City moves to curb spread of payday loan outlets

Ottawa is a step closer toward controlling the concentration of payday loan outlets in some of the city's lowest-income neighbourhoods, and limiting the spread of the high-interest moneylenders.

Staff will return with ideas to limit concentration of high-interest moneylenders in city's poorest areas

Most of the city's payday loan outlets are concentrated in Vanier and Centretown. (Lauren Pelley/CBC News)

Ottawa is a step closer toward controlling the concentration of payday loan outlets in some of the city's lowest-income neighbourhoods, and limiting the spread of the high-interest moneylenders.

On Wednesday city council readily approved Mayor Jim Watson's motion directing staff to come up with a new set of rules governing payday loan outlets, which he said "prey on the poor and the vulnerable."

The businesses are not considered banks and can therefore charge extremely high interest rates. The outlets are concentrated along Montreal Road in Vanier and Bank Street in Centretown.

No say over existing outlets

The province recently changed the Ontario Municipal Act to allow cities to limit the number of payday loan outlets.

Before they can do that, municipalities including Ottawa must alter their zoning rules and consult with the public, especially segments of the population that would be most directly affected by the restrictions.

City staff will look at capping the overall number of outlets, as well as setting a minimum distance between them. Staff will bring recommendations back to council in early 2019.

Staff will also look at whether the city should consider licensing payday loan outlets, making it more costly for the businesses to operate, a move being considered in Toronto

But even if and when new restrictions come into force, it could be years before their effect is felt. That's because the city has no power to close existing outlets, and there's nothing to stop new ones from setting up shop before the rules change.

No interim measures

Some councillors wanted to look at the possibility of prohibiting new outlets from opening up in the interim, but that could only be accomplished through a measure called an interim control bylaw, a tool considered so powerful that municipalities are only allowed to wield it once every three years.

Last year council approved an interim control bylaw to halt the construction of bunkhouses in certain neighbourhoods. If council opts to use the measure again, it could only be applied to areas where it wasn't already used.

On Wednesday senior city staff recommended against the use of an interim control bylaw at this time.

Watson told reporters he's not overly concerned additional outlets will open before the new rules come into effect because there's already a glut of the businesses. However, if the city notices a rush to establish more payday loan outlets in the next couple of months, Watson said he'd be willing to revisit the idea of an interim control bylaw.

They've been directed to brainstorm a new set of rules to handle payday loans. And, it just so happens one researcher has already put together guidelines for cities grappling with the issue. He'll share his tips with us. 9:46