An Alternative to Pay Day Loans

Gregg Lombardi-Executive Director

I am pleased to announce that, as a result of the work of volunteer attorneys at three major law firms, low-income Kansas Citians now have an alternative to Pay Day loans.

For many years Pay Day loans have been the scourge of low income neighborhoods.  The average interest rate on these short term loans is 450% APR.  Although the default rate on these loans is about 6% and they are obscenely profitable, traditional major banks have, to date, not offered competitive alternatives and efforts to find a legislative solution to the problem in Missouri have failed.

About two years ago, CCO, a local community organizing group, started working to create a competitive alternative to Pay Day loans.  Legal Aid joined the effort about 18 months ago.  Our Volunteer Attorney Project has recruited talented volunteer attorneys including Adam LaBoda from Spencer Fane Britt & Browne, Kyle McCurry from Stinson Morrison Hecker and Tom Schenkelberg of Polsinelli Shughart to work on the project. Kyle initially provided pro bono representation in support of the project generally and subsequently represented Central Bank, which will actually be making the loans.

Other partners in the project include the FDIC, Commerce Bank, United Way and numerous other community stakeholders.

As a result of the attorneys' work, a new not-for-profit-- Fair Community Corporation-- has been formed, complex banking regulations have been navigated, funds raised and FCC is now taking applications for loans.  The loans will be at 36% APR and will come with the opportunity for financial education to allow the borrowers to gain access to even lower interest loans.  A set of referring agencies will be referring qualified, low-income borrowers to the project for loans.  For now at least, borrowers will have to go through a referring agency. 

If the project is as successful, as we think it will be, it is likely to be a powerful tool in driving Pay Day lenders out of Kansas City and may well be replicated elsewhere.

The project is also an excellent demonstration of what talented pro bono attorneys working through VAP can accomplish.  We are tremendously grateful for the excellent work that Adam, Kyle and Tom have done on this project.

Volunteer Attorneys Give Marlborough Neighborhood a Bright Future

by Gregg Lombardi, Executive Director

There are times when you have to fight and scratch to make a project work and then, thankfully, there are times when things work out much better than you had even hoped.

Steve Chinn’s work for the Marlborough Neighborhood is a shining example of the latter. About a year ago Latricia Scott Adams, the Director of our Volunteer Attorney Project and I made a presentation to a group of about 30 Stinson Morrison Hecker LLP attorneys about possible volunteer projects that the firm could take on. One we suggested was adopting an urban core neighborhood. Steve was at that meeting and immediately took interest in the idea.

As the Chair of Stinson's Public Law Practice Group, Steve knows a lot about community problem solving. It’s just that normally he devotes his time to massive, multi-million dollar projects like developing the Kansas Speedway.

Under Steve’s leadership, Stinson Morrison Hecker adopted the Marlborough neighborhood, a low-income neighborhood in southeastern Kansas City. Steve immediately put his skill and experience to work in solving problems for the neighborhood.

And the work that they have done has been tremendous. They have gotten the state and federal government to approve the neighborhood association as a tax exempt not-for-profit organization. They are fighting an unlicensed, under-aged drinking establishment that is a major nuisance and serious danger in the neighborhood. When the federal government suggested using the old Bendix plant, which is just outside the neighborhood, as a lead waste storage facility, Stinson attorneys drafted comments on the draft Environmental Impact Statement and the proposal appears to be dead.

Stinson attorneys are also working closely with the neighborhood and a local community development corporation to create a model block in the neighborhood, in which the city will focus resources.

Steve goes to all the neighborhood association meetings, so he can address whatever legal questions come up. All told, 13 Stinson attorneys and one Stinson paralegal have put in over 300 hours on the project.

Steve reports that the work is gratifying and fulfilling. The neighborhood, in turn, is ecstatic about the firm’s work. Betty Ost-Everly, the Marlborough Community Coalition President reports:

Many people have commented at what Marlborough has been able to accomplish in a very short amount of time and have wondered how. From start-up discussions in May 2008 to present, we have established governance, received Nonprofit status from the State of Missouri and our 501(c)(3), protested against the Federal Government's proposal of placing a Mercury storage facility at the Bannister Federal Complex, and started on the long and arduous task of stablizing housing in the four neighborhood association areas that make up the Coalition. Absolutely none of that could have been possible without Stinson. The firm came to us as part of Legal Aid’s Volunteer Attorney Project, and has worked alongside the Coalition and in partnership with Legal Aid and Neighborhood Housing Services to help us. This area has been neglected for a number of years, but with Stinson's help, we are looking to a much brighter future.

Many thanks to Steve and to Stinson for their fantastic ongoing work on this project.