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Board of Adjustment postpones variance for title loan company

Tuesday, April 22, 2014 by Elizabeth Pagano

The Board of Adjustment is taking extra time to consider a case that could test the city’s new ordinance regulating payday lenders. One company, Texas Title Loans, is complaining that the law is being improperly applied to them retroactively.


Jackson Walker LLP consultant Katherine Loayza spoke to the board on behalf of Texas Title Loans, located at 7501 North Lamar. She explained that she believes that it is a legal, non-complying business that is now being asked to comply with code passed well after it was established.


City Council passed an ordinance in April 2012 that restricted the operations of alternative financial services businesses, a category that includes businesses that offer title loans, payday loans and other high-interest financial instruments. Such businesses generally offer very-high interest short-term loans to borrowers with poor or no credit.


Though staff offered assurances that the changes would not affect existing businesses in this category, Texas Title Loans may find that isn’t the case.


“It was widely publicized, that change in the code,” said Board Member Melissa Hawthorne. “It’s a little bit disappointing to see this case after the fact.”


Loayza told the board that the city has told her that she will need variances to continue operation of the business at its current location, where it has been since 2007, because of restrictions put in place in 2012.


“Staff refuses to recognize the existing Certificate of Occupancy (CO) for this use,” said Loayza. “We are being treated differently than any other legal, non-conforming use, with what we believe is a valid CO.”


Loayza explained that alternative financial service businesses are required to obtain an annual Credit Access Business registration permit. It was during this process that the application went through the Planning and Development Review Department in order to determine whether it had a valid Certificate of Occupancy that specified the use of the building, something that Loayza says is a recent change.


She explained that the current Certificate of Occupancy for Texas Title Loans identified a category that includes a range of uses, as was the practice in the city for many years. Loayza said that she could find “thousands” of valid Certificates of Occupancy across the city that don’t have the end user’s name listed.


“Now, all of a sudden, they are saying that if you don’t have the end user cited in your CO, it’s not valid,” said Loayza. “We’re saying, OK, if you are going to change the rule now to say that every single Certificate of Occupancy has to have the end use on it, then you need to have a rules change in the Building Criteria Manual that tells people this.”


Loayza explained that not only do older buildings have no reason to get new Certificate of Occupancies if they aren’t remodeled, COs aren’t necessarily granted without a change taking place. She noted that, in her research, the only certificates that she found listing alternative financial services had remodel permits attached.


“They won’t just grant me a new CO because I asked for it. You have to do something that triggers the issuance of a new CO,” said Loayza.


Chair Jeff Jack wondered aloud about how many other businesses could be caught in the same situation, noting that it was impossible to estimate without staff’s input.


“I think what you’re seeing is that 20 years ago, our Land Development Code was pretty  simple, because the situations we were faced with were pretty simple. But we’ve got a much more complex city than back then. The attempt by Council to deal with alternative financial services couldn’t have even been imagined 20 years ago,” said Jack. “The way that they are handling it is to try and get all these businesses into some sort of conformity with the new ordinance. I see what they are trying to do – whether it’s the appropriate tool or not, I don’t know.”


After being unable to sort out the confusion administratively, Texas Title Loans is now seeking a variance from the requirement that they be located 1,000 feet from another alternative financial business use.


Texas Title Loans is also seeking variances that will allow the business to be located within 200 feet of residential districts and co-located in a structure that allows other uses.


Though several neighbors wrote letters asking that the variances be denied, no one spoke in person against the variances at the Board of Adjustment’s April meeting.


Board members voted unanimously to postpone the case to their next meeting.

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