City moves to curb spread of payday loan outlets

Ottawa is a step closertowardcontrolling 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."

• Mayor hopes to cap Ottawa's 'glut' of payday loan outlets

The businessesare not considered banks and can therefore charge extremely high interest rates.The outlets are concentrated alongMontreal 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 theirzoning rules and consult with the public, especially segments of the populationthat would be mostdirectly 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 thatmunicipalities are only allowed to wieldit once every three years.

Last yearcouncil approved an interim control bylaw tohalt the construction of bunkhousesin 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 recommendedagainst 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.