The Georgia-based company filed the petition against the City of Long Beach on the grounds that the Council “succumbed to public pressure” in its decision to deny the firm’s request for a conditional-use permit (CUP) last year. The permit was needed for the firm to take up a vacant lot at the corner of Pacific Coast Highway and Pacific Avenue, considered a “gateway” to the Wrigley district.
Roger Jon Diamond, a Santa Monica-based attorney representing Pennbrooke Financial, cited a number of reasons to support the case, claiming that the Council’s CUP denial was a violation of California law because it was based on opposition to the type of business the company is, rather than on land-use findings.
The attorney argued, among other things, that auto-title loan companies are legal businesses in California and the assumption that such a business would negatively impact the community is “pre-textual.” According to the petitioner, the opposition to the proposed use was “based on moral objections to predatory lending.”
In a tentative judgment on Tuesday, Oct. 22, Los Angeles County Superior Court Judge James C. Chalfant, however, declared that there was in fact “substantial evidence” that supports the Council’s findings that the proposed use would be “detrimental to the surrounding community,” adding that the petitioner failed to prove otherwise, according to court documents.
Though the attorney cited a 1995 federal court case in which a topless bar was denied a CUP in Westminster, the judge said the case of Pennbrooke Financial “does not involve First Amendment issues.”
Long Beach Assistant City Attorney Michael Mais confirmed in an email that the judge is expected to sign a formal judgment within 10 days from the initial ruling after which Pennbrooke would have 60 days to appeal the judge’s ruling.
“From the city attorney’s perspective, we believe that the judge was absolutely correct to conclude that the City Council acted appropriately when it denied Pennbrooke’s CUP application,” Mais said. “The proposed use clearly did not comport with the City’s General Plan or the vision of the local community with respect to the use of the property. Hopefully, a suitable business use will be found for this site, and the community and property owner will both benefit from its ultimate use.”
The petition was filed just weeks after the Council unanimously voted (9-0) to turn down the business’s CUP application in November 2012. The Council’s decision was made on appeal after the Planning Commission came to a (3-3) tie vote on the permit.
City officials have stated that the Council’s decision was based solely on grounds of an inappropriate land use and not on conjecture of the company’s business practices, despite opinions of some residents and councilmembers, who have called such companies “predatory lenders,” claiming they target low-income communities with high-interest-rate loans.
The Council’s findings were based on the fact that the property sits on two separate designated land-use districts, a pedestrian-oriented zone and another zone for small retail operations.
Wrigley community activists testified in various meetings that the area is already oversaturated with such short-term lenders. City officials have stated that there are already 53 such businesses that exist in the city. In particular, a payday lender that also offers auto-title lending is already located within yards of the Wrigley intersection.
In hearing the ruling, Lee Fukui, a Wrigley neighborhood resident who fought the business from moving in, said many residents are “relieved” by the judge’s decision.
“I’m hoping that Pennbrooke will let this go and not appeal, so that we can put this behind us and move forward in attracting better businesses to the Wrigley area,” he said. “I feel we need to require more from not only residents, but particularly the landlords, local businesses and business property owners to help improve the quality of life in our community. When we act responsibly and work to make the neighborhood cleaner, safer, and healthier, it will be easier to attract new start-up businesses to our city.”
The Wrigley gateway is located in a former redevelopment area that residents were working on revitalizing before redevelopment was shut down by the State.
Though proposals from various clients have recently come forward, including plans for a brick-and-mortar Wrigley BBQ location, the auto-title-loan company has already signed a lease agreement with the property owner.
The Council eventually agreed to put a one-year moratorium on such short-term lenders while developing a new city ordinance. The new law was passed by the Council in September and establishes new definitions and regulations for check-cashing, payday-loan, car-title-loan, signature-loan and other financial-services businesses.
Liana Molina, an organizer for the California Reinvestment Coalition, a statewide, nonprofit financial-justice organization, said these types of cases are common in California, where short-term-loan businesses try to “intimidate” cities with veiled threats in an effort to dissuade them from taking any regulatory measures. Though there are fewer locations than in the past, there is still an estimated 2,100 to 2,200 payday lenders across the state, she said.
“We support the judge’s decision, and I think local communities should have a say in what’s happening in their neighborhoods, including what kind of businesses are appropriate for their particular neighborhood,” Molina said. “We’re very happy that the City of Long Beach went forward, and they were successful at this round.”
Phone calls by the Signal Tribune to Pennbrooke’s attorney were not returned before press time.