mike Schilling expressed concern for borrowers during the coronavirus pandemic.
“It’s sort of an ironic time when we’re in a kind of an economic downturn that could be even more harmful to people in this situation who need these emergency loans with high interest rates. I hope that spurs people at the ballot box to think about moving forward with this,” said Schilling.
Melissa Soper, senior vice president of public affairs at Speedy Cash’s corporate office in Wichita, Kansas, said payday loans have decreased over the last few months. Speedy Cash operates a storefront at the corner of National Avenue and Battlefield Road.
“In times like these, consumers are really cautious about bringing on new debt,” Soper said.
She cited low application numbers and lower approval rates nationwide.
According to a report published by the Online Lenders Alliance, demand for short-term, small-dollar loans has dropped 67% since the end of February.
Soper said she was unaware of the local ordinance and that the company already is heavily regulated under state guidelines and 18 federal laws.
Other local payday lender officials could not be reached for comment by deadline.
Fassnight Creek improvements
The Phelps Grove neighborhood is set to see construction this year.
Council heard the first reading of a proposal to allocate $2 million of the quarter-cent capital improvement sales tax for the construction of a Fassnight Creek stormwater upgrade at the Springfield Art Museum.
Martin Gugel, assistant director of the city’s Public Works Department, told council members the project was critical in easing flooding risks at the museum.
“We’re looking at modifying the existing open channel to increase the capacity of water through the site, which should alleviate flooding and flooding concerns,” Gugel said.
Council will vote on the proposal May 18.
Council members also greenlighted two grants for additional construction along Fassnight Creek.
A $217,000 Missouri Highways and Transportation Commission grant will be used to extend the Fassnight Creek Greenway from Clay Street through Phelps Grove Park to the Springfield Art Museum at Brookside Drive by creating a new path and constructing a pedestrian and bicycle bridge, according to bill documents.
The grant covers 80% of the nearly $272,000 project, which also will be funded by the city’s eighth-cent transportation sales tax.
Additionally, council accepted a grant from the Missouri Department of Natural Resources for nearly $278,000 to naturalize the Fassnight Creek channel and reduce the risk of flooding to the area.
Other action items:
Council voted to rezone 13 undeveloped acres near West Chestnut Expressway and North West Bypass to a manufactured home community district. The land at 3859 W. Maple St. will be used to create roughly 100 rental units, according to past Springfield Business Journal reporting.
Council unanimously approved up to $2.1 million in capital improvement sales tax funds toward the Grant Avenue Parkway project’s preliminary engineering expenses. The city is contributing roughly $5.2 million to the $26 million project mainly funded by a federal development grant.
The Tax Increment Financing Commission met virtually on May 4 and approved a financial proposal for the IDEA Commons redevelopment plan.
The tax increment financing plan includes the expansion of Missouri State University’s Jordan Valley Innovation Center building, a public parking garage and an office building developed by The Vecino Group LLC, as well as public improvements to sewer, stormwater infrastructure and roads.
The $55 million project will be funded through Missouri State University, the city and The Vecino Group, as well as tax credits and loans. Roughly $6.2 million will be eligible for TIF reimbursement to MSU and the city, according to city documents.
The project is projected to generate $3.3 million in local TIF revenues over the 23-year collection period, said Sarah Kerner, director of economic development for the city.
That revenue is made up of payments in lieu of taxes and economic activity taxes.
“We’re seeing this as a next phase of our long-term downtown redevelopment,” Kerner said in the meeting.
“Having this next phase of new construction of office buildings is a really great next step.”
Before the project can begin, the city and developer must execute a redevelopment agreement, and the city will establish a special allocation fund, Kerner said.
The 30,000-square-foot expansion of the existing JVIC building is expected to be complete by July 2021, with the 100,000-square-foot office building and central commons slated to be complete in December 2021. Kerner said the dates may change because of COVID-19 impacts to the timeline.
Flying V Mercantile’s recent move in Monett is already paying dividends.