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HomeMy WebLinkAbout2019-09-04 Council Packet Kenai City Council - Regular Meeting Page 1 of 188 September 04, 2019 Kenai City Council - Regular Meeting September 04, 2019 – 6:00 PM Kenai City Council Chambers 210 Fidalgo Avenue, Kenai, Alaska www.kenai.city AGENDA A. CALL TO ORDER 1. Pledge of Allegiance 2. Roll Call 3. Agenda Approval 4. Consent Agenda (Public comment limited to three (3) minutes) per speaker; thirty (30) minutes aggregated) *All items listed with an asterisk (*) are considered to be routine and non-controversial by the council and will be approved by one motion. There will be no separate discussion of these items unless a council member so requests, in which case the item will be removed from the consent agenda and considered in its normal sequence on the agenda as part of the General Orders. B. SCHEDULED PUBLIC COMMENTS (Public comment limited to ten (10) minutes per speaker) C. UNSCHEDULED PUBLIC COMMENTS (Public comment limited to three (3) minutes per speaker; thirty (30) minutes aggregated) D. PUBLIC HEARINGS 1. Ordinance No. 3072-2019 - Renaming, Repealing and Re-Enacting Kenai Municipal Code Title 22-General Fund Lands, Renaming Title 21-City Airport and Airport Lands, and Repealing Kenai Municipal Code Chapter 21.15-Lease and Sale of Airport Lands Outside of the Airport Reserve to Encourage Responsible Growth and Development to Support a Thriving Business, Residential, Recreational and Cultural Community through Responsible Land Policies and Practices. (Administration) [Clerk’s Note: At the 08/21/19 Meeting, this Item was Postponed to the Meeting After a Work Session was Held Regarding the Matter for a Second Public Hearing. A Work Session was Held On 09/03/19. A Motion to Enact is On the Floor.] 2. Ordinance No. 3079-2019 - Increasing Estimated Revenues and Appropriations in the Airport Special Revenue and Airport Improvements Capital Project Funds and Page 1 Kenai City Council - Regular Meeting Page 2 of 188 September 04, 2019 Accepting a Grant from the Federal Aviation Administration for the Purchase of Two Aircraft Rescue and Firefighting (ARFF) Vehicles, Rehabilitation of the Fire Training Props, and Rehabilitation of the Training Facility for the Alaska Regional Fire Training Facility. (Administration) 3. Ordinance No. 3080-2019 - Increasing Estimated Revenues and Appropriations in the Terminal Improvements Capital Fund, and Authorizing an Increase to the Construction Purchase Order to Blazy Construction, Inc. (Administration) 4. Ordinance No. 3081-2019 - Increasing Estimated Revenues and Appropriations in the Airport Improvements Capital Project Fund, and Authorizing an Increase to the Construction Purchase Order to Polar North Construction, Inc. (Administration) 5. Ordinance No. 3082-2019 - Amending Kenai Municipal Code Chapter 5.35, Oil and Gas Wells, to Provide that Applications and Supplemental Applications be Filed with the City Manager. (City Clerk) 6. Ordinance No. 3083-2019 - Amending Kenai Municipal Code 14.20.175 - Adult Businesses, To Increase The Buffer Distances Between Adult Businesses And Sensitive Uses From 500 Feet To 1000 Feet And Define Sensitive Uses. (Council Member Pettey)  Substitute Ordinance No. 3083-2019 - Amending Kenai Municipal Code 14.20.175 - Adult Businesses, To Increase The Buffer Distances Between Adult Businesses And Sensitive Uses From 500 Feet To 1000 Feet And Define Sensitive Uses and Amend Kenai Municipal Code 14.22.010 – Land Use Table, to Add Adult Businesses. (Council Members Pettey and Knackstedt) 7. Resolution No. 2019-61 - Awarding a Construction Contract for Rehabilitation of Training Props at the Alaska Regional Fire Training Facility. (Administration) 8. Resolution No. 2019-62 - Awarding a Construction Contract for Rehabilitation of the Alaska Regional Fire Training Facility. (Administration) 9. Resolution No. 2019-63 - Authorizing the Use of the State of Alaska Department of Transportation and Public Facilities Fleet Procurement Program for the Purchase of Two Aircraft Rescue and Firefighting (ARFF) Vehicles for the Alaska Regional Fire Training Facility. (Administration) E. MINUTES 1. *Action/Approval - Regular Meeting of August 21, 2019 F. UNFINISHED BUSINESS 1. Resolution No. 2019-58 - Amending its Comprehensive Schedule of Rates, Charges, and Fees to Incorporate Changes to Application Fees for Lands Outside the Airport Reserve. (Administration) [Clerk’s Note: At the 08/21/19 Meeting, this Item was Postponed to the Meeting which Ordinance No. 3072-2019 was Scheduled for its Second Public Hearing; a Motion to Enact is On the Floor.] Page 2 Kenai City Council - Regular Meeting Page 3 of 188 September 04, 2019 G. NEW BUSINESS 1. *Action/Approval - Bills to be Ratified. (Administration) 2. *Action/Approval - Purchase Orders Exceeding $15,000. (Administration) 3. *Ordinance No. 3084-2019 - Increasing Estimated Revenues and Appropriations in the General Fund for Reimbursement Received for Support of the Swan Lake Fire Suppression Efforts. (Administration) 4. Discussion – Amending Kenai Municipal Code 14.20.330 - Standards for Commercial Marijuana Establishments, to Incorporate Hours of Operation for Retail Marijuana Establishments into the City of Kenai’s Code of Ordinances as Recommended by the Planning and Zoning Commission. (Council Member Molloy) 5. Discussion - Set a Board of Adjustment Hearing Date. (City Clerk) H. COMMISSION / COMMITTEE REPORTS 1. Council on Aging 2. Airport Commission 3. Harbor Commission 4. Parks and Recreation Commission 5. Planning and Zoning Commission 6. Beautification Committee 7. Mini-Grant Steering Committee I. REPORT OF THE MAYOR J. ADMINISTRATION REPORTS 1. City Manager 2. City Attorney 3. City Clerk K. ADDITIONAL PUBLIC COMMENT 1. Citizens Comments (Public comment limited to five (5) minutes per speaker) 2. Council Comments L. EXECUTIVE SESSION Page 3 Kenai City Council - Regular Meeting Page 4 of 188 September 04, 2019 M. PENDING ITEMS N. ADJOURNMENT O. INFORMATION ITEMS 1. Purchase Orders between $2,500 and $15,000. The agenda and supporting documents are posted on the City’s website at www.kenai.city. Copies of resolutions and ordinances are available at the City Clerk’s Office or outside the Council Chamber prior to the meeting. For additional information, please contact the City Clerk’s Office at 907-283-8231. Page 4 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] Sponsored by: Administration CITY OF KENAI ORDINANCE NO. 3072-2019 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, RENAMING, REPEALING AND RE-ENACTING KENAI MUNICIPAL CODE TITLE 22-GENERAL FUND LANDS, RENAMING TITLE 21-CITY AIRPORT AND AIRPORT LANDS, AND REPEALING KENAI MUNICIPAL CODE CHAPTER 21.15-LEASE AND SALE OF AIRPORT LANDS OUTSIDE OF THE AIRPORT RESERVE TO ENCOURAGE RESPONSIBLE GROWTH AND DEVELOPMENT TO SUPPORT A THRIVING BUSINESS, RESIDENTIAL, RECREATIONAL AND CULTURAL COMMUNITY THROUGH RESPONSIBLE LAND POLICIES AND PRACTICES. WHEREAS, amendments to Title 22-General Fund Lands, coupled with the repeal of Chapter 21.15- Lease and Sale of Airport Lands Outside the Airport Reserve, are intended to encourage responsible growth and development to support a thriving business, residential, recreational and cultural community through responsible land policies and practices; and, WHEREAS, combining code provisions for general fund lands, lands outside the airport reserve restricted by the Federal Aviation Administration, and certain tidelands recognizes these are all City-owned lands and should be similarly treated consistent with granting restrictions, if any; and, WHEREAS, the changes provide for development incentives to encourage new development in the City and changes to the term table and ownership of improvements to encourage investment; and, WHEREAS, other changes are focused on providing a City-wide approach to land management and lease and sales policy along with rental rate adjustments based on consumer price indexes protect lessees from unexpected increases and to reduce conflict between the City and current and future lessees; and, WHEREAS, the amendments discourage land speculation on commercial City-owned lands by requiring development for lease or sale; and, WHEREAS, the Planning and Zoning Commission, at its meeting of August 14, 2019, recommended the City Council ______ Ordinance No. 3072-2019; and, WHEREAS, the Airport Commission, at its meeting of August 8, 2019, recommended the City Council ______ Ordinance No. 3072-2019, and, WHEREAS, the Harbor Commission at its meeting of August 19, 2019, recommended the City Council ______ Ordinance No. 3072-2019. Page 5 Ordinance 3072-2019 Page 2 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. Renaming Title 21 of the Kenai Municipal Code: That Kenai Municipal Code, Title 21 – City Airport And Airport Lands is hereby renamed as follows: CITY AIRPORT RESERVE [AND AIRPORT] LANDS Section 2. Repealing Chapter 21.15 of the Kenai Municipal Code: That Kenai Municipal Code, Chapter 21.15 – Lease and Sale of Airport Land Outside of the Airport Reserve is hereby repealed as follows: [CHAPTER 21.15 LEASE AND SALE OF AIRPORT LAND OUTSIDE OF THE AIRPORT RESERVE 21.15.010 AIRPORT LAND OUTSIDE OF THE AIRPORT RESERVE. (A) THIS CHAPTER APPLIES TO AIRPORT LAND OUTSIDE OF THE AIRPORT RESERVE. (B) THE CITY MAY SELL, CONVEY, EXCHANGE, TRANSFER, DONATE, DEDICATE, DIRECT, OR ASSIGN TO USE, OR OTHERWISE DISPOSE OF AIRPORT LAND OUTSIDE OF THE AIRPORT RESERVE, INCLUDING PROPERTY ACQUIRED, HELD FOR, OR DEVOTED TO A PUBLIC USE, IN ACCORDANCE WITH THIS CHAPTER. DISPOSAL OR SALE OF LANDS SHALL BE MADE ONLY WHEN, IN THE JUDGMENT OF THE CITY COUNCIL, SUCH LANDS ARE NOT REQUIRED BY THE CITY FOR A PUBLIC PURPOSE, (C) THE CITY MAY LEASE, SELL OR DISPOSE OF REAL PROPERTY BY WARRANTY OR QUIT-CLAIM DEED, EASEMENT, GRANT, PERMIT, LICENSE, DEED OF TRUST, MORTGAGE, CONTRACT FOR SALE OF REAL PROPERTY, PLAT DEDICATION, LEASE, OR ANY OTHER LAWFUL METHOD OR MODE OF CONVEYANCE OR GRANT. ANY INSTRUMENT REQUIRING EXECUTION BY THE CITY SHALL BE SIGNED BY THE CITY MANAGER AND ATTESTED BY THE CITY CLERK. THE FORM OF ANY INSTRUMENT SHALL BE APPROVED BY THE CITY ATTORNEY. (D) THE PROVISIONS OF THIS CHAPTER SHALL NOT ALTER OR AMEND THE TERMS OR RIGHTS GRANTED UNDER LEASES EXISTING PRIOR TO THE EFFECTIVE DATE OF THE ORDINANCE CODIFIED IN THIS CHAPTER. (E) PENDING LEASE APPLICATIONS FOR AIRPORT LAND FILED PRIOR TO THE EFFECTIVE DATE OF THE ORDINANCE CODIFIED IN THIS CHAPTER SHALL BE PROCESSED AND ISSUED UNDER THE PROVISIONS OF KMC TITLES 21 AND 22 IN EXISTENCE IMMEDIATELY PRIOR TO THE EFFECTIVE DATE OF THE ORDINANCE CODIFIED IN THIS CHAPTER. OTHERWISE THE PROVISIONS OF THIS CHAPTER SHALL APPLY. Page 6 Ordinance 3072-2019 Page 3 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.020 QUALIFICATIONS OF APPLICANTS OR BIDDERS. AN APPLICANT OR BIDDER FOR A LEASE IS QUALIFIED IF THE APPLICANT OR BIDDER: (A) IS AN INDIVIDUAL AT LEAST EIGHTEEN (18) YEARS OF AGE OR OVER; OR (B) IS A GROUP, ASSOCIATION, OR CORPORATION WHICH IS AUTHORIZED TO CONDUCT BUSINESS UNDER THE LAWS OF ALASKA; OR (C) IS ACTING AS AN AGENT FOR ANOTHER AND HAS QUALIFIED BY FILING WITH THE CITY MANAGER A PROPER POWER OF ATTORNEY OR A LETTER OF AUTHORIZATION CREATING SUCH AGENCY. THE AGENT SHALL REPRESENT ONLY ONE (1) PRINCIPAL TO THE EXCLUSION OF HIM OR HERSELF. THE TERM “AGENT” INCLUDES REAL ESTATE BROKERS AND AGENTS. 21.15.030 APPLICATIONS. (A) ALL APPLICATIONS FOR LEASE OF LANDS SHALL BE FILED WITH THE CITY MANAGER ON FORMS PROVIDED BY THE CITY AVAILABLE AT CITY HALL. APPLICATIONS SHALL BE DATED ON RECEIPT AND PAYMENT OF FILING FEE AND DEPOSIT. NO APPLICATION WILL BE ACCEPTED BY THE CITY MANAGER UNLESS IT APPEARS TO THE CITY MANAGER TO BE COMPLETE. FILING FEES ARE NOT REFUNDABLE. (B) WITH EVERY APPLICATION, THE APPLICANT SHALL SUBMIT A DEVELOPMENT PLAN, SHOWING AND STATING: (1) THE PURPOSE OF THE PROPOSED LEASE; (2) THE USE, VALUE AND NATURE OF IMPROVEMENTS TO BE CONSTRUCTED; (3) THE TYPE OF CONSTRUCTION; (4) THE DATES CONSTRUCTION IS ESTIMATED TO COMMENCE AND BE COMPLETED (ORDINARILY A MAXIMUM OF TWO (2) YEARS); AND (5) WHETHER INTENDED USE COMPLIES WITH THE ZONING ORDINANCE AND COMPREHENSIVE PLAN OF THE CITY. APPLICATIONS SHALL BECOME A PART OF THE LEASE. 21.15.040 FILING FEE AND DEPOSIT. (A) WHEN SUBMITTING AN APPLICATION FOR LEASE OF LAND, THE APPLICANT SHALL PAY THE CITY THE FOLLOWING AS SET FORTH IN THE CITY’S SCHEDULE OF FEES ADOPTED BY THE CITY COUNCIL: (1) PAY A NON-REFUNDABLE FILING FEE; AND (2) A DEPOSIT TO SHOW GOOD FAITH AND SECURE THE CITY IN PAYMENT OF ANY COSTS, INCLUDING: (A) AN APPRAISAL COST RECOVERY DEPOSIT; AND Page 7 Ordinance 3072-2019 Page 4 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (B) AN ENGINEERING, SURVEYING AND CONSULTING COST RECOVERY DEPOSIT. (B) IF THE CITY DECIDES TO REJECT THE APPLICANT’S APPLICATION AND NOT ENTER INTO A LEASE WITH THE APPLICANT THROUGH NO FAULT OF THE APPLICANT OR FAILURE OF THE APPLICANT TO COMPLY WITH ANY REQUIREMENT OF THIS CHAPTER, ANY DEPOSIT MADE UNDER SUBSECTION (A)(2) OF THIS SECTION WILL BE RETURNED TO THE APPLICANT. (C) IF THE CITY ENTERS INTO A LEASE WITH THE APPLICANT ANY DEPOSIT MADE BY THE APPLICANT UNDER SUBSECTION (A)(2) OF THIS SECTION WILL BE APPLIED TO THE CITY’S ENGINEERING, APPRAISAL, AND CONSULTING COSTS RELATED TO THE PROCESSING OF THE APPLICANT’S APPLICATION AND ENTERING INTO THE LEASE. THE CITY WILL APPLY ANY UNUSED BALANCE OF A DEPOSIT TO THE RENT PAYABLE UNDER THE LEASE. IF THE CITY’S COSTS EXCEED THE AMOUNT OF ANY DEPOSIT, THE APPLICANT SHALL PAY THE SHORTAGE TO THE CITY AS A CONDITION OF THE LEASE. (D) IF THE APPLICANT FAILS TO COMPLY WITH ANY REQUIREMENT OF THIS CHAPTER, CAUSES INORDINATE DELAY, AS DETERMINED BY THE CITY MANAGER, OR REFUSES TO SIGN A LEASE OFFERED TO THE APPLICANT, THE CITY MANAGER WILL REJECT THE APPLICANT’S APPLICATION AND APPLY ANY DEPOSIT MADE BY THE APPLICANT UNDER SUBSECTION (A) OF THIS SECTION TO THE CITY’S APPRAISAL, ENGINEERING, AND CONSULTING COSTS INCURRED IN CONNECTION WITH THE APPLICANT’S APPLICATION. IF THE CITY’S COSTS FOR APPRAISAL, ENGINEERING AND CONSULTING COSTS EXCEED THE DEPOSITS, THE APPLICANT WILL BE RESPONSIBLE FOR THESE COSTS. THE CITY WILL RETURN ANY UNUSED DEPOSIT BALANCE TO THE APPLICANT. 21.15.050 RIGHTS PRIOR TO LEASING. THE FILING OF AN APPLICATION FOR A LEASE SHALL GIVE THE APPLICANT NO RIGHT TO LEASE OR TO THE USE OF THE LAND FOR WHICH THE APPLICANT APPLIED. THE APPLICATION SHALL EXPIRE WITHIN TWELVE (12) MONTHS AFTER THE APPLICATION HAS BEEN MADE IF A LEASE HAS NOT BEEN ENTERED INTO BETWEEN THE CITY AND THE APPLICANT BY THAT TIME UNLESS THE CITY COUNCIL FOR GOOD CAUSE GRANTS AN EXTENSION. NO EXTENSION MAY BE GRANTED FOR A PERIOD LONGER THAN SIX (6) ADDITIONAL MONTHS. LEASE RATES ARE SUBJECT TO CHANGE ON THE BASIS OF AN APPRAISAL DONE EVERY TWELVE (12) MONTHS ON THE PROPERTY APPLIED FOR. Page 8 Ordinance 3072-2019 Page 5 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.060 PROCESSING PROCEDURE. (A) APPLICATIONS SHALL BE FORWARDED TO THE PLANNING AND ZONING COMMISSION UPON RECEIPT. THE PLANNING AND ZONING COMMISSION SHALL NORMALLY CONSIDER APPLICATIONS FOR SPECIFIC LANDS ON A FIRST-COME, FIRST-SERVED BASIS IF THE COMMISSION FINDS THAT THE APPLICATION IS COMPLETE AND CONFORMS TO THE COMPREHENSIVE PLAN AND THE KENAI ZONING CODE. WHERE THERE IS DIFFICULTY IN OBTAINING A PERFECTED APPLICATION, DETAILS AS TO DEVELOPMENT PLANS, ETC., OR WHERE THE APPLICANT FAILS TO COMPLY WITH DIRECTIONS OR REQUESTS OF THE PLANNING AND ZONING COMMISSION, ANY SUCH PRIORITY WILL BE LOST. IF AN APPLICATION FOR THE PURCHASE OF CITY-OWNED LANDS, PREVIOUSLY AUTHORIZED FOR SALE BY THE COUNCIL, IS RECEIVED BY THE CITY PRIOR TO THE KENAI PLANNING AND ZONING COMMISSION MAKING AN AFFIRMATIVE OR NEGATIVE RECOMMENDATION TO THE COUNCIL REGARDING THE LEASE APPLICATION FOR THE SAME PROPERTY, THE CITY MAY ELECT TO SELL SAID PROPERTY IN ACCORDANCE WITH THE PROVISIONS OF THE CODE. (B) THE CITY COUNCIL SHALL NORMALLY CONSIDER A LEASE PROPOSAL ONLY AFTER APPROVAL OF THE PLANNING AND ZONING COMMISSION. HOWEVER, APPEALS OF PLANNING AND ZONING COMMISSION DISAPPROVAL MAY BE MADE TO THE CITY COUNCIL. COMPLETED LEASE APPLICATIONS MUST BE PRESENTED TO THE CITY COUNCIL WITHIN THIRTY (30) DAYS AFTER APPROVAL BY THE PLANNING AND ZONING COMMISSION. (C) WHERE THERE ARE TWO (2) OR MORE APPLICATIONS FOR THE SAME AIRPORT LANDS FOR DIFFERENT USES, THEN IF THE PLANNING AND ZONING COMMISSION MAKES A FINDING THAT A SUBSEQUENT APPLICATION WOULD RESULT IN USE OF THE LANDS FOR A HIGHER AND BETTER PURPOSE WITH A GREATER BENEFIT TO THE CITY OF KENAI AND THE CITIZENS THEREOF, THEN THE LEASE WILL BE ISSUED TO SUCH APPLICANT NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (A) IN THIS SECTION WHICH PROVIDE FOR LEASING ON A FIRST-COME, FIRST-SERVED BASIS. ANY APPLICANT MAY APPEAL TO THE CITY COUNCIL FROM A FINDING OR A REFUSAL TO FIND BY THE PLANNING AND ZONING COMMISSION BY FILING AN APPEAL WITH THE CITY CLERK WITHIN SEVEN (7) DAYS AFTER THE FINDING IS MADE OR REFUSED BY THE PLANNING AND ZONING COMMISSION. (D) THE DECISION WHETHER OR NOT TO LEASE LAND RESTS IN THE SOLE DISCRETION OF THE CITY COUNCIL. Page 9 Ordinance 3072-2019 Page 6 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.070 REVIEW. NO LEASED LAND MAY BE CHANGED IN USE, NOR MAY ANY RENEWAL LEASE BE ISSUED UNTIL THE PROPOSED USE OR RENEWAL HAS BEEN REVIEWED BY THE PLANNING COMMISSION AND APPROVED BY THE COUNCIL. 21.15.080 APPRAISAL. NO LAND SHALL BE SOLD, LEASED, OR A RENEWAL OF LEASE ISSUED, UNLESS THE SAME HAS BEEN APPRAISED WITHIN A TWELVE (12) MONTH PERIOD PRIOR TO THE SALE OR DATE FIXED FOR BEGINNING OF THE TERM OF THE LEASE OR RENEWAL LEASE. NO LAND SHALL BE LEASED FOR LESS THAN THE APPROVED APPRAISED ANNUAL RENTAL. APPRAISALS SHALL REFLECT THE NUMBER AND VALUE OF CITY SERVICES RENDERED THE LAND IN QUESTION. 21.15.090 TERMS OF LEASE. ALL LEASES SHALL BE APPROVED BY THE CITY COUNCIL BEFORE THE SAME SHALL BECOME EFFECTIVE. THE TERM OF ANY GIVEN LEASE SHALL DEPEND UPON THE DURABILITY OF THE PROPOSED USE, THE AMOUNT OF INVESTMENT IN IMPROVEMENT PROPOSED AND MADE, AND THE NATURE OF THE IMPROVEMENT PROPOSED WITH RESPECT TO DURABILITY AND TIME REQUIRED TO AMORTIZE THE PROPOSED INVESTMENT. 21.15.100 ANNUAL M INIMUM RENTAL. (A) ANNUAL MINIMUM RENTALS SHALL BE COMPUTED FROM THE APPROVED APPRAISED MARKET VALUE UTILIZING THE METHOD AS DESCRIBED IN KMC 21.15.120 OF THIS CHAPTER. (B) UPON EXECUTION OF THE LEASE, THE LANDS BECOME TAXABLE TO THE EXTENT OF ITS LEASEHOLD INTEREST AND LESSEE SHALL PAY ALL REAL PROPERTY TAXES LEVIED UPON SUCH LEASEHOLD INTEREST IN THESE LANDS, AND SHALL PAY ANY SPECIAL ASSESSMENTS AND TAXES AS IF LESSEE WERE THE OWNER OF SAID LAND. (C) RENT SHALL BE PAID ANNUALLY IN ADVANCE. SAID PAYMENTS SHALL BE PRORATED TO CONFORM TO THE CITY OF PAYMENT EXCEEDS TWO HUNDRED DOLLARS ($200.00), THEN THE LESSEE SHALL HAVE THE OPTION OF Kenai’s fiscal year BEGINNING JULY 1 AND ENDING JUNE 30. IF THE EQUIVALENT MONTHLY MAKING PAYMENTS ON A MONTHLY BASIS. (D) LESSEE SHALL BE RESPONSIBLE FOR ALL SALES TAXES APPLICABLE TO ITS OPERATIONS. Page 10 Ordinance 3072-2019 Page 7 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.110 BIDDING PROCEDURE. AS AN EXCEPTION TO GENERAL POLICY LISTED ABOVE, THE CITY COUNCIL MAY DESIGNATE A SPECIFIC LOT OR LOTS TO BE MADE AVAILABLE ONLY FOR BID. THIS PROVISION SHALL APPLY ONLY WHEN THERE IS NO OUTSTANDING APPLICATION PENDING ON THE LOT OR LOTS. AS DESIGNATED, SEALED BIDS SHALL BE RECEIVED OFFERING A ONE-TIME PREMIUM IN ADDITION TO THE ESTABLISHED LEASE RATE. HIGHEST BID, HOWEVER, SHALL BE SUBJECT TO ALL PROVISIONS OF REVIEW AND APPROVAL ESTABLISHED FOR ALL OTHER LEASE APPLICATIONS. 21.15.120 PRINCIPLES AND POLICY OF LEASE RATES. (A) A FAIR RETURN TO THE AIRPORT SYSTEM IS MANDATED BY THE TERMS AND CONDITIONS OF THE QUITCLAIM DEED AND APPROPRIATE DEEDS OF RELEASE, GRANTING THESE LANDS TO THE AIRPORT SYSTEM BY THE FEDERAL GOVERNMENT. TO ENSURE A FAIR RETURN, ALL LEASES FOR A PERIOD IN EXCESS OF FIVE (5) YEARS SHALL INCLUDE A REDETERMINATION CLAUSE AS OF THE FIFTH ANNIVERSARY, AND ALL LANDS FOR LEASE SHALL BE APPRAISED PRIOR TO LEASE AND AGAIN PRIOR TO REDETERMINATION. LEASE RATES: (1) SHALL BE BASED ON FAIR MARKET VALUE OF THE LAND, INCLUDING AN APPROPRIATE CONSIDERATION OF FACILITIES AND SERVICES AVAILABLE (PUBLIC WATER, PUBLIC SEWER, STORM SEWERS, AND OTHER PUBLIC UTILITIES) AS DETERMINED BY A QUALIFIED INDEPENDENT APPRAISER, CONSIDERING THE BEST USE OF THE SPECIFIED LAND; AND, (2) SHALL BE EIGHT PERCENT (8%) OF FAIR MARKET VALUE. (B) FOR LEASES IN EXISTENCE PRIOR TO THE EFFECTIVE DATE OF THIS CHAPTER, THE LEASE RATE REDETERMINATION SHALL BE AS PROVIDED IN THE LEASE. (C) THE CITY MANAGER SHALL CHANGE THE RENT IN A LEASE BY GIVING THE LESSEE WRITTEN NOTICE AT LEAST THIRTY (30) DAYS IN ADVANCE OF THE EFFECTIVE DATE OF THE CHANGE. (D) THE “FAIR MARKET VALUE” OF THE PREMISES SHALL BE EQUAL TO THE THEN- FAIR MARKET RATE FOR SIMILAR COMMERCIAL PROPERTY IN THE CITY OF KENAI, ALASKA (THE “RELEVANT AREA”). CITY SHALL GIVE NOTICE TO LESSEE OF CITY’S ESTIMATION OF THE FAIR MARKET VALUE NOT LATER THAN THIRTY (30) DAYS PRIOR TO THE EXPIRATION OF THE THEN-APPLICABLE FIVE (5) YEAR PERIOD, AS EVIDENCED AND SUPPORTED BY THE WRITTEN OPINION OF AN INDEPENDENT REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87, SELECTED AND PAID FOR BY THE CITY, FAMILIAR WITH THE RELEVANT AREA (THE “FIRST APPRAISER”). IF LESSEE DISAGREES WITH SUCH ESTIMATE, IT SHALL ADVISE THE CITY IN WRITING THEREOF WITHIN THIRTY (30) DAYS OF LESSEE’S RECEIPT OF Page 11 Ordinance 3072-2019 Page 8 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] SUCH ESTIMATE, AS EVIDENCED AND SUPPORTED BY THE WRITTEN OPINION OF A REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 (SELECTED AND PAID FOR BY LESSEE) FAMILIAR WITH THE RELEVANT AREA (THE “SECOND APPRAISER”). THE PARTIES SHALL PROMPTLY MEET TO ATTEMPT TO RESOLVE THEIR DIFFERENCES BETWEEN THE FIRST APPRAISER AND THE SECOND APPRAISER CONCERNING THE FAIR MARKET VALUE OF THE PREMISES. IF CITY AND LESSEE CANNOT AGREE UPON SUCH VALUE THEN, WITH ALL DELIBERATE SPEED, THEY SHALL DIRECT THE FIRST APPRAISER AND THE SECOND APPRAISER TO EXPEDITIOUSLY AND MUTUALLY SELECT A THIRD REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 (SELECTED AND PAID FOR JOINTLY BY THE PARTIES) FAMILIAR WITH THE RELEVANT AREA (THE “THIRD APPRAISER”). WITHIN THIRTY (30) DAYS AFTER THE THIRD APPRAISER HAS BEEN APPOINTED, THE THIRD APPRAISER SHALL DECIDE WHICH OF THE TWO (2) RESPECTIVE APPRAISALS FROM THE FIRST APPRAISER AND THE SECOND APPRAISER MOST CLOSELY REFLECTS THE FAIR MARKET VALUE OF THE PREMISES. THE FAIR MARKET VALUE OF THE PREMISES SHALL IRREBUTTABLY BE PRESUMED TO BE THE VALUE CONTAINED IN SUCH APPRAISAL SELECTED BY THE THIRD APPRAISER, AND THE RENTAL SHALL BE REDETERMINED BASED ON SUCH VALUE. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, RENT SHALL CONTINUE TO BE PAID AT THE THEN-APPLICABLE RATE UNTIL ANY SUCH NEW RENTAL RATE IS ESTABLISHED, AND LESSEE AND CITY SHALL PROMPTLY PAY OR REFUND, AS THE CASE MAY BE, ANY VARIANCE IN THE RENT, WITHOUT INTEREST THEREON ACCRUING TO THE EXTENT TO BE PAID/REFUNDED IN A TIMELY FASHION. 21.15.130 REIMBURSEMENT FOR CITY-CONSTRUCTED IMPROVEMENTS. (A) THE CITY MANAGER MAY INCLUDE IN A LEASE A REQUIREMENT FOR THE LESSEE TO REIMBURSE THE CITY FOR THE CITY’S COST OF: (1) LAND CLEARING, GRAVEL FILL, UTILITY EXTENSIONS AND OTHER IMPROVEMENTS OR AMENITIES ON OR IN DIRECT CONNECTION WITH THE PREMISES, CONSTRUCTED BY THE CITY PRIOR TO THE EFFECTIVE DATE OF THE LEASE; OR (2) LAND CLEARING, GRAVEL FILL, UTILITY EXTENSIONS AND OTHER IMPROVEMENTS OR AMENITIES ON OR IN DIRECT CONNECTION WITH THE PREMISES, WHICH THE CITY AGREES TO CONSTRUCT AS A CONDITION OF THE LEASE, SUBJECT TO CITY COUNCIL APPROVAL. (B) THE LESSEE SHALL REIMBURSE THE CITY FOR THE CITY’S COST OF CONSTRUCTING THE IMPROVEMENTS IN TEN (10) EQUAL ANNUAL PAYMENTS, Page 12 Ordinance 3072-2019 Page 9 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] PLUS INTEREST AT EIGHT PERCENT (8%) PER YEAR ON THE UNPAID BALANCE OR UNDER SUCH TERMS AND CONDITIONS AS THE COUNCIL MAY SET BY RESOLUTION. IF THE LEASE IS FOR LESS THAN TEN (10) YEARS, THE REPAYMENT SCHEDULE MAY NOT BE LONGER THAN THE TERM OF THE LEASE. THE LESSEE MAY PAY THE ENTIRE REMAINING BALANCE TO THE CITY AT ANY TIME DURING THE TERM OF THE LEASE. 21.15.140 LEASE EXECUTION. THE LEASE APPLICANT SHALL EXECUTE AND RETURN THE APPROPRIATE LEASE AGREEMENT WITH THE CITY OF KENAI WITHIN THIRTY (30) DAYS OF MAILING THE AGREEMENT TO SAID APPLICANT. THE LEASE AGREEMENT SHALL BE PREPARED IN ACCORDANCE WITH THE REQUIREMENTS OF THIS TITLE. FAILURE TO EXECUTE AND RETURN THE LEASE AGREEMENT WITHIN THE SPECIFIED PERIOD SHALL RESULT IN THE FORFEITURE OF ALL LEASING RIGHTS. 21.15.150 LEASE UTILIZATION. LEASED LANDS SHALL BE UTILIZED FOR PURPOSES WITHIN THE TERMS OF THE LEASE AND IN CONFORMITY WITH THE ORDINANCES OF THE CITY, AND IN SUBSTANTIAL CONFORMITY WITH THE COMPREHENSIVE PLAN. UTILIZATION OR DEVELOPMENT FOR OTHER THAN THE ALLOWED USES SHALL CONSTITUTE A VIOLATION OF THE LEASE AND SUBJECT THE LEASE TO CANCELLATION AT ANY TIME. FAILURE TO SUBSTANTIALLY COMPLETE THE DEVELOPMENT PLAN FOR THE LAND, CONSISTENT WITH THE PROPOSED USE AND TERMS OF THE LEASE, SHALL CONSTITUTE GROUNDS FOR CANCELLATION. 21.15.160 FORM OF LEASE. (A) WHEN LEASING LAND UNDER THIS CHAPTER, THE CITY MANAGER SHALL USE A STANDARD LEASE FORM THAT IS: (1) DRAFTED TO: (I) PROVIDE A REASONABLE BASIS FOR THE LESSEE’S USE OF THE PREMISES, (II) FOSTER THE SAFE, EFFECTIVE, AND EFFICIENT OPERATION OF THE AIRPORT, (III) CONFORM WITH THE APPLICABLE REQUIREMENTS OF THE KMC, INCLUDING THIS CHAPTER, ALASKA STATUTES, FEDERAL AVIATION ADMINISTRATION REGULATIONS, AND OTHER APPLICABLE FEDERAL LAW, AND (Iv) PROVIDE FOR THE BEST INTEREST OF THE CITY. Page 13 Ordinance 3072-2019 Page 10 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (2) APPROVED AS TO FORM BY THE CITY ATTORNEY; AND (3) ADOPTED BY RESOLUTION OF THE CITY COUNCIL. (B) THE CITY MANAGER MAY ENTER INTO A LAND LEASE THAT DEVIATES FROM THE STANDARD FORM ADOPTED UNDER SUBSECTION (A) OF THIS SECTION, IF: (1) THE MANAGER BELIEVES THE ACTION IS IN THE BEST INTEREST OF THE CITY; AND (2) THE LEASE IS APPROVED AS TO FORM BY THE CITY ATTORNEY; AND (3) THE LEASE IS APPROVED BY RESOLUTION OF THE CITY COUNCIL. 21.15.170 CONVEYANCE TO ENCOURAGE NEW ENTERPRISES. (A) NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS CHAPTER, WHERE IT IS FOUND THAT ENCOURAGEMENT OF A NEW COMMERCIAL OR INDUSTRIAL ENTERPRISE WOULD BE BENEFICIAL TO THE CITY OF KENAI, THE CITY COUNCIL BY ORDINANCE SO FINDING MAY DIRECT CONVEYANCE OF ONE OR MORE PARCELS OF CITY LAND BY THE CITY MANAGER TO SUCH ENTERPRISE UPON SUCH TERMS AS TO PRICE, CONDITIONS OF CONVEYANCE, AND WITH SUCH CONTINGENCIES AS MAY BE SET FORTH IN SAID ORDINANCE. (B) IN THE EVENT THE LAND DIRECTED TO BE CONVEYED UNDER SUBSECTION (A) OF THIS SECTION CONSISTS IN PART OR IN WHOLE OF AIRPORT LANDS, THEN THE ORDINANCE ORDERING ITS CONVEYANCE. WILL NOT BE EFFECTIVE UNTIL THE CITY COUNCIL BY ORDINANCE HAS APPROPRIATED FROM THE GENERAL FUND TO BE DEDICATED TO THE AIRPORT THE DIFFERENCE BETWEEN THE APPRAISED FAIR MARKET VALUE OF SAID AIRPORT LANDS AND THE PURCHASE PRICE, IF ANY, SET FORTH IN SAID ORDINANCE. 21.15.180 SALE. (A) AIRPORT LAND OUTSIDE THE AIRPORT RESERVE TO WHICH THE CITY OF KENAI HOLDS TITLE WHICH ARE NOT RESTRICTED FROM SALE BY THE DEED OF CONVEYANCE TO THE CITY, OR WHICH HAVE BEEN RELEASED FROM SUCH RESTRICTIONS, WHICH THE CITY COUNCIL HAS DETERMINED ARE NOT REQUIRED FOR A PUBLIC PURPOSE, MAY BE LISTED FOR SALE BY THE CITY MANAGER, EXCEPT THAT LANDS WHICH HAVE BEEN LEASED SHALL NOT BE SOLD UNLESS THE LESSEE HAS MADE A WRITTEN REQUEST TO THE CITY TO PLACE THE LAND FOR SALE. THE DECISION WHETHER OR NOT TO SELL THE LAND RESTS IN THE SOLE DISCRETION OF THE CITY. (B) SALES OF LAND PURSUANT TO SUBSECTION (A) OF THIS SECTION SHALL BE MADE AT NOT LESS THAN FAIR MARKET VALUE. THE PURCHASER SHALL EXECUTE Page 14 Ordinance 3072-2019 Page 11 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] THE “AGREEMENT FOR SALE OF LAND” WITHIN ONE (1) YEAR OF THE DATE OF APPRAISAL. THE CITY MANAGER HAS THE OPTION TO DISPOSE OF SUCH PROPERTIES IN ACCORDANCE WITH THE SALE PROCEDURES SET OUT IN THIS TITLE: (1) BY NEGOTIATED SALE; OR (2) BY OUTCRY AUCTION TO THE HIGHEST RESPONSIBLE BIDDER; OR (3) BY COMPETITIVE SEALED BIDS TO THE HIGHEST RESPONSIBLE BIDDER. IN THE EVENT THAT THE SALE IS NOT CLOSED WITHIN ONE (1) YEAR OF THE DATE OF APPRAISAL, THE BUYER WILL BE CHARGED, UPON CLOSING, INTEREST COMPUTED IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE KENAI MUNICIPAL CODE, BASED UPON THE TOTAL SALES PRICE FOR THE NUMBER OF DAYS PAST THE EXPIRATION OF THE SIX (6) MONTH PERIOD. 