Resolution 2014-05RESOLUTION NO. 2014-05
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GILROY REQUESTING THE CALIFORNIA STATE
LEGISLATURE TO ENACT RESTRICTIONS ON PAYDAY
LOANS
WHEREAS, nearly 1.7 million California households patronize payday lenders annually,
paying more than $540 million in fees alone; and
WHEREAS, each of the four existing payday lending outlets in the city of Gilroy takes in
over $922,000 in excessive fees annually, creating an annual negative impact on our local economy
of over $218,000; and
WHEREAS, seventeen (17) states and the District of Columbia have acted to limit payday
lending, including eleven (11) which have banned the usurious practice entirely; and
WHEREAS, high -cost payday loans harm low- to moderate - income borrowers, women and
African- Americans and Latinos disproportionately; and
WHEREAS, research indicates that payday lenders concentrate most heavily in these
neighborhoods even after accounting for income, neighborhood type, education and a host of other
factors; and
WHEREAS, the payday lending business model is fundamentally flawed by design, as it
virtually guarantees repeat borrowing while claiming that loans are for one -time, emergency use; and
WHEREAS, payday lenders flout basic tenets of responsible lending by making loans
without verifying a borrower's ability to repay that loan and simultaneously cover other expenses;
and
WHEREAS, the Department of Defense has stated that payday lending practices have proven
to be detrimental to service members who have used these loans to meet immediate cash needs, and
has suggested working toward state statutes to limit the practice; and
RESOLUTION NO. 2014-05
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WHEREAS, the Consumer Financial Protection Bureau has stated that payday loans "raise
substantial consumer protection concerns," particularly because borrowers can get caught in an
extended "cycle of high -cost borrowing "; and
WHEREAS, despite the actions of other states and the federal government, the California
Legislature has refused to enact a 36 percent rate cap on these products; and
WHEREAS, SB 515 (Jackson) would address the "debt trap" aspects of payday loans by
enacting an annual loan cap, requiring basic underwriting standards, and extending the minimum
loan repayment terms.
NOW THEREFORE BE IT RESOLVED THAT the City Council of the City of Gilroy
supports legislation to restrict the proliferation of payday lending businesses in the State of
California, and requests the California Legislature to pass SB 515 or similar legislation that may be
proposed during the upcoming legislative cycle.
BE IT FURTHER RESOLVED that the City Council requests that the Mayor diligently
pursue this matter with the Gilroy legislative delegation.
PASSED AND ADOPTED this 6b day of January 2014 by the following roll call vote:
AYES: COUNCILMEMBERS: ARELLANO, BRACCO, LEROE- MUNOZ,
TUCKER, WOODWARD and GAGE
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: AULMAN
APPROVED:
Ct
Donald Gage, Mayor
ATTES
G
as Freels, City Clerk
4813- 7224 -7MI RESOLUTION NO. 2014-05
MVAKHARIA104706002
I, SHAWNA FREELS, City Clerk of the City of Gilroy, do hereby certify that the
attached Resolution No. 2014 -05 is an original resolution, or true and correct copy of a city
resolution, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council
held on the 6th day of January, 2014, at which meeting a quorum was present.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of
Clerk of the City of Gilroy
(Seal)
4.