The D.C. Council moved ahead Tuesday on a bill that would restrict the sky-high interest rates levied by so-called “payday” lenders, ignoring an analysis by the city’s finance office that the proposal would cost the city more than half a million dollars in revenues.

The bill, introduced by Council Member Mary Cheh, D-Ward 3, places a 24 percent annual percentage rate cap on interest charged by the lenders. Now, the businesses can offer two-week quick cash fixes without any city restrictions. The measure passed the council on an initial reading Tuesday.

D.C. Chief Financial Officer Natwar Gandhi Tuesday provided the council with a fiscal impact statement that predicted the city would lose $123,000 in revenues in fiscal 2008 and $527,000 through fiscal 2011 if the measure passed. The city reaps money from taxes on the lenders.

But Council Member David Catania suggested Gandhi should butt out of the council’s business.

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“What exactly is the CFO thinking producing documents like this for this body?” Catania asked, questioning the wording of the statement. He called the fiscal impact statement “the most bizarre” document of the type he has seen.

Cheh was also visibly angry over the fiscal impact statement after the vote.

“What the CFO has focused on is whether we’re spending more than we’re bringing in. If this is his new front in financial supervision, well, then he might as well put himself in charge of the entire District government,” Cheh said.

There are 49 payday lending shops in the District, located predominantly in lower-income, minority areas. Many of the lenders are near the Maryland border because Maryland does not allow such loans.

Council Member Marion Barry, D-Ward 8, had co-introduced the bill with Cheh. But Tuesday he backed off the legislation and abstained from voting. Barry, who did not offer any amendments, said he wanted to reform the businesses, not force them out.

Gandhi wrote that the likely outcome of the bill would be cessation of payday lending in the District.

CFO spokeswoman Maryann Young defended Gandhi.

“There’s no policy determination in the fiscal impact statement,” Young said. “There is a fiscal impact in this legislation and we quantified it — it always makes council members nervous to vote for legislation that has a fiscal impact.”

cmabeus@dcexaminer.com