21.15.190 SALE PROCEDURE. (A) THE CITY MANAGER WILL OBTAIN SUCH AN APPRAISAL FOR A DETERMINATION OF THE MINIMUM PRICE ON SAID LAND. (B) WHERE ANY PARTY, HEREINAFTER CALLED “APPLICANT,” REQUESTS THAT A TRACT OR TRACTS OF LAND BE SOLD FOR WHICH AN APPRAISAL WILL BE REQUIRED, WHICH WILL REQUIRE SUBDIVIDING, PLATTING, OR SURVEYING AND STAKING, OR WHICH WILL REQUIRE ADVERTISING OR INCURRING ANY OTHER EXPENDITURES BY THE CITY PRIOR TO SALE, (1) NO ACTIONS IN PREPARATION FOR SALE WILL BE TAKEN BY THE CITY UNTIL AN AGREEMENT TO PURCHASE SHALL BE PROPERLY EXECUTED AND FILED WITH THE CITY MANAGER FOR THE PURCHASE OF SUCH LAND WITH PAYMENT OF SUFFICIENT GOOD FAITH DEPOSIT, WHICH SHALL CONSIST OF CASH OR ITS EQUIVALENT DEPOSITED WITH THE FINANCE OFFICER OF THE CITY OF KENAI, AS MAY BE DETERMINED BY THE CITY MANAGER, TO COVER ALL EXPENSES OF THE CITY AND SUCH AGREEMENT TO PURCHASE SHALL FURTHER CONTAIN THE AGREEMENT BY APPLICANT TO PAY ANY ADDITIONAL COSTS IF SUCH GOOD FAITH DEPOSIT IS INSUFFICIENT TO PAY ALL COSTS INCURRED BY THE CITY. (2) IF AT ANY TIME DURING THE PROCESS OF PREPARING FOR SALE, THE APPLICANT GIVES NOTICE TO THE CITY MANAGER OF WITHDRAWAL OF THE REQUEST FOR SALE, THE CITY MANAGER SHALL STOP ALL PROCEDURES, SHALL PAY EXPENSES INCURRED PRIOR TO TERMINATION OF SALE PROCEDURES, AND SHALL REIMBURSE APPLICANT FOR ANY GOOD FAITH DEPOSIT ADVANCED IN EXCESS OF ALL EXPENSES INCURRED. (HOWEVER, IF ANOTHER PARTY DESIRES THE SALE TO PROCEED, FILES AN APPLICATION Page 15 Ordinance 3072-2019 Page 12 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] FOR SALE, EXECUTES AND FILES AN AGREEMENT TO PURCHASE, AND ADVANCES SUFFICIENT FUNDS THEREFOR, THEN THE PRIOR APPLICANT WILL BE REIMBURSED FOR EXPENSES CHARGES WHICH CAN BE ATTRIBUTED TO THE SUBSEQUENT APPLICANT.) (3) IF ALL ACTIONS NECESSARY FOR PREPARATION FOR SALE HAVE BEEN ACCOMPLISHED, AND IF NEITHER THE APPLICANT NOR ANY OTHER PARTY PURCHASES SAID LAND WHEN FIRST OFFERED FOR SALE AFTER SUCH REQUEST, THEN ALL EXPENSES INCURRED IN PREPARATION FOR THE SALE WILL BE PAID FROM THE GOOD FAITH DEPOSIT, AND THE BALANCE, IF ANY, SHALL BE RETURNED TO THE APPLICANT. IF THE SUMS ADVANCED AS GOOD FAITH DEPOSIT ARE INSUFFICIENT TO PAY ALL OF THE COSTS, THE APPLICANT WILL BE BILLED FOR THE BALANCE DUE AND NORMAL COLLECTION PROCEDURES FOLLOWED. (4) IF THE LAND APPLIED FOR IS SOLD ON PUBLIC SALE SET IN RESPONSE TO SUCH REQUEST TO ANYONE OTHER THAN APPLICANT, THEN ON CLOSING OF THE SALE, THE GOOD FAITH DEPOSIT WILL BE REFUNDED IN TOTAL TO THE APPLICANT. THE CITY’S EXPENSES WILL BE FIRST DEDUCTED FROM THE DEPOSIT OF THE SUCCESSFUL BIDDER. (5) IF THE LAND IN QUESTION IS SOLD TO APPLICANT, THE GOOD FAITH DEPOSIT ADVANCED, AFTER DEDUCTING THE CITY’S EXPENSES, WILL BE APPLIED ON THE PAYMENT DUE AT CLOSING. (6) IF THE LAND IN QUESTION IS TO BE SOLD BY SEALED BID AND THE APPLICANT HAS SUBMITTED A VALID BID, BUT THE APPLICANT IS NOT THE HIGH BIDDER, HE OR SHE MAY PURCHASE THE LAND BY TENDERING THE CITY A BID EQUAL TO THE HIGH BID WITHIN FIVE (5) DAYS OF THE BID OPENING. IF THE LAND SALE IS INITIATED IN ACCORDANCE WITH KMC 21.15.060(A), THE APPLICANT SHALL BE DEFINED AS THAT PARTY SUBMITTING THE INITIAL LEASE APPLICATION. (C) IF THE TRACT OF LAND PROPOSED TO BE SOLD IS LEASED LAND, THE LESSEE MAY REQUEST THE SALE OF THE LAND AT NOT LESS THAN THE FAIR MARKET VALUE. THE CURRENT LESSEE MAY REQUEST TO NEGOTIATE A SALE ONLY AFTER, TO THE SATISFACTION OF THE CITY MANAGER, DEVELOPMENT HAS BEEN COMPLETED AS DETAILED IN THE DEVELOPMENT SCHEDULE WHICH HAS BEEN INCORPORATED INTO THE LEASE AGREEMENT. IF THERE IS NO DEVELOPMENT SCHEDULE, THE LESSEE MAY REQUEST TO PURCHASE THE PROPERTY IF THERE HAVE BEEN SUBSTANTIAL IMPROVEMENTS AS DETERMINED BY THE CITY MANAGER. THE DECISION WHETHER OR NOT TO SELL THE LAND TO THE LESSEE RESTS IN THE SOLE DISCRETION OF THE CITY. Page 16 Ordinance 3072-2019 Page 13 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (D) AN APPLICANT MAY REQUEST THE LEASE OF CITY LAND INCLUDE A RIGHT TO PURCHASE THE LEASED LAND WITHIN TWELVE (12) MONTHS OF THE COMPLETION OF THE DEVELOPMENT AS DETAILED IN THE DEVELOPMENT SCHEDULE. A SALE UNDER THIS SUBSECTION SHALL BE AT NOT LESS THAN FAIR MARKET VALUE AS DETERMINED BY AN APPRAISER QUALIFIED UNDER AS 8.87. THE CITY MAY CHARGE ADDITIONAL CONSIDERATION FOR GRANTING THE RIGHT TO PURCHASE THE PROPERTY. THE LAND MUST BE APPRAISED WITHIN TWELVE (12) MONTHS OF SALE AS REQUIRED UNDER KMC 21.15.070. AN APPLICANT’S REQUEST TO HAVE A CONTRACTUAL RIGHT TO PURCHASE THE LEASE PROPERTY MUST BE APPROVED BY AN ORDINANCE OF THE COUNCIL. THE COUNCIL MAY GRANT THE REQUEST IF IT DETERMINES IT IS IN THE BEST INTEREST OF THE CITY. (E) IF THE TRACT OF LAND PROPOSED TO BE SOLD IS NOT LEASED LAND, OR IS LEASED LAND WITHOUT SUBSTANTIAL IMPROVEMENTS, THEN THE TRACT OF LAND MAY ONLY BE SOLD BY OUTCRY AUCTION OR BY COMPETITIVE SEALED BIDS. THE DECISION WHETHER OR NOT TO SELL THE LAND RESTS IN THE SOLE DISCRETION OF THE CITY. IF THE TRACT IS TO BE PUT UP FOR SUCH COMPETITIVE AUCTION OR SEALED BID SALE, NOTICE OF SALE AND THE MANNER IN WHICH THE LAND IS TO BE SOLD SHALL BE PUBLISHED IN A NEWSPAPER OF GENERAL CIRCULATION WITHIN THE CITY ONCE EACH WEEK FOR TWO (2) SUCCESSIVE WEEKS NOT LESS THAN THIRTY (30) DAYS PRIOR TO THE DATE OF SALE; SUCH NOTICE SHALL ALSO BE POSTED IN AT LEAST THREE PUBLIC PLACES WITHIN THE CITY AT LEAST THIRTY (30) DAYS PRIOR TO THE DATE OF SALE, AND SUCH OTHER NOTICE MAY BE GIVEN BY SUCH OTHER MEANS AS MAY BE CONSIDERED ADVISABLE BY THE CITY MANAGER. SUCH NOTICE MUST CONTAIN: (1) THE LEGAL DESCRIPTION OF THE LAND; (2) A BRIEF PHYSICAL DESCRIPTION OF THE LAND; (3) THE AREA AND GENERAL LOCATION OF THE LAND; (4) THE MINIMUM ACCEPTABLE OFFER FOR THE LAND (WHICH SHALL BE ITS APPRAISED FAIR MARKET VALUE); (5) THE TERMS UNDER WHICH THE LAND WILL BE SOLD; (6) ANY LIMITATIONS ON THE SALE OF THE LAND; (7) THE TIME AND PLACE SET FOR THE AUCTION OR BID OPENING; (8) THE AMOUNT OF DEPOSIT TO BE SUBMITTED WITH EACH BID IN ORDER TO COVER THE CITY’S EXPENSES SUCH AS SURVEY, APPRAISAL, AND REVIEWS; (9) ANY OTHER MATTERS CONCERNING THE SALE OF WHICH THE CITY MANAGER BELIEVES THE PUBLIC SHOULD BE INFORMED. (F) WHERE A REAL ESTATE AGENT FURNISHES A BUYER FOR CITY LAND, THE CLOSING AGENT SHALL BE AUTHORIZED TO PAY THE AGENT A REAL ESTATE Page 17 Ordinance 3072-2019 Page 14 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] COMMISSION OF FIVE PERCENT (5%) OF THE PURCHASE PRICE FOR THE LAND OR FIVE PERCENT (5%) OF THE APPRAISED FAIR MARKET VALUE OF THE LAND, WHICHEVER IS LOWER, UNDER THE FOLLOWING TERMS AND CONDITIONS: (1) THE CITY MANAGER SHALL PROVIDE A NON-EXCLUSIVE LISTING OF LANDS AVAILABLE FOR SALE. (2) NO COMMISSION SHALL BE PAID TO AN AGENT WHERE SAID AGENT IS A PARTY, OR IN PRIVITY WITH A PARTY, TO THE SALE. (G) CLOSING OF SALE OF CITY LANDS SHALL BE HANDLED BY A TITLE OR ESCROW COMPANY WITHIN THE CITY WHICH SPECIALIZES IN CLOSING OF REAL ESTATE SALES. (H) CONVEYANCE OF CITY LANDS SHALL BE BY QUIT CLAIM OR WARRANTY DEED FURNISHED BY THE CITY, AND BUYERS ARE ADVISED THAT ALL SUCH CONVEYANCES ARE SUBJECT TO ALL LIENS, ENCUMBRANCES, RESTRICTIONS, AND COVENANTS OF RECORD AND ARE SPECIFICALLY, WITHOUT BEING LIMITED THERETO, SUBJECT TO ANY UNRELEASED RESTRICTIONS CONTAINED IN THE DEED OR DEEDS BY WHICH THE CITY RECEIVED TITLE TO THE LAND. THE DEED SHALL BE SIGNED BY THE CITY MANAGER AND ATTESTED BY THE CITY CLERK. THE FORM OF THE DEED SHALL BE APPROVED BY THE CITY ATTORNEY. (I) IF A BUYER DESIRES TO OBTAIN A PRELIMINARY COMMITMENT FOR TITLE INSURANCE OR TITLE INSURANCE TO THE LAND, THEN IT SHALL BE THE RESPONSIBILITY OF THE BUYER TO OBTAIN SUCH COMMITMENT OR INSURANCE AND TO PAY FOR THE SAME. (J) IF THE TRACT OR TRACTS OF LAND ARE SOLD UNDER TERMS BY WHICH THE CITY IS TO ACCEPT A NOTE AS A PORTION OF THE PURCHASE PRICE, THE NOTE AND ACCOMPANYING DEED OF TRUST MUST BE PREPARED BY AN ATTORNEY, BUT MUST BE APPROVED BY THE CITY ATTORNEY PRIOR TO CLOSING. (K) THE NOTE SHALL BE PLACED FOR COLLECTION WITH A BANK SELECTED BY THE CITY MANAGER, WHICH MAY BE CHANGED FROM TIME TO TIME, AND WHICH SHALL BE THE BANK IN WHICH CITY FUNDS ARE DEPOSITED. THE SET-UP FEE TO INITIATE COLLECTION MAY BE NEGOTIATED, AND THE BUYER SHALL PAY THE ANNUAL COLLECTION FEES FOR SUCH BANK COLLECTION. (L) TO ENABLE THE CITY TO COMPETE ON AN EQUAL BASIS WITH PRIVATE ENTERPRISE IN LANDS DISPOSAL, THE CITY MANAGER IS AUTHORIZED TO NEGOTIATE A DIVISION OF THE COSTS OF SALE LISTED IN KMC 21.15.190(F) (G), (H), (I) AND (J) TO A MAXIMUM OF FIFTY PERCENT (50%) OF THE REQUIRED COSTS BEING BORNE BY THE CITY. Page 18 Ordinance 3072-2019 Page 15 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.200 TERMS FOR FINANCING SALE OF CITY LAND s. (A) IN ORDER TO EXPEDITE AND FACILITATE THE SALE OF CITY LANDS, THE CITY MANAGER IS AUTHORIZED TO ACCEPT TERMS FOR SAID SALES AND MAY ACCEPT A NOTE SECURED BY A DEED OF TRUST FOR A PORTION OF THE PURCHASE PRICE THEREOF, SUBJECT TO THE FOLLOWING RESTRICTIONS: (1) IF THE SALE IS TO A LESSEE WHO HAS PLACED A LIEN FOR FINANCING UPON THE LAND OR IMPROVEMENTS, THEN THE CITY MANAGER IS NOT AUTHORIZED TO SELL THE LAND EXCEPT FOR TOTAL CASH PAYMENT, PROVIDED; HOWEVER, THAT THE CITY MANAGER MAY ACCEPT A NOTE SECURED BY A DEED OF TRUST SUBORDINATE TO THE EXISTING SECURITY INTEREST IF THE AMOUNT OF THE NOTE THEREBY SECURED IS WITHIN THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE OF THE LAND WITH IMPROVEMENTS, AND THE SUM OF ALL PRIOR SECURITY INTERESTS. THE SALE DOCUMENTS SHALL BE SUBJECT TO THE SAME RESTRICTIONS CONTAINED IN THE LEASE AS THE LEASE PROVIDES AT THE TIME OF SALE. (2) PRIOR TO MAKING A DETERMINATION TO ACCEPT A NOTE AND DEED OF TRUST FROM A PROSPECTIVE PURCHASER, THE CITY MANAGER SHALL SECURE A PRELIMINARY COMMITMENT FOR TITLE INSURANCE (AT PURCHASER’S EXPENSE) AND A REVIEW OF THE GRANTEE INDEX COVERING THE PARTY DESIRING TO PURCHASE THE LAND FROM THE TITLE COMPANY IN THE LOCAL RECORDING DISTRICT, AND NO CREDIT WILL BE ADVANCED ON SUCH SALE IF THERE ARE ANY DELINQUENT LIENS OR UNPAID JUDGMENTS FOUND IN THE TITLE COMPANY REPORT UNTIL ANY SUCH JUDGMENTS OR LIENS ARE PAID AND RELEASES THEREFORE HAVE BEEN FILED. (3) IN THE EVENT OF A CREDIT SALE, THE DOWN PAYMENT REQUIRED SHALL BE DETERMINED BY THE CITY MANAGER, BUT SHALL NOT BE LESS THAN FIFTEEN PERCENT (15%) OF THE SALES PRICE. (B) IF THE CITY MANAGER DETERMINES THAT IT IS IN THE CITY’S INTEREST TO SELL CITY LANDS, THE SALE SHALL BE EITHER A CASH TRANSACTION OR BY A NOTE SECURED BY A DEED OF TRUST, SUBJECT TO SUBSECTION (A) OF THIS SECTION, AND BY NO OTHER MEANS. THE NOTE AND DEED OF TRUST SHALL CARRY TERMS AS FOLLOWS: (1) THE TERM OF SUCH NOTE MAY BE SET BY THE CITY MANAGER, BUT IT SHALL PROVIDE FOR MONTHLY PAYMENTS AND NOT EXCEED TWENTY (20) YEARS UNLESS A LONGER PERIOD FOR A SPECIFIC SALE OF LAND IS APPROVED BY RESOLUTION OF THE CITY COUNCIL. (2) SUCH NOTE SHALL BEAR INTEREST AT A RATE TO BE DETERMINED BY THE CITY COUNCIL BY RESOLUTION. Page 19 Ordinance 3072-2019 Page 16 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.210 DETERMINATION AS TO NEED FOR PUBLIC USE. (A) WHETHER LAND SHALL BE ACQUIRED, RETAINED, DEVOTED, OR DEDICATED TO A PUBLIC USE SHALL BE DETERMINED BY ORDINANCE WHICH SHALL CONTAIN THE PUBLIC USE FOR W HICH SAID PROPERTY IS TO BE DEDICATED, THE LEGAL DESCRIPTION OF THE PROPERTY, AND THE ADDRESS OR A GENERAL DESCRIPTION OF THE PROPERTY SUFFICIENT TO PROVIDE THE PUBLIC WITH NOTICE OF ITS LOCATION. (B) WHETHER LAND PREVIOUSLY DEDICATED TO A PUBLIC USE SHOULD BE DEDICATED TO A DIFFERENT PUBLIC USE OR SHOULD NO LONGER BE NEEDED BY THE CITY FOR PUBLIC USE SHALL BE DETERMINED BY THE CITY COUNCIL BY ORDINANCE WHICH SHALL CONTAIN THE NEW PUBLIC USE FOR WHICH SAID PROPERTY IS TO BE DEDICATED OR THE REASON THE LAND IS NO LONGER NEEDED FOR PUBLIC USE, THE LEGAL DESCRIPTION OF THE PROPERTY, AND THE ADDRESS OR A GENERAL DESCRIPTION OF THE PROPERTY SUFFICIENT TO PROVIDE THE PUBLIC W ITH NOTICE OF ITS LOCATION. 21.15.220 PROPERTY EXCHANGES. THE COUNCIL MAY APPROVE, BY RESOLUTION, AFTER PUBLIC NOTICE AND AN OPPORTUNITY FOR PUBLIC HEARING, THE CONVEYANCE AND EXCHANGE OF A PARCEL OF CITY PROPERTY FOR PROPERTY OWNED BY ANOTHER PERSON SUBJECT TO SUCH CONDITIONS AS COUNCIL MAY IMPOSE ON THE EXCHANGE, WHENEVER IN THE JUDGMENT OF THE CITY COUNCIL IT IS ADVANTAGEOUS TO THE CITY TO MAKE THE PROPERTY EXCHANGE AND THE CITY SHALL RECEIVE PROPERTY (INCLUDING A PORTION OF MONEY) AT LEAST EQUIVALENT TO THE VALUE OF THE PROPERTY EXCHANGED BY THE CITY. 21.15.230 PROPERTY SALE TO ADJACENT OWNERS. THE COUNCIL MAY APPROVE, BY RESOLUTION, AFTER PUBLIC NOTICE AND AN OPPORTUNITY FOR PUBLIC HEARING, THE SALE AND CONVEYANCE OF A PARCEL OF CITY PROPERTY AT ITS APPRAISED VALUE TO THE OWNER OF ADJACENT LAND WHENEVER, IN THE JUDGMENT OF THE CITY COUNCIL, THE PARCEL OF LAND IS OF SUCH SMALL SIZE, SHAPE, OR LOCATION THAT IT COULD NOT BE PUT TO PRACTICAL USE BY ANY OTHER PARTY AND, IN ADDITION THERETO, WHERE THERE IS NO FORESEEABLE NEED OF THE LAND FOR ANY FUTURE USE BY THE CITY. Page 20 Ordinance 3072-2019 Page 17 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.240 GRANT OR DEVOTION. (A) THE COUNCIL, BY ORDINANCE, MAY LEASE, GRANT OR DEVOTE REAL PROPERTY NO LONGER NEEDED BY THE CITY FOR A PUBLIC PURPOSE TO THE UNITED STATES, THE STATE OF ALASKA, A LOCAL POLITICAL SUBDIVISION OF THE STATE OF ALASKA (INCLUDING THE CITY OF KENAI GENERAL FUND), OR ANY AGENCY OF ANY OF THESE GOVERNMENTS OR NON-PROFIT CORPORATION, FOR A CONSIDERATION AGREED UPON BETWEEN THE CITY AND GRANTEE WITHOUT A PUBLIC SALE IF THE GRANT OR DEVOTION IS ADVANTAGEOUS TO THE CITY. (B) IN THE EVENT THE LAND DIRECTED TO BE CONVEYED UNDER SUBSECTION (A) OF THIS SECTION CONSISTS IN PART OR IN WHOLE OF AIRPORT LANDS, THEN THE ORDINANCE ORDERING ITS CONVEYANCE WILL NOT BE EFFECTIVE UNTIL THE CITY COUNCIL BY ORDINANCE HAS APPROPRIATED FROM THE GENERAL FUND TO BE DEDICATED TO THE AIRPORT THE DIFFERENCE BETWEEN THE APPRAISED FAIR MARKET VALUE OF SAID AIRPORT LANDS AND THE PURCHASE PRICE, IF ANY, SET FORTH IN SAID ORDINANCE. 21.15.250 USE PERMITS. THE COUNCIL MAY AUTHORIZE THE CITY MANAGER TO GRANT PERMITS FOR THE TEMPORARY USE OF REAL PROPERTY OWNED BY THE CITY FOR A PERIOD NOT TO EXCEED ONE (1) YEAR, WITHOUT APPRAISAL OF THE VALUE OF THE PROPERTY OR PUBLIC AUCTION, FOR ANY PURPOSE COMPATIBLE WITH THE ZONING OF THE LAND, AND ON SUCH TERMS AND FOR SUCH RENTALS AS THE COUNCIL SHALL DETERMINE. 21.15.260 ACQUISITION OF REAL PROPERTY. (A) THE CITY, BY AUTHORIZATION OF THE CITY COUNCIL, EXPRESSED IN A RESOLUTION FOR SUCH PURPOSE, MAY PURCHASE OR ACQUIRE AN INTEREST IN, OR LEASE REAL PROPERTY NEEDED FOR A PUBLIC USE WITHIN OR OUTSIDE THE AIRPORT RESERVE ON SUCH TERMS AND CONDITIONS AS THE COUNCIL SHALL DETERMINE, BUT NO PURCHASE SHALL BE MADE UNTIL A QUALIFIED APPRAISER HAS APPRAISED THE PROPERTY AND GIVEN THE COUNCIL AN INDEPENDENT OPINION AS TO THE FULL AND TRUE VALUE THEREOF; (B) BECAUSE OF THE UNIQUE VALUE OF REAL PROPERTY, THE CITY NEED NOT ACQUIRE OR LEASE REAL PROPERTY BY COMPETITIVE BIDDING. Section 3. Repealing, Renaming and Re-enacting Title 22 of the Kenai Municipal Code: That Kenai Municipal Code, Title 22 – General Fund Lands is hereby repealed, renamed, and re- enacted as follows: Page 21 Ordinance 3072-2019 Page 18 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] [TITLE 22 GENERAL FUND LANDS CHAPTER 22.05 DISPOSITION OF CITY GENERAL FUND LANDS 22.05.010 POWER TO DISPOSE OF REAL PROPERTY. (A) THE PROVISIONS OF THIS CHAPTER APPLY TO GENERAL FUND REAL PROPERTY. (B) THE CITY MAY SELL, CONVEY, EXCHANGE, TRANSFER, DONATE, DEDICATE, DIRECT, OR ASSIGN TO USE, OR OTHERWISE DISPOSE OF CITY-OWNED REAL PROPERTY, INCLUDING PROPERTY ACQUIRED, HELD FOR, OR DEVOTED TO A PUBLIC USE, ONLY IN ACCORDANCE WITH THIS CHAPTER, AND, WITH RESPECT TO PROPERTIES ACQUIRED THROUGH FORECLOSURE FOR TAXES, IN COMPLIANCE WITH THOSE TERMS AND PROVISIONS OF AS 29 Which Home-Rule Municipalities Are Required To Comply With. DISPOSAL OR SALE OF LANDS SHALL BE MADE ONLY WHEN, IN THE JUDGMENT OF THE CITY COUNCIL, SUCH LANDS ARE NOT REQUIRED FOR A PUBLIC PURPOSE. 22.05.015 SALE OR DISPOSAL. THE CITY MAY SELL OR DISPOSE OF REAL PROPERTY BY WARRANTY OR QUIT-CLAIM DEED, EASEMENT, LEASE, GRANT, PERMIT, LICENSE, DEED OF TRUST, MORTGAGE CONTRACT OF SALE OF REAL PROPERTY, PLAT DEDICATION, TAX DEED, OR ANY OTHER LAWFUL METHOD OR MODE OF CONVEYANCE OR GRANT. ANY INSTRUMENT REQUIRING EXECUTION BY THE CITY SHALL BE SIGNED BY THE CITY MANAGER AND ATTESTED BY THE CITY CLERK. THE FORM OF ANY INSTRUMENT SHALL BE APPROVED BY THE CITY ATTORNEY. 22.05.020 QUALIFICATIONS OF APPLICANTS OR BIDDERS. AN APPLICANT OR BIDDER FOR A LEASE IS QUALIFIED IF THE APPLICANT OR BIDDER: (A) IS AN INDIVIDUAL AT LEAST EIGHTEEN (18) YEARS OF AGE OR OVER; OR (B) IS A GROUP, ASSOCIATION, OR CORPORATION WHICH IS AUTHORIZED TO CONDUCT BUSINESS UNDER THE LAWS OF ALASKA; OR (C) IS ACTING AS AN AGENT FOR ANOTHER AND HAS QUALIFIED BY FILING WITH THE CITY MANAGER A PROPER POWER OF ATTORNEY OR A LETTER OF AUTHORIZATION CREATING SUCH AGENCY. THE AGENT SHALL REPRESENT ONLY ONE (1) PRINCIPAL TO THE EXCLUSION OF HIMSELF OR HERSELF. THE TERM “AGENT” INCLUDES REAL ESTATE BROKERS AND AGENTS. Page 22 Ordinance 3072-2019 Page 19 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 22.05.025 APPLICATIONS. (A) ALL APPLICATIONS FOR LEASE OF LANDS SHALL BE FILED WITH THE CITY MANAGER ON FORMS PROVIDED BY THE CITY AVAILABLE AT CITY HALL. APPLICATIONS SHALL BE DATED ON RECEIPT AND PAYMENT OF FILING FEE AND DEPOSIT. NO APPLICATION WILL BE ACCEPTED BY THE CITY MANAGER UNLESS IT APPEARS TO THE CITY MANAGER TO BE COMPLETE. FILING FEES ARE NOT REFUNDABLE. (B) WITH EVERY APPLICATION, THE APPLICANT SHALL SUBMIT A DEVELOPMENT PLAN, SHOWING AND STATING: (1) THE PURPOSE OF THE PROPOSED LEASE; (2) THE USE, VALUE AND NATURE OF IMPROVEMENTS TO BE CONSTRUCTED; (3) THE TYPE OF CONSTRUCTION; (4) THE DATES CONSTRUCTION IS ESTIMATED TO COMMENCE AND BE COMPLETED (ORDINARILY A MAXIMUM OF TWO (2) YEARS); AND (5) WHETHER INTENDED USE COMPLIES WITH THE ZONING ORDINANCE AND COMPREHENSIVE PLAN OF THE CITY. APPLICATIONS SHALL BECOME A PART OF THE LEASE. 22.05.030 FILING FEE AND DEPOSIT. (A) WHEN SUBMITTING AN APPLICATION FOR LEASE OF LAND, THE APPLICANT SHALL PAY THE CITY THE FOLLOWING AS SET FORTH IN THE CITY’S SCHEDULE OF FEES ADOPTED BY THE CITY COUNCIL: (1) PAY A NON-REFUNDABLE FILING FEE IN THE AMOUNT; AND (2) A DEPOSIT TO SHOW GOOD FAITH AND SECURE THE CITY IN PAYMENT OF ANY COSTS, INCLUDING: (A) AN APPRAISAL COST RECOVERY DEPOSIT; AND (B) AN ENGINEERING, SURVEYING AND CONSULTING COST RECOVERY DEPOSIT. (B) IF THE CITY DECIDES TO REJECT THE APPLICANT’S APPLICATION AND NOT ENTER INTO A LEASE WITH THE APPLICANT THROUGH NO FAULT OF THE APPLICANT OR FAILURE OF THE APPLICANT TO COMPLY WITH ANY REQUIREMENT OF THIS CHAPTER, ANY DEPOSIT MADE UNDER SUBSECTION (A)(2) OF THIS SECTION WILL BE RETURNED TO THE APPLICANT. (C) IF THE CITY ENTERS INTO A LEASE WITH THE APPLICANT ANY DEPOSIT MADE BY THE APPLICANT UNDER SUBSECTION (A)(2) OF THIS SECTION WILL BE APPLIED TO THE CITY’S ENGINEERING, APPRAISAL, AND CONSULTING COSTS RELATED TO THE PROCESSING OF THE APPLICANT’S APPLICATION AND ENTERING INTO THE Page 23 Ordinance 3072-2019 Page 20 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] LEASE. THE CITY WILL APPLY ANY UNUSED BALANCE OF A DEPOSIT TO THE RENT PAYABLE UNDER THE LEASE. IF THE CITY’S COSTS EXCEED THE AMOUNT OF ANY DEPOSIT, THE APPLICANT SHALL PAY THE SHORTAGE TO THE CITY AS A CONDITION OF THE LEASE. (D) IF THE APPLICANT FAILS TO COMPLY WITH ANY REQUIREMENT OF THIS CHAPTER, CAUSES INORDINATE DELAY, AS DETERMINED BY THE CITY MANAGER, OR REFUSES TO SIGN A LEASE OFFERED TO THE APPLICANT, THE CITY MANAGER WILL REJECT THE APPLICANT’S APPLICATION AND APPLY ANY DEPOSIT MADE BY THE APPLICANT UNDER SUBSECTION (A) OF THIS SECTION TO THE CITY’S APPRAISAL, ENGINEERING, AND CONSULTING COSTS INCURRED IN CONNECTION WITH THE APPLICANT’S APPLICATION. IF THE CITY’S COSTS FOR APPRAISAL, ENGINEERING AND CONSULTING COSTS EXCEED THE DEPOSITS, THE APPLICANT WILL BE RESPONSIBLE FOR THESE COSTS. THE CITY WILL RETURN ANY UNUSED DEPOSIT BALANCE TO THE APPLICANT. 22.05.035 RIGHTS PRIOR TO LEASING. THE FILING OF AN APPLICATION FOR A LEASE SHALL GIVE THE APPLICANT NO RIGHT TO LEASE OR TO THE USE OF THE LAND FOR WHICH THEY HAVE APPLIED. THE APPLICATION SHALL EXPIRE WITHIN TWELVE (12) MONTHS AFTER THE APPLICATION HAS BEEN MADE IF A LEASE HAS NOT BEEN ENTERED INTO BETWEEN THE CITY AND THE APPLICANT BY THAT TIME UNLESS THE CITY COUNCIL FOR GOOD CAUSE GRANTS AN EXTENSION. NO EXTENSION MAY BE GRANTED FOR A PERIOD LONGER THAN SIX (6) ADDITIONAL MONTHS. LEASE RATES ARE SUBJECT TO CHANGE ON THE BASIS OF AN APPRAISAL DONE EVERY TWELVE (12) MONTHS ON THE PROPERTY APPLIED FOR. 22.05.040 PROCESSING PROCEDURE. (A) APPLICATIONS SHALL BE FORWARDED TO THE PLANNING AND ZONING COMMISSION UPON RECEIPT. THE PLANNING AND ZONING COMMISSION SHALL NORMALLY CONSIDER APPLICATIONS FOR SPECIFIC LANDS ON A FIRST-COME, FIRST-SERVED BASIS IF THE COMMISSION FINDS THAT THE APPLICATION IS COMPLETE AND CONFORMS TO THE COMPREHENSIVE PLAN AND THE KENAI ZONING CODE. WHERE THERE IS DIFFICULTY IN OBTAINING A PERFECTED APPLICATION, DETAILS AS TO DEVELOPMENT PLANS, ETC., OR WHERE THE APPLICANT FAILS TO COMPLY WITH DIRECTIONS OR REQUESTS OF THE PLANNING AND ZONING COMMISSION, ANY SUCH PRIORITY WILL BE LOST. IF AN APPLICATION FOR THE PURCHASE OF CITY-OWNED LANDS, PREVIOUSLY AUTHORIZED FOR SALE BY THE COUNCIL, IS RECEIVED BY THE CITY PRIOR TO THE KENAI PLANNING AND ZONING COMMISSION MAKING AN AFFIRMATIVE OR NEGATIVE RECOMMENDATION Page 24 Ordinance 3072-2019 Page 21 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] TO THE COUNCIL REGARDING THE LEASE APPLICATION FOR THE SAME PROPERTY, THE CITY MAY ELECT TO SELL THE PROPERTY IN ACCORDANCE WITH THE PROVISIONS OF THE CODE. (B) THE CITY COUNCIL SHALL NORMALLY CONSIDER A LEASE PROPOSAL ONLY AFTER APPROVAL OF THE PLANNING AND ZONING COMMISSION. HOWEVER, APPEALS OF PLANNING AND ZONING COMMISSION DISAPPROVAL MAY BE MADE TO THE CITY COUNCIL. COMPLETED LEASE APPLICATIONS MUST BE PRESENTED TO THE CITY COUNCIL WITHIN THIRTY (30) DAYS AFTER APPROVAL BY THE PLANNING AND ZONING COMMISSION. (C) WHERE THERE ARE TWO (2) OR MORE APPLICATIONS FOR THE SAME LANDS FOR DIFFERENT USES, THEN IF THE PLANNING AND ZONING COMMISSION MAKES A FINDING THAT A SUBSEQUENT APPLICATION WOULD RESULT IN USE OF THE LANDS FOR A HIGHER AND BETTER PURPOSE WITH A GREATER BENEFIT TO THE CITY OF KENAI AND THE CITIZENS THEREOF, THEN THE LEASE MAY BE ISSUED TO SUCH APPLICANT NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (A) IN THIS SECTION WHICH PROVIDE FOR LEASING ON A FIRST-COME, FIRST-SERVED BASIS. ANY APPLICANT MAY APPEAL TO THE CITY COUNCIL FROM A FINDING OR A REFUSAL TO FIND BY THE PLANNING AND ZONING COMMISSION BY FILING AN APPEAL WITH THE CITY CLERK WITHIN SEVEN (7) DAYS AFTER THE FINDING IS MADE OR REFUSED BY THE PLANNING AND ZONING COMMISSION. (D) THE DECISION WHETHER OR NOT TO LEASE LAND RESTS IN THE SOLE DISCRETION OF THE CITY COUNCIL. 22.05.045 REVIEW. NO LEASED LAND MAY BE CHANGED IN USE, NOR MAY ANY RENEWAL LEASE BE ISSUED UNTIL THE PROPOSED USE OR RENEWAL HAS BEEN REVIEWED BY THE PLANNING COMMISSION AND APPROVED BY THE COUNCIL. 22.05.050 APPRAISAL. NO LAND SHALL BE SOLD, LEASED, OR A RENEWAL OF LEASE ISSUED, UNLESS THE SAME HAS BEEN APPRAISED WITHIN A TWELVE (12) MONTH PERIOD PRIOR TO THE SALE OR DATE FIXED FOR BEGINNING OF THE TERM OF THE LEASE OR RENEWAL LEASE. NO LAND SHALL BE LEASED FOR LESS THAN THE APPROVED APPRAISED ANNUAL RENTAL. APPRAISALS SHALL REFLECT THE NUMBER AND VALUE OF CITY SERVICES RENDERED THE LAND IN QUESTION. Page 25 Ordinance 3072-2019 Page 22 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 22.05.055 TERMS OF LEASE. ALL LEASES SHALL BE APPROVED BY THE CITY COUNCIL BEFORE THE SAME SHALL BECOME EFFECTIVE. THE TERM OF ANY GIVEN LEASE SHALL DEPEND UPON THE DURABILITY OF THE PROPOSED USE, THE AMOUNT OF INVESTMENT IN IMPROVEMENT PROPOSED AND MADE, AND THE NATURE OF THE IMPROVEMENT PROPOSED WITH RESPECT TO DURABILITY AND TIME REQUIRED TO AMORTIZE THE PROPOSED INVESTMENT. (ORD. 2200-2006) 22.05.060 ANNUAL MINIMUM RENTAL. (A) ANNUAL MINIMUM RENTALS SHALL BE COMPUTED FROM THE APPROVED APPRAISED MARKET VALUE UTILIZING THE METHOD AS DESCRIBED IN KMC 22.05.070 OF THIS CHAPTER. (B) UPON EXECUTION OF THE LEASE, THE LANDS BECOME TAXABLE TO THE EXTENT OF ITS LEASEHOLD INTEREST AND LESSEE SHALL PAY ALL REAL PROPERTY TAXES LEVIED UPON SUCH LEASEHOLD INTEREST IN THESE LANDS, AND SHALL PAY ANY SPECIAL ASSESSMENTS AND TAXES AS IF HE OR SHE WERE THE OWNER OF THE LAND. (C) RENT SHALL BE PAID ANNUALLY IN ADVANCE. PAYMENTS SHALL BE PRORATED TO CONFORM TO THE CITY OF KENAI’S FISCAL YEAR BEGINNING JULY 1ST AND ENDING JUNE 30TH. IF THE EQUIVALENT MONTHLY PAYMENT EXCEEDS TWO HUNDRED DOLLARS ($200.00), THEN THE LESSEE SHALL HAVE THE OPTION OF MAKING PAYMENTS ON A MONTHLY BASIS. (D) LESSEE SHALL BE RESPONSIBLE FOR ALL SALES TAXES APPLICABLE TO ITS OPERATIONS. 22.05.065 BIDDING PROCEDURE. AS AN EXCEPTION TO GENERAL POLICY LISTED ABOVE, THE CITY COUNCIL MAY DESIGNATE A SPECIFIC LOT OR LOTS TO BE MADE AVAILABLE ONLY FOR BID. THIS PROVISION SHALL APPLY ONLY WHEN THERE IS NO OUTSTANDING APPLICATION PENDING ON THE LOT OR LOTS. AS DESIGNATED, SEALED BIDS SHALL BE RECEIVED OFFERING A ONE (1) TIME PREMIUM IN ADDITION TO THE ESTABLISHED LEASE RATE. HIGHEST BID, HOWEVER, SHALL BE SUBJECT TO ALL PROVISIONS OF REVIEW AND APPROVAL ESTABLISHED FOR ALL OTHER LEASE APPLICATIONS. 22.05.070 PRINCIPLES AND POLICY OF LEASE RATES. (A) A FAIR RETURN TO THE GENERAL FUND IS THE POLICY OF THE CITY, UNLESS DEVIATION FROM THAT POLICY IS IN THE BEST INTEREST OF THE CITY AS DETERMINED BY THE CITY COUNCIL. TO ENSURE A FAIR RETURN, ALL LEASES FOR Page 26 Ordinance 3072-2019 Page 23 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] A PERIOD IN EXCESS OF FIVE (5) YEARS SHALL INCLUDE A REDETERMINATION CLAUSE AS OF THE FIFTH ANNIVERSARY OF THE LEASE AND EVERY FIVE (5) YEARS THEREAFTER, AND ALL LANDS FOR LEASE SHALL BE APPRAISED PRIOR TO LEASE AND AGAIN PRIOR TO REDETERMINATION. LEASE RATES: (1) SHALL BE BASED ON FAIR MARKET VALUE OF THE LAND, INCLUDING AN APPROPRIATE CONSIDERATION OF FACILITIES AND SERVICES AVAILABLE (PUBLIC WATER, PUBLIC SEWER, STORM SEWERS, AND OTHER PUBLIC UTILITIES) AS DETERMINED BY A QUALIFIED INDEPENDENT APPRAISER, CONSIDERING THE BEST USE OF THE SPECIFIED LAND; AND (2) SHALL BE EIGHT PERCENT (8%) OF FAIR MARKET VALUE. (B) FOR LEASES IN EXISTENCE PRIOR TO THE EFFECTIVE DATE OF THE ORDINANCE CODIFIED IN THIS CHAPTER, THE LEASE RATE REDETERMINATION SHALL BE AS PROVIDED IN THE LEASE. (C) THE CITY MANAGER SHALL CHANGE THE RENT IN A LEASE BY GIVING THE LESSEE WRITTEN NOTICE AT LEAST THIRTY (30) DAYS IN ADVANCE OF THE EFFECTIVE DATE OF THE CHANGE. (D) THE “FAIR MARKET VALUE” OF THE PREMISES SHALL BE EQUAL TO THE THEN FAIR MARKET RATE FOR SIMILAR COMMERCIAL PROPERTY IN THE CITY OF KENAI, ALASKA (THE “RELEVANT AREA”). CITY SHALL GIVE NOTICE TO LESSEE OF CITY’S ESTIMATION OF THE FAIR MARKET VALUE NOT LATER THAN THIRTY (30) DAYS PRIOR TO THE EXPIRATION OF THE THEN-APPLICABLE FIVE (5) YEAR PERIOD, AS EVIDENCED AND SUPPORTED BY THE WRITTEN OPINION OF AN INDEPENDENT REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87, SELECTED AND PAID FOR BY THE CITY, FAMILIAR WITH THE RELEVANT AREA (THE “FIRST APPRAISER”). IF LESSEE DISAGREES WITH SUCH ESTIMATE, IT SHALL ADVISE THE CITY IN WRITING THEREOF WITHIN THIRTY (30) DAYS OF LESSEE’S RECEIPT OF SUCH ESTIMATE, AS EVIDENCED AND SUPPORTED BY THE WRITTEN OPINION OF A REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 (SELECTED AND PAID FOR BY LESSEE) FAMILIAR WITH THE RELEVANT AREA (THE “SECOND APPRAISER”). THE PARTIES SHALL PROMPTLY MEET TO ATTEMPT TO RESOLVE THEIR DIFFERENCES BETWEEN THE FIRST APPRAISER AND THE SECOND APPRAISER CONCERNING THE FAIR MARKET VALUE OF THE PREMISES. IF CITY AND LESSEE CANNOT AGREE UPON SUCH VALUE THEN, WITH ALL DELIBERATE SPEED, THEY SHALL DIRECT THE FIRST APPRAISER AND THE SECOND APPRAISER TO EXPEDITIOUSLY AND MUTUALLY SELECT A THIRD REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 (SELECTED AND PAID FOR JOINTLY BY THE PARTIES) FAMILIAR WITH THE RELEVANT AREA (THE “THIRD APPRAISER”). WITHIN THIRTY (30) DAYS AFTER THE THIRD APPRAISER HAS BEEN APPOINTED, Page 27 Ordinance 3072-2019 Page 24 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] THE THIRD APPRAISER SHALL DECIDE WHICH OF THE TWO (2) RESPECTIVE APPRAISALS FROM THE FIRST APPRAISER AND THE SECOND APPRAISER MOST CLOSELY REFLECTS THE FAIR MARKET VALUE OF THE PREMISES. THE FAIR MARKET VALUE OF THE PREMISES SHALL IRREBUTTABLY BE PRESUMED TO BE THE VALUE CONTAINED IN SUCH APPRAISAL SELECTED BY THE THIRD APPRAISER, AND THE RENTAL SHALL BE REDETERMINED BASED ON SUCH VALUE. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, RENTAL SHALL CONTINUE TO BE PAID AT THE THEN-APPLICABLE RATE UNTIL ANY SUCH NEW RENTAL RATE IS ESTABLISHED, AND LESSEE AND CITY SHALL PROMPTLY PAY OR REFUND, AS THE CASE MAY BE, ANY VARIANCE IN THE RENTAL, WITHOUT INTEREST THEREON ACCRUING TO THE EXTENT TO PAID/REFUNDED IN A TIMELY FASHION. 22.05.075 REIMBURSEMENT FOR CITY-CONSTRUCTED IMPROVEMENTS. (A) THE CITY MANAGER MAY INCLUDE IN A LEASE A REQUIREMENT FOR THE LESSEE TO REIMBURSE THE CITY FOR THE CITY’S COST OF: (1) LAND CLEARING, GRAVEL FILL, UTILITY EXTENSIONS AND OTHER IMPROVEMENTS OR AMENITIES ON OR IN DIRECT CONNECTION WITH THE PREMISES, CONSTRUCTED BY THE CITY PRIOR TO THE EFFECTIVE DATE OF THE LEASE; OR (2) LAND CLEARING, GRAVEL FILL, UTILITY EXTENSIONS AND OTHER IMPROVEMENTS OR AMENITIES ON OR IN DIRECT CONNECTION WITH THE PREMISES, WHICH THE CITY AGREES TO CONSTRUCT AS A CONDITION OF THE LEASE, SUBJECT TO CITY COUNCIL APPROVAL. (B) THE LESSEE SHALL REIMBURSE THE CITY FOR THE CITY’S COST OF CONSTRUCTING THE IMPROVEMENTS IN TEN (10) EQUAL ANNUAL PAYMENTS, PLUS INTEREST AT EIGHT PERCENT (8%) PER YEAR ON THE UNPAID BALANCE. IF THE LEASE IS FOR LESS THAN TEN (10) YEARS, THE REPAYMENT SCHEDULE MAY NOT BE LONGER THAN THE TERM OF THE LEASE. THE LESSEE MAY PAY THE ENTIRE REMAINING BALANCE TO THE CITY AT ANY TIME DURING THE TERM OF THE LEASE. 22.05.080 LEASE EXECUTION. THE LEASE APPLICANT SHALL EXECUTE AND RETURN THE APPROPRIATE LEASE AGREEMENT WITH THE CITY OF KENAI WITHIN THIRTY (30) DAYS OF MAILING THE AGREEMENT TO THE APPLICANT. THE LEASE AGREEMENT SHALL BE PREPARED IN ACCORDANCE WITH THE REQUIREMENTS OF THIS TITLE. FAILURE TO EXECUTE AND Page 28 Ordinance 3072-2019 Page 25 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] RETURN THE LEASE AGREEMENT WITHIN THE SPECIFIED PERIOD SHALL RESULT IN THE FORFEITURE OF ALL LEASING RIGHTS. 22.05.085 LEASE UTILIZATION. LEASED LANDS SHALL BE UTILIZED FOR PURPOSES WITHIN THE SCOPE OF THE APPLICATION, THE TERMS OF THE LEASE AND IN CONFORMITY WITH THE ORDINANCES OF THE CITY, AND IN SUBSTANTIAL CONFORMITY WITH THE COMPREHENSIVE PLAN. UTILIZATION OR DEVELOPMENT FOR OTHER THAN THE ALLOWED USES SHALL CONSTITUTE A VIOLATION OF THE LEASE AND SUBJECT THE LEASE TO CANCELLATION AT ANY TIME. FAILURE TO SUBSTANTIALLY COMPLETE THE DEVELOPMENT PLAN FOR THE LAND SHALL CONSTITUTE GROUNDS FOR CANCELLATION. 22.05.090 CONVEYANCE TO ENCOURAGE NEW ENTERPRISES. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS CHAPTER, WHERE IT IS FOUND THAT ENCOURAGEMENT OF A NEW COMMERCIAL OR INDUSTRIAL ENTERPRISE WOULD BE BENEFICIAL TO THE CITY OF KENAI, THE CITY COUNCIL BY ORDINANCE SO FINDING MAY DIRECT CONVEYANCE OF ONE OR MORE PARCELS OF CITY LAND BY THE CITY MANAGER TO SUCH ENTERPRISE UPON SUCH TERMS AS TO PRICE, CONDITIONS OF CONVEYANCE, AND WITH SUCH CONTINGENCIES AS MAY BE SET FORTH IN THE ORDINANCE. 22.05.095 SALE. (A) LANDS, TO WHICH THE CITY OF KENAI HOLDS TITLE WHICH ARE NOT RESTRICTED FROM SALE BY THE DEED OF CONVEYANCE TO THE CITY, OR WHICH HAVE BEEN RELEASED FROM SUCH RESTRICTIONS, WHICH THE CITY COUNCIL HAS DETERMINED ARE NOT REQUIRED FOR A PUBLIC PURPOSE, MAY BE LISTED FOR SALE BY THE CITY MANAGER, EXCEPT THAT LANDS WHICH HAVE BEEN LEASED SHALL NOT BE SOLD UNLESS THE LESSEE HAS MADE A WRITTEN REQUEST TO THE CITY TO PLACE THE LAND FOR SALE. (B) SALES OF LAND PURSUANT TO SUBSECTION (A) OF THIS SECTION SHALL BE MADE AT NOT LESS THAN FAIR MARKET VALUE. THE PURCHASER SHALL EXECUTE THE “AGREEMENT FOR SALE OF LAND” WITHIN ONE (1) YEAR OF THE DATE OF APPRAISAL. THE CITY MANAGER HAS THE OPTION TO DISPOSE OF SUCH PROPERTIES IN ACCORDANCE WITH THE SALE PROCEDURES SET OUT IN THIS TITLE: (1) BY NEGOTIATED SALE; OR (2) BY OUTCRY AUCTION TO THE HIGHEST RESPONSIBLE BIDDER; OR (3) BY COMPETITIVE SEALED BIDS TO THE HIGHEST RESPONSIBLE BIDDER. Page 29 Ordinance 3072-2019 Page 26 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] IN THE EVENT THAT THE SALE IS NOT CLOSED WITHIN SIX (6) MONTHS OF THE DATE OF APPRAISAL, THE BUYER WILL BE CHARGED, UPON CLOSING, INTEREST COMPUTED IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE KENAI MUNICIPAL CODE, BASED UPON THE TOTAL SALES PRICE FOR THE NUMBER OF DAYS PAST THE EXPIRATION OF THE SIX (6) MONTH PERIOD. 22.05.100 SALE PROCEDURE. (A) THE CITY MANAGER WILL OBTAIN SUCH AN APPRAISAL FOR A DETERMINATION OF THE MINIMUM PRICE ON THE LAND. (B) WHERE ANY PARTY, HEREINAFTER CALLED “APPLICANT,” REQUESTS THAT A TRACT OR TRACTS OF LAND BE SOLD FOR W HICH AN APPRAISAL WILL BE REQUIRED, WHICH WILL REQUIRE SUBDIVIDING, PLATTING, OR SURVEYING AND STAKING, OR WHICH WILL REQUIRE ADVERTISING OR INCURRING ANY OTHER EXPENDITURES BY THE CITY PRIOR TO SALE. (1) NO ACTIONS IN PREPARATION FOR SALE WILL BE TAKEN BY THE CITY UNTIL AN AGREEMENT TO PURCHASE SHALL BE PROPERLY EXECUTED AND FILED WITH THE CITY MANAGER FOR THE PURCHASE OF SUCH LAND WITH PAYMENT OF SUFFICIENT GOOD FAITH DEPOSIT, WHICH SHALL CONSIST OF CASH OR ITS EQUIVALENT DEPOSITED WITH THE FINANCE OFFICER OF THE CITY OF KENAI, AS MAY BE DETERMINED BY THE CITY MANAGER, TO COVER ALL EXPENSES OF THE CITY AND SUCH AGREEMENT TO PURCHASE SHALL FURTHER CONTAIN THE AGREEMENT BY APPLICANT TO PAY ANY ADDITIONAL COSTS IF SAID GOOD FAITH DEPOSIT IS INSUFFICIENT TO PAY ALL COSTS INCURRED BY THE CITY. (2) IF AT ANY TIME DURING THE PROCESS OF PREPARING FOR SALE, THE APPLICANT GIVES NOTICE TO THE CITY MANAGER OF WITHDRAWAL OF THE REQUEST FOR SALE, THE CITY MANAGER SHALL STOP ALL PROCEDURES, SHALL PAY EXPENSES INCURRED PRIOR TO TERMINATION OF SALE PROCEDURES, AND SHALL REIMBURSE APPLICANT FOR ANY GOOD FAITH DEPOSIT ADVANCED IN EXCESS OF ALL EXPENSES INCURRED. (HOWEVER, IF ANOTHER PARTY DESIRES THE SALE TO PROCEED, FILES AN APPLICATION FOR SALE, EXECUTES AND FILES AN AGREEMENT TO PURCHASE, AND ADVANCES SUFFICIENT FUNDS THEREFOR, THEN THE PRIOR APPLICANT WILL BE REIMBURSED FOR EXPENSES CHARGES WHICH CAN BE ATTRIBUTED TO THE SUBSEQUENT APPLICANT.) (3) IF ALL ACTIONS NECESSARY FOR PREPARATION FOR SALE HAVE BEEN ACCOMPLISHED, AND IF NEITHER THE APPLICANT NOR ANY OTHER PARTY PURCHASES SAID LAND WHEN FIRST OFFERED FOR SALE AFTER SUCH Page 30 Ordinance 3072-2019 Page 27 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] REQUEST, THEN ALL EXPENSES INCURRED IN PREPARATION FOR THE SALE WILL BE PAID FROM THE GOOD FAITH DEPOSIT, AND THE BALANCE, IF ANY, SHALL BE RETURNED TO THE APPLICANT. IF THE SUMS ADVANCED AS GOOD FAITH DEPOSIT ARE INSUFFICIENT TO PAY All Of THE COSTS, THE APPLICANT WILL BE BILLED FOR THE BALANCE DUE AND NORMAL COLLECTION PROCEDURES FOLLOWED. (4) IF THE LAND APPLIED FOR IS SOLD ON PUBLIC SALE SET IN RESPONSE TO SUCH REQUEST TO ANYONE OTHER THAN APPLICANT, THEN ON CLOSING OF THE SALE, THE GOOD FAITH DEPOSIT WILL BE REFUNDED IN TOTAL TO THE APPLICANT. THE CITY’S EXPENSES WILL BE FIRST DEDUCTED FROM THE DEPOSIT OF THE SUCCESSFUL BIDDER. (5) IF THE LAND IN QUESTION IS SOLD TO APPLICANT, THE GOOD FAITH DEPOSIT ADVANCED, AFTER DEDUCTING THE CITY’S EXPENSES, WILL BE APPLIED ON THE PAYMENT DUE AT CLOSING. (6) IF THE LAND IN QUESTION IS TO BE SOLD BY SEALED BID AND THE APPLICANT HAS SUBMITTED A VALID BID, BUT THE APPLICANT IS NOT THE HIGH BIDDER, HE OR SHE MAY PURCHASE THE LAND BY TENDERING THE CITY A BID EQUAL TO THE HIGH BID WITHIN FIVE (5) DAYS OF THE BID OPENING. IF THE LAND SALE IS INITIATED IN ACCORDANCE WITH KMC 22.05.040(A), THE APPLICANT SHALL BE DEFINED AS THAT PARTY SUBMITTING THE INITIAL LEASE APPLICATION. (C) IF THE TRACT OF LAND PROPOSED TO BE SOLD IS LEASED LAND, THE LESSEE MAY REQUEST THE SALE OF THE LAND AT NOT LESS THAN THE FAIR MARKET VALUE. THE CURRENT LESSEE OBTAINS THIS RIGHT TO REQUEST A SALE ONLY AFTER, TO THE SATISFACTION OF THE CITY MANAGER, DEVELOPMENT HAS BEEN COMPLETED AS DETAILED IN THE DEVELOPMENT SCHEDULE WHICH HAS BEEN INCORPORATED INTO THE LEASE AGREEMENT. IF THERE IS NO DEVELOPMENT SCHEDULE, THE LESSEE MAY PURCHASE THE PROPERTY IF THERE HAVE BEEN SUBSTANTIAL IMPROVEMENTS AS DETERMINED BY THE CITY MANAGER. THE DECISION WHETHER OR NOT TO SELL THE LAND TO THE LESSEE RESTS WITH THE SOLD DISCRETION OF THE CITY. (D) IF THE TRACT OF LAND PROPOSED TO BE SOLD IS NOT LEASED LAND, OR IS LEASED LAND WITHOUT SUBSTANTIAL IMPROVEMENTS, THEN THE TRACT OF LAND MAY ONLY BE SOLD BY OUTCRY AUCTION OR BY COMPETITIVE SEALED BIDS. IF THE TRACT IS TO BE PUT UP FOR SUCH COMPETITIVE AUCTION OR SEALED BID SALE, NOTICE OF SALE AND THE MANNER IN WHICH THE LAND IS TO BE SOLD SHALL BE PUBLISHED IN A NEWSPAPER OF GENERAL CIRCULATION WITHIN THE CITY ONCE EACH WEEK FOR TWO (2) SUCCESSIVE WEEKS NOT LESS THAN THIRTY Page 31 Ordinance 3072-2019 Page 28 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (30) DAYS PRIOR TO THE DATE OF SALE; SUCH NOTICE SHALL ALSO BE POSTED IN AT LEAST THREE (3) PUBLIC PLACES WITHIN THE CITY AT LEAST THIRTY (30) DAYS PRIOR TO THE DATE OF SALE, AND SUCH OTHER NOTICE MAY BE GIVEN BY SUCH OTHER MEANS AS MAY BE CONSIDERED ADVISABLE BY THE CITY MANAGER. SUCH NOTICE MUST CONTAIN: (1) THE LEGAL DESCRIPTION OF THE LAND; (2) A BRIEF PHYSICAL DESCRIPTION OF THE LAND; (3) THE AREA AND GENERAL LOCATION OF THE LAND; (4) THE MINIMUM ACCEPTABLE OFFER FOR THE LAND (WHICH SHALL BE ITS APPRAISED FAIR MARKET VALUE); (5) THE TERMS UNDER WHICH THE LAND WILL BE SOLD; (6) ANY LIMITATIONS ON THE SALE OF THE LAND; (7) THE TIME AND PLACE SET FOR THE AUCTION OR BID OPENING; (8) THE AMOUNT OF DEPOSIT TO BE SUBMITTED WITH EACH BID IN ORDER TO COVER THE CITY’S EXPENSES SUCH AS SURVEY, APPRAISAL, AND REVIEWS; (9) ANY OTHER MATTERS CONCERNING THE SALE OF WHICH THE CITY MANAGER BELIEVES THE PUBLIC SHOULD BE INFORMED. (E) IF NO OFFERS ARE SUBMITTED MEETING THE MINIMUM ACCEPTABLE OFFER (OR APPRAISED VALUATION), THE CITY MANAGER MAY NEGOTIATE FOR SALE OF THE TRACT OR TRACTS OF LAND WITH A MODIFICATION OF PROPOSED TERMS OR FOR LESS THAN THE APPRAISED VALUATION PROVIDED THAT NO SUCH NEGOTIATED SALE FOR LESS THAN APPRAISED VALUE SHALL BE BINDING UPON THE CITY UNLESS THE TERMS AND PRICE THEREIN ARE APPROVED BY RESOLUTION OF THE CITY COUNCIL. (F) WHERE A REAL ESTATE AGENT FURNISHES A BUYER FOR CITY LAND, THE CLOSING AGENT SHALL BE AUTHORIZED TO PAY THE AGENT A REAL ESTATE COMMISSION OF FIVE PERCENT (5%) OF THE PURCHASE PRICE FOR THE LAND OR FIVE PERCENT (5%) OF THE APPRAISED FAIR MARKET VALUE OF THE LAND, WHICHEVER IS LOWER, UNDER THE FOLLOWING TERMS AND CONDITIONS: (1) THE CITY MANAGER SHALL PROVIDE A NON-EXCLUSIVE LISTING OF LANDS AVAILABLE FOR SALE. (2) NO COMMISSION SHALL BE PAID TO AN AGENT WHERE THE AGENT IS A PARTY, OR IN PRIVITY WITH A PARTY, TO THE SALE. (G) CLOSING OF SALE OF CITY LANDS SHALL BE HANDLED BY A TITLE OR ESCROW COMPANY. (H) CONVEYANCE OF CITY LANDS SHALL BE BY QUIT CLAIM OR WARRANTY DEED FURNISHED BY THE CITY, AND BUYERS ARE ADVISED THAT ALL SUCH CONVEYANCES ARE SUBJECT TO ALL LIENS, ENCUMBRANCES, RESTRICTIONS, Page 32 Ordinance 3072-2019 Page 29 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] AND COVENANTS OF RECORD AND ARE SPECIFICALLY, WITHOUT BEING LIMITED THERETO, SUBJECT TO ANY UNRELEASED RESTRICTIONS CONTAINED IN THE DEED OR DEEDS BY WHICH THE CITY RECEIVED TITLE TO THE LAND. (I) IF A BUYER DESIRES TO OBTAIN A PRELIMINARY COMMITMENT FOR TITLE INSURANCE OR TITLE INSURANCE TO THE LAND, THEN IT SHALL BE THE RESPONSIBILITY OF THE BUYER TO OBTAIN SUCH COMMITMENT OR INSURANCE AND TO PAY FOR THE SAME. (J) IF THE TRACT OR TRACTS OF LAND ARE SOLD UNDER TERMS BY WHICH THE CITY IS TO ACCEPT A NOTE AS A PORTION OF THE PURCHASE PRICE, THE NOTE AND ACCOMPANYING DEED OF TRUST MUST BE PREPARED BY AN ATTORNEY, BUT MUST BE APPROVED BY THE CITY ATTORNEY PRIOR TO CLOSING. (K) THE NOTE SHALL BE PLACED FOR COLLECTION WITH A BANK SELECTED BY THE CITY MANAGER, WHICH MAY BE CHANGED FROM TIME TO TIME, AND WHICH SHALL BE THE BANK IN WHICH CITY FUNDS ARE DEPOSITED. THE SET-UP FEE TO INITIATE COLLECTION MAY BE NEGOTIATED AS SPECIFIED IN KMC 22.05.100(L), AND THE BUYER SHALL PAY THE ANNUAL COLLECTION FEES FOR SUCH BANK COLLECTION. (l) THE CITY MANAGER IS AUTHORIZED TO NEGOTIATE A DIVISION OF THE COSTS OF SALE LISTED IN KMC 22.05.100(G) (H), (I), (J) AND (K) TO A MAXIMUM OF FIFTY PERCENT (50%) OF THE REQUIRED COSTS BEING BORNE BY THE CITY, PROVIDED HOWEVER THAT NO COSTS OF SALE WILL BE PAID BY THE CITY WHERE A SALE IS NEGOTIATED AT A PRICE BELOW APPRAISED FAIR MARKET VALUE. 