In Collinsville, what do flea markets, pawn shops, and payday loan businesses have in common?
The answer is that there's only one of each allowed per every 12,500 residents.
Since the city's population is 25,579, according to the 2010 Census, in theory there someday might be only be two of each type in Collinsville. At least until the population hits 37,500. Or the law changes.
The city ordinance that links these businesses to population was passed in 2005. It was not retroactive.
In the case of the Missouri PayDay Loan that once sat at 502 Vandalia St., the business, according to its lawyer, had the misfortune of being in the way of highway project.
The Illinois Department of Transportation seized the property through eminent domain for the ongoing improvement of Illinois Route 159. In March the property owner was awarded $300,000 in compensation.
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But PayDay Loan didn't own the property. Or the building. And it didn't get a cent of that $300,000, says Steven Koslovsky, the attorney for Title Lenders, the parent company of PayDay Loan.
Title Lenders sued the city in May in state court. The case has moved to federal court.
Koslovsky tells me PayDay Loan had been doing business at 502 Vandalia for 'several years" prior to the 2005 law.
After the company lost its business site it wanted to relocate in the city — specifically to a location farther north on Vandalia — and was told by the city it couldn't.
First, according to court documents, the city said the desired new location wasn't zoned for such a business.
Second, the city said, there's this matter of population.
The city attorney, Steven Giacoletto, wrote in March that, "It would take 37,500 residents before the third payday would qualify." Giacoletto tells me the city is well within its legal rights to limit the number of payday loans that can take up residence. Same for pawn shops and flea markets.
For example, he says, municipalities routinely limit the number of liquor licenses they grant.
But if you listen to Koslovsky, the issue is clear: The city violated his client's property rights by not letting it stay in business in Collinsville.
"It was pretty clear that was the intent of the ordinance," Koslovsky says. "It was not to regulate. It was to eliminate."
By his count there are, today, about five payday loan businesses operating in the city because, like his client, they predate the 2005 ordinance.
According to Koslovsky, the city's position is that his client should seek compensation for its loss from IDOT. The problem, he says, is that IDOT says go seek it from the city.
OK. At this point I'll ask the question that I believe has an obvious answer.
I asked Giacoletto if the city wants to limit the number of payday loan businesses, flea markets and pawn shops because they are, well, you know ... undesirable.
He declined to answer. When I had tried to reach City Manager Robert Knabel he referred me to Giacoletto.
Since I'm a columnist I'll give my opinion: Most municipalities don't want a lot of payday loans and pawn shops and flea markets. In the eyes of many they symbolize poverty and decline, not affluence and growth.
After all, doesn't a place like PayDay Loans take advantage of poor people in a financial pinch? Doesn't it charge predatory rates?
In case you didn't know, here's how PayDay Loans and similar businesses work: If you need cash in a crunch you go there and get a high-interest loan that can tide you over to your next paycheck. You write a post-dated check to repay the loan. In some cases your car is collateral. You must have clear title to the car.
Clearly, it's not the best borrowing option for many. A 2005 Illinois law limits interest rates on such loans.
According to Illinois Attorney General Lisa Madigan's website: "Payday loans are an extremely expensive form of borrowing money. They often carry triple-digit interest rates and include all kinds of hidden fees. One payday loan can quickly snowball into too much debt for one family to handle."
But it can be the best option for some, Koslovsky says.
"Payday loans have gotten a lot of bad press," he says. "I don't think the public understands the full service of what they provide to the community. Whether it's a business that people like to see or a business that people don't like to see it is still a property right.
"You might not like the color I paint my home," he says. "But that doesn't mean I don't have property rights or I'm not entitled to compensation when somebody takes it."
Steve Pokin is a columnist for the Suburban Journals. He can be reached at spokin@yourjournal.com or by phone at 618-344-0264, ext. 126. His column is on Facebook at www.facebook.com/PokinAround.