Georgia-based Pennbrooke Financial Services, LLC has applied for a conditional-use permit to operate out of the empty commercial building on the northwest corner of Pacific Coast Highway and Pacific Avenue in the south Wrigley area, however, the proposal has stalled so far, after the Long Beach Planning Commission reached a deadlock vote on Sept. 20.
Staff Writer
To some Wrigley-area residents, allowing an auto-title loan firm to move into their neighborhood would create “financial blight” in an already fragile community. But representatives of the company see it differently, contesting that stopping the firm’s move would crush any chance for the vacant lot to be developed, and that the City doesn’t have any legal grounds to make such a determination in the first place.
The Long Beach Planning Commission came to a (3-3) tie vote on Sept. 20 on whether to grant Georgia-based Pennbrooke Financial Services, LLC a conditional-use permit (CUP) to operate out of an empty commercial building on the northwest corner of Pacific Coast Highway and Pacific Avenue. Meanwhile, the Long Beach City Council has agendized an item for the Oct. 2 meeting to request the city attorney, Planning Commission and Development Services Department staff conduct a city-wide study on zoning regulations related to so-called payday lending, car-title loan lending and short-term consumer finance lending. The City Council is also requesting the city attorney prepare an interim zoning ordinance, initiating a one-year moratorium, temporarily prohibiting the land uses until the study is completed and recommended for approval by the City Council.
This action will delay any appeal of the Planning Commission’s deadlock on Pennbrooke’s request for a CUP, according to John Edmond, chief of staff for 6th District Councilmember Dee Andrews.
Unlike a check-cashing or payday-loan company that offers cash advances of up to $255, the car-title loan company allows individuals to take out a minimum $2,500-loan worth half the Blue Book-value of any vehicle owned free and clear. The loan is paid back with a .33-percent per-day interest rate. Pennbrooke representatives said the firm, which primarily markets for startups and individual business owners, has a track record of only having 5 percent of the loans end in default or vehicle repossession.
The company has more than 500 locations under different names, including Loan Max, in 22 states, as well as in Puerto Rico and the United Kingdom. Ken Waco, CEO of Pennbrooke, said the company is planning to open six locations in the greater Los Angeles area, including two in Long Beach: one at the Wrigley-area site and another at South Street and Paramount Boulevard, neither of which has yet to receive permits.
But, the business has been met with strong opposition from community groups that have sent responses and letters, “overwhelmingly” in opposition to the use, calling the company a form of “predatory lending” for imposing exorbitantly high interest rates. Community groups also claim the use would detract from an improving community that is still struggling to build itself after the state’s shutdown of redevelopment agencies (RDAs).
“I’m not sure that this is a good thing for the community,” said Annie Greenfeld, co-chair of the South Wrigley Neighborhood Advisory Group and president of the Central Project Area Council, during an Aug. 2 commission meeting. “I feel that this business is loan-sharking ! This is planning blight at its finest ! Wrigley neighborhood is too fragile to bring in this type of questionable business and bad land use.”
Concerns about the company moving into the area cropped up several months ago, after the City requested the firm conduct outreach to nearby community groups since the type of business is relatively new to the State of California and the City of Long Beach.
The business is proposing to occupy a one-story commercial building at 201 W. Pacific Coast Highway that has been vacant for close to a decade on a site that was previously slated for an RDA project that never got off the ground. The empty lot is adjacent to another small loan company called Nix Financial.
In its May 11, 2012 issue, the Signal Tribune reported that the Long Beach RDA tried to attract new retail to the site, including Shoe City, Prepaid Cell Phone Store, Indoor Swap Meet and Family Saver, but those proposals were declined by the property owner as not being suitable for the location. The article also reported that Pennbrooke, under the name Loan Max, and a lender named Cash Point agreed to a $1 million settlement in a lawsuit brought by hundreds of District of Columbia residents who had lost their cars and had paid thousands of dollars in interest for auto loans. In California, at least one state legislator has tried to pass a bill, known as AB 336, that would put requirements on “high-interest auto-title loan” companies, but so far no such legislation has passed.
Still, despite the overwhelming negative response from the community, Long Beach Department of Development Services staff recommended approval of Pennbrooke’s request for a CUP, requiring a condition that the permit would only last five years, after which the City would assess whether the business was a good fit for the neighborhood.
According to city staff, the title-loan company is licensed with the state, but the type of business is not regulated under the state’s resources code and is not listed under the City’s commercial-use index. Assistant City Attorney Michael Mais said, until a “moratorium” is put on the commercial use so the City can conduct a study on such title-loan companies, the Planning Commission must base its findings on the City’s existing policies for land use and could not make findings based on conjecture about the type of business.