22.05.105 TERMS FOR FINANCING SALE OF CITY LANDS. (A) IN ORDER TO EXPEDITE AND FACILITATE THE SALE OF CITY LANDS, THE CITY MANAGER IS AUTHORIZED TO ACCEPT TERMS FOR SALES AND MAY ACCEPT A NOTE SECURED BY A DEED OF TRUST FOR A PORTION OF THE PURCHASE PRICE THEREOF, SUBJECT TO THE FOLLOWING RESTRICTIONS: (1) IF THE SALE IS TO A LESSEE WHO HAS PLACED A LIEN FOR FINANCING UPON THE LAND OR IMPROVEMENTS, THEN THE CITY MANAGER IS NOT AUTHORIZED TO SELL THE LAND EXCEPT FOR TOTAL CASH PAYMENT, PROVIDED, HOWEVER, THAT THE CITY MANAGER MAY ACCEPT A NOTE SECURED BY A DEED OF TRUST SUBORDINATE TO THE EXISTING SECURITY INTEREST IF THE AMOUNT OF THE NOTE THEREBY SECURED IS WITHIN THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE OF THE LAND WITH IMPROVEMENTS, AND THE SUM OF ALL PRIOR SECURITY INTERESTS. THE SALE DOCUMENTS SHALL BE SUBJECT TO THE SAME RESTRICTIONS CONTAINED IN THE LEASE AS THE LEASE PROVIDES AT THE TIME OF SALE. Page 33 Ordinance 3072-2019 Page 30 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (2) EXCEPT FOR PROPERTY SOLD BY THE CITY SUBSEQUENT TO FORECLOSURE FOR DELINQUENT TAXES OR ASSESSMENTS, PRIOR TO MAKING A DETERMINATION TO ACCEPT A NOTE AND DEED OF TRUST FROM A PROSPECTIVE PURCHASER, THE CITY MANAGER SHALL SECURE A PRELIMINARY COMMITMENT FOR TITLE INSURANCE AND A REVIEW OF THE GRANTEE INDEX COVERING THE PARTY DESIRING TO PURCHASE THE LAND FROM THE TITLE COMPANY IN THE LOCAL RECORDING DISTRICT, AND NO CREDIT WILL BE ADVANCED ON SUCH SALE IF THERE ARE ANY DELINQUENT LIENS OR UNPAID JUDGMENTS FOUND IN THE TITLE COMPANY REPORT UNTIL ANY SUCH JUDGMENTS OR LIENS ARE PAID AND RELEASES THEREFOR HAVE BEEN FILED. (3) IN THE EVENT OF A CREDIT SALE, THE DOWN PAYMENT REQUIRED SHALL BE DETERMINED BY THE CITY MANAGER, BUT SHALL NOT BE LESS THAN FIFTEEN PERCENT (15%) OF THE SALES PRICE. (4) THE CITY MANAGER IS NOT AUTHORIZED TO ACCEPT TERMS FOR THE SALE OF TAX-FORECLOSED LANDS UNLESS THE DOWN PAYMENT TO BE RECEIVED THEREUNDER, OR OTHER SUMS APPROPRIATED FOR THE PURPOSE, ARE SUFFICIENT TO MAKE IMMEDIATE PAYMENT TO THE KENAI PENINSULA BOROUGH AND THE FORMER RECORD OWNER OF THE SUMS WHICH ARE, OR MAY BECOME, DUE TO THEM PURSUANT TO THE PROVISIONS OF AS 29. (B) IF THE CITY MANAGER DETERMINES THAT IT IS IN THE CITY’S INTEREST TO SELL CITY LANDS, THE SALE SHALL BE EITHER A CASH TRANSACTION OR BY A NOTE SECURED BY A DEED OF TRUST, SUBJECT TO SUBSECTION (A) OF THIS SECTION, AND BY NO OTHER MEANS. THE NOTE AND DEED OF TRUST SHALL CARRY TERMS AS FOLLOWS: (1) THE TERM OF SUCH NOTE MAY BE SET BY THE CITY MANAGER, BUT IT SHALL PROVIDE FOR MONTHLY PAYMENTS AND NOT EXCEED TWENTY (20) YEARS UNLESS A LONGER PERIOD FOR A SPECIFIC SALE OF LAND IS APPROVED BY RESOLUTION OF THE CITY COUNCIL. (2) SUCH NOTE SHALL BEAR INTEREST AT A RATE TO BE DETERMINED BY THE CITY COUNCIL BY RESOLUTION. 22.05.110 DETERMINATION AS TO NEED FOR PUBLIC USE. (A) WHETHER LAND SHALL BE ACQUIRED, RETAINED, DEVOTED, OR DEDICATED TO A PUBLIC USE SHALL BE DETERMINED BY ORDINANCE WHICH SHALL CONTAIN THE PUBLIC USE FOR WHICH THE PROPERTY IS TO BE DEDICATED, THE LEGAL DESCRIPTION OF THE PROPERTY, AND THE ADDRESS OR A GENERAL Page 34 Ordinance 3072-2019 Page 31 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] DESCRIPTION OF THE PROPERTY SUFFICIENT TO PROVIDE THE PUBLIC WITH NOTICE OF ITS LOCATION. THIS REQUIREMENT DOES NOT APPLY TO RIGHTS-OF- WAY OR EASEMENTS DEDICATED THROUGH THE CITY AND BOROUGH PLATTING PROCESS. (B) WHETHER LAND PREVIOUSLY DEDICATED TO A PUBLIC USE SHOULD BE DEDICATED TO A DIFFERENT PUBLIC USE OR SHOULD NO LONGER BE NEEDED FOR PUBLIC USE SHALL BE DETERMINED BY THE CITY COUNCIL BY ORDINANCE, EXCEPT IN CASES OF VACATION OF RIGHTS-OF-WAY OR EASEMENTS WHICH MAY BE DETERMINED BY RESOLUTION, EITHER OF WHICH SHALL CONTAIN THE NEW PUBLIC USE FOR WHICH THE PROPERTY IS TO BE DEDICATED OR THE REASON THE LAND IS NO LONGER NEEDED FOR PUBLIC USE, THE LEGAL DESCRIPTION OF THE PROPERTY, AND THE ADDRESS OR A GENERAL DESCRIPTION OF THE PROPERTY SUFFICIENT TO PROVIDE THE PUBLIC WITH NOTICE OF ITS LOCATION. 22.05.115 PROPERTY EXCHANGES. THE COUNCIL MAY APPROVE, BY ORDINANCE, AFTER PUBLIC NOTICE AND AN OPPORTUNITY FOR PUBLIC HEARING, THE CONVEYANCE AND EXCHANGE OF A PARCEL OF CITY PROPERTY FOR PROPERTY OWNED BY ANOTHER PERSON SUBJECT TO SUCH CONDITIONS AS COUNCIL MAY IMPOSE ON THE EXCHANGE, WHENEVER IN THE JUDGMENT OF THE CITY COUNCIL IT IS ADVANTAGEOUS TO THE CITY TO MAKE THE PROPERTY EXCHANGE. 22.05.120 PROPERTY SALE TO ADJACENT OWNERS. THE COUNCIL MAY APPROVE, BY ORDINANCE, AFTER PUBLIC NOTICE AND AN OPPORTUNITY FOR PUBLIC HEARING, THE SALE AND CONVEYANCE OF A PARCEL OF CITY PROPERTY AT ITS APPRAISED VALUE TO THE OWNER OF ADJACENT LAND WHENEVER, IN THE JUDGMENT OF THE CITY COUNCIL, THE PARCEL OF LAND IS OF SUCH SMALL SIZE, SHAPE, OR LOCATION THAT IT COULD NOT BE PUT TO PRACTICAL USE BY ANY OTHER PARTY AND, IN ADDITION THERETO, WHERE THERE IS NO FORESEEABLE NEED OF THE LAND FOR ANY FUTURE USE BY THE CITY. 22.05.125 GRANT OR DEVOTION. THE COUNCIL, BY ORDINANCE, MAY WAIVE THE PROVISIONS OF THIS CHAPTER AND LEASE, GRANT OR DEVOTE REAL PROPERTY NO LONGER NEEDED BY THE CITY FOR PUBLIC PURPOSE TO THE UNITED STATES, THE STATE OF ALASKA, A LOCAL POLITICAL SUBDIVISION OF THE STATE OF ALASKA, OR ANY AGENCY OF ANY OF THESE GOVERNMENTS OR A NON-PROFIT CORPORATION, FOR A CONSIDERATION AGREED Page 35 Ordinance 3072-2019 Page 32 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] UPON BETWEEN THE CITY AND GRANTEE WITHOUT A PUBLIC SALE IF THE GRANT, DEVOTION OR LEASE IS ADVANTAGEOUS TO THE CITY. 22.05.130 USE PERMITS. THE COUNCIL MAY AUTHORIZE THE CITY MANAGER TO GRANT PERMITS FOR THE TEMPORARY USE OF REAL PROPERTY OWNED BY THE CITY FOR A PERIOD NOT TO EXCEED FIVE (5) YEARS, WITHOUT APPRAISAL OF THE VALUE OF THE PROPERTY OR PUBLIC AUCTION, FOR ANY PURPOSE COMPATIBLE WITH THE ZONING OF THE LAND, AND ON SUCH TERMS AND FOR SUCH RENTALS AS THE COUNCIL SHALL DETERMINE. 22.05.135 ACQUISITION OF REAL PROPERTY. (A) THE CITY, BY AUTHORIZATION OF THE CITY COUNCIL, EXPRESSED IN A RESOLUTION FOR SUCH PURPOSE, MAY LEASE, PURCHASE OR ACQUIRE AN INTEREST IN REAL PROPERTY NEEDED FOR A PUBLIC USE ON SUCH TERMS AND CONDITIONS AS THE COUNCIL SHALL DETERMINE. NO PURCHASE SHALL BE MADE UNTIL A QUALIFIED APPRAISER HAS APPRAISED THE PROPERTY AND GIVEN THE COUNCIL AN INDEPENDENT OPINION AS TO THE FULL AND TRUE VALUE THEREOF UNLESS THE COUNCIL, UPON RESOLUTION SO FINDING, DETERMINES THAT THE PUBLIC INTEREST WILL NOT BE SERVED BY AN APPRAISAL. (B) BECAUSE OF THE UNIQUE VALUE OF REAL PROPERTY, THE CITY NEED NOT ACQUIRE OR LEASE REAL PROPERTY BY COMPETITIVE BIDDING. (C) RIGHTS-OF-WAY AND EASEMENTS MAY BE ACCEPTED OR ISSUED BY THE CITY MANAGER AFTER APPROVAL BY THE CITY COUNCIL FOR UTILITY LINES AND SERVICES OF ALL TYPES AND FOR NECESSARY RIGHTS-OF-WAY EASEMENTS.] Title 22 CITY-OWNED LANDS Chapter 22.05 DISPOSITION OF CITY LANDS 22.05.05 Definitions. When used in this chapter, the following terms shall have the meaning given below: “Amendment” means a formal change to a lease of lands other than a lease extension or renewal. “Annual rent” means an amount paid to the City annually according to the terms of the lease and Kenai Municipal Code. “Assignment” means the transfer of all interest in a lease from one person or entity to another. “City” means the City of Kenai, its elected officials, officers, employees or agents. “Consumer Price Index (CPI)” means the annual CPI for all urban consumers (CPI-U) for Anchorage, Alaska. “Existing lease” means a lease with at least one (1) year of term remaining. “Expiring lease” means a lease with less than one (1) year of term remaining. Page 36 Ordinance 3072-2019 Page 33 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] “Fair market value” means the most probable price which a property should bring in a competitive and open market as determined by a qualified independent appraiser, or the value as determined by the latest appraisal adjusted by the change in Consumer Price Index from the date of the latest appraisal. “Lease extension” means extending the term of an existing lease. “Lease rate percent” means a percentage that when applied to the fair market value of land establishes a rate of rent commensurate with rental rates prevalent in the local area as determined by a qualified real estate appraiser. “Lease renewal” means a new lease of property currently under an existing or expiring lease to an existing lessee or a purchaser. “Market analysis” means an analysis of data collected from other land leases to determine whether a market adjustment in either fair market value or lease rate percentage reflects the market. “Permanent improvement” means a fixed addition or change to land that is not temporary or portable, including a building, building addition, retaining wall, storage tank, earthwork, fill material, gravel, and pavement, and remediation of contamination for which the applicant is not responsible and excluding items of ordinary maintenance, such as glass replacement, painting, roof repairs, door repairs, plumbing repairs, floor covering replacement, or pavement patching. “Professional estimate of the remaining useful life of the principal improvement” means an estimate of the number of remaining years that the principal improvement will be able to function in accordance with its intended purpose prepared by a qualified real estate appraiser, engineer, or architect licensed in Alaska. “Qualified independent appraiser” means a general real estate appraiser certified by the State of Alaska under AS 08.87. “Site development materials” means materials used for preparing a lease site for building construction or to provide a firm surface on which to operate a vehicle or aircraft, including geotextile, fill, gravel, paving, utilities and pavement reinforcement materials. “Site preparation work” means work on the leased premises to include clearing and grubbing, unclassified excavation, classified fill and back fill, a crushed aggregate base course and utility extensions. 22.05.010 Authority and Intent. (a) The provisions of this chapter apply to City-owned real property other than lands within the Airport Reserve as described in KMC 21.10 and the leasing of tidelands for shore fisheries. (b) The City may sell, convey, exchange, transfer, donate, dedicate, direct, assign to use, or otherwise dispose of City-owned real property, including property acquired, held for, or previously devoted to a public use, only in accordance with this chapter, and, with respect to properties acquired through foreclosure for taxes, in compliance with those terms and provisions of AS 29 which apply to home-rule municipalities. Disposal or sale of lands shall be made only when, in the judgment of the City Council, such lands are not or are no longer required for a public purpose. (c) It is the intent of this chapter to provide land policies and practices that encourage responsible growth and development to support a thriving business, residential, recreational and cultural community. (d) It is not the intent of this chapter to allow for speculation on City-owned lands. All leases, sales, and other disposals of City-owned land must meet the intent of this chapter. (e) The provisions of this chapter shall not alter or amend the terms or rights granted under leases existing prior to the effective date of the ordinances codified in this chapter. Page 37 Ordinance 3072-2019 Page 34 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 22.05.015 Lands Available for Lease, Sale or Disposal. (a) The City may lease, sell or dispose of real property not restricted from lease or sale which the City Council has determined is not required for a public purpose by any lawful method or mode of conveyance or grant. Any instrument requiring execution by the City shall be signed by the City Manager and attested by the City Clerk. The form of any instrument shall be approved by the City Attorney. 22.05.020 Qualifications of Lease Applicants or Bidders. An applicant or bidder for a lease is qualified if the applicant or bidder: (a) Is an individual at least eighteen (18) years of age; or (b) Is a legal entity which is authorized to conduct business under the laws of Alaska; or (c) Is acting as an agent for another meeting the requirements of subsection (a) or (b) of this section and has qualified by filing with the City a proper power of attorney or a letter of authorization creating such agency. 22.05.025 Initial Lease Application. (a) All applications for lease of lands must be submitted to the City on an application form provided by the City. Applications will be dated on receipt and must include payment of the nonrefundable application fee as set forth in the City’s schedule of fees approved by the City Council. (b) The application form must include the following information: (1) The purpose of the proposed lease; (2) The use, nature, type, and estimated cost of improvements to be constructed; (3) The dates construction is estimated to commence and be completed. Construction must be completed within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council; and (4) A comprehensive description of the proposed business or activity intended; (5) Whether the applicant requests a lease with an option to purchase; and (6) How the proposed lease meets the intent of this chapter. (c) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to any new appraisal, engineering services, surveying and consulting costs, unless in the sole discretion of the City Council, it is determined that the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a lease with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will apply to the rent payable under the lease. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the lease. Page 38 Ordinance 3072-2019 Page 35 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (5) If the application is rejected or if the applicant withdraws the application or fails to sign a lease offered to the applicant, the City will return any unused deposit balance to the applicant. (d) Applications for lands which have not been appraised within one (1) year of the requested starting date of the lease require the applicant to be responsible for all costs associated with appraisal. The cost of the appraisal shall be credited or refunded to the lessee once development is completed as required by the lease, extension or renewal. (e) Applications which result in a lease agreement with the City require the lessee to be responsible for all recording costs and any other fees associated with execution of the lease including a preliminary commitment for title insurance and fifty percent (50%) of the required costs associated with a sale of leased land in which the lease contains an option to purchase once the minimum development requirements have been met. (f) Anytime during the processing of a lease application, the City may request, and the applicant must supply, any clarification or additional information that the City reasonably determines is necessary for the City to make a final decision on the application. 22.05.035 No Right of Occupancy – Lease Application Expiration. (a) Submitting an application for a lease does not give the applicant a right to lease or use City-owned land. (b) The application shall expire upon execution of a lease or rejection of a lease application by the City Council or within twelve (12) months after the date the application has been submitted. 22.05.040 Lease Application Review. (a) Applications shall be reviewed by City staff for application completeness and conformance with City ordinances. (b) Based on the initial review, if the City Manager determines the application is complete, the application shall be referred to the Planning and Zoning Commission and any other applicable commissions for review and comment, together with the City Manager’s recommendation for approval or rejection. (c) Notice of complete applications for new leases, renewals or extensions shall be published in a newspaper of general circulation within the City and posted on the property. The notice must contain the name of the applicant, a brief description of the land, whether the applicant requests a lease with an option to purchase, and the date upon which any competing applications must be submitted (thirty (30) days from the date of publication). (d) The recommendations of the City Manager, Planning and Zoning Commission, and any other applicable commissions shall be provided to the City Council. The City Council shall determine whether the lease is consistent with the intent of this chapter. The decision whether or not to lease land or authorize a lease extension, renewal, amendment or assignment rests in the sole discretion of the City Council. (e) If the applicant is in default of any charges, fees, rents, taxes, or other sums due and payable to the City or the applicant is in default of a requirement of any lease or contract with the City a lease shall not be entered into until the deficiencies are remedied . 22.05.045 Application for Lease Amendment, Assignment, Extension or Renewal. (a) A request from an existing lessee for a lease amendment, assignment, extension or renewal of the lease must be submitted to the City on an application form provided by the City. Page 39 Ordinance 3072-2019 Page 36 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] Applications must be complete and dated on receipt and include payment of the nonrefundable application fee and applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. (b) An application for an amendment must include the following information: (1) The purpose of the proposed amendment; (2) The proposed change in use or activity, if any; (3) A comprehensive description of the proposed business or activity, if applicable; and (4) How the proposed amendment meets the intent of this chapter. (c) An application for a lease assignment must include the following: (1) The name of the individual or legal entity to which the lessee requests to assign the lease. (d) An application for a lease extension must include the following information: (1) The use, nature, type and estimated cost of additional improvements to be constructed; (2) The dates new construction is estimated to commence and be completed; and (3) How the proposed lease extension meets the intent of this chapter. (e) An application for a lease renewal must include the following information: (1) For a lease renewal of an existing lease: (i) The use, nature, type and estimated cost of additional investment in the construction of new permanent improvements; (ii) The dates new construction is estimated to commence and be completed; (iii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of real property improvements on the premises as certified by the current lessee and proposed purchaser in a bill of sale; and (iv) How the proposed lease renewal meets the intent of this chapter. (2) For a lease renewal of an expiring lease: (i) A fair market value appraisal of the existing principal improvement on the property, paid for by the applicant, and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (ii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of existing real property improvements, as certified by the current lessee and the proposed purchaser in a bill of sale and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (iii) If the renewal is based on a professional estimate of the remaining useful life of the real property improvements on the premises, the estimated value and how it was determined; (iv) The use, nature, type and estimated cost of any additional improvements to be constructed, if applicable; (v) The dates any new construction is estimated to commence and be completed; and (vi) How the proposed lease meets the intent of this chapter. (f) Applications for amendment, assignment, extension or renewal shall be processed in accordance with the lease application review provisions of this chapter, except that applications for assignment shall not be referred to the Planning and Zoning Commission. The City has no obligation to amend, assign, renew or extend a lease and may decline to do so upon making specific findings as to why a lease amendment, assignment, renewal, or extension is not in the best interest of the City. 22.05.050 Competing Lease Applications. Page 40 Ordinance 3072-2019 Page 37 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] If another application for a new lease, extension or a renewal is received for the same property within thirty (30) days from the notice of application publication date by a different applicant, City staff shall process the application and forward the application, the City Manager’s recommendation and applicable commission recommendations to the City Council for approval of the application anticipated to best serve the interests of the City. The City Council may approve one (1) of the applications, reject all the applications or direct the City Manager to award a lease of the property by sealed bid. An applicant for a renewal or extension may withdraw an application for a renewal or extension at any time prior to a decision by the City Council whether or not to approve such a renewal or extension. 22.05.055 Length of Lease Term. (a) The length of term for an initial lease shall be based on the amount of investment the applicant proposes to make in the construction of new permanent improvements on the premises as provided in the application. The City Council may offer a shorter lease term, if the City Council makes specific findings that a shorter lease term is in the best interest of the City. (b) The maximum term of a lease shall be determined according to the following term table and cannot exceed forty-five (45) years: Term Table APPLICANT’S INVESTMENT/VALUE MAXIMUM TERM OF YEARS $7,500 5 15,000 6 22,500 7 30,000 8 37,500 9 45,000 10 52,500 11 60,000 12 67,500 13 75,000 14 82,500 15 90,000 16 97,500 17 105,000 18 112,500 19 120,000 20 127,500 21 135,000 22 142,500 23 150,000 24 157,500 25 165,000 26 172,500 27 180,000 28 187,500 29 195,000 30 202,500 31 210,000 32 Page 41 Ordinance 3072-2019 Page 38 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 217,500 33 225,000 34 232,500 35 240,000 36 247,500 37 255,000 38 262,500 39 270,000 40 277,500 41 285,000 42 292,500 43 300,000 44 307,500 45 (c) Lease extension. The length of term for a lease extension shall be determined based on the remaining term of the initial lease and the estimated cost of new investment the applicant proposes to make in the construction of new permanent improvements on the premises according to the term table and provided no extension shall extend a lease term past forty- five (45) years. (d) Lease renewal for an existing lease. A renewal for an existing lease requires the construction of new permanent improvements, and the length of term for a lease renewal for an existing lease shall be determined as follows: (1) Based on the remaining term of the initial lease according to the term table and the estimated cost of new investment the applicant proposes to make in the construction of new permanent improvements on the premises according to the term table; or (2) Pursuant to a transaction between the current lessee and a new buyer and prospective lessee and based on the purchase price of existing real property improvements on the premises, as certified by the current lessee and the proposed purchaser in the bill of sale, to be executed at closing of the transaction and the estimated cost of new investment in the construction of new permanent improvements on the premises according to the term table. (3) The term for renewal of an existing lease cannot exceed forty-five (45) years. (e) Lease renewal for an expiring lease. The length of term for a lease renewal of an expiring lease shall be determined as follows: (1) The purchase price of existing real property improvements on the premises, as certified by the current lessee and the proposed purchaser in the bill of sale, to be executed at closing of the transaction and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table; or (2) A professional estimate of the remaining useful life of the real property improvements on the premises, paid for by the applicant and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table; or (3) A fair market value appraisal of the existing real property improvements on the premises, paid for by the applicant and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table. (4) The term for renewal of an existing lease cannot exceed forty-five (45) years. (f) If the initial lease, term extension, or lease renewal granted to the applicant requires construction of new permanent improvements, the lease or term extension shall be subject to the following conditions: Page 42 Ordinance 3072-2019 Page 39 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (1) The lessee to complete the proposed permanent improvements within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council. (2) The lessee to provide a performance bond, deposit, personal guarantee, or other security if the City Council determines security is necessary or prudent to ensure the applicant’s completion of the permanent improvements required in the lease, renewal, or extension. The City Council shall determine the form and amount of the security according to the best interest of the City, after a recommendation by the City Manager considering the nature and scope of the proposed improvements and the financial responsibility of the applicant. (3) At no expense to the City, the lessee must obtain and keep in force during the term of the lease, insurance of the type and limits required by the City for the activities on the premises. (4) Within thirty (30) days after completion of the permanent improvements, the lessee shall submit to the City written documentation that the improvements have been completed as required. The City Manager shall make a report to the City Council of completion as soon as reasonably practical. (5) If the applicant shows good cause and the City Council determines the action is in the best interest of the City, the City Council may grant an extension of the time allowed to complete permanent improvements by resolution that is sufficient to allow for the completion of the permanent improvements or for submission of documentation that the permanent improvements have been completed. (6) If, within the time required, the applicant fails to complete the required permanent improvements, the City shall: (i) If the application is for a new lease or lease renewal, execute the forfeiture of the performance bond, deposit, personal guarantee, or other security posted by the applicant under subsection (f)(2) of this section to the extent necessary to reimburse the City for all costs and damages, including administrative and legal costs, arising from the applicant’s failure to complete the required improvements, and/or initiate cancellation of the lease or reduce the term of the lease to a period consistent with the portion of the improvements substantially completed in a timely manner according to the best interests of the City. (ii) If the application is for a lease extension, the City shall terminate the amendment extending the term of the lease or reduce the term of the extension at the City’s sole discretion. 