Knoxville City Council passed on first reading Tuesday night an amendment to the city zoning ordinance that would regulate the location and proximity of title and payday lenders.
It actually passed twice, after a parliamentary glitch that overlooked those who wanted to speak on the matter led Council to consider the ordinance a second time.
The first vote was unanimous; only at-large Councilman George Wallace voted against the ordinance. The ordinance, strongly championed by South Knoxville Councilman Nick Pavlis, will be up for a second reading in two weeks.
The decision came despite a cautionary note from city Law Director Charles Swanson that the city may not have explicit authority to govern the location of “alternative financial services.” Chattanooga, Nashville, and Memphis, however, have zoning restrictions against pay-day lenders and similar businesses.
The restrictions in play in Knoxville would prevent “clustering” of the establishments by requiring 1,000 feet between each such lender and forbidding them within 1,000 feet of a residentially zoned property. The zoning ordinance was recommended to council unanimously by the Metropolitan Planning Commission, which had issued a report on such zoning measures.
“These loan businesses are like cockroaches, scuttling in and burrowing ahead of development,” South Knoxville resident Terry Caruthers wrote in an email urging support of the ordinance ahead of the vote.
“Nesting in properties to the point that when retail and restaurant businesses peek through our neighborhood doors they are going to shudder and move on. They will not want to move into a cockroach-filled community, just as you would not want to move into a cockroach-filled home. And these types of businesses are like leeches once a person becomes prey to them,” Caruthers wrote.
Pavlis said “my (1st) district has yelled and screamed and said no more of this,” later stating “we’re the last of the big four (Tennessee) cities to address this.” He said businesses in his district were adversely affected by the lengthy rehabilitation of Henley Street bridge, and the proliferation of payday lenders is another “black eye. This is a step back.”
Other Council members said it was a problem all over the city, where the services are mainly clustered around less affluent housing and might dissuade development of other businesses.
“I really do think we need this ordinance … and am willing to take the risk,” of potential legal action by the industry, said 3rd District Councilwoman Brenda Palmer.
There are about 70 such “alternative financial services” in the city.
Vice Mayor Duane Grieve said he was “philosophically” averse to dictating to businesses. “I’ll be doing a lot of thinking about this in the next couple weeks,” he added.
As far as the alleged predatory lending that occurs within these businesses, that’s a matter of federal and state regulation. Wallace said other businesses, in his estimation, are more damaging to the community.
“Where,” he said of city regulation, “does it stop?”
Knox County-based journalist Thomas Fraser is a native of Charleston, S.C. who grew up in Oak Ridge and Knoxville. He is a graduate of the University of Tennessee and has worked as an editor and reporter for daily newspapers and websites in Tennessee, North Carolina, New Jersey and Virginia.
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