Planning Commission urges supervisors to restrict payday lenders, backs ‘Bank on San Francisco’ alternatives

The San Francisco Planning Commission unanimously voted Sept. 20 to advise the Board of Supervisors to adopt a proposed ordinance defining and limiting “fringe financial services,” a category the measure construes to include many payday lenders and check‑cashing operations. Planning Department staff said the ordinance would add a clear definition to the planning code, prohibit new fringe financial services within a quarter‑mile of an existing operation in many commercial districts, and create restricted‑use map areas where new FFS could not locate.

Planning Department senior staff Anne Marie Rogers introduced the measure, saying it implements recommendations from a 2005 staff report and is intended to avoid repeated discretionary conditional‑use hearings by making the use definition and geographic controls objective and transparent. “This legislation identifies where fringe financial services are and are not allowed,” Rogers said, “thereby avoiding complicated hearings to determine whether the services are necessary and desirable.”

David Augustine of the Treasurer’s Office described a complementary program, Bank on San Francisco, which partners city agencies, the Federal Reserve Bank of San Francisco, community nonprofits and banks to offer low‑cost starter accounts and short‑term lending alternatives intended to reduce reliance on check cashers and payday lenders. Augustine said participating banks and credit unions will accept consular‑issued IDs and offer low or no monthly fees and short‑term, lower‑cost lending products.

During public comment community credit unions and neighborhood nonprofit advocates urged the commission to adopt the ordinance, saying it would reduce concentrations of high‑cost financial services in low‑income neighborhoods and help channel residents toward alternatives. Salvador Duran of Mission Area Federal Credit Union and Jaime Trejo of the Mission Economic Development Agency described local programs that provide lower‑cost check‑cashing and small loans and urged that the ordinance be paired with outreach to expand those alternatives.

Representatives of check‑cashing and payday industries testified in opposition, arguing their businesses serve customers who cannot obtain convenient bank services, and that posted fees allow customers clear pricing. A national representative said many customers use such outlets because banks refuse service to people with expired identification or a history of bounced checks.

Planning staff recommended, and the commission accepted, several implementation clarifications to the ordinance: regular coordination with state licensing agencies to maintain an accurate inventory of fringe financial services; formal routing of building permits or tenant improvements through the Planning Department and Department of Building Inspection when a potential fringe financial use is proposed; deletion of Mission Bay text not governed by the Planning Code; and tightened language to prevent FFS from reentering prohibited areas as accessory uses. The commission also urged the Board of Supervisors to consider whether the mapping approach should be broadened citywide in the future.

The commission’s recommendation is advisory; the Board of Supervisors must adopt the actual ordinance and any implementing amendments. The commission asked staff to work with the treasurer’s office, city attorney and community groups on implementation language and enforcement protocols.