22.05.060 Principles and Policy of Lease Rates. (a) Annual rent shall be computed by multiplying the fair market value of the land by a lease rate percentage of eight percent (8%) for each parcel; and (b) The City will determine the fair market value of the land requested to be leased based on an appraisal conducted for the City by an independent real estate appraiser certified under Alaska State statutes and ordered by the City for the purpose of determining annual rent. The appraisal shall be paid for by the applicant, and the cost of the appraisal shall be credited or refunded to the lessee once development is completed as required by the lease. The fair market value of the land will be adjusted annually based on the rate of inflation determined by the consumer price index (CPI) to determine annual rent; and (c) The City will conduct a land market analysis of City-owned land under lease once every ten (10) years to determine whether a market adjustment in either fair market value of land or lease rate percentage is justified; and Page 43 Ordinance 3072-2019 Page 40 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (d) If the City determines from the market analysis that a market adjustment to the lease rate percentage is in the best interests of the City, the new lease percentage must be approved by an ordinance and utilized to compute annual rents for the next fiscal year; and (e) If the market analysis or extraordinary circumstances determine a fair market value adjustment is in the best interests of the City, the City shall retain the services of an independent, real estate appraiser certified under Alaska State statutes to determine the fair market value of all leased land and shall use these values to compute annual rents for the next fiscal year; and (f) The City shall adjust the annual rent of a lease by giving the lessee written notice at least thirty (30) days prior to application of a new annual rent determination; and (g) If a lessee disagrees with the proposed change in the fair market value of land or lease rate percent (excluding CPI determinations, which cannot be appealed) and cannot informally resolve the issue with the City, the lessee must: (1) Provide notice of appeal in writing within ninety (90) days of notification supported by the written appraisal of a qualified real estate appraiser, selected and paid for by lessee (the “second appraiser”); and (2) The City and the lessee will meet to attempt to resolve the differences between the first appraiser and the second appraiser concerning the fair market value of the land or lease rate percent; and (3) If the City and lessee cannot agree upon the fair market value or lease rate percent then they shall direct the first appraiser and the second appraiser to mutually select a third qualified real estate appraiser, paid for jointly by the parties (the “third appraiser”); and (4) Within thirty (30) days after the third appraiser has been appointed, the third appraiser shall decide which of the two (2) respective appraisals from the first appraiser and the second appraiser most closely reflects the fair market value of the land or lease rate percent; and (5) The fair market value of the land or lease rate percent shall irrefutably be presumed to be the value(s) contained in such appraisal selected by the third appraiser, and the rent shall be redetermined based on such value(s); and (6) Rent shall continue to be paid at the then-applicable rate until any such new rental rate is established, and lessee and the City shall promptly pay or refund, as the case may be, any variance in the rent, without interest accruing to the extent to be paid/refunded. 22.05.065 Lease Bidding Procedure. With the approval of the City Council, the City Manager may designate a specific lot or lots to be leased through competitive sealed bid. The City Manager shall award the lease to the qualified bidder utilizing a procurement procedure which may consider qualitative factors in addition to the amount of any one (1) time premium payment to be paid by the successful bidder; provided, however, that the high bidder and the bidder’s lease proposal shall be subject to all provisions of lease application review and approval under this chapter. 22.05.070 Development Incentives. (a) The City Council may include a lease rent incentive to encourage commercial investment as follows: (1) A credit may be applied toward rent for a maximum of five (5) years. The credit may only include the value of site preparation work on the leased premises to include clearing and grubbing, unclassified excavation, classified fill and back fill, crushed aggregate base course, and utility extensions. Page 44 Ordinance 3072-2019 Page 41 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (2) An estimate of the value of the work, including a scope of work, prepared by a qualified engineer licensed to work in Alaska must be provided to the City and accepted prior to work being performed. (3) Any changes to the estimate of the value of the work or scope of work must be provided to the City and accepted prior to work being performed to be eligible for the credit. (4) For the credit to be applied, the approved scope of work must be completed. (5) A certification from a qualified engineer that the accepted scope of work has been completed must be provided to the City and accepted at the completion of the site preparation work. (6) Credit will be limited to original qualified engineer’s estimate unless another amount is accepted by the City in advance of work being completed. (7) Once the work is completed as proposed and the qualified engineer’s certification of completion has been received, a credit shall be applied to the lease payments, prorated as necessary for a maximum of five (5) years. (8) Rent shall be paid at the then-applicable rate until any such credit toward rent has been approved by the City Manager or designee, and the City shall apply a credit to lease payments prorated as necessary or promptly pay or refund, as the case may be, any variance between the credit applied and the rent paid, without interest accruing to the extent to be paid/refunded. 22.05.075 Ownership of Improvements. (a) Permanent improvements on the premises, excluding site development materials, constructed, placed, or purchased by the lessee remain the lessee’s property as long as a lease for the premises remains in effect with the lessee, including renewals, any period of extension approved by the City pursuant to the provisions of this chapter, or any period of holdover. (b) Unless otherwise provided in a land lease, at the expiration, cancellation, or termination of a lease that is extended or followed by a successive lease, the departing lessee may do one (1) or more of the following: (1) Remove lessee-owned permanent improvements from the premises, remediate any contamination for which the lessee is responsible, and restore the premises to a clean and neat physical condition acceptable to the City within ninety (90) days after the expiration, cancellation, or termination date of the lease; or (2) Sell lessee-owned permanent improvements to the succeeding lessee, remove all personal property, remediate any contamination for which the lessee is responsible, and leave the premises in a clean and neat physical condition acceptable to the City within sixty (60) days after notice from the City that the City has approved an application for a lease of the premises by another person or such longer period specified in the notice, but in no event more than one hundred eighty (180) days after the expiration, termination, or cancellation date of the lease; or (3) Purchase the property in which the lease contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. (c) If the lessee does not timely remove or sell the lessee-owned permanent improvements on a premises in accordance with the requirements of this section, any remaining permanent improvements and any remaining personal property of the departing lessee will be considered permanently abandoned. The City may sell, lease, demolish, dispose of, remove, or retain the abandoned property for use as the City determines is in the best interest of the City. The lessee shall, within thirty (30) days after being billed by the City, reimburse the City for any Page 45 Ordinance 3072-2019 Page 42 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] costs reasonably incurred by the City, including legal and administrative costs, to demolish, remove, dispose, clear title to, or sell the abandoned property and to remediate any contamination and restore the premises. (d) Site development materials that a lessee places on a premises become part of the City- owned real property and property of the City upon placement. The lessee: (1) Must maintain the site development work and site development materials throughout the term of the lease or successive lease, including any extensions and periods of holdover; and (2) May not remove the site development materials unless the City approves in writing. 22.05.080 Lease Execution. The lease applicant shall execute and return the appropriate lease agreement with the City of Kenai within thirty (30) days of mailing the agreement to the applicant. The lease agreement shall be prepared in accordance with the requirements of this title. Failure to execute and return the lease agreement within the specified period shall result in the forfeiture of all leasing rights. 22.05.085 Lease Utilization. Leased lands shall be utilized for purposes within the scope of the application, the terms of the lease and in conformity with the ordinances of the City, and in substantial conformity with the Comprehensive Plan. Utilization or development for other than the allowed uses shall constitute a material breach of the lease and subject the lease to cancellation at any time. Failure to substantially complete the development plan for the land shall constitute grounds for cancellation. 22.05.086 Form of Lease. (a) When leasing land under this chapter, the City Manager shall use a standard lease form that: (1) Provides a reasonable basis for the lessee’s use of the premises, (2) Complies with the intent of this chapter, and (3) Provides for the best interest of the City. (4) Approved as to form by the City Attorney; and (5) Adopted by resolution of the City Council. (b) The City Manager may enter into a land lease that deviates from the standard form adopted under subsection (a) of this section, if: (1) The City Manager believes the action is in the best interest of the City; (2) The lease is approved as to form by the City Attorney; and (3) The lease is approved by resolution of the City Council. 22.05.087 Lease Payments. (a) Upon execution of the lease, the land becomes taxable to the extent of the lessee’s leasehold interest and lessee shall pay all real property taxes levied upon such leasehold interest in these lands, and shall pay any special assessments and taxes. (b) Rent shall be paid annually in advance unless the lessee submits a written request to the City to pay on a quarterly or monthly basis. The payments shall be prorated to conform to the City of Kenai’s fiscal year beginning July 1st and ending June 30th. (c) Lessee shall be responsible for all sales taxes due on payments under the lease. Page 46 Ordinance 3072-2019 Page 43 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 22.05.095 Methods of Sale or Disposal. (a) Lands to which the City of Kenai holds title which are not restricted from sale by the deed of conveyance to the City or which have been released from such restrictions and that the City Council has determined are not required for a public purpose, may be listed for sale by the City Manager. The decision whether or not to sell the land rests in the sole discretion of the City Council. (b) The City Council may by ordinance authorize the City Manager to dispose of such properties in accordance with the intent of this chapter as follows: (1) Non-competitive process: (i) Conveyance to encourage new enterprises where it is found that encouragement of a new commercial or industrial enterprise would be beneficial to the City of Kenai, one or more parcels of City land may be sold upon such terms as to price, conditions of conveyance, and with such contingencies as may be set forth in the ordinance. (ii) Property sale to adjacent owners for the conveyance of a parcel of City property at fair market value to the owner of adjacent land whenever, in the judgment of the City Council, the parcel of land is of such small size, shape, or location that it could not be put to practical use by any other party. (iii) Grant or devotion of real property to the United States, the State of Alaska, a local political subdivision of the State of Alaska, or any agency of any of these governments or a non-profit corporation, for a consideration agreed upon between the City and grantee without a public sale if the grant, devotion or lease is advantageous to the City. (iv) Conveyance of land to resolve a land use conflict. (2) Competitive process: (i) Public outcry auction to the highest responsible bidder. (ii) Sealed bid to the highest responsible bidder. (iii) Over-the-Counter sale after a public outcry auction or sealed bid process on a first- come basis, provided minimum development requirements are met within two (2) years of sale and the land is sold for fair market value. An appraisal to determine fair market value must be completed within a one (1) year period prior to the date of sale. (iv) Leased land in which the lease was subject to competition through the lease application review process and which contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. An appraisal to determine fair market value must be completed within a one (1) year period prior to the sale. (3) Property exchange: Property exchanges for the conveyance and exchange of a parcel of City-owned property for property owned by another individual or legal entity subject to such conditions as Council may impose on the exchange, whenever the City Council makes findings it is advantageous to the City to make the property exchange. (c) Any sale of land owned by the City of Kenai and held by it for the use or benefit of the Kenai Municipal Airport must include in any instrument conveying title to the property restrictions accepted by the City under the terms of the 1963 Quitclaim Deed from the United States of America recorded at Book 27, Page 303 at the Kenai Recording District, Kenai Alaska or any other land owned by the City and acquired with Airport funds which may include similar restrictions. Additionally, any sale or disposal of the aforementioned lands for less than fair market value shall require a deposit in the amount of the difference between fair market value and the sale price to the Airport Land Sale Permanent Fund for the benefit of the Kenai Municipal Airport. Page 47 Ordinance 3072-2019 Page 44 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 22.05.100 Sale Procedure. (a) All requests to purchase City land must be submitted to the City on approved forms provided by the City. Applications will be dated on receipt and payment of the nonrefundable application fee and must include applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. (b) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to engineering services, surveying and consulting costs, unless in the sole discretion of the City Council it is determined the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a sale with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will be credited toward the purchaser at closing. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the sale. (5) If the application is rejected or if the applicant withdraws the application or fails to enter into a sale offered to the applicant, the City will return any unused deposit balance to the applicant. (c) The City will retain the services of an independent, real estate appraiser certified under Alaska State statutes to determine the fair market value for a determination of the minimum price on the land to be paid for from the deposit made by the applicant unless such an appraisal has been obtained within one (1) year prior to the date of sale. The cost of the appraisal will be credited toward the purchaser at closing. (d) If at any time during the process of preparing for sale, the applicant withdraws the application for sale, the City shall stop all procedures, pay expenses incurred prior to withdrawal of the application for sale, and reimburse applicant for any deposit advanced in excess of expenses incurred. However, if another party desires the sale to proceed, files an application for sale, executes and files an agreement to purchase, and deposits sufficient funds, then the prior applicant will be reimbursed for expenses which can be attributed to the subsequent applicant. (e) If all actions necessary for preparation for sale have been accomplished, and if neither the applicant nor any other party purchases said land when first offered for sale after such request, then all expenses incurred in preparation for the sale will be paid from the applicant’s deposit, and the balance, if any, shall be returned to the applicant. If the amount of the deposit is insufficient to pay all of the costs, the applicant will be billed for the balance due. (f) If the land is sold in a competitive public sale set in response to such request to anyone other than the applicant, the applicant’s deposit will be refunded in total to the applicant. The City’s expenses will be first deducted from the deposit of the successful bidder. (g) If the land is sold to the applicant, any deposit advanced, after deducting the City’s expenses, will be credited to the purchaser at closing. Page 48 Ordinance 3072-2019 Page 45 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (h) If the land is leased land in which the lease contains an option to purchase once the minimum development requirements have been met, the lessee may request the sale of the land at not less than the fair market value. (i) If the land is to be sold through a competitive process, notice of sale and the manner in which the land is to be sold must be posted to the extent possible to be visible from each improved street adjacent to the property and published in a newspaper of general circulation within the City. The published notice must contain: (1) The legal description of the land; (2) A brief physical description of the land; (3) The area and general location of the land; (4) The minimum acceptable offer for the land (which shall be the fair market value); (5) The terms under which the land will be sold; (6) Any limitations on the sale of the land; (7) The time and place set for the auction or bid opening; (8) The amount of deposit to be submitted with each bid in order to cover the City’s expenses such as survey, appraisal, and reviews; (9) Any other matters concerning the sale of which the City Manager believes the public should be informed. (j) If a buyer desires to obtain a preliminary commitment for title insurance or title insurance to the land, it shall be the responsibility of the buyer to obtain and pay for such commitment or insurance. (k) The City Manager is authorized to negotiate a division of the costs of sale to a maximum of fifty percent (50%) of the required costs being borne by the City, provided however that no costs of sale will be paid by the City where a sale is negotiated at a price below the fair market value of the land. 22.05.101 No Right of Occupancy – Land Purchase Application Expiration. (a) Submitting an application to purchase land does not give the applicant a right to purchase or use City-owned land. (b) The application shall expire upon closing of the sale or rejection of a land purchase application by the City Council or within twelve (12) months after the date the application has been submitted. 22.05.105 Terms for Financing Sale of City-Owned Lands. (a) In order to expedite and facilitate the sale of City lands, the City Manager is authorized to accept terms for sales and may accept a note secured by a deed of trust for a portion of the purchase price thereof, subject to the following restrictions: (1) Except for property sold by the City subsequent to foreclosure for delinquent taxes or assessments, prior to making a determination to accept a note and deed of trust from a prospective purchaser, the City shall order a preliminary commitment for title insurance and a review of the grantee index covering the party desiring to purchase the land at the cost of the party requesting to purchase the land, and no credit will be advanced on such sale if there are any delinquent liens or unpaid judgments found in the title company report until any such judgments or liens are paid and releases therefor have been filed. (2) In the event of a credit sale, terms shall be approved by the City Council in the Ordinance approving the sale, as follows: (i) The down payment required, which shall not be less than fifteen percent (15%) of the sales price; and Page 49 Ordinance 3072-2019 Page 46 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (ii) The length of the note; and (iii) A fixed or variable interest rate. 22.05.110 Determination as to Need for Public Use. (a) Whether land shall be acquired, retained, devoted, or dedicated to a public use shall be determined by ordinance which shall contain the public use for which the property is to be dedicated, the legal description of the property, and the address or a general description of the property sufficient to provide the public with notice of its location. This requirement does not apply to rights-of-way or easements dedicated through the City and Borough platting process. (b) Whether land previously dedicated to a public use should be dedicated to a different public use or should no longer be needed for public use shall be determined by the City Council by ordinance, except in cases of vacation of rights-of-way or easements which may be determined by resolution, either of which shall contain the new public use for which the property is to be dedicated or the reason the land is no longer needed for public use, the legal description of the property, and the address or a general description of the property sufficient to provide the public with notice of its location. 22.05.130 Special Use Permits. The City Council may authorize the City Manager to grant special use permits for the temporary use of real property owned by the City for a period not to exceed one (1) year, without appraisal of the value of the property or public auction, for any purpose compatible with the zoning of the land, and on such terms and for such rentals as the Council shall determine. 22.05.135 Acquisition of Real Property. (a) The City, by authorization of the City Council, expressed in a resolution for such purpose, may lease, purchase or acquire an interest in real property needed for a public purpose on such terms and conditions as the Council shall determine. No purchase shall be made until a qualified independent appraiser has appraised the property and given the Council an opinion as to the fair market value of the land unless the Council, upon resolution so finding, determines that the public interest will not be served by an appraisal. (b) Rights-of-way and easements may be accepted or issued by the City Manager after approval by the City Council for utility lines and services of all types and for necessary rights- of-way easements. This requirement does not apply to rights-of-way or easements dedicated through the City and Borough platting process. Section 4. Leaseholders of existing leases may convert their current lease to a new lease form approved by the City Council and governed by the Kenai Municipal Code Enacted by this Ordinance, except that the existing lease terms will not be entered only by virtue of the lease conversion. Section 5. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. Page 50 Ordinance 3072-2019 Page 47 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 6. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect 30 days after enactment. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 21st day of August, 2019. BRIAN GABRIEL SR., MAYOR ATTEST: ___________________________________ Jamie Heinz, CMC, City Clerk Introduced: August 7, 2019 Enacted: August 21, 2019 Effective: September 21, 2019 Page 51 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Scott Bloom City Attorney DATE: July 31, 2019 SUBJECT: Ordinance No. 3072-2019 – City Owned Lands ____________________________________________________________________________ Introduction: Building off recent code changes to airport reserve lands, Ordinance No. 3072-2019 amends the City’s lands code with the intent of providing land policies and practices that encourage responsible growth and development to support a thriving business, residential, recreational, and cultural community. These changes will affect City general fund lands, lands outside the airport reserve restricted by FAA, and certain harbor lands. The changes provide consistent guidance for the competitive lease and sale of lands, require development of commercial properties and discourage land speculation. Amendments to ownership of improvements on leases, the term table, and the provision of development incentives are designed to encourage interest in development in the City. The Ordinance repeals and re-enacts Chapter 22.05, changes the title of Title 22, repeals Chapter 21.15 (airport lands outside the airport reserve), and renames Title 21. This memo contains procedural guidance and a sectional analysis of the changes below. Additionally, a copy of the amendments in legislative format (not repeal and replace as in the Ordinance) and a clean copy is provided. Procedure: Administration has presented the material in this Ordinance to Council, the Planning and Zoning Commission, and Airport Commission, and will present to the Harbor Commission the third week in August. Administration recommends this Ordinance be referred to the three commissions for recommendations prior to a public hearing. The Airport Commission meets August 8, the Harbor Commission, August 19, and the Planning and Zoning Commission, August 14. Page 52 Page 2 of 4 Ordinance 3072-2019 Trailing this Ordinance is the City Administration’s Land Management Plan, which will identify parcels for sale and lease, among other information, and revisions to the Harbor Code addressing land leases and sales. Sectional Analysis: 1. Renaming Title 21: Title 21 is renamed to reflect that it only applies to lands within the airport reserve as lands restricted by the FAA outside the airport reserve are incorporated within Title 22 in the Ordinance and will be treated the same as other City lands outside the airport reserve, in compliance with any FAA restrictions per new KMC 22.05.095 which also provides for proceeds from sales to go to the airport. 2. Repealing 21.15: Chapter 21.15, which addresses FAA restricted lands outside the airport reserve, is repealed consistent with the new title for Title 21 addressed above, as all FAA restricted lands outside the airport reserve lands are incorporated into Chapter 22.05. This is reflected on pages 2 through 17 of the Ordinance. 3. Repealing and Re-enacting Title 22: Due to the number and significance of the proposed amendments to Title 22, which only contains one chapter, Chapter 22.05, the entire title is replaced as opposed to making changes one section at a time. This repeal is reflected on pages 17 through 32 of the Ordinance. 4. Renaming Title 22: On page 32, the title of Title 22 is changed from General Funds Lands to City-Owned Lands to reflect the inclusion of FAA restricted lands and certain harbor lands. 5. Renaming Chapter 22.05: Similarly on page 32, the title of Chapter 22.05 within Title 22 is amended to read “disposition of City Lands,” instead of “Disposition of City General Fund Lands.” 6. KMC 22.05.005: This is a new definitions section which did not previously exist, providing key terms for the Chapter. 7. KMC 22.05.010: This section, “Authority and Intent”, was formerly titled “Power to Dispose of Real Property.” This section now clarifies that it applies to all City owned lands except lands within the airport reserve and the leasing of tidelands for shore fisheries. It also makes an affirmative statement of the intent of the chapter: “to provide land policies and practices that encourage responsible growth and development to support a thriving business, residential, recreational and cultural community” and requires that all land sales and leases meet this intent. 8. KMC 22.05.015: “Lands Available for Lease, Sale or Disposal,” formerly titled, “Sale or Disposal,” clarifies that the City can lease, sell, or dispose of real property, not restricted from the same, after Council has determined it is not needed for a public purpose by any lawful method. 9. KMC 22.05.020: “Qualifications of Lease Applicants or Bidders” makes only housekeeping changes to the former section, describing who can lease or purchase property from the City. 10. KMC 22.05.025: “Initial Lease Application,” formerly titled “Applications,” describes the information required and process for submitting lease applications. Changes include provisions for applications requiring a subdivision, whether the applicant wants an option to purchase, and whether the lease meets the intent of the Chapter. For properties without a recent appraisal, this section now requires the applicant to pay for an appraisal, and the appraisal cost to be credited or refunded once development is complete. The changes are generally intended to more clearly define what information the City needs to evaluate a lease and communicate the process going forward and potential costs for lessees. Page 53 Page 3 of 4 Ordinance 3072-2019 11. Former KMC 22.05.030: This section formerly titled “Filing Fee and Deposit” is repealed in its entirety, as fees and deposits are now addressed in KMC 22.05.025 and other sections of code. 12. KMC 22.05.035: “No Right of Occupancy-Lease Application Expiration,” formerly titled “Rights Prior to Leasing,” clarifies that submission of a lease application does not give an applicant the right to lease or occupy the land. It also provides that a lease application expires within 12 months of the date of submission, upon execution of a lease, or rejection of the application by the Council. 13. KMC 22.05.040: “Lease Application Review” formerly titled “Processing Procedure” provides the following review process: (i) Administration reviews for completeness and conformance with City ordinances, (ii) If complete, Manager forwards to appropriate commissions for review and comment together with a Manager’s recommendation for approval or rejection, (iii) Notice of complete applications are published and posted on the property, with a date in which any competing applications must be received, (iv) The recommendations of the City Manager and any applicable commissions are provided to Council, which decides whether the application meets the intent of the code and whether the application should be approved. 14. KMC 22.05.045: “Application for Lease Amendment, Assignment, Extension or Renewal,” formally “Review,” provides the process for lease amendments, assignments, extensions, or renewals. Similar to the airport reserve properties, the term of a lease can be based on other factors than new development, such as the purchase price or estimated remaining useful life of improvements. These transactions are generally reviewed by the City in the same way as a new lease application, although lease assignments are not required to be reviewed by planning and zoning. 15. KMC 22.05.050: “Competing Lease Applications,” replaces former “Appraisal,” to provide a process for evaluating competing lease applications. Information regarding appraisal requirements has been incorporated into other code sections. When more than one application is submitted for a property, the Council can choose which applicant to lease to based on which application is found to be in the best interest of the City, after review and recommendation by the City Manager and applicable commissions. A safe harbor is provided for existing lessees seeking an extension or renewal, by allowing them to withdraw their application and stop the competitive process at any time prior to Council making a decision. 16. KMC 22.05.055: “Length of Lease Term” describes how the term of a new lease, extension, or renewal is determined. The term table matches that of the term table for properties within the airport reserve. Development of $307,500 or greater receives the maximum term of 45 years. The term of a lease can also be determined by the purchase price of improvements, an appraisal value of improvements, or the remaining useful life of improvements depending on the transaction. 17. KMC 22.05.060: “Principals and Policy of Lease Rates” was formerly 22.05.070. This provides that annual rent is based on 8% of the fair market value of the land. Annual rental adjustments are based on the Consumer Price Index (CPI). Every ten years, or pursuant to extraordinary circumstances, the City will conduct a market analysis to determine whether its rates and adjustments are in line with the market or whether changes need to be made. A process for a lessee to appeal is provided in this section as well, however, CPI adjustments are not appealable. 18. KMC 22.05.65: “Lease Bidding Procedure” provides a process for the City to designate lots to be leased through a competitive bid process to the highest bidder. Page 54 Page 4 of 4 Ordinance 3072-2019 19. KMC 22.05.070: “Development Incentives” is a new section similar to what is offered within the airport reserve. Certain improvements to the property paid for by the lessee can be used to offset up to five years of rental payments. 20. KMC 22.05.075: “Ownership of Improvements” is a new section that provides that the lessee owns the improvements on the leased property. These improvements can be sold by the lessee. A process for sale and/ or removal is also provided. 21. KMC 22.05.080 and 22.05.085: “Lease Execution” and “Lease Utilization” remain largely unchanged and describe the process for executing a lease and how the leased property can be used by the lessee. 