Christina Estes/KJZZ

Phoenix Resident Don Russell urges council members to find a lower-interest rate for a loan program offered to city employees.

A new loan program that will be offered to Phoenix employees is raising some eyebrows. Resident Don Russell thinks leaders could have found a better deal for employees.

“It’s almost criminal,” he said during Wednesday’s council meeting.

Russell is upset over what the council report describes as “a reasonable interest rate of 24.9 percent.”

“Anybody here think that’s a reasonable interest rate? Anybody?” Russell asked. “Please raise your hand.”

No hands went up, but the city’s human resources director Lori Bays explained to council members that the loans are voluntary, offered through an outside contractor, and intended to “take the place of an employee that may go to a payday lender or a title lender which have interest rates of approximately 400 percent, on average.”

Bays said the federally insured loans offered by a company called TrueConnect require no credit checks and will be repaid through automatic payroll deductions over a 12-month period.

“There are many individuals in our community and many within our employee base who have a need for a reasonably priced loan for emergency situations,” Bays said. “There was a recent Federal Reserve Study that came out that indicated 40 percent of adults cannot manage a $400 or more emergency expense.”

The maximum loan would be $3,000 and should be available starting Jan. 1, 2019. The council report said the program would be provided at no cost of liability to the city and will not impact the general fund.