The Planning Commission, however, ended up denying the requested CUP in a 3-2 vote at an Aug. 2 meeting, indicating that the business would have a “low impact” to the community and wouldn’t generate enough economic activity as originally envisioned. Some planning commissioners, however, said the business would provide an improvement to the property that would otherwise be vacant.
Commissioner Mark Christoffels made a motion to deny the CUP, claiming the negative findings were made based on “the proposed land use would be detrimental to the future development of the adjoining parcels and is not necessarily in conjunction with the anticipated vision of what was planned for the redevelopment of that corner.”
Development services staff was then directed to return with revised findings to support the denial of the CUP. However, upon revising the findings, staff determined that the City had provided the wrong general plan designation for a portion of the property, which required an additional approval. As it turned out, the Planning Commission eventually came to a deadlock vote on approving the CUP with Commissioner Molly Campbell recusing herself. Both the applicant and appellants have now indicated they are appealing that decision to the City Council, which is required to take up the matter during a hearing within 60 days of the appeal.
David Carlat, a lobbyist representing Pennbrooke and property owner Kay Mendoza, said the Planning Commission’s actions were unfounded and illegal since a previous case had already been determined in state appellate court. “You can’t just deny an application ! You have to make it based on city code or legal grounds, none of which was done,” Carlat said, adding that calling the business a “nuisance” is an “absurd claim.”
He also said the company’s offer to develop the site is considered the only chance for the property owner to turn around the vacant lot. Carlat added that the company may have better success with the City Council, indicating that Councilmember Dee Andrews, whose 6th district encompasses the site, has already expressed support of the project. Phone calls to Andrews’s office requesting comment were not returned.
Greenfeld, however, said the community is not backing down from its fight against the proposed commercial use and is appealing the Planning Commission’s decision as well. “The reason for the CUP zoning is to revitalize the area and to make it a pedestrian walk ! This business will not do that,” she said. “We’re going to be putting up gateway signs within the next six to eight months, and to have that as our anchor business is ridiculous.”
Great article. To help everyone with the math…the 0.33% per day interest rate that Pennbrooke likes to quote actually equates to a 120% APR loan. That doesn’t sound like the company will bring a positive impact to Long Beach if you asked me.
Councilmembers are doing the right thing by considering a one-year moratorium on these loan sharks. Anything less on Tuesday is an implicit acknowledgment by each Council Member who votes no that they are comfortable with their most vulnerable residents being ripped off like this.
Studies from around the country have shown the detrimental impacts that auto title loan companies bring to the communities they are allowed to enter. In fact, the same company that is proposing to come into Long Beach (which goes by the name Loan Max in other states but is not allowed to use that name in California) has been kicked out of the District of Columbia for illegal practices and has settled lawsuits out of court in Virginia.
There are compelling and specific justifications for why auto title lenders like Pennbrooke are incompatible land uses. Council has an opportunity to stand up on Tuesday night to objectively research these justifications over the next year and put a temporary halt to any of these places moving in. By doing so, they are standing up for the best interests of Long Beach residents and against companies whose only objective is to take advantage of our city.
The real, non-realestate loan rate right now is 18-24% What difference does it make WHERE they are located? Can’t they make loans from just about anyplace? By phone? By skype?
This tenant might have really cleaned up the property.
The first question you have to ask yourself is “Why is Pembrooke willing to hire the most expensive consultant and attorneys?” the reason being is because there is so much money at stake here. They are coming into California for the first time. They chose Long Beach ( Wrigley ) because it was a perfect place to fleece the little money this community has from its least educated population. This is not conjecture this is fact. They have stated that thier loans are directed to “small business contractors”. They have not provided any evidence to show this area is a mecca of small businesses. If you look at where they establish themselves it is in low income, low educational level communities. This being done so as to take advantage of this population. Pembooke is willing to expend all it has to in order to force this on the community that does not want it here, the reason being that Long Beach is the foothold they need to get thier teeth into the financial veins of population that is most at risk. As for Mrs. Mendoza she has had ample opportunities to rent this location out if she wanted to, maybe these were not the most glamorous uses but were not detrimental. Mrs. Mendoza states that she is “Concerned” as to what use will be best for our community, the reality is she is selling out to the highest bidder and could care less who rents it. We will keep fighting to keep this cancer from infesting our neighborhood. If by some reason of the political nature this is allowed to be established in Wrigley then the fight will just have to be brought to City Hall. There is a reason “Recall” elections were created. How can a Councilman support a business that is detrimental to the very community he is entrusted to protect?.