22. KMC 22.05.086: “Form of Lease.” This section provides some of the basic terms for the lease form that is developed by the City Attorney and approved by the Council. A resolution to approve the standard lease form will be brought to Council at the same meeting as the public hearing on this ordinance. 23. KMC 22.05.087: “Lease Payments.” this section provides that the lessee is responsible for all taxes and special assessments on the property. Rent is paid annually or quarterly to the City. 24. KMC 22.05.095: “Methods of Sale” incorporates former KMC 22.05.090 “Conveyance to Encourage New Enterprise,” KMC 22.05.115, 22.05.120 and 22.05.125: “Property Exchanges”, “Property Sale to Adjacent Owners,” and “Grant or Devotion,” and provides the methods of sale or disposal for City owned lands. Non-competitive sales are allowed only to encourage new enterprise, for sale to adjacent property owners when the land is not practicably usable by others, to other government agencies, or to resolve a land use conflict. All other sales require a competitive process. 25. KMC 22.05.100: “Sale Procedure” provides the process for selling City property, public notice of sales, and describes which party is responsible for various costs associated with a sale. 26. KMC 22.05.101: “No Right of Occupancy-Land Purchase Application Expiration.” This section explains that an application to purchase land does not convey any rights to the property and that an application expires after 12 months, a decision by Council not to sell the property, or upon closing of the sale. 27. KMC 22.05.105: “Terms for Financing Sale of City Owned Lands” this section provides the process for the City to finance a sale. It provides that the length of the note and rate, whether fixed or variable, is determined by the Council in the ordinance approving a sale. 28. KMC 22.05.110: “Determination as to Need for Public Use.” This section is unchanged and requires that before any property can be sold, Council must first determine that it is not needed for a public use. 29. KMC 22.05.115, 22.05.120 and 22.05.125: “Property Exchanges,” “Property Sale to Adjacent Owners,” and “Grant or Devotion,” are all repealed as their terms and provisions are incorporated into 22.05.095. 30. KMC 22.05.130: “Special Use Permits” allows for a more informal use of City lands for a period of up to one year. 31. KMC 22.05.135: “Acquisition of Real Property” describes the process for the City to purchase or otherwise acquire new property and remains largely unchanged from the existing code. Page 55 1 Title 22 [GENERAL FUND]CITY-OWNED LANDS Chapter 22.05 DISPOSITION OF CITY [GENERAL FUND]LANDS 22.05.05 Definitions. When used in this chapter, the following terms shall have the meaning given below: “Amendment” means a formal change to a lease of lands other than a lease extension or renewal. “Annual rent” means an amount paid to the City annually according to the terms of the lease and Kenai Municipal Code. “Assignment” means the transfer of all interest in a lease from one person or entity to another. “City” means the City of Kenai, its elected officials, officers, employees or agents. “Consumer Price Index (CPI)” means the annual CPI for all urban consumers (CPI-U) for Anchorage, Alaska. “Existing lease” means a lease with at least one (1) year of term remaining. “Expiring lease” means a lease with less than one (1) year of term remaining. “Fair market value” means the most probable price which a property should bring in a competitive and open market as determined by a qualified independent appraiser, or the value as determined by the latest appraisal adjusted by the change in Consumer Price Index from the date of the latest appraisal. “Lease extension” means extending the term of an existing lease. “Lease rate percent” means a percentage that when applied to the fair market value of land establishes a rate of rent commensurate with rental rates prevalent in the local area as determined by a qualified real estate appraiser. “Lease renewal” means a new lease of property currently under an existing or expiring lease to an existing lessee or a purchaser. Page 56 2 “Market analysis” means an analysis of data collected from other land leases to determine whether a market adjustment in either fair market value or lease rate percentage reflects the market. “Permanent improvement” means a fixed addition or change to land that is not temporary or portable, including a building, building addition, retaining wall, storage tank, earthwork, fill material, gravel, and pavement, and remediation of contamination for which the applicant is not responsible and excluding items of ordinary maintenance, such as glass replacement, painting, roof repairs, door repairs, plumbing repairs, floor covering replacement, or pavement patching. “Professional estimate of the remaining useful life of the principal improvement” means an estimate of the number of remaining years that the principal improvement will be able to function in accordance with its intended purpose prepared by a qualified real estate appraiser, engineer, or architect licensed in Alaska. “Qualified independent appraiser” means a general real estate appraiser certified by the State of Alaska under AS 08.87. “Site development materials” means materials used for preparing a lease site for building construction or to provide a firm surface on which to operate a vehicle or aircraft, including geotextile, fill, gravel, paving, utilities and pavement reinforcement materials. “Site preparation work” means work on the leased premises to include clearing and grubbing, unclassified excavation, classified fill and back fill, a crushed aggregate base course and utility extensions. 22.05.010 [POWER]Authority and Intent [TO DISPOSE OF REAL PROPERTY]. (a) The provisions of this chapter apply to [GENERAL FUND] City-owned real property other than lands within the Airport Reserve as described in KMC 21.10 and the leasing of tidelands for shore fisheries. (b) The City may sell, convey, exchange, transfer, donate, dedicate, direct, [OR ]assign to use, or otherwise dispose of City-owned real property, including property acquired, held for, or previously devoted to a public use, only in accordance with this chapter, and, with respect to properties acquired through foreclosure for taxes, in compliance with those terms and provisions of AS 29 which apply to home-rule municipalities [ARE REQUIRED TO COMPLY WITH]. Disposal or sale of lands shall be made only when, in the judgment of the City Council, such lands are not or are no longer required for a public purpose. (c) It is the intent of this chapter to provide land policies and practices that encourage responsible growth and development to support a thriving business, residential, recreational and cultural community. (d) It is not the intent of this chapter to allow for speculation on City-owned lands. All leases, sales, and other disposals of City-owned land must meet the intent of this chapter. Page 57 3 (e) The provisions of this chapter shall not alter or amend the terms or rights granted under leases existing prior to the effective date of the ordinances codified in this chapter. 22.05.015 Lands Available for Lease, Sale or [D]Disposal. (a) The City may lease, sell or dispose of real property not restricted from lease or sale which the City Council has determined is not required for a public purpose [BY WARRANTY OR QUIT-CLAIM DEED, EASEMENT, LEASE, GRANT, PERMIT, LICENSE, DEED OF TRUST, MORTGAGE CONTRACT OF SALE OF REAL PROPERTY, PLAT DEDICATION, TAX DEED, OR] by any [OTHER ]lawful method or mode of conveyance or grant. Any instrument requiring execution by the City shall be signed by the City Manager and attested by the City Clerk. The form of any instrument shall be approved by the City Attorney. 22.05.020 Qualifications of Lease [A]Applicants or [B]Bidders. An applicant or bidder for a lease is qualified if the applicant or bidder: (a) Is an individual at least eighteen (18) years of age [OR OVER]; or (b) Is a [GROUP, ASSOCIATION, OR CORPORATION WHICH IS] legal entity which is authorized to conduct business under the laws of Alaska; or (c) Is acting as an agent for another meeting the requirements of subsection (a) or (b) of this section and has qualified by filing with the City [MANAGER] a proper power of attorney or a letter of authorization creating such agency. [THE AGENT SHALL REPRESENT ONLY ONE (1) PRINCIPAL TO THE EXCLUSION OF HIMSELF OR HERSELF. THE TERM “AGENT” INCLUDES REAL ESTATE BROKERS AND AGENTS.] 22.05.025 Initial Lease Application[S]. (a) All applications for lease of lands [SHALL] must be [FILED WITH] submitted to the City [MANAGER] on an application form[S] provided by the City[AVAILABLE AT CITY HALL]. Applications [SHALL] will be dated on receipt and must include payment of [FILING] the nonrefundable application fee [AND DEPOSIT. NO APPLICATION WILL BE ACCEPTED BY THE CITY MANAGER UNLESS IT APPEARS TO THE CITY MANAGER TO BE COMPLETE. FILING FEES ARE NOT REFUNDABLE] as set forth in the City’s schedule of fees approved by the City Council. (b) [WITH EVERY]The application[, THE APPLICANT SHALL SUBMIT A DEVELOPMENT PLAN, SHOWING AND STATING] form must include the following information: (1) The purpose of the proposed lease; (2) The use, [VALUE AND]nature, type, and estimated cost of improvements to be constructed; (3) [THE TYPE OF CONSTRUCTION; Page 58 4 (4)] The dates construction is estimated to commence and be completed. [(ORDINARILY A MAXIMUM OF TWO (2) YEARS)] Construction must be completed within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council; and ([5]4) [WHETHER INTENDED USE COMPLIES WITH THE ZONING ORDINANCE AND COMPREHENSIVE PLAN OF THE CITY. APPLICATIONS SHALL BECOME A PART OF THE LEASE]A comprehensive description of the proposed business or activity intended; (5) Whether the applicant requests a lease with an option to purchase; and (6) How the proposed lease meets the intent of this chapter. (c) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to any new appraisal, engineering services, surveying and consulting costs, unless in the sole discretion of the City Council, it is determined that the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a lease with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will apply to the rent payable under the lease. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the lease. (5) If the application is rejected or if the applicant withdraws the application or fails to sign a lease offered to the applicant, the City will return any unused deposit balance to the applicant. (d) Applications for lands which have not been appraised within one (1) year of the requested starting date of the lease require the applicant to be responsible for all costs associated with appraisal. The cost of the appraisal shall be credited or refunded to the lessee once development is completed as required by the lease, extension or renewal. (e) Applications which result in a lease agreement with the City require the lessee to be responsible for all recording costs and any other fees associated with execution of the lease including a preliminary commitment for title insurance and fifty percent (50%) of the required costs associated with a sale of leased land in which the lease contains an option to purchase once the minimum development requirements have been met. Page 59 5 (f) Anytime during the processing of a lease application, the City may request, and the applicant must supply, any clarification or additional information that the City reasonably determines is necessary for the City to make a final decision on the application. [22.05.030 FILING FEE AND DEPOSIT. (A) WHEN SUBMITTING AN APPLICATION FOR LEASE OF LAND, THE APPLICANT SHALL PAY THE CITY THE FOLLOWING AS SET FORTH IN THE CITY’S SCHEDULE OF FEES ADOPTED BY THE CITY COUNCIL: (1) PAY A NON-REFUNDABLE FILING FEE IN THE AMOUNT; AND (2) A DEPOSIT TO SHOW GOOD FAITH AND SECURE THE CITY IN PAYMENT OF ANY COSTS, INCLUDING: (A) AN APPRAISAL COST RECOVERY DEPOSIT; AND (B) AN ENGINEERING, SURVEYING AND CONSULTING COST RECOVERY DEPOSIT. (B) IF THE CITY DECIDES TO REJECT THE APPLICANT’S APPLICATION AND NOT ENTER INTO A LEASE WITH THE APPLICANT THROUGH NO FAULT OF THE APPLICANT OR FAILURE OF THE APPLICANT TO COMPLY WITH ANY REQUIREMENT OF THIS CHAPTER, ANY DEPOSIT MADE UNDER SUBSECTION (A)(2) OF THIS SECTION WILL BE RETURNED TO THE APPLICANT. (C) IF THE CITY ENTERS INTO A LEASE WITH THE APPLICANT ANY DEPOSIT MADE BY THE APPLICANT UNDER SUBSECTION (A)(2) OF THIS SECTION WILL BE APPLIED TO THE CITY’S ENGINEERING, APPRAISAL, AND CONSULTING COSTS RELATED TO THE PROCESSING OF THE APPLICANT’S APPLICATION AND ENTERING INTO THE LEASE. THE CITY WILL APPLY ANY UNUSED BALANCE OF A DEPOSIT TO THE RENT PAYABLE UNDER THE LEASE. IF THE CITY’S COSTS EXCEED THE AMOUNT OF ANY DEPOSIT, THE APPLICANT SHALL PAY THE SHORTAGE TO THE CITY AS A CONDITION OF THE LEASE. (D) IF THE APPLICANT FAILS TO COMPLY WITH ANY REQUIREMENT OF THIS CHAPTER, CAUSES INORDINATE DELAY, AS DETERMINED BY THE CITY MANAGER, OR REFUSES TO SIGN A LEASE OFFERED TO THE APPLICANT, THE CITY MANAGER WILL REJECT THE APPLICANT’S APPLICATION AND APPLY ANY DEPOSIT MADE BY THE APPLICANT UNDER SUBSECTION (A) OF THIS SECTION TO THE CITY’S APPRAISAL, ENGINEERING, AND CONSULTING COSTS INCURRED IN CONNECTION WITH THE APPLICANT’S APPLICATION. IF THE CITY’S COSTS FOR APPRAISAL, ENGINEERING AND CONSULTING COSTS EXCEED THE DEPOSITS, THE APPLICANT WILL BE RESPONSIBLE FOR THESE COSTS. THE CITY WILL RETURN ANY UNUSED DEPOSIT BALANCE TO THE APPLICANT.] 22.05.035 [RIGHTS PRIOR TO LEASING.]No Right of Occupancy – Lease Application Expiration. Page 60 6 (a) Submitting [THE FILING OF] an application for a lease [SHALL] does not give the applicant [NO]a right to lease or [TO THE]use [OF THE]City-owned land[ FOR WHICH THEY HAVE APPLIED]. (b) The application shall expire upon execution of a lease or rejection of a lease application by the City Council or within twelve (12) months after the date the application has been [MADE] submitted [IF A LEASE HAS NOT BEEN ENTERED INTO BETWEEN THE CITY AND THE APPLICANT BY THAT TIME UNLESS THE CITY COUNCIL FOR GOOD CAUSE GRANTS AN EXTENSION. NO EXTENSION MAY BE GRANTED FOR A PERIOD LONGER THAN SIX (6) MONTHS. LEASE RATES ARE SUBJECT TO CHANGE ON THE BASIS OF AN APPRAISAL DONE EVERY TWELVE (12) MONTHS ON THE PROPERTY APPLIED FOR]. 22.05.040 [PROCESSING PROCEDURE] Lease Application Review. (a) Applications shall be [FORWARDED]reviewed by City staff for application completeness and conformance with City ordinances. (b) Based on the initial review, if the City Manager determines the application is complete, the application shall be referred to the Planning and Zoning Commission and any other applicable commissions [UPON RECEIPT]for review and comment, together with the City Manager’s recommendation for approval or rejection. [THE PLANNING AND ZONING COMMISSION SHALL NORMALLY CONSIDER APPLICATIONS FOR SPECIFIC LANDS ON A FIRST- COME, FIRST-SERVED BASIS IF THE COMMISSION FINDS THAT THE APPLICATION IS COMPLETE AND CONFORMS TO THE COMPREHENSIVE PLAN AND THE KENAI ZONING CODE. WHERE THERE IS DIFFICULTY IN OBTAINING A PERFECTED APPLICATION, DETAILS AS TO DEVELOPMENT PLANS, ETC., OR WHERE THE APPLICANT FAILS TO COMPLY WITH DIRECTIONS OR REQUESTS OF THE PLANNING AND ZONING COMMISSION, ANY SUCH PRIORITY WILL BE LOST. IF AN APPLICATION FOR THE PURCHASE OF CITY-OWNED LANDS, PREVIOUSLY AUTHORIZED FOR SALE BY THE COUNCIL, IS RECEIVED BY THE CITY PRIOR TO THE KENAI PLANNING AND ZONING COMMISSION MAKING AN AFFIRMATIVE OR NEGATIVE RECOMMENDATION TO THE COUNCIL REGARDING THE LEASE APPLICATION FOR THE SAME PROPERTY, THE CITY MAY ELECT TO SELL THE PROPERTY IN ACCORDANCE WITH THE PROVISIONS OF THE CODE. (B) THE CITY COUNCIL SHALL NORMALLY CONSIDER A LEASE PROPOSAL ONLY AFTER APPROVAL OF THE PLANNING AND ZONING COMMISSION. HOWEVER, APPEALS OF PLANNING AND ZONING COMMISSION DISAPPROVAL MAY BE MADE TO THE CITY COUNCIL. COMPLETED LEASE APPLICATIONS MUST BE PRESENTED TO THE CITY COUNCIL WITHIN THIRTY (30) DAYS AFTER APPROVAL BY THE PLANNING AND ZONING COMMISSION.] (c) Notice of complete applications for new leases, renewals or extensions shall be published in a newspaper of general circulation within the City and posted on the property. The notice must contain the name of the applicant, a brief description of the land, whether the applicant requests a Page 61 7 lease with an option to purchase, and the date upon which any competing applications must be submitted (thirty (30) days from the date of publication). [(C) WHERE THERE ARE TWO (2) OR MORE APPLICATIONS FOR THE SAME LANDS FOR DIFFERENT USES, THEN IF THE PLANNING AND ZONING COMMISSION MAKES A FINDING THAT A SUBSEQUENT APPLICATION WOULD RESULT IN USE OF THE LANDS FOR A HIGHER AND BETTER PURPOSE WITH A GREATER BENEFIT TO THE CITY OF KENAI AND THE CITIZENS THEREOF, THEN THE LEASE MAY BE ISSUED TO SUCH APPLICANT NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (A) IN THIS SECTION WHICH PROVIDE FOR LEASING ON A FIRST- COME, FIRST-SERVED BASIS. ANY APPLICANT MAY APPEAL TO THE CITY COUNCIL FROM A FINDING OR A REFUSAL TO FIND BY THE PLANNING AND ZONING COMMISSION BY FILING AN APPEAL WITH THE CITY CLERK WITHIN SEVEN (7) DAYS AFTER THE FINDING IS MADE OR REFUSED BY THE PLANNING AND ZONING COMMISSION. (d) The recommendations of the City Manager, Planning and Zoning Commission, and any other applicable commissions shall be provided to the City Council. The City Council shall determine whether the lease is consistent with the intent of this chapter. The decision whether or not to lease land or authorize a lease extension, renewal, amendment or assignment rests in the sole discretion of the City Council. (e) If the applicant is in default of any charges, fees, rents, taxes, or other sums due and payable to the City or the applicant is in default of a requirement of any lease or contract with the City a lease shall not be entered into until the deficiencies are remedied . 22.05.045 [REVIEW]Application for Lease Amendment, Assignment, Extension or Renewal. [NO LEASED LAND MAY BE CHANGED IN USE, NOR MAY ANY RENEWAL LEASE BE ISSUED UNTIL THE PROPOSED USE OR RENEWAL HAS BEEN REVIEWED BY THE PLANNING COMMISSION AND APPROVED BY THE COUNCIL.] (a) A request from an existing lessee for a lease amendment, assignment, extension or renewal of the lease must be submitted to the City on an application form provided by the City. Applications must be complete and dated on receipt and include payment of the nonrefundable application fee and applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. (b) An application for an amendment must include the following information: (1) The purpose of the proposed amendment; (2) The proposed change in use or activity, if any; (3) A comprehensive description of the proposed business or activity, if applicable; and (4) How the proposed amendment meets the intent of this chapter. Page 62 8 (c) An application for a lease assignment must include the following: (1) The name of the individual or legal entity to which the lessee requests to assign the lease. (d) An application for a lease extension must include the following information: (1) The use, nature, type and estimated cost of additional improvements to be constructed; (2) The dates new construction is estimated to commence and be completed; and (3) How the proposed lease extension meets the intent of this chapter. (e) An application for a lease renewal must include the following information: (1) For a lease renewal of an existing lease: (i) The use, nature, type and estimated cost of additional investment in the construction of new permanent improvements; (ii) The dates new construction is estimated to commence and be completed; (iii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of real property improvements on the premises as certified by the current lessee and proposed purchaser in a bill of sale; and (iv) How the proposed lease renewal meets the intent of this chapter. (2) For a lease renewal of an expiring lease: (i) A fair market value appraisal of the existing principal improvement on the property, paid for by the applicant, and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (ii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of existing real property improvements, as certified by the current lessee and the proposed purchaser in a bill of sale and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (iii) If the renewal is based on a professional estimate of the remaining useful life of the real property improvements on the premises, the estimated value and how it was determined; (iv) The use, nature, type and estimated cost of any additional improvements to be constructed, if applicable; (v) The dates any new construction is estimated to commence and be completed; and (vi) How the proposed lease meets the intent of this chapter. Page 63 9 (f) Applications for amendment, assignment, extension or renewal shall be processed in accordance with the lease application review provisions of this chapter, except that applications for assignment shall not be referred to the Planning and Zoning Commission. The City has no obligation to amend, assign, renew or extend a lease and may decline to do so upon making specific findings as to why a lease amendment, assignment, renewal, or extension is not in the best interest of the City. [22.05.050 APPRAISAL. NO LAND SHALL BE SOLD, LEASED, OR A RENEWAL OF LEASE ISSUED, UNLESS THE SAME HAS BEEN APPRAISED WITHIN A TWELVE (12) MONTH PERIOD PRIOR TO THE SALE OR DATE FIXED FOR BEGINNING OF THE TERM OF THE LEASE OR RENEWAL LEASE. NO LAND SHALL BE LEASED FOR LESS THAN THE APPROVED APPRAISED ANNUAL RENTAL. APPRAISALS SHALL REFLECT THE NUMBER AND VALUE OF CITY SERVICES RENDERED THE LAND IN QUESTION.] 22.05.050 Competing Lease Applications. If another application for a new lease, extension or a renewal is received for the same property within thirty (30) days from the notice of application publication date by a different applicant, City staff shall process the application and forward the application, the City Manager’s recommendation and applicable commission recommendations to the City Council for approval of the application anticipated to best serve the interests of the City. The City Council may approve one (1) of the applications, reject all the applications or direct the City Manager to award a lease of the property by sealed bid. An applicant for a renewal or extension may withdraw an application for a renewal or extension at any time prior to a decision by the City Council whether or not to approve such a renewal or extension. 22.05.055 [TERMS]Length of [L]Lease [T]Term. [ALL LEASES SHALL BE APPROVED BY THE CITY COUNCIL BEFORE THE SAME SHALL BECOME EFFECTIVE. THE TERM OF ANY GIVEN LEASE SHALL DEPEND UPON THE DURABILITY OF THE PROPOSED USE, THE AMOUNT OF INVESTMENT IN IMPROVEMENT PROPOSED AND MADE, AND THE NATURE OF THE IMPROVEMENT PROPOSED WITH RESPECT TO DURABILITY AND TIME REQUIRED TO AMORTIZE THE PROPOSED INVESTMENT]. (a) The length of term for an initial lease shall be based on the amount of investment the applicant proposes to make in the construction of new permanent improvements on the premises as provided in the application. The City Council may offer a shorter lease term, if the City Council makes specific findings that a shorter lease term is in the best interest of the City. (b) The maximum term of a lease shall be determined according to the following term table and cannot exceed forty-five (45) years: Term Table Page 64 10 Applicant’s Investment/Value Maximum Term Of Years $7,500 5 15,000 6 22,500 7 30,000 8 37,500 9 45,000 10 52,500 11 60,000 12 67,500 13 75,000 14 82,500 15 90,000 16 97,500 17 105,000 18 112,500 19 120,000 20 127,500 21 135,000 22 142,500 23 150,000 24 157,500 25 165,000 26 172,500 27 180,000 28 187,500 29 195,000 30 202,500 31 210,000 32 217,500 33 225,000 34 232,500 35 240,000 36 247,500 37 255,000 38 262,500 39 270,000 40 277,500 41 285,000 42 292,500 43 300,000 44 307,500 45 (c) Lease extension. The length of term for a lease extension shall be determined based on the remaining term of the initial lease and the estimated cost of new investment the applicant Page 65 11 proposes to make in the construction of new permanent improvements on the premises according to the term table and provided no extension shall extend a lease term past forty-five (45) years. (d) Lease renewal for an existing lease. A renewal for an existing lease requires the construction of new permanent improvements, and the length of term for a lease renewal for an existing lease shall determined as follows: (1) Based on the remaining term of the initial lease according to the term table and the estimated cost of new investment the applicant proposes to make in the construction of new permanent improvements on the premises according to the term table; or (2) Pursuant to a transaction between the current lessee and a new buyer and prospective lessee and based on the purchase price of existing real property improvements on the premises, as certified by the current lessee and the proposed purchaser in the bill of sale, to be executed at closing of the transaction and the estimated cost of new investment in the construction of new permanent improvements on the premises according to the term table. (3) The term for renewal of an existing lease cannot exceed forty-five (45) years. (e) Lease renewal for an expiring lease. The length of term for a lease renewal of an expiring lease shall be determined as follows: (1) The purchase price of existing real property improvements on the premises, as certified by the current lessee and the proposed purchaser in the bill of sale, to be executed at closing of the transaction and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table; or (2) A professional estimate of the remaining useful life of the real property improvements on the premises, paid for by the applicant and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table; or (3) A fair market value appraisal of the existing real property improvements on the premises, paid for by the applicant and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table. (4) The term for renewal of an existing lease cannot exceed forty-five (45) years. (f) If the initial lease, term extension, or lease renewal granted to the applicant requires construction of new permanent improvements, the lease or term extension shall be subject to the following conditions: (1) The lessee to complete the proposed permanent improvements within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council. (2) The lessee to provide a performance bond, deposit, personal guarantee, or other security if the City Council determines security is necessary or prudent to ensure the applicant’s completion of the permanent improvements required in the lease, renewal, or extension. The City Council Page 66 12 shall determine the form and amount of the security according to the best interest of the City, after a recommendation by the City Manager considering the nature and scope of the proposed improvements and the financial responsibility of the applicant. (3) At no expense to the City, the lessee must obtain and keep in force during the term of the lease, insurance of the type and limits required by the City for the activities on the premises. (4) Within thirty (30) days after completion of the permanent improvements, the lessee shall submit to the City written documentation that the improvements have been completed as required. The City Manager shall make a report to the City Council of completion as soon as reasonably practical. (5) If the applicant shows good cause and the City Council determines the action is in the best interest of the City, the City Council may grant an extension of the time allowed to complete permanent improvements by resolution that is sufficient to allow for the completion of the permanent improvements or for submission of documentation that the permanent improvements have been completed. (6) If, within the time required, the applicant fails to complete the required permanent improvements, the City shall: (i) If the application is for a new lease or lease renewal, execute the forfeiture of the performance bond, deposit, personal guarantee, or other security posted by the applicant under subsection (f)(2) of this section to the extent necessary to reimburse the City for all costs and damages, including administrative and legal costs, arising from the applicant’s failure to complete the required improvements, and/or initiate cancellation of the lease or reduce the term of the lease to a period consistent with the portion of the improvements substantially completed in a timely manner according to the best interests of the City. (ii) If the application is for a lease extension, the City shall terminate the amendment extending the term of the lease or reduce the term of the extension at the City’s sole discretion. 22.05.060 [ANNUAL MINIMUM RENTAL]Principles and Policy of Lease Rates. (a) Annual [MINIMUM] rent[ALS] shall be computed [FROM THE APPROVED APPRAISED]by multiplying the fair market value of the land by a lease rate percentage of eight percent (8%) for each parcel [UTILIZING THE METHOD AS DESCRIBED IN KMC 22.05.070 OF THIS CHAPTER.]; and (b) The City will determine the fair market value of the land requested to be leased based on an appraisal conducted for the City by an independent real estate appraiser certified under Alaska State statutes and ordered by the City for the purpose of determining annual rent. The appraisal shall be paid for by the applicant, and the cost of the appraisal shall be credited or refunded to the lessee once development is completed as required by the lease. The fair market value of the land will be adjusted annually based on the rate of inflation determined by the consumer price index (CPI) to determine annual rent[.]; and Page 67 13 [(B) UPON EXECUTION OF THE LEASE, THE LANDS BECOME TAXABLE TO THE EXTENT OF ITS LEASEHOLD INTEREST AND LESSEE SHALL PAY ALL REAL PROPERTY TAXES LEVIED UPON SUCH LEASEHOLD INTEREST IN THESE LANDS, AND SHALL PAY ANY SPECIAL ASSESSMENTS AND TAXES AS IF HE OR SHE WERE THE OWNER OF THE LAND. (C) RENT SHALL BE PAID ANNUALLY IN ADVANCE. PAYMENTS SHALL BE PRORATED TO CONFORM TO THE CITY OF KENAI’S FISCAL YEAR BEGINNING JULY 1ST AND ENDING JUNE 30TH. IF THE EQUIVALENT MONTHLY PAYMENT EXCEEDS TWO HUNDRED DOLLARS ($200.00), THEN THE LESSEE SHALL HAVE THE OPTION OF MAKING PAYMENTS ON A MONTHLY BASIS. (D) LESSEE SHALL BE RESPONSIBLE FOR ALL SALES TAXES APPLICABLE TO ITS OPERATIONS.] (c) The City will conduct a land market analysis of City-owned land under lease once every ten (10) years to determine whether a market adjustment in either fair market value of land or lease rate percentage is justified; and (d) If the City determines from the market analysis that a market adjustment to the lease rate percentage is in the best interests of the City, the new lease percentage must be approved by an ordinance and utilized to compute annual rents for the next fiscal year; and (e) If the market analysis or extraordinary circumstances determine a fair market value adjustment is in the best interests of the City, the City shall retain the services of an independent, real estate appraiser certified under Alaska State statutes to determine the fair market value of all leased land and shall use these values to compute annual rents for the next fiscal year; and (f) The City shall adjust the annual rent of a lease by giving the lessee written notice at least thirty (30) days prior to application of a new annual rent determination; and (g) If a lessee disagrees with the proposed change in the fair market value of land or lease rate percent (excluding CPI determinations, which cannot be appealed) and cannot informally resolve the issue with the City, the lessee must: (1) Provide notice of appeal in writing within ninety (90) days of notification supported by the written appraisal of a qualified real estate appraiser, selected and paid for by lessee (the “second appraiser”); and (2) The City and the lessee will meet to attempt to resolve the differences between the first appraiser and the second appraiser concerning the fair market value of the land or lease rate percent; and (3) If the City and lessee cannot agree upon the fair market value or lease rate percent then they shall direct the first appraiser and the second appraiser to mutually select a third qualified real estate appraiser, paid for jointly by the parties (the “third appraiser”); and Page 68 14 (4) Within thirty (30) days after the third appraiser has been appointed, the third appraiser shall decide which of the two (2) respective appraisals from the first appraiser and the second appraiser most closely reflects the fair market value of the land or lease rate percent; and (5) The fair market value of the land or lease rate percent shall irrefutably be presumed to be the value(s) contained in such appraisal selected by the third appraiser, and the rent shall be redetermined based on such value(s); and (6) Rent shall continue to be paid at the then-applicable rate until any such new rental rate is established, and lessee and the City shall promptly pay or refund, as the case may be, any variance in the rent, without interest accruing to the extent to be paid/refunded. 