The Smyrna Town Council has mad the decision to put some new restrictions on lending companies. These restrictions are intended to stop the lending locations from bunching up and causing property values to experience a negative impact.
At a recent public hearing in Smyrna, one in which no one had anything to say, the council officially approved a new zoning ordinance that specified that alternative lending companies can only set up shop in Commercial 2 and Commercial 3 zones, and that they must be at least a quarter of a mile away from other lenders and residences. Existing loan locations will be allowed to stay where they are via a grandfather clause.
As of right now, there are 22 payday lending, pawn shops and title loan locations scattered around the town of Smyrna. Most of these businesses are centrally located on Lowry Street, which is known as the town’s main strip, even though it is the oldest area in town. Some studies have shown that when lenders, pawn shops and other alternative financial companies cluster together in an area that the net effect is that property values go down, according to Smyrna Mayor Mary Esther Reed.
Mayor Reed said, “We had citizens that were concerned,” when she was asked why town leaders were putting the new legislation into place. The town leaders ultimately decided to use the zoning ordinance to bring to light the issues that Smyrna residents have expressed concern about.
To draft the ordinance, Smyrna used a study that Chattanooga and Metro Nashville recently used to put pressure on payday lending companies in their areas, according to Rigsby clarified his stance by drawing attention to properties that are located around clusters of lending companies that don’t seem to be gaining value as quickly as other businesses in town.
A Chattanooga study in 2006 found that residential property located within ¼ mile of payday lenders or title loan companies experienced a value increase of 23 percent between 2000 and 2004. This is about 8 percent less than the values gained in areas around the city. Both Chattanooga and Metro Nashville have already passed restrictions similar to those now being proposed in Smyrna.
Rigsby did explain that officials in Smyrna have not yet noticed any concrete instances of this supposed negative impact, and said that town leadership is attempting to, “… head off a problem” before it gets started. All of this is based on what other cities have found by way of their own investigations.
The C2 and C3 zones are areas where payday lending locations are already set up. The distance restriction is being put in place to keep further locations from opening up close to each other. Town leaders are also trying to stop new lending locations from opening up near neighborhoods and areas where office buildings are located.
The new ordinance may indeed make alternative lenders think twice about where they will set up shop. At the end of the day, though, this restriction will not stop new lenders from offering their services to folks in the Smyrna area. And with many payday lenders now offering online loan services, people can readily take out short term, small dollar loans by simply logging onto the Internet. As to whether or not payday lenders will try to service more clients online in this city is something that is yet to be seen. For the time being, however, at least the existing lenders can continue to keep their doors open and their services available to people who need fast access to cash during emergencies.
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