Fairfax County supervisors consider restrictions on car title lenders

LoanMax on Columbia Pike, Annandale.

The Fairfax County Board of Supervisors is considering taking action to curb car title lending businesses, which are popping up all over Annandale and other areas that need to be revitalized.

The BoS unanimously approved a “joint board matter” Oct. 29 proposed by supervisors Jeff McKay (Lee) and Gerry Hyland (Mount Vernon) to direct the county’s land use staff to come up with “any possible regulatory or land use strategies to potentially regulate these types of businesses.”

McKay told the Annandale Blog he has two objections to title lenders. “From a consumer advocacy standpoint, these businesses are ripping off people, preying on our most vulnerable population.” Title lenders exploit the poor by charging exorbitant interest rates and imposing balloon payments. They are “debt traps” that leave borrowers in worse financial shape than when they started, the Center for Responsible Lending reports.

From a community development perspective, “we have invested a lot of time and effort into revitalizing older parts of the county,” McKay said. “Having title loan business cropping up in all these areas is sending a negative message to investors. We have enough of these businesses. We should stop the flow. We don’t need one in every shopping center.”

During the BoS meeting, Mason Supervisor Penny Gross expressed strong support for clamping down on title lenders. “These title places have popped up all over Annandale, Bailey’s Crossroads, and other revitalization areas,” she said. “They have become more prolific than drug stores. It has become just a horrible situation. They are providing no benefits to the community.”

In Annandale, a TitleMax opened on Little River Turnpike last May. There are also relatively new TitleMax stores on Arlington Boulevard in Seven Corners, Leesburg Pike in Bailey’s Crossroads, and South Van Dorn Street in Alexandria.

Fast Auto Loans has a store on Little River Turnpike in Annandale and Arlington Boulevard in Falls Church. There are two LoanMax locations in central Annandale: on Columbia Pike and on Little River Turnpike in the building formerly occupied by Trophy Mart.

Under the current zoning ordinance, car title businesses can be developed in commercial areas on a by-right basis, which means the county has no way to restrict them, said McKay. There are at least a dozen in his district, he said, including several along the Route 1 corridor and central Springfield.

“We knew this was going to happen” when the Virginia General Assembly passed a bill in 2011 that allowed these businesses to make high-interest rate loans to people from other states, he said. As a result, residents of Maryland and the District of Columbia are flocking to Virginia for car title loans that they can’t get in their communities because Maryland and D.C. impose  interest rate caps.

McKay said he’s been concerned about this issue for a long time, but was told the county couldn’t do anything about it. “My conversations with staff have not been productive,” he said.

Now, though, he’s heartened by recent action taken by Chesterfield County, Va., to restrict car title lenders and payday lenders. That county’s board of supervisors is considering a revision to the zoning ordinance to prohibit these businesses in stand-alone buildings and only allow them in shopping centers with a mix of shops. These so-called alternative lenders would also be prohibited from being within one mile of one another and would be banned from certain revitalization areas, the Richmond Times-Dispatch reports.

McKay believes that if Chesterfield County’s zoning ordinance passes legal muster, Fairfax County should be able to act, too. If the Fairfax County BoS agrees to go ahead with a zoning change for title lenders, it would have to be approved by the Planning Commission and BoS and there would be public hearings before both bodies.