22.05.065 [B]Lease Bidding [P]Procedure. [AS AN EXCEPTION TO GENERAL POLICY LISTED ABOVE]With the approval of the City Council, the [CITY COUNCIL]City Manager may designate a specific lot or lots to be [MADE AVAILABLE ONLY FOR]leased through competitive sealed bid. The City Manager shall award the lease to the qualified bidder utilizing a procurement procedure which may consider qualitative factors in addition to the amount of any [AS DESIGNATED, SEALED BIDS SHALL BE RECEIVED OFFERING A]one (1) time premium payment to be paid by the successful bidder; provided, however, that the high bidder and the bidder’s lease proposal [IN ADDITION TO THE ESTABLISHED LEASE RATE. HIGHEST BID, HOWEVER,]shall be subject to all provisions of lease application review and approval [ESTABLISHED FOR ALL OTHER LEASE APPLICATIONS]under this chapter. [22.05.070 PRINCIPLES AND POLICY OF LEASE RATES. (A) A FAIR RETURN TO THE GENERAL FUND IS THE POLICY OF THE CITY, UNLESS DEVIATION FROM THAT POLICY IS IN THE BEST INTEREST OF THE CITY AS DETERMINED BY THE CITY COUNCIL. TO ENSURE A FAIR RETURN, ALL LEASES FOR A PERIOD IN EXCESS OF FIVE (5) YEARS SHALL INCLUDE A REDETERMINATION CLAUSE AS OF THE FIFTH ANNIVERSARY OF THE LEASE AND EVERY FIVE (5) YEARS THEREAFTER, AND ALL LANDS FOR LEASE SHALL BE APPRAISED PRIOR TO LEASE AND AGAIN PRIOR TO REDETERMINATION. LEASE RATES: (1) SHALL BE BASED ON FAIR MARKET VALUE OF THE LAND, INCLUDING AN APPROPRIATE CONSIDERATION OF FACILITIES AND SERVICES AVAILABLE (PUBLIC WATER, PUBLIC SEWER, STORM SEWERS, AND OTHER PUBLIC UTILITIES) AS DETERMINED BY A QUALIFIED INDEPENDENT APPRAISER, CONSIDERING THE BEST USE OF THE SPECIFIED LAND; AND (2) SHALL BE EIGHT PERCENT (8%) OF FAIR MARKET VALUE. (B) FOR LEASES IN EXISTENCE PRIOR TO THE EFFECTIVE DATE OF THE ORDINANCE CODIFIED IN THIS CHAPTER, THE LEASE RATE REDETERMINATION SHALL BE AS PROVIDED IN THE LEASE. Page 69 15 (C) THE CITY MANAGER SHALL CHANGE THE RENT IN A LEASE BY GIVING THE LESSEE WRITTEN NOTICE AT LEAST THIRTY (30) DAYS IN ADVANCE OF THE EFFECTIVE DATE OF THE CHANGE. (D) THE “FAIR MARKET VALUE” OF THE PREMISES SHALL BE EQUAL TO THE THEN FAIR MARKET RATE FOR SIMILAR COMMERCIAL PROPERTY IN THE CITY OF KENAI, ALASKA (THE “RELEVANT AREA”). CITY SHALL GIVE NOTICE TO LESSEE OF CITY’S ESTIMATION OF THE FAIR MARKET VALUE NOT LATER THAN THIRTY (30) DAYS PRIOR TO THE EXPIRATION OF THE THEN-APPLICABLE FIVE (5) YEAR PERIOD, AS EVIDENCED AND SUPPORTED BY THE WRITTEN OPINION OF AN INDEPENDENT REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87, SELECTED AND PAID FOR BY THE CITY, FAMILIAR WITH THE RELEVANT AREA (THE “FIRST APPRAISER”). IF LESSEE DISAGREES WITH SUCH ESTIMATE, IT SHALL ADVISE THE CITY IN WRITING THEREOF WITHIN THIRTY (30) DAYS OF LESSEE’S RECEIPT OF SUCH ESTIMATE, AS EVIDENCED AND SUPPORTED BY THE WRITTEN OPINION OF A REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 (SELECTED AND PAID FOR BY LESSEE) FAMILIAR WITH THE RELEVANT AREA (THE “SECOND APPRAISER”). THE PARTIES SHALL PROMPTLY MEET TO ATTEMPT TO RESOLVE THEIR DIFFERENCES BETWEEN THE FIRST APPRAISER AND THE SECOND APPRAISER CONCERNING THE FAIR MARKET VALUE OF THE PREMISES. IF CITY AND LESSEE CANNOT AGREE UPON SUCH VALUE THEN, WITH ALL DELIBERATE SPEED, THEY SHALL DIRECT THE FIRST APPRAISER AND THE SECOND APPRAISER TO EXPEDITIOUSLY AND MUTUALLY SELECT A THIRD REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 (SELECTED AND PAID FOR JOINTLY BY THE PARTIES) FAMILIAR WITH THE RELEVANT AREA (THE “THIRD APPRAISER”). WITHIN THIRTY (30) DAYS AFTER THE THIRD APPRAISER HAS BEEN APPOINTED, THE THIRD APPRAISER SHALL DECIDE WHICH OF THE TWO (2) RESPECTIVE APPRAISALS FROM THE FIRST APPRAISER AND THE SECOND APPRAISER MOST CLOSELY REFLECTS THE FAIR MARKET VALUE OF THE PREMISES. THE FAIR MARKET VALUE OF THE PREMISES SHALL IRREBUTTABLY BE PRESUMED TO BE THE VALUE CONTAINED IN SUCH APPRAISAL SELECTED BY THE THIRD APPRAISER, AND THE RENTAL SHALL BE REDETERMINED BASED ON SUCH VALUE. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, RENTAL SHALL CONTINUE TO BE PAID AT THE THEN- APPLICABLE RATE UNTIL ANY SUCH NEW RENTAL RATE IS ESTABLISHED, AND LESSEE AND CITY SHALL PROMPTLY PAY OR REFUND, AS THE CASE MAY BE, ANY VARIANCE IN THE RENTAL, WITHOUT INTEREST THEREON ACCRUING TO THE EXTENT TO PAID/REFUNDED IN A TIMELY FASHION. 22.05.075 REIMBURSEMENT FOR CITY-CONSTRUCTED IMPROVEMENTS. (A) THE CITY MANAGER MAY INCLUDE IN A LEASE A REQUIREMENT FOR THE LESSEE TO REIMBURSE THE CITY FOR THE CITY’S COST OF: (1) LAND CLEARING, GRAVEL FILL, UTILITY EXTENSIONS AND OTHER IMPROVEMENTS OR AMENITIES ON OR IN DIRECT CONNECTION WITH THE Page 70 16 PREMISES, CONSTRUCTED BY THE CITY PRIOR TO THE EFFECTIVE DATE OF THE LEASE; OR (2) LAND CLEARING, GRAVEL FILL, UTILITY EXTENSIONS AND OTHER IMPROVEMENTS OR AMENITIES ON OR IN DIRECT CONNECTION WITH THE PREMISES, WHICH THE CITY AGREES TO CONSTRUCT AS A CONDITION OF THE LEASE, SUBJECT TO CITY COUNCIL APPROVAL. (B) THE LESSEE SHALL REIMBURSE THE CITY FOR THE CITY’S COST OF CONSTRUCTING THE IMPROVEMENTS IN TEN (10) EQUAL ANNUAL PAYMENTS, PLUS INTEREST AT EIGHT PERCENT (8%) PER YEAR ON THE UNPAID BALANCE. IF THE LEASE IS FOR LESS THAN TEN (10) YEARS, THE REPAYMENT SCHEDULE MAY NOT BE LONGER THAN THE TERM OF THE LEASE. THE LESSEE MAY PAY THE ENTIRE REMAINING BALANCE TO THE CITY AT ANY TIME DURING THE TERM OF THE LEASE.] 22.05.070 Development Incentives. (a) The City Council may include a lease rent incentive to encourage commercial investment as follows: (1) A credit may be applied toward rent for a maximum of five (5) years. The credit may only include the value of site preparation work on the leased premises to include clearing and grubbing, unclassified excavation, classified fill and back fill, crushed aggregate base course, and utility extensions. (2) An estimate of the value of the work, including a scope of work, prepared by a qualified engineer licensed to work in Alaska must be provided to the City and accepted prior to work being performed. (3) Any changes to the estimate of the value of the work or scope of work must be provided to the City and accepted prior to work being performed to be eligible for the credit. (4) For the credit to be applied, the approved scope of work must be completed. (5) A certification from a qualified engineer that the accepted scope of work has been completed must be provided to the City and accepted at the completion of the site preparation work. (6) Credit will be limited to original qualified engineer’s estimate unless another amount is accepted by the City in advance of work being completed. (7) Once the work is completed as proposed and the qualified engineer’s certification of completion has been received, a credit shall be applied to the lease payments, prorated as necessary for a maximum of five (5) years. (8) Rent shall be paid at the then-applicable rate until any such credit toward rent has been approved by the City Manager or designee, and the City shall apply a credit to lease payments Page 71 17 prorated as necessary or promptly pay or refund, as the case may be, any variance between the credit applied and the rent paid, without interest accruing to the extent to be paid/refunded. 22.05.075 Ownership of Improvements. (a) Permanent improvements on the premises, excluding site development materials, constructed, placed, or purchased by the lessee remain the lessee’s property as long as a lease for the premises remains in effect with the lessee, including renewals, any period of extension approved by the City pursuant to the provisions of this chapter, or any period of holdover. (b) Unless otherwise provided in a land lease, at the expiration, cancellation, or termination of a lease that is extended or followed by a successive lease, the departing lessee may do one (1) or more of the following: (1) Remove lessee-owned permanent improvements from the premises, remediate any contamination for which the lessee is responsible, and restore the premises to a clean and neat physical condition acceptable to the City within ninety (90) days after the expiration, cancellation, or termination date of the lease; or (2) Sell lessee-owned permanent improvements to the succeeding lessee, remove all personal property, remediate any contamination for which the lessee is responsible, and leave the premises in a clean and neat physical condition acceptable to the City within sixty (60) days after notice from the City that the City has approved an application for a lease of the premises by another person or such longer period specified in the notice, but in no event more than one hundred eighty (180) days after the expiration, termination, or cancellation date of the lease; or (3) Purchase the property in which the lease contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. (c) If the lessee does not timely remove or sell the lessee-owned permanent improvements on a premises in accordance with the requirements of this section, any remaining permanent improvements and any remaining personal property of the departing lessee will be considered permanently abandoned. The City may sell, lease, demolish, dispose of, remove, or retain the abandoned property for use as the City determines is in the best interest of the City. The lessee shall, within thirty (30) days after being billed by the City, reimburse the City for any costs reasonably incurred by the City, including legal and administrative costs, to demolish, remove, dispose, clear title to, or sell the abandoned property and to remediate any contamination and restore the premises. (d) Site development materials that a lessee places on a premises become part of the City-owned real property and property of the City upon placement. The lessee: (1) Must maintain the site development work and site development materials throughout the term of the lease or successive lease, including any extensions and periods of holdover; and (2) May not remove the site development materials unless the City approves in writing. Page 72 18 22.05.080 Lease [E]Execution. The lease applicant shall execute and return the appropriate lease agreement with the City of Kenai within thirty (30) days of mailing the agreement to the applicant. The lease agreement shall be prepared in accordance with the requirements of this title. Failure to execute and return the lease agreement within the specified period shall result in the forfeiture of all leasing rights. 22.05.085 Lease [U]Utilization. Leased lands shall be utilized for purposes within the scope of the application, the terms of the lease and in conformity with the ordinances of the City, and in substantial conformity with the Comprehensive Plan. Utilization or development for other than the allowed uses shall constitute a [VIOLATION]material breach of the lease and subject the lease to cancellation at any time. Failure to substantially complete the development plan for the land shall constitute grounds for cancellation. 22.05.086 Form of Lease. (a) When leasing land under this chapter, the City Manager shall use a standard lease form that: (1) Provides a reasonable basis for the lessee’s use of the premises, (2) Complies with the intent of this chapter, and (3) Provides for the best interest of the City. (4) Approved as to form by the City Attorney; and (5) Adopted by resolution of the City Council. (b) The City Manager may enter into a land lease that deviates from the standard form adopted under subsection (a) of this section, if: (1) The City Manager believes the action is in the best interest of the City; (2) The lease is approved as to form by the City Attorney; and (3) The lease is approved by resolution of the City Council. 22.05.087 Lease Payments. (a) Upon execution of the lease, the land becomes taxable to the extent of the lessee’s leasehold interest and lessee shall pay all real property taxes levied upon such leasehold interest in these lands, and shall pay any special assessments and taxes. Page 73 19 (b) Rent shall be paid annually in advance unless the lessee submits a written request to the City to pay on a quarterly or monthly basis. The payments shall be prorated to conform to the City of Kenai’s fiscal year beginning July 1st and ending June 30th. (c) Lessee shall be responsible for all sales taxes due on payments under the lease. [22.05.090 CONVEYANCE TO ENCOURAGE NEW ENTERPRISES. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS CHAPTER, WHERE IT IS FOUND THAT ENCOURAGEMENT OF A NEW COMMERCIAL OR INDUSTRIAL ENTERPRISE WOULD BE BENEFICIAL TO THE CITY OF KENAI, THE CITY COUNCIL BY ORDINANCE SO FINDING MAY DIRECT CONVEYANCE OF ONE OR MORE PARCELS OF CITY LAND BY THE CITY MANAGER TO SUCH ENTERPRISE UPON SUCH TERMS AS TO PRICE, CONDITIONS OF CONVEYANCE, AND WITH SUCH CONTINGENCIES AS MAY BE SET FORTH IN THE ORDINANCE.] 22.05.095 [S]Methods of Sale or Disposal. (a) Lands[,] to which the City of Kenai holds title which are not restricted from sale by the deed of conveyance to the City[,] or which have been released from such restrictions[, WHICH] and that the City Council has determined are not required for a public purpose, may be listed for sale by the City Manager[, EXCEPT THAT LANDS WHICH HAVE BEEN LEASED SHALL NOT BE SOLD UNLESS THE LESSEE HAS MADE A WRITTEN REQUEST TO THE CITY TO PLACE THE LAND FOR SALE]. The decision whether or not to sell the land rests in the sole discretion of the City Council. (b) [SALES OF LAND PURSUANT TO SUBSECTION (A) OF THIS SECTION SHALL BE MADE AT NOT LESS THAN FAIR MARKET VALUE. THE PURCHASER SHALL EXECUTE THE “AGREEMENT FOR SALE OF LAND” WITHIN ONE (1) YEAR OF THE DATE OF APPRAISAL. ]The City Council may by ordinance authorize the City Manager [HAS THE OPTION ]to dispose of such properties in accordance with [THE SALE PROCEDURES SET OUT IN THIS TITLE]the intent of this chapter as follows: (1) [BY NEGOTIATED SALE; OR]Non-competitive process: (i) Conveyance to encourage new enterprises where it is found that encouragement of a new commercial or industrial enterprise would be beneficial to the City of Kenai, one or more parcels of City land may be sold upon such terms as to price, conditions of conveyance, and with such contingencies as may be set forth in the ordinance. (ii) Property sale to adjacent owners for the conveyance of a parcel of City property at fair market value to the owner of adjacent land whenever, in the judgment of the City Council, the parcel of land is of such small size, shape, or location that it could not be put to practical use by any other party. (iii) Grant or devotion of real property to the United States, the State of Alaska, a local political subdivision of the State of Alaska, or any agency of any of these governments or a non-profit Page 74 20 corporation, for a consideration agreed upon between the City and grantee without a public sale if the grant, devotion or lease is advantageous to the City. (iv) Conveyance of land to resolve a land use conflict. (2) [BY]Competitive process: (i) Public outcry auction to the highest responsible bidder[; OR]. [(3) BY COMPETITIVE S](ii) Sealed bid[s] to the highest responsible bidder. (iii) Over-the-Counter sale after a public outcry auction or sealed bid process on a first-come basis, provided minimum development requirements are met within two (2) years of sale and the land is sold for fair market value. An appraisal to determine fair market value must be completed within a one (1) year period prior to the date of sale. (iv) Leased land in which the lease was subject to competition through the lease application review process and which contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. An appraisal to determine fair market value must be completed within a one (1) year period prior to the sale. (3) Property exchange: Property exchanges for the conveyance and exchange of a parcel of City-owned property for property owned by another individual or legal entity subject to such conditions as Council may impose on the exchange, whenever the City Council makes findings it is advantageous to the City to make the property exchange. [IN THE EVENT THAT THE SALE IS NOT CLOSED WITHIN SIX (6) MONTHS OF THE DATE OF APPRAISAL, THE BUYER WILL BE CHARGED, UPON CLOSING, INTEREST COMPUTED IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE KENAI MUNICIPAL CODE, BASED UPON THE TOTAL SALES PRICE FOR THE NUMBER OF DAYS PAST THE EXPIRATION OF THE SIX (6) MONTH PERIOD.] (c) Any sale of land owned by the City of Kenai and held by it for the use or benefit of the Kenai Municipal Airport must include in any instrument conveying title to the property restrictions accepted by the City under the terms of the 1963 Quitclaim Deed from the United States of America recorded at Book 27, Page 303 at the Kenai Recording District, Kenai Alaska or any other land owned by the City and acquired with Airport funds which may include similar restrictions. Additionally, any sale or disposal of the aforementioned lands for less than fair market value shall require a deposit in the amount of the difference between fair market value and the sale price to the Airport Land Sale Permanent Fund for the benefit of the Kenai Municipal Airport. 22.05.100 Sale [P]Procedure. (a) All requests to purchase City land must be submitted to the City on approved forms provided by the City. Applications will be dated on receipt and payment of the nonrefundable application Page 75 21 fee and must include applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. (b) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to engineering services, surveying and consulting costs, unless in the sole discretion of the City Council it is determined the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a sale with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will be credited toward the purchaser at closing. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the sale. (5) If the application is rejected or if the applicant withdraws the application or fails to enter into a sale offered to the applicant, the City will return any unused deposit balance to the applicant. (c) The City [MANAGER WILL OBTAIN SUCH AN APPRAISAL]will retain the services of an independent, real estate appraiser certified under Alaska State statutes to determine the fair market value for a determination of the minimum price on the land to be paid for from the deposit made by the applicant unless such an appraisal has been obtained within one (1) year prior to the date of sale. The cost of the appraisal will be credited toward the purchaser at closing. [(B) WHERE ANY PARTY, HEREINAFTER CALLED “APPLICANT,” REQUESTS THAT A TRACT OR TRACTS OF LAND BE SOLD FOR WHICH AN APPRAISAL WILL BE REQUIRED, WHICH WILL REQUIRE SUBDIVIDING, PLATTING, OR SURVEYING AND STAKING, OR WHICH WILL REQUIRE ADVERTISING OR INCURRING ANY OTHER EXPENDITURES BY THE CITY PRIOR TO SALE. (1) NO ACTIONS IN PREPARATION FOR SALE WILL BE TAKEN BY THE CITY UNTIL AN AGREEMENT TO PURCHASE SHALL BE PROPERLY EXECUTED AND FILED WITH THE CITY MANAGER FOR THE PURCHASE OF SUCH LAND WITH PAYMENT OF SUFFICIENT GOOD FAITH DEPOSIT, WHICH SHALL CONSIST OF CASH OR ITS EQUIVALENT DEPOSITED WITH THE FINANCE OFFICER OF THE CITY OF KENAI, AS MAY BE DETERMINED BY THE CITY MANAGER, TO COVER ALL EXPENSES OF THE CITY AND SUCH AGREEMENT TO PURCHASE SHALL FURTHER CONTAIN THE AGREEMENT BY APPLICANT TO PAY ANY ADDITIONAL COSTS IF SAID GOOD FAITH DEPOSIT IS INSUFFICIENT TO PAY ALL COSTS INCURRED BY THE CITY.] Page 76 22 (2)](d) If at any time during the process of preparing for sale, the applicant [GIVES NOTICE TO THE CITY MANAGER OF WITHDRAWAL OF ]withdraws the [REQUEST]application for sale, the City [MANAGER ]shall stop all procedures, [SHALL ]pay expenses incurred prior to [TERMINATION OF SALE PROCEDURES ]withdrawal of the application for sale, and [SHALL ]reimburse applicant for any [GOOD FAITH ]deposit advanced in excess of [ALL]expenses incurred. [(]However, if another party desires the sale to proceed, files an application [FOR SALE ]for sale, executes and files an agreement to purchase, and [ADVANCES ]deposits sufficient funds[ THEREFOR], then the prior applicant will be reimbursed for expenses [CHARGES ]which can be attributed to the subsequent applicant.[) (3)](e) If all actions necessary for preparation for sale have been accomplished, and if neither the applicant nor any other party purchases said land when first offered for sale after such request, then all expenses incurred in preparation for the sale will be paid from the [GOOD FAITH ]applicant’s deposit, and the balance, if any, shall be returned to the applicant. If the [SUMS ]amount of the deposit is [ADVANCED AS GOOD FAITH DEPOSIT ARE]insufficient to pay all of the costs, the applicant will be billed for the balance due[ AND NORMAL COLLECTION PROCEDURES FOLLOWED]. [(4)](f) If the land [APPLIED FOR ]is sold [ON ]in a competitive public sale set in response to such request to anyone other than the applicant, [THEN ON CLOSING OF THE SALE, ]the [GOOD FAITH] applicant’s deposit will be refunded in total to the applicant. The City’s expenses will be first deducted from the deposit of the successful bidder. [(5)](g) If the land [IN QUESTION ]is sold to the applicant, [THE]any [GOOD FAITH ]deposit advanced, after deducting the City’s expenses, will be [APPLIED ON THE PAYMENT DUE] credited to the purchaser at closing. [(6) IF THE LAND IN QUESTION IS TO BE SOLD BY SEALED BID AND THE APPLICANT HAS SUBMITTED A VALID BID, BUT THE APPLICANT IS NOT THE HIGH BIDDER, HE OR SHE MAY PURCHASE THE LAND BY TENDERING THE CITY A BID EQUAL TO THE HIGH BID WITHIN FIVE (5) DAYS OF THE BID OPENING. IF THE LAND SALE IS INITIATED IN ACCORDANCE WITH KMC 22.05.040[(A)], THE APPLICANT SHALL BE DEFINED AS THAT PARTY SUBMITTING THE INITIAL LEASE APPLICATION.] ([C]h) If the [TRACT OF ]land [PROPOSED TO BE SOLD ]is leased land in which the lease contains an option to purchase once the minimum development requirements have been met, the lessee may request the sale of the land at not less than the fair market value. [THE CURRENT LESSEE OBTAINS THIS RIGHT TO REQUEST A SALE ONLY AFTER, TO THE SATISFACTION OF THE CITY MANAGER, DEVELOPMENT HAS BEEN COMPLETED AS DETAILED IN THE DEVELOPMENT SCHEDULE WHICH HAS BEEN INCORPORATED INTO THE LEASE AGREEMENT. IF THERE IS NO DEVELOPMENT SCHEDULE, THE LESSEE MAY PURCHASE THE PROPERTY IF THERE HAVE BEEN SUBSTANTIAL IMPROVEMENTS AS DETERMINED BY THE CITY MANAGER. THE DECISION WHETHER OR NOT TO SELL THE LAND TO THE LESSEE RESTS WITH THE SOLD DISCRETION OF THE CITY.] Page 77 23 ([D]i) [IF THE TRACT OF LAND PROPOSED TO BE SOLD IS NOT LEASED LAND, OR IS LEASED LAND WITHOUT SUBSTANTIAL IMPROVEMENTS, THEN THE TRACT OF LAND MAY ONLY BE SOLD BY OUTCRY AUCTION OR BY COMPETITIVE SEALED BIDS.] If the [TRACT] land is to be [PUT UP FOR SUCH ]sold through a competitive [AUCTION OR SEALED BID SALE ]process, notice of sale and the manner in which the land is to be sold [SHALL BE]must be posted to the extent possible to be visible from each improved street adjacent to the property and published in a newspaper of general circulation within the City [ONCE EACH WEEK FOR TWO (2) SUCCESSIVE WEEKS NOT LESS THAN THIRTY (30) DAYS PRIOR TO THE DATE OF SALE; SUCH NOTICE SHALL ALSO BE POSTED IN AT LEAST THREE (3) PUBLIC PLACES WITHIN THE CITY AT LEAST THIRTY (30) DAYS PRIOR TO THE DATE OF SALE, AND SUCH OTHER NOTICE MAY BE GIVEN BY SUCH OTHER MEANS AS MAY BE CONSIDERED ADVISABLE BY THE CITY MA NAGER. SUCH]. The published notice must contain: (1) The legal description of the land; (2) A brief physical description of the land; (3) The area and general location of the land; (4) The minimum acceptable offer for the land (which shall be [ITS APPRAISED ]the fair market value); (5) The terms under which the land will be sold; (6) Any limitations on the sale of the land; (7) The time and place set for the auction or bid opening; (8) The amount of deposit to be submitted with each bid in order to cover the City’s expenses such as survey, appraisal, and reviews; (9) Any other matters concerning the sale of which the City Manager believes the public should be informed. [(E) IF NO OFFERS ARE SUBMITTED MEETING THE MINIMUM ACCEPTABLE OFFER (OR APPRAISED VALUATION), THE CITY MANAGER MAY NEGOTIATE FOR SALE OF THE TRACT OR TRACTS OF LAND WITH A MODIFICATION OF PROPOSED TERMS OR FOR LESS THAN THE APPRAISED VALUATION PROVIDED THAT NO SUCH NEGOTIATED SALE FOR LESS THAN APPRAISED VALUE SHALL BE BINDING UPON THE CITY UNLESS THE TERMS AND PRICE THEREIN ARE APPROVED BY RESOLUTION OF THE CITY COUNCIL. (F) WHERE A REAL ESTATE AGENT FURNISHES A BUYER FOR CITY LAND, THE CLOSING AGENT SHALL BE AUTHORIZED TO PAY THE AGENT A REAL ESTATE COMMISSION OF FIVE PERCENT (5%) OF THE PURCHASE PRICE FOR THE LAND OR FIVE PERCENT (5%) OF THE APPRAISED FAIR MARKET VALUE OF THE LAND, WHICHEVER IS LOWER, UNDER THE FOLLOWING TERMS AND CONDITIONS: Page 78 24 (1) THE CITY MANAGER SHALL PROVIDE A NON-EXCLUSIVE LISTING OF LANDS AVAILABLE FOR SALE. (2) NO COMMISSION SHALL BE PAID TO AN AGENT WHERE THE AGENT IS A PARTY, OR IN PRIVITY WITH A PARTY, TO THE SALE. (G) CLOSING OF SALE OF CITY LANDS SHALL BE HANDLED BY A TITLE OR ESCROW COMPANY. (H) CONVEYANCE OF CITY LANDS SHALL BE BY QUIT CLAIM OR WARRANTY DEED FURNISHED BY THE CITY, AND BUYERS ARE ADVISED THAT ALL SUCH CONVEYANCES ARE SUBJECT TO ALL LIENS, ENCUMBRANCES, RESTRICTIONS, AND COVENANTS OF RECORD AND ARE SPECIFICALLY, WITHOUT BEING LIMITED THERETO, SUBJECT TO ANY UNRELEASED RESTRICTIONS CONTAINED IN THE DEED OR DEEDS BY WHICH THE CITY RECEIVED TITLE TO THE LAND.] ([I]j) If a buyer desires to obtain a preliminary commitment for title insurance or title insurance to the land, [THEN ]it shall be the responsibility of the buyer to obtain and pay for such commitment or insurance[ AND TO PAY FOR THE SAME]. [(J) IF THE TRACT OR TRACTS OF LAND ARE SOLD UNDER TERMS BY WHICH THE CITY IS TO ACCEPT A NOTE AS A PORTION OF THE PURCHASE PRICE, THE NOTE AND ACCOMPANYING DEED OF TRUST MUST BE PREPARED BY AN ATTORNEY, BUT MUST BE APPROVED BY THE CITY ATTORNEY PRIOR TO CLOSING. (K) THE NOTE SHALL BE PLACED FOR COLLECTION WITH A BANK SELECTED BY THE CITY MANAGER, WHICH MAY BE CHANGED FROM TIME TO TIME, AND WHICH SHALL BE THE BANK IN WHICH CITY FUNDS ARE DEPOSITED. THE SET-UP FEE TO INITIATE COLLECTION MAY BE NEGOTIATED AS SPECIFIED IN KMC 22.05.100(L), AND THE BUYER SHALL PAY THE ANNUAL COLLECTION FEES FOR SUCH BANK COLLECTION.] ([L]k) The City Manager is authorized to negotiate a division of the costs of sale [LISTED IN KMC 22.05.100(G) (H), (I), (J)AND (K) ]to a maximum of fifty percent (50%) of the required costs being borne by the City, provided however that no costs of sale will be paid by the City where a sale is negotiated at a price below [APPRAISED ]the fair market value of the land. 22.05.101 No Right of Occupancy – Land Purchase Application Expiration. (a) Submitting an application to purchase land does not give the applicant a right to purchase or use City-owned land. (b) The application shall expire upon closing of the sale or rejection of a land purchase application by the City Council or within twelve (12) months after the date the application has been submitted. 22.05.105 Terms for [F]Financing [S]Sale of City-Owned [L]Lands. Page 79 25 (a) In order to expedite and facilitate the sale of City lands, the City Manager is authorized to accept terms for sales and may accept a note secured by a deed of trust for a portion of the purchase price thereof, subject to the following restrictions: (1) [IF THE SALE IS TO A LESSEE WHO HAS PLACED A LIEN FOR FINANCING UPON THE LAND OR IMPROVEMENTS, THEN THE CITY MANAGER IS NOT AUTHORIZED TO SELL THE LAND EXCEPT FOR TOTAL CASH PAYMENT, PROVIDED, HOWEVER, THAT THE CITY MANAGER MAY ACCEPT A NOTE SECURED BY A DEED OF TRUST SUBORDINATE TO THE EXISTING SECURITY INTEREST IF THE AMOUNT OF THE NOTE THEREBY SECURED IS WITHIN THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE OF THE LAND WITH IMPROVEMENTS, AND THE SUM OF ALL PRIOR SECURITY INTERESTS. THE SALE DOCUMENTS SHALL BE SUBJECT TO THE SAME RESTRICTIONS CONTAINED IN THE LEASE AS THE LEASE PROVIDES AT THE TIME OF SALE. (2)] Except for property sold by the City subsequent to foreclosure for delinquent taxes or assessments, prior to making a determination to accept a note and deed of trust from a prospective purchaser, the City [MANAGER] shall [SECURE] order a preliminary commitment for title insurance and a review of the grantee index covering the party desiring to purchase the land [FROM THE TITLE COMPANY IN THE LOCAL RECORDING DISTRICT]at the cost of the party requesting to purchase the land, and no credit will be advanced on such sale if there are any delinquent liens or unpaid judgments found in the title company report until any such judgments or liens are paid and releases therefor have been filed. ([3]2) In the event of a credit sale, terms shall be approved by the City Council in the Ordinance approving the sale, as follows: (i) [T]The down payment required, which shall [BE DETERMINED BY THE CITY MANAGER, BUT SHALL ]not be less than fifteen percent (15%) of the sales price[.]; and (ii) The length of the note; and (iii) A fixed or variable interest rate. [(4) THE CITY MANAGER IS NOT AUTHORIZED TO ACCEPT TERMS FOR THE SALE OF TAX-FORECLOSED LANDS UNLESS THE DOWN PAYMENT TO BE RECEIVED THEREUNDER, OR OTHER SUMS APPROPRIATED FOR THE PURPOSE, ARE SUFFICIENT TO MAKE IMMEDIATE PAYMENT TO THE KENAI PENINSULA BOROUGH AND THE FORMER RECORD OWNER OF THE SUMS WHICH ARE, OR MAY BECOME, DUE TO THEM PURSUANT TO THE PROVISIONS OF AS 29.] [(B) IF THE CITY MANAGER DETERMINES THAT IT IS IN THE CITY’S INTEREST TO SELL CITY LANDS, THE SALE SHALL BE EITHER A CASH TRANSACTION OR BY A NOTE SECURED BY A DEED OF TRUST, SUBJECT TO SUBSECTION (A) OF THIS SECTION, AND BY NO OTHER MEANS. THE NOTE AND DEED OF TRUST SHALL CARRY TERMS AS FOLLOWS: Page 80 26 (1) THE TERM OF SUCH NOTE MAY BE SET BY THE CITY MANAGER, BUT IT SHALL PROVIDE FOR MONTHLY PAYMENTS AND NOT EXCEED TWENTY (20) YEARS UNLESS A LONGER PERIOD FOR A SPECIFIC SALE OF LAND IS APPROVED BY RESOLUTION OF THE CITY COUNCIL. (2) SUCH NOTE SHALL BEAR INTEREST AT A RATE TO BE DETERMINED BY THE CITY COUNCIL BY RESOLUTION.] 22.05.110 Determination as to [N]Need for [P]Public [U]Use. (a) Whether land shall be acquired, retained, devoted, or dedicated to a public use shall be determined by ordinance which shall contain the public use for which the property is to be dedicated, the legal description of the property, and the address or a general description of the property sufficient to provide the public with notice of its location. This requirement does not apply to rights-of-way or easements dedicated through the City and Borough platting process. (b) Whether land previously dedicated to a public use should be dedicated to a different public use or should no longer be needed for public use shall be determined by the City Council by ordinance, except in cases of vacation of rights-of-way or easements which may be determined by resolution, either of which shall contain the new public use for which the property is to be dedicated or the reason the land is no longer needed for public use, the legal description of the property, and the address or a general description of the property sufficient to provide the public with notice of its location. [22.05.115 PROPERTY EXCHANGES. THE COUNCIL MAY APPROVE, BY ORDINANCE, AFTER PUBLIC NOTICE AND AN OPPORTUNITY FOR PUBLIC HEARING, THE CONVEYANCE AND EXCHANGE OF A PARCEL OF CITY PROPERTY FOR PROPERTY OWNED BY ANOTHER PERSON SUBJECT TO SUCH CONDITIONS AS COUNCIL MAY IMPOSE ON THE EXCHANGE, WHENEVER IN THE JUDGMENT OF THE CITY COUNCIL IT IS ADVANTAGEOUS TO THE CITY TO MAKE THE PROPERTY EXCHANGE. 