Local officials in Daly City, Calif. will review Monday whether to approve legislation that will prohibit new payday lending businesses from opening within 2,000 feet of existing payday lenders.

The proposal, an effort to prevent the businesses from saturating low-income neighborhoods, were driven by concerns from the California-based Youth Leadership Institute, which recommends that the minimum separation between new payday lenders be at least 1,000 feet.

Daly City Councilman Sal Torres suggested the resolution be amended to require 2,000 feet of separation.

Daly City officials are expected to adopt an ordinance regulating such establishments.

Check-cashing businesses are the most common sources of payday loans. To obtain payday loans, borrowers write post-dated checks for the requested loan amount, plus a 15% fee. Lenders typically deposit the checks at agreed-upon future dates, usually at the start of the next pay period.

Because cities lack the authority to regulate financial products, several council members urged the youth activists to lobby for stricter statewide payday lending laws. But the activists said they haven’t had much success at the state level.

Mission SF Community Financial Center representative Dairo Romero said he was disappointed that several Latino lawmakers in Southern California appeared to support the payday lending industry.

According to Youth Leadership Institute representative Fahad Qurashi, the 15% fees borrowers are charged can translate into annual percentage rates of 459%. Although it’s illegal to issue a payday loan to pay off a payday loan, Qurashi said the close concentration of payday lenders in Daly City could encourage borrowers to misuse the services by rotating their debts from one lender to the next, each time incurring fees.

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