ACTION REQUESTED:
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Communication from the City Manager, Assistant City Manager and Finance Director/Comptroller with a Request to ADOPT an ORDINANCE Amending the City of Peoria 2020 - 2021 BIENNIAL BUDGET Relating to the General Fund Budget for Fiscal Year 2020, in the Amount of $30,000.00, the East Village TIF Fund, in the Amount of $5,000.00, and the Warehouse District TIF Fund, in the Amount of $5,000.00, to Fund Administrative and Start-up Costs to Deliver the Full-Time Presence of a Non-profit Microloan and Financial Services Organization, JUSTINE PETERSEN.
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BACKGROUND:
Across the United States, use of standard retail banking services and products is below 75% and even lower in our most at-risk households. These same underserved households are the least likely to be able to save for emergencies and unexpected expenses. Peoria needs multiple organizations and deep funding to provide alternatives to the payday loans and informal banking methods (e.g. family member loan) these households turn to instead of banks. Reasons households do not use formal bank options are many including: lack of credit quality, lack of trust in banks, the low dollar amount of the loan, and access to banks.
Key Details from FDIC Report on use of Banks
In 2018 the FDIC released its 2017 biennial survey of unbanked and underbanked households in the United States. This study has three critical definitions, unbanked - households that have no standard retail bank relationship (e.g. debit, checking, savings services); Alternative Financial Services (AFS) - non-bank financial services such as payday loans, rent-to-own, lien loans and other very high interest rate financial services. AFS can range from 40% to over 400% APR. Lastly, the report focuses on underbanked households, where they do have a standard retail bank service or account in the household, but also rely on AFS.
Their study found that over 1/4 of American households are either unbanked or underbanked and uns...
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