22.05.120 PROPERTY SALE TO ADJACENT OWNERS. THE COUNCIL MAY APPROVE, BY ORDINANCE, AFTER PUBLIC NOTICE AND AN OPPORTUNITY FOR PUBLIC HEARING, THE SALE AND CONVEYANCE OF A PARCEL OF CITY PROPERTY AT ITS APPRAISED VALUE TO THE OWNER OF ADJACENT LAND WHENEVER, IN THE JUDGMENT OF THE CITY COUNCIL, THE PARCEL OF LAND IS OF SUCH SMALL SIZE, SHAPE, OR LOCATION THAT IT COULD NOT BE PUT TO PRACTICAL USE BY ANY OTHER PARTY AND, IN ADDITION THERETO, WHERE THERE IS NO FORESEEABLE NEED OF THE LAND FOR ANY FUTURE USE BY THE CITY. 22.05.125 GRANT OR DEVOTION. THE COUNCIL, BY ORDINANCE, MAY WAIVE THE PROVISIONS OF THIS CHAPTER AND LEASE, GRANT OR DEVOTE REAL PROPERTY NO LONGER NEEDED BY THE Page 81 27 CITY FOR PUBLIC PURPOSE TO THE UNITED STATES, THE STATE OF ALASKA, A LOCAL POLITICAL SUBDIVISION OF THE STATE OF ALASKA, OR ANY AGENCY OF ANY OF THESE GOVERNMENTS OR A NON-PROFIT CORPORATION, FOR A CONSIDERATION AGREED UPON BETWEEN THE CITY AND GRANTEE WITHOUT A PUBLIC SALE IF THE GRANT, DEVOTION OR LEASE IS ADVANTAGEOUS TO THE CITY.] 22.05.130 Special Use [P]Permits. The City Council may authorize the City Manager to grant special use permits for the temporary use of real property owned by the City for a period not to exceed [FIVE (5)] one (1) year[S], without appraisal of the value of the property or public auction, for any purpose compatible with the zoning of the land, and on such terms and for such rentals as the [C]Council shall determine. 22.05.135 Acquisition of [R]Real [P]Property. (a) The City, by authorization of the City Council, expressed in a resolution for such purpose, may lease, purchase or acquire an interest in real property needed for a public [USE] purpose on such terms and conditions as the Council shall determine. No purchase shall be made until a qualified independent appraiser has appraised the property and given the Council an [INDEPENDENT ]opinion as to the [FULL AND TRUE ]fair market value [THEREOF ]of the land unless the Council, upon resolution so finding, determines that the public interest will not be served by an appraisal. [(B) BECAUSE OF THE UNIQUE VALUE OF REAL PROPERTY, THE CITY NEED NOT ACQUIRE OR LEASE REAL PROPERTY BY COMPETITIVE BIDDING.] (c) Rights-of-way and easements may be accepted or issued by the City Manager after approval by the City Council for utility lines and services of all types and for necessary rights-of-way easements. This requirement does not apply to rights-of-way or easements dedicated through the City and Borough platting process. Page 82 Title 22 CITY-OWNED LANDS Chapter 22.05 DISPOSITION OF CITY LANDS 22.05.05 Definitions. When used in this chapter, the following terms shall have the meaning given below: “Amendment” means a formal change to a lease of lands other than a lease extension or renewal. “Annual rent” means an amount paid to the City annually according to the terms of the lease and Kenai Municipal Code. “Assignment” means the transfer of all interest in a lease from one person or entity to another. “City” means the City of Kenai, its elected officials, officers, employees or agents. “Consumer Price Index (CPI)” means the annual CPI for all urban consumers (CPI-U) for Anchorage, Alaska. “Existing lease” means a lease with at least one (1) year of term remaining. “Expiring lease” means a lease with less than one (1) year of term remaining. “Fair market value” means the most probable price which a property should bring in a competitive and open market as determined by a qualified independent appraiser, or the value as determined by the latest appraisal adjusted by the change in Consumer Price Index from the date of the latest appraisal. “Lease extension” means extending the term of an existing lease. “Lease rate percent” means a percentage that when applied to the fair market value of land establishes a rate of rent commensurate with rental rates prevalent in the local area as determined by a qualified real estate appraiser. “Lease renewal” means a new lease of property currently under an existing or expiring lease to an existing lessee or a purchaser. “Market analysis” means an analysis of data collected from other land leases to determine whether a market adjustment in either fair market value or lease rate percentage reflects the market. “Permanent improvement” means a fixed addition or change to land that is not temporary or portable, including a building, building addition, retaining wall, storage tank, earthwork, fill material, gravel, and pavement, and remediation of contamination for which the applicant is not responsible and excluding items of ordinary maintenance, such as glass replacement, painting, roof repairs, door repairs, plumbing repairs, floor covering replacement, or pavement patching. “Professional estimate of the remaining useful life of the principal improvement” means an estimate of the number of remaining years that the principal improvement will be able to function in accordance with its intended purpose prepared by a qualified real estate appraiser, engineer, or architect licensed in Alaska. “Qualified independent appraiser” means a general real estate appraiser certified by the State of Alaska under AS 08.87. “Site development materials” means materials used for preparing a lease site for building construction or to provide a firm surface on which to operate a vehicle or aircraft, including geotextile, fill, gravel, paving, utilities and pavement reinforcement materials. “Site preparation work” means work on the leased premises to include clearing and grubbing, unclassified excavation, classified fill and back fill, a crushed aggregate base course and utility extensions. Page 83 22.05.010 Authority and Intent. (a) The provisions of this chapter apply to City-owned real property other than lands within the Airport Reserve as described in KMC 21.10 and the leasing of tidelands for shore fisheries. (b) The City may sell, convey, exchange, transfer, donate, dedicate, direct, assign to use, or otherwise dispose of City-owned real property, including property acquired, held for, or previously devoted to a public use, only in accordance with this chapter, and, with respect to properties acquired through foreclosure for taxes, in compliance with those terms and provisions of AS 29 which apply to home-rule municipalities. Disposal or sale of lands shall be made only when, in the judgment of the City Council, such lands are not or are no longer required for a public purpose. (c) It is the intent of this chapter to provide land policies and practices that encourage responsible growth and development to support a thriving business, residential, recreational and cultural community. (d) It is not the intent of this chapter to allow for speculation on City-owned lands. All leases, sales, and other disposals of City-owned land must meet the intent of this chapter. (e) The provisions of this chapter shall not alter or amend the terms or rights granted under leases existing prior to the effective date of the ordinances codified in this chapter. 22.05.015 Lands Available for Lease, Sale or Disposal. (a) The City may lease, sell or dispose of real property not restricted from lease or sale which the City Council has determined is not required for a public purpose by any lawful method or mode of conveyance or grant. Any instrument requiring execution by the City shall be signed by the City Manager and attested by the City Clerk. The form of any instrument shall be approved by the City Attorney. 22.05.020 Qualifications of Lease Applicants or Bidders. An applicant or bidder for a lease is qualified if the applicant or bidder: (a) Is an individual at least eighteen (18) years of age; or (b) Is a legal entity which is authorized to conduct business under the laws of Alaska; or (c) Is acting as an agent for another meeting the requirements of subsection (a) or (b) of this section and has qualified by filing with the City a proper power of attorney or a letter of authorization creating such agency. 22.05.025 Initial Lease Application. (a) All applications for lease of lands must be submitted to the City on an application form provided by the City. Applications will be dated on receipt and must include payment of the nonrefundable application fee as set forth in the City’s schedule of fees approved by the City Council. (b) The application form must include the following information: (1) The purpose of the proposed lease; (2) The use, nature, type, and estimated cost of improvements to be constructed; (3) The dates construction is estimated to commence and be completed. Construction must be completed within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council; and (4) A comprehensive description of the proposed business or activity intended; (5) Whether the applicant requests a lease with an option to purchase; and (6) How the proposed lease meets the intent of this chapter. Page 84 (c) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to any new appraisal, engineering services, surveying and consulting costs, unless in the sole discretion of the City Council, it is determined that the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a lease with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will apply to the rent payable under the lease. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the lease. (5) If the application is rejected or if the applicant withdraws the application or fails to sign a lease offered to the applicant, the City will return any unused deposit balance to the applicant. (d) Applications for lands which have not been appraised within one (1) year of the requested starting date of the lease require the applicant to be responsible for all costs associated with appraisal. The cost of the appraisal shall be credited or refunded to the lessee once development is completed as required by the lease, extension or renewal. (e) Applications which result in a lease agreement with the City require the lessee to be responsible for all recording costs and any other fees associated with execution of the lease including a preliminary commitment for title insurance and fifty percent (50%) of the required costs associated with a sale of leased land in which the lease contains an option to purchase once the minimum development requirements have been met. (f) Anytime during the processing of a lease application, the City may request, and the applicant must supply, any clarification or additional information that the City reasonably determines is necessary for the City to make a final decision on the application. 22.05.035 No Right of Occupancy – Lease Application Expiration. (a) Submitting an application for a lease does not give the applicant a right to lease or use City-owned land. (b) The application shall expire upon execution of a lease or rejection of a lease application by the City Council or within twelve (12) months after the date the application has been submitted 22.05.040 Lease Application Review. (a) Applications shall be reviewed by City staff for application completeness and conformance with City ordinances. (b) Based on the initial review, if the City Manager determines the application is complete, the application shall be referred to the Planning and Zoning Commission and any other applicable commissions for review and comment, together with the City Manager’s recommendation for approval or rejection. (c) Notice of complete applications for new leases, renewals or extensions shall be published in a newspaper of general circulation within the City and posted on the property. The notice Page 85 must contain the name of the applicant, a brief description of the land, whether the applicant requests a lease with an option to purchase, and the date upon which any competing applications must be submitted (thirty (30) days from the date of publication). (d) The recommendations of the City Manager, Planning and Zoning Commission, and any other applicable commissions shall be provided to the City Council. The City Council shall determine whether the lease is consistent with the intent of this chapter. The decision whether or not to lease land or authorize a lease extension, renewal, amendment or assignment rests in the sole discretion of the City Council. (e) If the applicant is in default of any charges, fees, rents, taxes, or other sums due and payable to the City or the applicant is in default of a requirement of any lease or contract with the City a lease shall not be entered into until the deficiencies are remedied . 22.05.045 Application for Lease Amendment, Assignment, Extension or Renewal. (a) A request from an existing lessee for a lease amendment, assignment, extension or renewal of the lease must be submitted to the City on an application form provided by the City. Applications must be complete and dated on receipt and include payment of the nonrefundable application fee and applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. (b) An application for an amendment must include the following information: (1) The purpose of the proposed amendment; (2) The proposed change in use or activity, if any; (3) A comprehensive description of the proposed business or activity, if applicable; and (4) How the proposed amendment meets the intent of this chapter. (c) An application for a lease assignment must include the following: (1) The name of the individual or legal entity to which the lessee requests to assign the lease. (d) An application for a lease extension must include the following information: (1) The use, nature, type and estimated cost of additional improvements to be constructed; (2) The dates new construction is estimated to commence and be completed; and (3) How the proposed lease extension meets the intent of this chapter. (e) An application for a lease renewal must include the following information: (1) For a lease renewal of an existing lease: (i) The use, nature, type and estimated cost of additional investment in the construction of new permanent improvements; (ii) The dates new construction is estimated to commence and be completed; (iii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of real property improvements on the premises as certified by the current lessee and proposed purchaser in a bill of sale; and (iv) How the proposed lease renewal meets the intent of this chapter. (2) For a lease renewal of an expiring lease: (i) A fair market value appraisal of the existing principal improvement on the property, paid for by the applicant, and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (ii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of existing real property improvements, as certified by the current lessee and the proposed purchaser in a bill of sale and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; Page 86 (iii) If the renewal is based on a professional estimate of the remaining useful life of the real property improvements on the premises, the estimated value and how it was determined; (iv) The use, nature, type and estimated cost of any additional improvements to be constructed, if applicable; (v) The dates any new construction is estimated to commence and be completed; and (vi) How the proposed lease meets the intent of this chapter. (f) Applications for amendment, assignment, extension or renewal shall be processed in accordance with the lease application review provisions of this chapter, except that applications for assignment shall not be referred to the Planning and Zoning Commission. The City has no obligation to amend, assign, renew or extend a lease and may decline to do so upon making specific findings as to why a lease amendment, assignment, renewal, or extension is not in the best interest of the City. 22.05.050 Competing Lease Applications. If another application for a new lease, extension or a renewal is received for the same property within thirty (30) days from the notice of application publication date by a different applicant, City staff shall process the application and forward the application, the City Manager’s recommendation and applicable commission recommendations to the City Council for approval of the application anticipated to best serve the interests of the City. The City Council may approve one (1) of the applications, reject all the applications or direct the City Manager to award a lease of the property by sealed bid. An applicant for a renewal or extension may withdraw an application for a renewal or extension at any time prior to a decision by the City Council whether or not to approve such a renewal or extension. 22.05.055 Length of Lease Term. (a) The length of term for an initial lease shall be based on the amount of investment the applicant proposes to make in the construction of new permanent improvements on the premises as provided in the application. The City Council may offer a shorter lease term, if the City Council makes specific findings that a shorter lease term is in the best interest of the City. (b) The maximum term of a lease shall be determined according to the following term table and cannot exceed forty-five (45) years: Term Table APPLICANT’S INVESTMENT/VALUE MAXIMUM TERM OF YEARS $7,500 5 15,000 6 22,500 7 30,000 8 37,500 9 45,000 10 52,500 11 60,000 12 67,500 13 75,000 14 82,500 15 90,000 16 97,500 17 Page 87 105,000 18 112,500 19 120,000 20 127,500 21 135,000 22 142,500 23 150,000 24 157,500 25 165,000 26 172,500 27 180,000 28 187,500 29 195,000 30 202,500 31 210,000 32 217,500 33 225,000 34 232,500 35 240,000 36 247,500 37 255,000 38 262,500 39 270,000 40 277,500 41 285,000 42 292,500 43 300,000 44 307,500 45 (c) Lease extension. The length of term for a lease extension shall be determined based on the remaining term of the initial lease and the estimated cost of new investment the applicant proposes to make in the construction of new permanent improvements on the premises according to the term table and provided no extension shall extend a lease term past forty- five (45) years. (d) Lease renewal for an existing lease. A renewal for an existing lease requires the construction of new permanent improvements, and the length of term for a lease renewal for an existing lease shall be determined as follows: (1) Based on the remaining term of the initial lease according to the term table and the estimated cost of new investment the applicant proposes to make in the construction of new permanent improvements on the premises according to the term table; or (2) Pursuant to a transaction between the current lessee and a new buyer and prospective lessee and based on the purchase price of existing real property improvements on the premises, as certified by the current lessee and the proposed purchaser in the bill of sale, to be executed at closing of the transaction and the estimated cost of new investment in the construction of new permanent improvements on the premises according to the term table. (3) The term for renewal of an existing lease cannot exceed forty-five (45) years. (e) Lease renewal for an expiring lease. The length of term for a lease renewal of an expiring lease shall be determined as follows: (1) The purchase price of existing real property improvements on the premises, as certified by the current lessee and the proposed purchaser in the bill of sale, to be executed at closing of the transaction and the estimated cost of any new investment in the Page 88 construction of new permanent improvements on the premises according to the term table; or (2) A professional estimate of the remaining useful life of the real property improvements on the premises, paid for by the applicant and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table; or (3) A fair market value appraisal of the existing real property improvements on the premises, paid for by the applicant and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table. (4) The term for renewal of an existing lease cannot exceed forty-five (45) years. (f) If the initial lease, term extension, or lease renewal granted to the applicant requires construction of new permanent improvements, the lease or term extension shall be subject to the following conditions: (1) The lessee to complete the proposed permanent improvements within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council. (2) The lessee to provide a performance bond, deposit, personal guarantee, or other security if the City Council determines security is necessary or prudent to ensure the applicant’s completion of the permanent improvements required in the lease, renewal, or extension. The City Council shall determine the form and amount of the security according to the best interest of the City, after a recommendation by the City Manager considering the nature and scope of the proposed improvements and the financial responsibility of the applicant. (3) At no expense to the City, the lessee must obtain and keep in force during the term of the lease, insurance of the type and limits required by the City for the activities on the premises. (4) Within thirty (30) days after completion of the permanent improvements, the lessee shall submit to the City written documentation that the improvements have been completed as required. The City Manager shall make a report to the City Council of completion as soon as reasonably practical. (5) If the applicant shows good cause and the City Council determines the action is in the best interest of the City, the City Council may grant an extension of the time allowed to complete permanent improvements by resolution that is sufficient to allow for the completion of the permanent improvements or for submission of documentation that the permanent improvements have been completed. (6) If, within the time required, the applicant fails to complete the required permanent improvements, the City shall: (i) If the application is for a new lease or lease renewal, execute the forfeiture of the performance bond, deposit, personal guarantee, or other security posted by the applicant under subsection (f)(2) of this section to the extent necessary to reimburse the City for all costs and damages, including administrative and legal costs, arising from the applicant’s failure to complete the required improvements, and/or initiate cancellation of the lease or reduce the term of the lease to a period consistent with the portion of the improvements substantially completed in a timely manner according to the best interests of the City. (ii) If the application is for a lease extension, the City shall terminate the amendment extending the term of the lease or reduce the term of the extension at the City’s sole discretion. Page 89 22.05.060 Principles and Policy of Lease Rates. (a) Annual rent shall be computed by multiplying the fair market value of the land by a lease rate percentage of eight percent (8%) for each parcel; and (b) The City will determine the fair market value of the land requested to be leased based on an appraisal conducted for the City by an independent real estate appraiser certified under Alaska State statutes and ordered by the City for the purpose of determining annual rent. The appraisal shall be paid for by the applicant, and the cost of the appraisal shall be credited or refunded to the lessee once development is completed as required by the lease. The fair market value of the land will be adjusted annually based on the rate of inflation determined by the consumer price index (CPI) to determine annual rent; and (c) The City will conduct a land market analysis of City-owned land under lease once every ten (10) years to determine whether a market adjustment in either fair market value of land or lease rate percentage is justified; and (d) If the City determines from the market analysis that a market adjustment to the lease rate percentage is in the best interests of the City, the new lease percentage must be approved by an ordinance and utilized to compute annual rents for the next fiscal year; and (e) If the market analysis or extraordinary circumstances determine a fair market value adjustment is in the best interests of the City, the City shall retain the services of an independent, real estate appraiser certified under Alaska State statutes to determine the fair market value of all leased land and shall use these values to compute annual rents for the next fiscal year; and (f) The City shall adjust the annual rent of a lease by giving the lessee written notice at least thirty (30) days prior to application of a new annual rent determination; and (g) If a lessee disagrees with the proposed change in the fair market value of land or lease rate percent (excluding CPI determinations, which cannot be appealed) and cannot informally resolve the issue with the City, the lessee must: (1) Provide notice of appeal in writing within ninety (90) days of notification supported by the written appraisal of a qualified real estate appraiser, selected and paid for by lessee (the “second appraiser”); and (2) The City and the lessee will meet to attempt to resolve the differences between the first appraiser and the second appraiser concerning the fair market value of the land or lease rate percent; and (3) If the City and lessee cannot agree upon the fair market value or lease rate percent then they shall direct the first appraiser and the second appraiser to mutually select a third qualified real estate appraiser, paid for jointly by the parties (the “third appraiser”); and (4) Within thirty (30) days after the third appraiser has been appointed, the third appraiser shall decide which of the two (2) respective appraisals from the first appraiser and the second appraiser most closely reflects the fair market value of the land or lease rate percent; and (5) The fair market value of the land or lease rate percent shall irrefutably be presumed to be the value(s) contained in such appraisal selected by the third appraiser, and the rent shall be redetermined based on such value(s); and (6) Rent shall continue to be paid at the then-applicable rate until any such new rental rate is established, and lessee and the City shall promptly pay or refund, as the case may be, any variance in the rent, without interest accruing to the extent to be paid/refunded. 22.05.065 Lease Bidding Procedure. With the approval of the City Council, the City Manager may designate a specific lot or lots to be leased through competitive sealed bid. The City Manager shall award the lease to the qualified Page 90 bidder utilizing a procurement procedure which may consider qualitative factors in addition to the amount of any one (1) time premium payment to be paid by the successful bidder; provided, however, that the high bidder and the bidder’s lease proposal shall be subject to all provisions of lease application review and approval under this chapter. 22.05.070 Development Incentives. (a) The City Council may include a lease rent incentive to encourage commercial investment as follows: (1) A credit may be applied toward rent for a maximum of five (5) years. The credit may only include the value of site preparation work on the leased premises to include clearing and grubbing, unclassified excavation, classified fill and back fill, crushed aggregate base course, and utility extensions. (2) An estimate of the value of the work, including a scope of work, prepared by a qualified engineer licensed to work in Alaska must be provided to the City and accepted prior to work being performed. (3) Any changes to the estimate of the value of the work or scope of work must be provided to the City and accepted prior to work being performed to be eligible for the credit. (4) For the credit to be applied, the approved scope of work must be completed. (5) A certification from a qualified engineer that the accepted scope of work has been completed must be provided to the City and accepted at the completion of the site preparation work. (6) Credit will be limited to original qualified engineer’s estimate unless another amount is accepted by the City in advance of work being completed. (7) Once the work is completed as proposed and the qualified engineer’s certification of completion has been received, a credit shall be applied to the lease payments, prorated as necessary for a maximum of five (5) years. (8) Rent shall be paid at the then-applicable rate until any such credit toward rent has been approved by the City Manager or designee, and the City shall apply a credit to lease payments prorated as necessary or promptly pay or refund, as the case may be, any variance between the credit applied and the rent paid, without interest accruing to the extent to be paid/refunded. 22.05.075 Ownership of Improvements. (a) Permanent improvements on the premises, excluding site development materials, constructed, placed, or purchased by the lessee remain the lessee’s property as long as a lease for the premises remains in effect with the lessee, including renewals, any period of extension approved by the City pursuant to the provisions of this chapter, or any period of holdover. (b) Unless otherwise provided in a land lease, at the expiration, cancellation, or termination of a lease that is extended or followed by a successive lease, the departing lessee may do one (1) or more of the following: (1) Remove lessee-owned permanent improvements from the premises, remediate any contamination for which the lessee is responsible, and restore the premises to a clean and neat physical condition acceptable to the City within ninety (90) days after the expiration, cancellation, or termination date of the lease; or (2) Sell lessee-owned permanent improvements to the succeeding lessee, remove all personal property, remediate any contamination for which the lessee is responsible, and leave the premises in a clean and neat physical condition acceptable to the City within sixty (60) days after notice from the City that the City has approved an application for a Page 91 lease of the premises by another person or such longer period specified in the notice, but in no event more than one hundred eighty (180) days after the expiration, termination, or cancellation date of the lease; or (3) Purchase the property in which the lease contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. (c) If the lessee does not timely remove or sell the lessee-owned permanent improvements on a premises in accordance with the requirements of this section, any remaining permanent improvements and any remaining personal property of the departing lessee will be considered permanently abandoned. The City may sell, lease, demolish, dispose of, remove, or retain the abandoned property for use as the City determines is in the best interest of the City. The lessee shall, within thirty (30) days after being billed by the City, reimburse the City for any costs reasonably incurred by the City, including legal and administrative costs, to demolish, remove, dispose, clear title to, or sell the abandoned property and to remediate any contamination and restore the premises. (d) Site development materials that a lessee places on a premises become part of the City- owned real property and property of the City upon placement. The lessee: (1) Must maintain the site development work and site development materials throughout the term of the lease or successive lease, including any extensions and periods of holdover; and (2) May not remove the site development materials unless the City approves in writing. 22.05.080 Lease Execution. The lease applicant shall execute and return the appropriate lease agreement with the City of Kenai within thirty (30) days of mailing the agreement to the applicant. The lease agreement shall be prepared in accordance with the requirements of this title. Failure to execute and return the lease agreement within the specified period shall result in the forfeiture of all leasing rights. 22.05.085 Lease Utilization. Leased lands shall be utilized for purposes within the scope of the application, the terms of the lease and in conformity with the ordinances of the City, and in substantial conformity with the Comprehensive Plan. Utilization or development for other than the allowed uses shall constitute a material breach of the lease and subject the lease to cancellation at any time. Failure to substantially complete the development plan for the land shall constitute grounds for cancellation. 22.05.086 Form of Lease. (a) When leasing land under this chapter, the City Manager shall use a standard lease form that: (1) Provides a reasonable basis for the lessee’s use of the premises, (2) Complies with the intent of this chapter, and (3) Provides for the best interest of the City. (4) Approved as to form by the City Attorney; and (5) Adopted by resolution of the City Council. (b) The City Manager may enter into a land lease that deviates from the standard form adopted under subsection (a) of this section, if: (1) The City Manager believes the action is in the best interest of the City; (2) The lease is approved as to form by the City Attorney; and (3) The lease is approved by resolution of the City Council. Page 92 22.05.087 Lease Payments. (a) Upon execution of the lease, the land becomes taxable to the extent of the lessee’s leasehold interest and lessee shall pay all real property taxes levied upon such leasehold interest in these lands, and shall pay any special assessments and taxes. (b) Rent shall be paid annually in advance unless the lessee submits a written request to the City to pay on a quarterly or monthly basis. The payments shall be prorated to conform to the City of Kenai’s fiscal year beginning July 1st and ending June 30th. (c) Lessee shall be responsible for all sales taxes due on payments under the lease. 