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August 29, 2016

Legalese Column: How to Avoid Getting Zoned Out

This article originally ran in the August issue of AVN magazine. Just about every local zoning ordinance now includes special provisions for adult businesses. As we know from the Renton decision, in order to be valid, these ordinances must leave a “reasonable” opportunity for adult businesses to operate within the area which is subject to zoning—city, county, unincorporated county, township or whatever. We also have all learned that the Reagan-packed federal court system’s definition of what is “reasonable” is a far cry from reality. Of late, courts have been tussling with this concept, with mixed results, although mostly bad ones. The two Supreme Court decisions which addressed adult zoning laws are Young v. American Mini-Theatres in 1976 and City of Renton v. Playtime Theatres in 1986. The Young decision upheld Detroit’s prohibition against establishing any one of a number of specifically listed businesses (including adult bookstores and adult theaters) within 1,000 feet of any two that were already there. The City of Renton case approved that locale’s prohibition against opening an adult business within 500 feet of a residential zone (actually, the Detroit ordinance included that feature as well, but that issue was not before the Supreme Court). The typical adult ordinance mimics a combination of what was approved in the Young and Renton cases, generally prohibiting the establishment of an adult business within 1,000 or so feet of another, within 500 or so feet of a residential zone, and within some distance of various other “sensitive uses”—typically places of worship, schools, parks, playgrounds, daycare centers and sometimes some other bizarre things such as cemeteries and government buildings. One wonders what damage would be done to the government by including an adult bookstore nearby. Invariably, if you get a local zoning map and apply all of the various twists of the ordinance to it, by the time you color in the few zones where adult businesses are legal, draw circles around the churches, schools, playgrounds, parks and whatever other sensitive uses are included and then add the spacing for residential zones, you find there’s practically no place in town where you can open your adult emporium. For years now, clients have come to their lawyers bemoaning the fact that the city in which they would like to open has only fifty locations for adult businesses, but none of them are for rent. Thus, the clients complain, it cannot possibly be that the city has left a “reasonable” opportunity for them to open their businesses because there are no opportunities at all. “Not so,” say the courts. In the City of Renton opinion, Chief Justice Rehnquist made sure that adult businesses were not given any special favors. Rather, Justice Rehnquist opined, they must compete in the real estate market just like everybody else. The logical fallacy of that, of course, is that “everybody else” doesn’t have to be 1,000 feet from a school, 500 feet from a residential zone, 850 feet from a church and so on. Nonetheless, the courts have almost universally arrived at the conclusion that the fact that no potential site is for rent or for sale is of no consequence. As a result, it is not all that unusual to see an aspiring adult business operator who has located the perfect site—which means one that is legal—to purchase the building and kick the tenant out. Parenthetically, as mentioned on a number of occasions in this column, purchasing buildings earmarked for adult businesses is not a really good idea. Read on, and you’ll see why. There have been some terrible court decisions which stand for the proposition that nearly zero locations is enough in a very large city. Although these decisions arguably are a product of a combination of very unsympathetic judges and a lack of proof with respect to demand, they nonetheless are on the books. To put all of this in perspective, however, it is necessary to go back to the rudiments of zoning law. When God created the Earth, it was not divided into zoning districts. In fact, the institution of local government existed for centuries before anyone got the idea that there should be zoning. Original thinking held that the owner of a parcel of land owned the “Blackstonian wedge,” which extended from the center of the earth to the heavens and the owner could do with it whatever he pleased. (No mistake in the pronouns here; women could not own land back then.) When America started to become industrialized, however, and cities became congested, it became necessary to do something about regulating the use of land. But at that juncture, property owners—who still were obsessed with the concept of the “Blackstonian wedge”—gave the idea of land-use regulations, such as zoning and building codes, a lukewarm reception at best. Accordingly, the only way that such regulations could pass the “consent to be governed” test was to apply them to new endeavors. Thus began the concept of the “grandfather clause.” “Grandfather” rights exist in most land-use regulations. In roughly twenty states, grandfather rights are part of state law. This is true at every level, including local zoning regulations, the uniform building code and the Americans with Disabilities Act. Operators of retail establishments all are familiar with the latter, which dictates that it now costs $75,000 to build a bathroom, rather than the $5,000 or so it cost before they enacted ADA; restrooms now must be the size of an average tennis court. The bottom line is that in order to make zoning regulations palatable, it was necessary for cities as a general proposition to refrain from upending the status quo. Accordingly, zoning regulations almost invariably only apply to new endeavors. To the extent that they affect existing ones, the ordinances generally allow existing uses to continue for extraordinarily long periods of time, typically twenty to thirty years. These exceptional circumstances are referred to as “amortization,” a term derived from the concept of allowing property owners to realize a return on an investment. Unfortunately, the proponents of anti-adult-use ordinances discovered that reducing the typical amortization period (but only for adult businesses) from the normal twenty or thirty years to perhaps a year or two or three provided an excellent vehicle for doing away with them altogether. As a result, where a tanning factory or a zinc smelter might be allowed to remain in business for twenty or thirty years, or even perhaps for its natural life, before being required to close down and comply with the prevailing zoning regulations, adult businesses find themselves regularly faced with amortization periods of three years, one year or, in some cases, six months. They don’t have enough political clout to fall into line with other businesses; or, put another way, they have so much political opposition that they are unable to do that. The bottom line of all this zoning nonsense brings us to the question of what number of adult business sites is actually sufficient. The worst results along those lines probably come from Chicago, where the Illinois Supreme Court found that a handful of locations in the unincorporated portions of Cook County were sufficient and the 7th Circuit found that an even smaller handful in the entire City of Chicago (3 million people!) was sufficient. Perhaps the best result came from Los Angeles where the court held that the number of locations was insufficient, although numerically something like 2 to 3 percent of the city was available. The court found that so many of the locations were implausible—such as the airport, the harbor, Dodger Stadium, and so on—that realistically the available places for the businesses to relocate did not allow the displaced existing businesses a reasonable opportunity to move. Caveat: Grandfather clauses almost universally have a “use it or lose it” clause. That is, if a grandfathered use voluntarily ceases for some period of time—typically six months to two years—grandfather rights are lost.

 
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