Senator Eliot Shapleigh - El Paso, Texas

The City Council recently restricted where the shops may open, arguing that they hurt economic development in areas where too many of them cluster.

In its continuing effort to revitalize the city and its image, Mesquite is going head to head with check-cashing and payday loan businesses.

The City Council recently restricted where the shops may open, arguing that they hurt economic development in areas where too many of them cluster.

"Research has shown that the abundance of these kinds of establishments populating your storefronts creates a negative image about a community," said Richard Gertson, Mesquite's director of community development.

"Other businesses considering moving to that area may think the corridor they're looking at is not economically viable."

Mesquite acted a little more than a month after Richardson imposed similar restrictions. And other North Texas cities have expressed interest in learning more about the efforts, Mesquite officials said.

Payday loan businesses have long been accused of preying on the most economically vulnerable and charging exorbitant interest rates. Some U.S. cities have used that reasoning to support regulation of the shops.  But Mesquite primarily based its ordinance on the shops' effect on image and economic development.

The loan companies and an industry association counter that they provide needed services that can help people avoid high bank overdraft fees and late credit-card payments.

Lyndsey Medsker, a spokeswoman for the Community Financial Services Association, said cities' increasing efforts to limit the number and location of payday loan stores are misguided.

"Obviously, there's a huge demand for people to be able to get cash in between paychecks; that's the reality of the situation," she said. "Doing something like that, restricting them through rezoning, really does nothing to help the customer, which we assume is the person the city is trying to help."

Some Mesquite officials are concerned about the businesses' effects on clients.

"Unfortunately, they take advantage of those who are least able to be taken advantage of financially," Mayor John Monaco said. "If your business depends on people who are desperate, that speaks for itself. I don't look forward to seeing one more in Mesquite."

The ordinance the council adopted Feb. 18 requires payday loan, check-cashing and title loan companies, which make loans backed by borrowers' car titles, to obtain a permit before they can begin operating. The shops are barred from opening within 1,000 feet of a
similar business, and each must be in a freestanding building at least 200 feet from residential areas and 500 feet from freeways.

In addition, the businesses cannot locate in special "overlay" districts, such as Town East retail and restaurant, Mesquite Arena and Rodeo Entertainment, the Military Parkway-Scyene Corridor and Sherwood Forest.

Mr. Monaco said he expected no immediate effects from the ordinance because the 22 existing check-cashing and payday loan businesses in the city aren't subject to the rules unless they move or expand. New businesses, however, will have to comply.

Richardson enacted its ordinance in January. There, as in Mesquite, officials cited a Chattanooga, Tenn., planning agency study that found areas with lots of payday lenders had slower property value growth than the rest of the city, perhaps because of the image they projected about questionable economic health.

But representatives of Mesquite companies that offer payday loans said the new regulatory efforts stem from incomplete information and a misunderstanding of what the stores do.

"Folks from the industry haven't been able to make a presentation," said Jamie Fulmer, a spokesman for Advance America. "There's a lot of misunderstanding about what our product is and also who our customers are. They are honest, hard-working, middle-income folks who for whatever reason get caught between paychecks and need money."

Mr. Fulmer called payday loan stores good, viable businesses that employ local residents and pay local taxes.

"We believe we have every right to exist," said Mr. Fulmer, who said most of the businesses are well-kept, clean and located in thriving commercial areas.

Yancy Deering, a spokesman for Check 'n Go, said he couldn't address the Mesquite ordinance because his company hadn't yet reviewed it. But he said "reasonable density or setback requirements ... can make sense."

"The key is balance," Mr. Deering said. "A municipality should not attempt to ban the payday use altogether. Doing so would generally exceed the municipality's police powers."

Mr. Gertson, Mesquite's community development director, said cities have authority to ensure that businesses within their boundaries don't create a bad image. He said his city's measure is not intended to eliminate the businesses.

Mr. Monaco, however, said he wouldn't mind doing just that.

"They just don't do your community any good," the mayor said.