April 29, 2005

Councilman wants to curb check-cashing, not kill it

By Kelley Dupuis

Was this week’s decision by the Chula Vista City Council to impose a moratorium on payday-loan business a slam at low-income residents, predominantly Hispanic, who do business at such places?

City Councilman Steve Castaneda doesn’t think so.

When a high-profile check-cashing place suddenly sprang up at the corner of Broadway and E late last year, some city officials were concerned that the city had no control whatsoever over where such places would be—or how many could open. The city currently has 24 such businesses, according to Castaneda, up from just one a decade ago.

Coincidentally or not, National City has been trying to rid itself of check-cashing places at the same time that they’ve been appearing in Chula Vista.

In February, Castaneda asked the city to investigate imposing some controls on check-cashing and payday-loan businesses.

The council on Tuesday imposed a 45-day moratorium on new check-cashing businesses and on the expansion of current ones.

“What we’ve been able to glean, at least from the information I’ve been given, is that typically, the people who patronize those businesses tend to be low-income, immigrant and military populations,” Castaneda said on Wednesday. “But frankly, my position and my motivation for moving this forward in the council has little to do with the social and economic standpoint that’s been talked about by many people.”

Castaneda said he is thinking strictly in terms of land use and revitalization. Most of the check cashing businesses that have opened in the city in recent years are in two areas: along Broadway and along Third Avenue, mainly south of J Street in the latter case, although there are some check-cashing places north of J.

The locations do not surprise Castaneda, who points out that south of J Street in Chula Vista one finds moderate and lower-income neighborhoods where many immigrants and Latinos live.

Defenders of check-cashing businesses—and no one showed up at the city council on Tuesday to protest the moratorium—say they provide banking services to people who might not otherwise have access to them.

Castaneda agrees, in fact he noted that some check-cashing operations are even owned by banks. However, he pointed out that they do not provide all of the services banks do, and hinted that some of the services they do provide border on the predatory.

“For the banks, they don’t like to have the overhead of serving a lower-income community because they can’t do high-interest commercial loans, mortgage loans and such,” he said. “But they will put in an operation so they can charge people to cash their checks, or charge them exorbitant rates to give them an advance on their pay.”

“Really, they’re cherry-picking,” Castaneda said. “They’re providing only the services that have the highest profit-yield for them. They’re not providing the general banking services that many of us enjoy just as being part of our neighborhood.”

Castaneda said he has no desire to rid the city of check-cashing businesses altogether. He said he merely wants to restrict the numbers of them that can exist in certain areas. The city, he pointed out, has no power to require banks to locate in certain neighborhoods, but the city can require check-cashing and payday advance businesses to have a higher degree of security, limit their hours of operation and do other things to “make them a better neighbor.”

“The other thing is, by regulating these businesses from a land-use standpoint, we make sure that they don’t appear on every street corner,” he said. “The idea is to regulate how they do business and see that they’re not all clumped into one area. I don’t want to see them removed from the face of the earth; for many people they do serve a valuable service, but there’s also proof that they have a detrimental effect on certain neighborhoods.”

Also, Castaneda denied that the city has “singled out” check-cashing places in the war on west-side urban blight preceding its general redevelopment plans. To those who might claim that the city should be moving instead to clamp down on Broadway’s tattoo parlors, liquor stores, tire shops and vacant lots, Castaneda said those things will be next.

“This is not the last stop on the road to ensure that we have quality businesses in our neighborhoods,” he said. “As part of this effort, we will look into other kinds of uses: the massage parlors, the tattoo places, the liquor stores, in terms of trying to create policies and ordinances to make sure that they serve the community and not damage it.”

Also, Castaneda pointed out, the fact that check-cashing and payday-advance businesses are predominantly a western Chula Vista phenomenon at the moment does not by any means imply that they won’t “move east” as well.

“We don’t know that they’re not needed in Eastlake,” he said. “Right now it’s very, very easy to move into a vacant storefront on the western side, where rents are cheap and you have a lot of strip-type commercial centers. But we may get to a point in eastern Chula Vista where there’s excess commercial property and these operations could move in. Maybe they’re not needed, but there are types of people who may use them. I’m not saying that there should be none on the east side, but myself and the rest of my colleagues, we don’t want to see a proliferation of them.” (Tueday’s vote on the proposed moratorium was 4-0, with Councilman John McCann absent.)

Also, in terms of redevelopment, there is a simple question of aesthetics involved. Although he was absent from Tuesday’s meeting, McCann has expressed personal embarrassment that people entering Chula Vista from Interstate 5 on E Street now have a huge check-cashing business as one of the first sights that greets them as they enter the city. Castaneda shares McCann’s discomfort with the idea.

“It does send a message as to what people coming to this community would perceive as to who would be living here,” Castaneda said. “That’s clearly not the message we want to send. We have natural gateways like E Street, H Street, Palomar and L Street that we want to further regulate and do things so that people coming into our community will have the same feeling we all do, that it’s a great place to be.”


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