City to pursue limiting payday lenders in Ottawa under new regulations
By David Smith, Algonquin College Journalism, with files from CFRA’s Kristy Cameron
City Hall will be taking a closer look at capping the number of payday loan places in Ottawa.
City council passed a motion Wednesday from Mayor Jim Watson to begin the process of amending zoning by-laws to set a minimum distance between payday loan stores. City staff will also explore the concept of creating a licensing system for these businesses, which would make them more expensive to operate.
Councillors agreed that payday loans amount to "predatory lending", which targets the most vulnerable members of the community.
Under the new regulations in the Ontario Municipal Act, which came into effect January 1, the City can set a limit on the total number of payday lenders permitted to operate in Ottawa.
Implementing these changes will require studies and public consultation, which can take months to complete. Staff won't bring their recommendations on the matter back to council until 2019.
While the high interest rates offered by these short-term lenders are an issue for the Province, city councillors are focused on lowering their concentration in certain neighbourhoods.
There are currently seven payday lenders on Montreal Road alone, for example. Another six operate on the stretch of Bank Street between Gladstone Avenue and Wellington Street.Under the proposed changes, the City could treat payday lenders like strip clubs; only allowing them to operate in certain areas and preventing them from clustering in vulnerable communities.
Coun. Mathieu Fleury also put forward the hope that credit unions like Alterna Savings and Meridian could open small storefront operations to compete with the high saturation of payday lenders, as another way of controlling their proliferation.
"The fewer, the better in a neighbourhood," Mayor Watson said after the council meeting. "It doesn't really add any value to have payday loan after payday loan after payday loan on one block."
Watson said the new regulations do not grant the City power to close or suspend any existing payday loan operations.
Some councillors suggested an interim control by-law to stop any additional storefronts opening until zoning can be amended. City staff cautioned council against this, as it would limit their planning power in those communities; two interim control bylaws are not permitted to overlap in any given geographical area.
The mayor says he's not overly concerned about new outlets rushing in right now, but says he's open to discussing an interim ban if that becomes a problem.