Right now Dallas is the only Texas city with strict ordinances on zoning and lending practices for payday and car title loan businesses, but probably not for long. Austin’s city council recently consulted neighborhood Councilman Jerry Allen to introduce similar regulations.

“The awareness of the issue locally and its impact really came to a head in the last year,” says Ann Baddour, senior policy analyst for Austin-based Texas Appleseed, which she describes as “a nonprofit public interest law center” with core projects, such as advocating for fair financial services for low-income communities in Texas. The reason why it came to a head was that these types of businesses and their practices have been under much closer scrutiny, she says.

Catholic Charities, for example, completed a statewide survey of their locations that provide cash assistance. “Nearly 20 percent is going to people who are in payday or car title debt,” Baddour says, meaning that they are “using their money to pay back auto title lenders and coming to Catholic Charities to get utilities paid.”

Badour says that payday and car title loan businesses have been on the rise since 2004, the last year that they were licensed and therefore subject to usury laws  — since then, “essentially, they could charge unlimited fees, and there hasn’t been any oversight,” she says. A story published earlier this year in Austin’s Texas Observer gives a good overview of the situation, and if you scroll down the page, there’s a box with the question, “How Many Payday Lenders Are in Your Neighborhood?” It links to maps from 2004 and 2010, demonstrating the increase in such businesses.

The maps also demonstrate another point Baddour makes: In Dallas, Texas Appleseed has counted 234 payday and car title loan businesses (also known as credit service organizations, or CSOs), but because such businesses aren’t required to register with the state and city until next year, those figures are low. (A quick scan of the Lake Highlands area on the Texas Observer map reveals that a number of these businesses are missing from the count.)

“Dallas is the first city to pass an ordinance looking at the structure of the loan that was creating problems in the low-income community,” Baddour says. “To my knowledge, I haven’t seen anything like that before. There has been a lot of action nationally, but mostly on the zoning front.” She praised the anti-poverty coalition in Dallas, led by CitySquare and United Way, that has been “quite engaged,” and gave Allen credit for being “a pioneer locally … It’s very impressive to me to see to see how he’s shown such passion and commitment on this issue.”

Not surprisingly, Baddour believes the lawsuit filed by credit service organizations against Dallas’ new ordinances is without merit. “It’s designed within the capacity of the city to address the problem of people getting into a loan and not being able to get out of it,” she says. “Really, the Dallas ordinance only addresses the most extreme cases. The way it is structured, it puts a hard stop to how long that cycle can go on.”

Baddour also points out that, “in many ways, it’s also protecting local charitable resources,” which can be deduced from the Catholic Charities studies. And at the end of the day, she says, this is not just a problem for poor people.

“At its core, this is a basic economic development issue,” she says. “If we’re looing at the future prosperity of our community, allowing people to have financial services that allow them to build and grow wealth rather than hold them down in a precarious situation is very important.”

Already on Back Talk Lake Highlands: Councilman Jerry Allen attempts to fight payday loan and car title businesses with city ordinances and his efforts to provide alternatives to payday lenders. Coming soon: why this issue is important to Allen.