From the perspective of community groups, families and elected leaders in Montgomery, Ala., payday lenders and title pawn companies charge exceedingly-high interest rates that leave people in almost perpetual debt. 
On Tuesday, the Montgomery City Council took action to offer consumer protection to its nearly 205,300 residents by approving an ordinance that limits where such businesses can operate within the municipal boundaries.
Under the ordinance, payday lenders and title pawn companies can only operate in commercial zones and not mixed-use areas. Those areas have residences. The City Council also approved language requiring that no two businesses of this nature be within 2,500 feet of one another, according to the legislation.
The new city law also prohibits payday lenders and pawn companies from operating within 250 feet of a school, public park, church or residence.
The vote won immediate praise from community organizations, including Arise Citizens’ Policy Project (ACPP).
“Clusters of these storefronts create blight and high interest rates leave too many desperate borrowers trapped in deep cycles of debt,” Kimble Forrister, the coalition’s executive director, said in a statement.
“People deserve fair credit terms, but triple-digit annual interest rates on payday and title loans are nothing of the sort. Statewide, reform is only possible at the Legislature, but the city of Montgomery deserves praise for acting boldly to help protect citizens from legalized usury.”
Forrister was referring to the practice of lending money to people in exchange for a high interest rate.
Montgomery joins other Alabama cities that have approved restrictions or moratoriums on payday lenders and title pawn companies. Those cities, according to ACPP, are: Decatur, Birmingham, Jasper, Eufaula, Northport and Tuscaloosa.
In the approved ordinance, the City Council used direct language to describe these particular businesses, which officials and community groups say have grown in numbers in the municipality.
“Because of their very nature, such financial institutions are recognized to have a deleterious effect upon adjacent areas, detract from property values and have an adverse effect on the general welfare, particularly when several are concentrated in a given area,” according to the ordinance.
“Support for lending reform is growing across Alabama,” Forrister said. “We’re excited that momentum for change keeps building.”
Arise Citizens’ Policy Project, based in Montgomery, Ala., is a coalition of 140 groups and congregations working on public policies to help low-income residents.