John Kinnaird1

Waco City Councilman John Kinnaird on financial security: “What I’m most excited about is that local financial institutions are sitting around a table together and saying, ‘This is an issue. What can we do about it?’”

Staff photo— Jerry Larson

John Kinnaird, 36, vice president and trust officer of Community Bank & Trust, has served on the Waco City Council representing District 3 for the past four years and faces his first competitive election on May 7. A Baylor University graduate, he served on the city of Waco’s Zoning Board of Adjustment before his election to the council, replacing Randy Riggs. He serves as vice chair of a policy-steering committee for the National League of Cities and holds positions on the Waco Metropolitan Planning Organization’s policy board and the board of the Waco-McLennan County Public Health District. Election Day is May 7 with early voting beginning Monday.

Q    You served on the Zoning Board of Adjustment before coming on the City Council, telling people when their fences were too high.

A    Well, we didn’t tell them their fences were too high but if they wanted to make it higher than the city allowed, we might grant a variance for them. Our business went into easements and car-ports and setback lines and things like that — things that actually are very important and mean a lot to certain people.

Q    Did that help you a lot, serving on a board like this previously, or is it just a small part of what you do?

A    The board I served on — it’s a fairly decent part of what I do even now, because it deals with zoning ordinances and how they affect development, how they affect construction and what people can and can not do and where they can do it. There are limitations to all that. Sometimes people want to do something that the city says, “We don’t think this should be going in here.” And then there’s someone else (in authority) saying, “Well, wait — I think it might actually make sense in this area.” There is this dynamic that sometimes the rules can be bent a little when it makes sense. But all that is helpful to me now. So is meeting and knowing city staff. I didn’t know much about zoning regulations and overall comprehensive planning and land use before all that, but learning how that works and how vital that is — making sure development is sustainable and makes sense and that the infrastructure is capable of supporting it — understanding how that whole process plays out is very beneficial.

Q    So tell me about District 3 and what issues are unique to it.

A    My district is fairly far-flung. It takes into account Valley Mills Drive, it takes into account Hewitt Drive. Traffic is an issue, development and — particularly on Hewitt Drive, Panther Way and Chapel Road — really infrastructure, streets and just development in general because that area is growing so quickly that we want to make sure we’re properly servicing them with wide enough streets for the increased traffic. And all that goes back to zoning and land-use designations and density requirements. A lot of the development is single-family in my district so if there’s a development that wants to come in and make it more dense, there are always some concerns. And that’s part of the increased traffic and schools and other things where people are concerned. So again, we have to make sure that development and any changes we contemplate also consider the neighbors and the impact that it has on the city overall.

Q    Is there anything you hope to address in the coming term, assuming you win election?

A    Yes, in that area, widening Ritchie Road right now and at some point I think Chapel Road will have to be widened. Really, it’s about the infrastructure. There are some water and sewer projects happening out there and there’s that one big development in Park Meadows right there off Ritchie and Panther Way. There’s just a lot of growth. And, again, there’ll be some folks who will want land-use changes and zoning changes. We just want to make sure we’re cognizant, reasonable and that development is done in a prudent way in which we consider the impact to the existing neighborhoods and whether it’s sustainable and practical.

Q    What has been your proudest accomplishment so far?

A    The work we’re beginning with Prosper Waco and that I’ve been able to be involved in is something I’m proud of, especially given the potential for accomplishment. It has the most potential to be beneficial to our community as a whole and sustaining over the long term, whether it’s my work with the Community Loan Center to find an alternative to payday lenders or the financial literacy component with local banks and financial institutions. Even as those things gain traction, just bringing financial institutions together to discuss these issues and get them thinking and talking about it is important. The nonprofit Community Loan Center can be a part of the solution, but there’s a lot of interest by the financial institutions on their front to figure out solutions.

Q    Do financial institutions really want to be part of this equation?

