An advocacy group for the poor wants to restrict payday loan and title pawn businesses, a practice the group views as predatory lending.

Decatur officials listened to an Alabama Arise policy analyst’s presentation with interest at Monday’s City Council work session. Some residents and city leaders have bemoaned the proliferation of the businesses, particularly along Sixth Avenue Southeast, in recent years.

Alabama Arise is championing legislation that would place restrictions on the industry while pushing municipalities to act with local ordinances of their own.

“It’s hurting low-income residents and irritating the rest of us,” said Decatur Council President Gary Hammon. “We’ve all wanted to do something about them for a while, but I wasn’t aware we could do something locally.”

Stephen Stetson with Alabama Arise, a statewide coalition of 150 congregations and organizations that advocate on behalf of low-income Alabamians, proposed Decatur look at model ordinances passed by other Alabama cities as a template to restrict the number of short-term, small-loan lending businesses.

Some would prohibit the companies from operating within a specified distance of one another or limit them to certain areas of town. Stetson compared it to zoning for sex shops and liquor stores.

Decatur has issued business licenses to 16 shops it has classified as pawn brokers, but dozens more are licensed under other categories, said Revenue Administrator Tina Boyles.

Community and Economic Development Director Wally Terry said, “I think that gets to our problem: describing these places. One business can open under one license and then have three or four other kinds of businesses or services under the same roof. That’s the issue we’ve got to figure out for any ordinance we have is how we define them.”

According to a recent Pew study, 12 million Americans use payday loans every year. Some officials have estimated that as many as 20 percent of Alabama households have taken out such loans. On average, a patron takes out eight loans of $375 per year and spends $520 in interest.

“We’re talking about 456 percent APR (annual percentage rate) for payday loans and 300 percent APR for title pawns,” Stetson said.

Stetson said two bills are under consideration in Montgomery: one affecting title pawns and another dealing with payday loans. Both would cap interest rates at 36 percent, he said. The legislation also would require one database to track an individual’s loans, limit the number of loans a person can take out in a year and refund money to the owner of a repossessed vehicle that’s been sold, Stetson said.

Hammon said a moratorium on the businesses, which Birmingham and other cities have implemented, would be “useless” because existing shops could be grandfathered in.

“Moratoriums are actually said to be favored by existing businesses because it keeps new stores out of the market,” Stetson said.

City Attorney Herman Marks said he would review any sample ordinances Alabama Arise could provide for possible adoption.

Tiffeny Owens can be reached at 256-340-2440 or towens@decaturdaily.com.