A    They’re very sincere. Now, from the regulatory standpoint, making small-dollar consumer loans (to aid the poor needing such transactions) is a business that just isn’t profitable anymore and has been made almost untenable because of the way regulations have gone the past several years since the 2008 financial crisis. Local financial institutions want to reinvest in the community. That’s their job, they know the community better than anyone and they have a desire to do that and a desire to have the consumer market reopened to them in some form or fashion. So there’s some economic interest from their viewpoint. The regulatory issues make it not really feasible for them to make small-dollar loans. They can’t charge enough. Regulators from Community Reinvestment Act requirements and other things kind of scrutinize the smaller loans to where it just doesn’t make economic sense at this point. But if you can come up with things like the Community Loan Center [an employer-based small-dollar loan program now serving hundreds of city of Waco and Waco Independent School District employees with lower-interest alternatives to payday loans] where the overhead is really low but where it’s a frictionless transaction to get the funds to (the borrowers), if you can keep those loan losses low, that is an avenue to reopen that consumer market to banks.

Q    So federal regulations stand in the way?

A    Well, not with the Community Loan Center, which is a nonprofit. They participate in funding that by themselves.

Q    But in just serving City Hall and Waco Independent School District employees, isn’t that too narrowly focused?

A    Yes, right now the participation is just with the city of Waco and school district. As we develop the administrative function — how it works out — we’re gauging those. Any employer could participate if it makes sense and we’re comfortable with the loss reserve and the employee base, but it’s more about making sure it’s not an administrative burden on them (at the Community Loan Center, administered by the Heart of Texas Goodwill). With anything new, it’s a matter of working the kinks out, but I think it has a reasonable ability to at least begin to address this issue. And again, local bankers and financial institutions are discussing all this and thinking about it and they’re interested in a solution, whether it’s through that or something on their own. If the community benefits from it, if folks have an alternative to these excessively high payday-loan fees, then it’s a win-win for the community.

Q    You’ve also worked on financial literacy — that is, helping people be smarter with the dollars that they do make so they aren’t living paycheck to paycheck.

A    Right now a lot of nonprofits have their own curriculum and, through their outreach efforts, they address this issue as best they can. And local banks and community partners with Waco ISD do some of that and they have their own curriculum. My thought behind standardizing curriculum for financial institutions and nonprofits is this: As citizens start accessing services, whether from a bank or an employer who banks with one of the banks that has adopted this curriculum and is providing sessions with their customer base, or if it’s kids in the schools — if this is a standardized curriculum and they hear the same message over and over, then it may begin to stick a little better. The program I’ve worked on — and really [Extraco Banks official] Libby Cain did the groundwork and legwork, drawing on materials from the Federal Reserve Bank of Dallas — just from that we can get everyone on the same page in terms of bolstering their financial security.

Q    From Prosper Waco meetings I’ve attended, it looks like you’ve gotten into this deeply. But are you hopeful these will make a difference in the broader Prosper Waco goal of battling chronic poverty? Your opponent in this race says he got in because he opposed your vote against a city ordinance to regulate payday and auto-title loan businesses.

A    After 15 years in the financial services industry, I understand what financial regulations should look like and I was just concerned that what we were doing was going to be complaint-driven and the enforceability of it was a little suspect. I know a couple dozen cities statewide have done this and it definitely is an issue, but again from a financial regulation standpoint, for us to do it right, we’d have to ramp up the whole regulatory apparatus, which the city staff just isn’t able or willing to do from a budgetary standpoint. Or else it would just be driven on a complaint basis with staff members who aren’t really regulators evaluating these things. If someone’s car breaks down and they need $1,200 and our ordinance only allows them to get $400 from one lender because of the ordinance’s income requirements, there’s nothing to prevent them from going to two other lenders. They still need the $1,200 and they’re going to get it from somewhere. And we just made it harder for them to get the money they need to get their car fixed so they can go back to their job. And so we haven’t provided an alternative and that was my concern about all this. There are unintended consequences to anything we do and I wasn’t comfortable with this. I do recognize that it might provide some marginal good, but I’m worried that there could be a lot more negative consequences that people didn’t really contemplate, which is why I was reticent to do it and why I voted against it without an alternative, without providing some sort of solution.

Q    So just how will the city actually regulate payday lending? It looks complicated.

A    It won’t go into effect till August and it’ll just be complaint-driven. If a customer of one of the payday lenders feels he is egregiously charged or overcharged or that the lender is not complying (with the ordinance), they complain to the city and we send somebody out to evaluate the lending documents and see if there really was a violation of the ordinance and, if so, they will be fined. That will be the process for that. But beyond that our staff will not be going into payday lenders regularly and randomly selecting documents. There’s no apparatus to do that.

Q    When you put together your sole council vote against the ordinance to restrict local payday lending with your sole vote against further restrictions on restaurants about smoking, one might gather they represent your thoughts on when city ordinances are right and when they overreach.

A    Regulation has its place. There are things cities do well and there are things that they don’t, and we need to recognize what those are. I come from a priority standpoint about where our resources are going to be allocated: how we enforce things, how we restrict what we do. My sole thought on the smoking restriction was that, yes, public health absolutely needs to be considered. I’ve never smoked a cigarette and never plan to. Public health is important to me. I chair the public health district board. I have a vested interest in making sure public health is a priority in our community. But for those businesses that have deployed capital to follow the rules we have set earlier, I think we need to honor that and citizens and businesses deserve the right to make the economic choice once public health has been considered. I thought the ordinances as they existed, which prohibited smoking in 99.5 percent of publicly accessible buildings in town and where a business had to spend money if it wanted to build a separate smoking room — if they wanted to make that choice because it made economic sense for them and someone wanted to go to one of these establishments and smoke — then I thought preserving that choice made sense. But to your broader question, yes, there are things government should regulate, but at times we try to do a little too much. If I have a concern about enforceability or overreach, I am a little bit reticent or reluctant to do that.

Q    We at the newspaper also had some reservations on the latest smoking ordinance. We suggested grandfathering existing businesses that invested to comply with the last ordinance or allowing a phase-in period for them to fully recoup their investment from the last time.

A    That was the same rationale when I was the sole dissenting vote on the water rebate thing for the builders last June [ending long-standing city subsidies for water-utility construction in new subdivisions]. We set rules, capital was allocated and investments were made based on the rules that we set, and to just change them like that — I mean, sure, I thought the water rebates had probably run their course. And this doesn’t mean we can’t have a good discussion on how we incentivize development. I think we’re having that discussion now and will have it as we evaluate the city plan and comprehensive plan, which is ongoing. That’s why I really want to stay on the council and have some input because we’re growing and we’re developing and we’re on the cusp of some great and really fun things in this city. Making sure that the plan we put into place, the land-use and development issues and where we see the growth and fund it — this is a very crucial time for our city to really plan for the next few decades and I want to be a part of that.

Q    There is a growing concern state lawmakers we elect aren’t really representing us. What are one or two things they need to be working on by which we can measure their representation of us?

A    Given what the conversations are at the state right now, not putting revenue caps on our ability to raise the funds we need to address needs locally. Right now, if we collect more than an additional 8 percent in property taxes [on pre-existing properties], we might have to have a rollback election and they want to move that down to 4 percent or even less. There was discussion about it in the last legislative session. They need to let locals control local. Remember — each community is different. It has different needs and different demographics and different wants. The state is responsible for education and Medicaid and some big things. We’re responsible for local roads and local public health and we fund a lot of that. Letting us maintain that control locally and letting us address those needs in ways in which we are most responsive to our taxpayers and our citizens is the crux of this issue. And yet there have been continual efforts to try to crimp our ability to raise the funds we need. If we’re growing and our property tax base grows more than 8 percent in a year when, say, development really takes off, then all of a sudden we might have to hold an election if we want to increase property taxes. This isn’t about a city getting all that it wants. But state lawmakers should let local leaders be responsive to their constituents and, if it’s in domains such as streets and infrastructure, then let us deal with it. And if people don’t like how we do it, they can vote us out.

Interview condensed and edited by Bill Whitaker.