22.05.095 Methods of Sale or Disposal. (a) Lands to which the City of Kenai holds title which are not restricted from sale by the deed of conveyance to the City or which have been released from such restrictions and that the City Council has determined are not required for a public purpose, may be listed for sale by the City Manager. The decision whether or not to sell the land rests in the sole discretion of the City Council. (b) The City Council may by ordinance authorize the City Manager to dispose of such properties in accordance with the intent of this chapter as follows: (1) Non-competitive process: (i) Conveyance to encourage new enterprises where it is found that encouragement of a new commercial or industrial enterprise would be beneficial to the City of Kenai, one or more parcels of City land may be sold upon such terms as to price, conditions of conveyance, and with such contingencies as may be set forth in the ordinance. (ii) Property sale to adjacent owners for the conveyance of a parcel of City property at fair market value to the owner of adjacent land whenever, in the judgment of the City Council, the parcel of land is of such small size, shape, or location that it could not be put to practical use by any other party. (iii) Grant or devotion of real property to the United States, the State of Alaska, a local political subdivision of the State of Alaska, or any agency of any of these governments or a non-profit corporation, for a consideration agreed upon between the City and grantee without a public sale if the grant, devotion or lease is advantageous to the City. (iv) Conveyance of land to resolve a land use conflict. (2) Competitive process: (i) Public outcry auction to the highest responsible bidder. (ii) Sealed bid to the highest responsible bidder. (iii) Over-the-Counter sale after a public outcry auction or sealed bid process on a first-come basis, provided minimum development requirements are met within two (2) years of sale and the land is sold for fair market value. An appraisal to determine fair market value must be completed within a one (1) year period prior to the date of sale. (iv) Leased land in which the lease was subject to competition through the lease application review process and which contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. An appraisal to determine fair market value must be completed within a one (1) year period prior to the sale. (3) Property exchange: Property exchanges for the conveyance and exchange of a parcel of City-owned property for property owned by another individual or legal entity subject to Page 93 such conditions as Council may impose on the exchange, whenever the City Council makes findings it is advantageous to the City to make the property exchange. (c) Any sale of land owned by the City of Kenai and held by it for the use or benefit of the Kenai Municipal Airport must include in any instrument conveying title to the property restrictions accepted by the City under the terms of the 1963 Quitclaim Deed from the United States of America recorded at Book 27, Page 303 at the Kenai Recording District, Kenai Alaska or any other land owned by the City and acquired with Airport funds which may include similar restrictions. Additionally, any sale or disposal of the aforementioned lands for less than fair market value shall require a deposit in the amount of the difference between fair market value and the sale price to the Airport Land Sale Permanent Fund for the benefit of the Kenai Municipal Airport. 22.05.100 Sale Procedure. (a) All requests to purchase City land must be submitted to the City on approved forms provided by the City. Applications will be dated on receipt and payment of the nonrefundable application fee and must include applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. (b) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to engineering services, surveying and consulting costs, unless in the sole discretion of the City Council it is determined the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a sale with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will be credited toward the purchaser at closing. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the sale. (5) If the application is rejected or if the applicant withdraws the application or fails to enter into a sale offered to the applicant, the City will return any unused deposit balance to the applicant. (c) The City will retain the services of an independent, real estate appraiser certified under Alaska State statutes to determine the fair market value for a determination of the minimum price on the land to be paid for from the deposit made by the applicant unless such an appraisal has been obtained within one (1) year prior to the date of sale. The cost of the appraisal will be credited toward the purchaser at closing. (d) If at any time during the process of preparing for sale, the applicant withdraws the application for sale, the City shall stop all procedures, pay expenses incurred prior to withdrawal of the application for sale, and reimburse applicant for any deposit advanced in excess of expenses incurred. However, if another party desires the sale to proceed, files an application for sale, executes and files an agreement to purchase, and deposits sufficient funds, then the prior applicant will be reimbursed for expenses which can be attributed to the subsequent applicant. (e) If all actions necessary for preparation for sale have been accomplished, and if neither the applicant nor any other party purchases said land when first offered for sale after such Page 94 request, then all expenses incurred in preparation for the sale will be paid from the applicant’s deposit, and the balance, if any, shall be returned to the applicant. If the amount of the deposit is insufficient to pay all of the costs, the applicant will be billed for the balance due. (f) If the land is sold in a competitive public sale set in response to such request to anyone other than the applicant, the applicant’s deposit will be refunded in total to the applicant. The City’s expenses will be first deducted from the deposit of the successful bidder. (g) If the land is sold to the applicant, any deposit advanced, after deducting the City’s expenses, will be credited to the purchaser at closing. (h) If the land is leased land in which the lease contains an option to purchase once the minimum development requirements have been met, the lessee may request the sale of the land at not less than the fair market value. (i) If the land is to be sold through a competitive process, notice of sale and the manner in which the land is to be sold must be posted to the extent possible to be visible from each improved street adjacent to the property and published in a newspaper of general circulation within the City. The published notice must contain: (1) The legal description of the land; (2) A brief physical description of the land; (3) The area and general location of the land; (4) The minimum acceptable offer for the land (which shall be the fair market value); (5) The terms under which the land will be sold; (6) Any limitations on the sale of the land; (7) The time and place set for the auction or bid opening; (8) The amount of deposit to be submitted with each bid in order to cover the City’s expenses such as survey, appraisal, and reviews; (9) Any other matters concerning the sale of which the City Manager believes the public should be informed. (j) If a buyer desires to obtain a preliminary commitment for title insurance or title insurance to the land, it shall be the responsibility of the buyer to obtain and pay for such commitment or insurance. (k) The City Manager is authorized to negotiate a division of the costs of sale to a maximum of fifty percent (50%) of the required costs being borne by the City, provided however that no costs of sale will be paid by the City where a sale is negotiated at a price below the fair market value of the land. 22.05.101 No Right of Occupancy – Land Purchase Application Expiration. (a) Submitting an application to purchase land does not give the applicant a right to purchase or use City-owned land. (b) The application shall expire upon closing of the sale or rejection of a land purchase application by the City Council or within twelve (12) months after the date the application has been submitted. 22.05.105 Terms for Financing Sale of City-Owned Lands. (a) In order to expedite and facilitate the sale of City lands, the City Manager is authorized to accept terms for sales and may accept a note secured by a deed of trust for a portion of the purchase price thereof, subject to the following restrictions: (1) Except for property sold by the City subsequent to foreclosure for delinquent taxes or assessments, prior to making a determination to accept a note and deed of trust from a prospective purchaser, the City shall order a preliminary commitment for title insurance and a review of the grantee index covering the party desiring to purchase the land at the Page 95 cost of the party requesting to purchase the land, and no credit will be advanced on such sale if there are any delinquent liens or unpaid judgments found in the title company report until any such judgments or liens are paid and releases therefor have been filed. (2) In the event of a credit sale, terms shall be approved by the City Council in the Ordinance approving the sale, as follows: (i) The down payment required, which shall not be less than fifteen percent (15%) of the sales price; and (ii) The length of the note; and (iii) A fixed or variable interest rate. 22.05.110 Determination as to Need for Public Use. (a) Whether land shall be acquired, retained, devoted, or dedicated to a public use shall be determined by ordinance which shall contain the public use for which the property is to be dedicated, the legal description of the property, and the address or a general description of the property sufficient to provide the public with notice of its location. This requirement does not apply to rights-of-way or easements dedicated through the City and Borough platting process. (b) Whether land previously dedicated to a public use should be dedicated to a different public use or should no longer be needed for public use shall be determined by the City Council by ordinance, except in cases of vacation of rights-of-way or easements which may be determined by resolution, either of which shall contain the new public use for which the property is to be dedicated or the reason the land is no longer needed for public use, the legal description of the property, and the address or a general description of the property sufficient to provide the public with notice of its location. 22.05.130 Special Use Permits. The City Council may authorize the City Manager to grant special use permits for the temporary use of real property owned by the City for a period not to exceed one (1) year, without appraisal of the value of the property or public auction, for any purpose compatible with the zoning of the land, and on such terms and for such rentals as the Council shall determine. 22.05.135 Acquisition of Real Property. (a) The City, by authorization of the City Council, expressed in a resolution for such purpose, may lease, purchase or acquire an interest in real property needed for a public purpose on such terms and conditions as the Council shall determine. No purchase shall be made until a qualified independent appraiser has appraised the property and given the Council an opinion as to the fair market value of the land unless the Council, upon resolution so finding, determines that the public interest will not be served by an appraisal. (b) Rights-of-way and easements may be accepted or issued by the City Manager after approval by the City Council for utility lines and services of all types and for necessary rights- of-way easements. This requirement does not apply to rights-of-way or easements dedicated through the City and Borough platting process. Page 96 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Scott Bloom, City Attorney DATE: March 12, 2019 SUBJECT: Ordinance No. 3072 – 2019 ____________________________________________________________________________ The following amendments are intended to clarify that the City should not sell large parcels of land when only a portion is needed for the intended use or development. For example if a parcel is five acres and only one acre is needed for the development, the City should require a subdivision and only sell an acre parcel to be consistent with the intent of the Chapter and discourage land speculation. The amendments also attempt to clarify that land should only be sold when it is in the best interest of the City, and even if someone requests a sale, it may be more appropriate in certain cases for the City to pursue a lease with the interested party. Your consideration is appreciated, and the following motion would be appropriate to move the amendments: I move to amend Section 3 or Ordinance No. 3072-2019 by amending the new section 22.05.015- Lands Available for Lease, Sale or Disposal to read: 22.05.015 Lands Available for Lease, Sale or Disposal. (a) The City may lease, sell or dispose of real property not restricted from lease or sale which the City Council has determined is not required for a public purpose by any lawful method or mode of conveyance or grant. Any instrument requiring execution by the City shall be signed by the City Manager and attested by the City Clerk. The form of any instrument shall be approved by the City Attorney. Lands leased, sold or disposed of must be of appropriate size for the intended development or use to meet the intent of this Chapter. Council may require a subdivision prior to lease, sale or disposal of lands. I move to amend Section 3 or Ordinance No. 3072-2019 by amending the new section 22.05.040- Lease Application Review, subsection (b) to read: Page 2 of 14 Page 97 Page 2 of 2 Ord. No. 3072-2019 22.05.040 Lease Application Review. (b) Based on the initial review, if the City Manager determines the application is complete, the application shall be referred to the Planning and Zoning Commission and any other applicable commissions for review and comment, together with the City Manager’s recommendation for approval or rejection. The recommendation may include a recommendation for a subdivision to reduce or enlarge a parcel to meet the intended development or use. I move to amend Section 3 or Ordinance No. 3072-2019 by amending the new section 22.05.100- Sale Procedure, subsections (a) and (b) to read: 22.05.100 Sale Procedure. (a) All requests to purchase City land must be submitted to the City on approved forms provided by the City. Applications will be dated on receipt and payment of the nonrefundable application fee and must include applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. The City Council may decide to sell lands consistent with the intent of this Chapter after a recommendation from the City Manager and any appropriate City commission. The City Council may always recommend a lease as opposed to a sale when in the best interest of the City and consistent with the intent of this Chapter. (b) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to engineering services, surveying and consulting costs, unless in the sole discretion of the City Council it is determined the subdivision serves other City purposes. Sales of parcels must be of appropriate size to meet the needs of the proposed development or use to meet the intent of this Chapter. The sale of excess acreage not needed for the intended development or use does not meet the intent of this Chapter. Page 3 of 14 Page 98 New Text Underlined; [DELETED TEXT BRACKETED] MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Paul Ostrander, City Manager DATE: August 21, 2019 SUBJECT: Ordinance No. 3072-2019 Amendment ____________________________________________________________________________ The Administration provided presentations to the Planning and Zoning Commission, Airport Commission, and Harbor Commission on Ordinance 3072-2019. Additionally, each of the commissions considered the ordinance at a regularly scheduled meeting. Ordinance 3072-2019 should be amended to reflect their considerations. The sixth whereas should be amended as follows: WHEREAS, the Planning and Zoning Commission, at its meeting of August 14, 2019, recommended the City Council enact Ordinance No. 3072-2019; and, The seventh whereas should be amended as follows: WHEREAS, the Airport Commission, at its meeting of August 8, 2019, recommended the City Council enact Ordinance No. 3072-2019, and, The final whereas should be amended as follows: WHEREAS, the Harbor Commission at its meeting of August 19, 2019, [RECOMMENDED THE CITY COUNCIL] favorably discussed Ordinance No. 3072-2019 and had no recommended amendments. Your consideration is appreciated. Page 4 of 14 Page 99 Page 5 of 14 Page 100 Page 6 of 14 Page 101 _____________________________________________________________________________________ Sponsored by: Administration CITY OF KENAI ORDINANCE NO. 3079-2019 INCREASING ESTIMATED REVENUES AND APPROPRIATIONS IN THE AIRPORT SPECIAL REVENUE AND AIRPORT IMPROVEMENTS CAPITAL PROJECT FUNDS AND ACCEPTING A GRANT FROM THE FEDERAL AVIATION ADMINISTRATION FOR THE PURCHASE OF TWO AIRCRAFT RESCUE AND FIREFIGHTING (ARFF) VEHICLES, REHABILITATION OF THE FIRE TRAINING PROPS, AND REHABILITATION OF THE TRAINING FACILITY FOR THE ALASKA REGIONAL FIRE TRAINING FACILITY. WHEREAS, the Federal Aviation Administration (FAA) is providing one combined grant for the Alaska Regional Fire Training Facility for the purchase of two new Aircraft Rescue and Fire Fighting (ARFF) Vehicles, Rehabilitation of the Training Equipment Props, and Rehabilitation of the Training Facility Building; and, WHEREAS, the two 1998 Aircraft Rescue & Firefighting (ARFF) Vehicles used for training at the Alaska Regional Fire Training Facility have far exceeded what the Federal Aviation Administration considers their useful life and do not satisfy requirements for airport rescue vehicles; and, WHEREAS, new ARFF vehicles designed and manufactured in accordance with FAA Advisory Circular 150/5220-10 will allow airport firefighters to train and meet the 49 CFR 139 certification requirements for all levels of FAA indexed airports from A-E at the Alaska Regional Fire Training Facility; and, WHEREAS, KMC 17.15.070 (b) allows the City to purchase equipment under a contract of another governmental agency in which contract the City is authorized to participate and the FAA has approved the procurement process; and, WHEREAS, the cost to replace the aging ARFF vehicles is $X,XXX,XXX and funding to be provided by FAA grant funding of $X,XXX,XXX, 93.75% and required local match of $XXX,XXX, 6.25%; and, WHEREAS, the Alaska Regional Fire Training Facility was originally constructed twenty years ago and is in need of rehabilitation to the Facility’s operations equipment and controls; and, WHEREAS, the Federal Aviation Administration has expressed their interest in seeing the facility’s operations brought back to current standards; and, WHEREAS, the Design and Construction Costs for this work will be eligible under the grant from the Federal Aviation Administration; and, WHEREAS, on March 14, 2019 the City of Kenai released a Request for Proposals (RFP) where Morrison-Maierle was determined to be the successful proposer; and, Page 102 Ordinance 3079-2019 Page 2 of 3 _____________________________________________________________________________________ WHEREAS, on August 1, 2019 a formal Invitation to Bid was released for rehabilitation of the training equipment and training facility, with bids due on August 29, 2019; and, WHEREAS, the cost to rehabilitate the training facility’s props is estimated to be $X,XXX,XXX and funding to be provided by FAA grant funding of $X,XXX,XXX, 93.75% and required local match of $XXX,XXX, 6.25% and an additional $XXX,XXX in project contingency to be initially funded by the airport; and, WHEREAS, the cost to rehabilitate the Training Facility is $X,XXX,XXX and funding to be provided by FAA grant funding of $X,XXX,XXX, 93.75% and required local match of $XXX,XXX, 6.25% and an additional $XXX,XXX in project contingency to be initially funded by the airport; and; and, WHEREAS, with future concurrence from the FAA, contingency amounts will become eligible for 93.75% reimbursement; and, WHEREAS, sufficient funds are available in the Airport Special Revenue Fund to provide the required $XXX,XXX local match. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. That the City Manager is authorized to accept grant funding in the amount of $X,XXX,XXX from the Federal Aviation Administration and to execute a grant agreement and to expend grant funds to fulfill the purpose and intent of this ordinance. Section 2. That the estimated revenues and appropriations be increased as follows: Airport Special Revenue Fund Increase Estimated Revenues – Appropriation of Fund Balance $XXX,XXX Increase Appropriations - Airport Training Facility - Transfer to Other Funds $XXX,XXX Section 3. That the estimated revenues and appropriations be increased as follows: Airport Improvement Capital Project Fund Increase Estimated Revenues: FAA Grants $X,XXX,XXX Transfer from Other Funds XXX,XXX $X,XXX,XXX Increase Appropriations - Fire Training Center ARFF Vehicle Purchase - Machinery & Equipment $X,XXX,XXX Fire Training Center Training Prop Rehabilitation – Construction X,XXX,XXX Page 103 Ordinance 3079-2019 Page 3 of 3 _____________________________________________________________________________________ Fire Training Center Training Facility Rehabilitation – Construction X,XXX,XXX $ X,XXX,XXX Section 3. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 4. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect upon adoption. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 4th day of September 2019. BRIAN GABRIEL SR., MAYOR ATTEST: ___________________________________ Jamie Heinz, CMC, City Clerk Approved by Finance: Introduced: August 21, 2019 Enacted: September 4, 2019 Effective: September 4, 2019 Page 104 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council THROUGH: Paul Ostrander, City Manager FROM: Scott Curtin, Public Works Director DATE: August 14, 2019 SUBJECT: Ordinance No. 3079 - 2019 ____________________________________________________________________________ The Alaska Regional Fire Training Facility located at 450 Daubenspeck Circle was originally constructed approximately 20 years ago. Throughout the last fiscal year, Public Works and Airport Staff have been coordinating with the Federal Aviation Administration (FAA) to develop a project to rehabilitate the facility. These types of facilities are becoming fewer and far between nationwide, and the FAA has expressed good interest and intentions in seeing the Facility fully operational. Morrison-Maierle Engineering Consultants are the firm that designed the facility originally. This spring they were the successful proposer on providing professional services for the rehabilitation. In June 2019 a Facility Assessment Report was provided, identifying all of the areas within the facility in need of improvement. The grant is anticipated to cover three areas of improvement including: the purchase of two new ARFF Vehicles, Rehabilitation of Training Equipment & Props, Rehabilitation of Training Building. On July 31, 2019 the City was provided Construction Bid Documents, and a formal Invitation to Bid was released on August 1, 2019 with bids due on August 29, 2019. The Public Works Department anticipates accepting a grant from the FAA in September 2019, with a Notice to Proceed projected for October 1, 2019 with Project completions before June 30, 2020. The ARFF Vehicles may take as long as a year to arrive from the time they are ordered. Completion of this project is a great opportunity for the community, it will restore a City asset, and allow for continued and improved operations at the facility. Council’s approval is respectfully requested. Page 105 _____________________________________________________________________________________ Sponsored by: Administration CITY OF KENAI ORDINANCE NO. 3080-2019 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, INCREASING ESTIMATED REVENUES AND APPROPRIATIONS IN THE TERMINAL IMPROVEMENTS CAPITAL FUND, AND AUTHORIZING AN INCREASE TO THE CONSTRUCTION PURCHASE ORDER TO BLAZY CONSTRUCTION, INC. WHEREAS, the City of Kenai executed a Construction Agreement with Blazy Construction, Inc. on October 1, 2018 for the Terminal Rehabilitation Project in the amount of $10,985,994; and, WHEREAS, Council, through enactment of Ordinance 3037-2018 authorized the City Manager to issue a Purchase Order in the amount of $11,485,994 for the Contract amount of $10,985,994 including $500,000 of contingency funding; and, WHEREAS, Council, through enactment of Ordinance 3060-2019 increased estimated revenues and appropriations by $408,849.41 to provide for continued project contingency funds and increased the purchase order amount to $11,894,843.41; and, WHEREAS, to date the City has executed four change orders totaling $732,812.73 and Change Order five is within this packet for approval and totals $96,126.03 for a combined total Change Orders to date cost of $828,938.76; and, WHEREAS, the Federal Aviation Administration grant eligible portion of those Change Orders 1- 5 has been determined to be $734,232.51 with the City of Kenai’s share as $94,706.25; and, WHEREAS, Administration is requesting appropriation of the additional eligible federal share and an increase to the authorized Purchase Order Amount to Blazy Construction, Inc. of the same amount, $325,383.10 to replenish project contingency and to allow for the continued processing of future change orders; and, WHEREAS, once complete, the authorized purchase order amount to Blazy Construction, Inc. will be $12,220,226.51, the authorized contract to Blazy Construction, Inc. will be $11,814,932.76, with available contingency to complete the project of $405,293.75; and, WHEREAS, Council will continue to be informed of Change Orders through Public Works Mid- Month Report. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. The City Manager is authorized to accept grant funding from the Federal Aviation Administration in the amount of $325,383.10 for the grant eligible portions of Change Orders 3-5 to Blazy Construction, Inc. Page 106 Ordinance No. 3080-2019 Page 2 of 2 _____________________________________________________________________________________ Section 2. The City Manager is authorized to increase Purchase Order No. 116510 to Blazy Construction, Inc. by $325,383.10. Section 3. That the estimated revenues and appropriations be increased as follows: Terminal Improvement Capital Project Fund: Increase Estimated Revenues – FAA Grant $325,383.10 Increase Appropriations: Construction $325,383.10 Section 4. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 5. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect upon adoption. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 4th day of September, 2019. BRIAN GABRIEL SR., MAYOR ATTEST: ___________________________________ Jamie Heinz, CMC, City Clerk Approved by Finance: ___________ Introduced: August 21, 2019 Enacted: September 4, 2019 Effective: September 4, 2019 Page 107 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council THROUGH: Paul Ostrander, City Manager FROM: Scott Curtin, Public Works Director DATE: August 14, 2019 SUBJECT: Ordinance No. 3080-2019 ____________________________________________________________________________ The Kenai Municipal Airport Terminal Rehabilitation Project has been underway since October 1, 2018. The current completion date remains at February 2020. The Project was awarded with $500,000.00 in contingency funds to allow for the prompt processing of change orders during construction to minimize potential cost impacts related to time delays. The Public Works Director in coordination with the City Manager have been reviewing and processing change requests as they are received, and notifying council through Departmental Mid-month reports throughout the project. To summarize: Change Order #1 - $188,955.55 executed on January 31, 2019 Change Order #2 - $272,630.01 executed on March 4, 2019 Ordinance 3060-2019 appropriating the Federal share of CO#1-2 April 3, 2019- $408,849.41 Change Order #3 - $203,602.75 executed on April 26, 2019 Change Order #4 - $67,624.42 executed on May 29, 2019 Change Order #5 - $96,126.03 pending execution Ordinance 3080-2019 appropriating the Federal share of CO#3-5 August 21, 2019 - $325,383.10 The Original Contract to Blazy Construction, Inc. was $10,985,994.00 Total Change Orders to date CO#1-5 - $828,938.76 Total Contract to date shall be $11,814,932.76 Page 108 Ordinance 3080 - 2019 Page 2 of 2 Passage of this Ordinance will replenish the contingency and allow for the continued processing of future change orders. Council will continue to be informed of change orders through Public Works Mid-Month reports. As a reminder to Council, the extent of the Asbestos Abatement is the largest contributing factor to the additional costs, accounting for $546,896.40 of all change orders to date. Additionally, neither Ordinance 3060-2019, nor this Ordinance, increase the total amount of City funds appropriated for this project. Administration is anticipating that after closeout of this project some of the funds appropriated by Ordinance 3037-2018 will lapse back to the City’s Airport Special Revenue Fund. Council’s approval is respectfully requested. Page 109 _____________________________________________________________________________________ Sponsored by: Administration CITY OF KENAI ORDINANCE NO. 3081-2019 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, INCREASING ESTIMATED REVENUES AND APPROPRIATIONS IN THE AIRPORT IMPROVEMENTS CAPITAL PROJECT FUND, AND AUTHORIZING AN INCREASE TO THE CONSTRUCTION PURCHASE ORDER TO POLAR NORTH CONSTRUCTION, INC. WHEREAS, the Automated Flight Service Station is owned by the City of Kenai and leased to the Federal Aviation Administration (Lessee); and, WHEREAS, the City has an ongoing maintenance / rehabilitation project that the Lessee has requested additional work / improvements be included at the FAA’s expense; and, WHEREAS, the City of Kenai executed a Construction Agreement with Polar North Construction, Inc. on March 15, 2019 for the Automated Flight Service Station Renovations Phase 3 Project in the amount $182,315.00; and, WHEREAS, the City of Kenai previously appropriated $43,972.26 from the Lessee through Ordinance 3049-2019 at the February 6, 2019 Council Meeting in order to have sufficient funds to Award an Agreement to Polar North Construction; and, WHEREAS, the Lessee has requested an additional $28,651.99 of services from Polar North Construction, Inc. during the completion of the Project; and, WHEREAS, the Lessee has provided concurrence that they will provide 100% of the funding to cover the requested services; and, WHEREAS, this will be the first and final Change Order to Polar North Construction, in the amount of $28,651.99, for a total contract cost of $210,966.99; and, WHEREAS, the Lessee’s share of the total project cost is $72,624.25, and the City of Kenai’s share is $138,342.74; and, WHEREAS, Administration is requesting appropriation of the additional eligible FAA share and an increase to the authorized Purchase Order Amount to Polar North Construction, Inc. of the same amount, $28,651.99. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. The City Manager is authorized to accept tenant improvement funding from the Lessee in the amount of $28,651.99 for Change Order 1 to Polar North Construction, Inc. Page 110 Ordinance No. 3080-2019 Page 2 of 2 _____________________________________________________________________________________ Section 2. That the estimated revenues and appropriations be increased as follows: Airport Improvement Capital Project Fund: Increase Estimated Revenues – Miscellaneous Income $28,651.99 Increase Appropriations: Construction $28,651.99 Section 3. The City Manager is authorized to increase Purchase Order No. 117573 to Polar North Construction, Inc. by $28,651.99. Section 4. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 5. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect upon adoption. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 4th day of September, 2019. BRIAN GABRIEL SR., MAYOR ATTEST: ___________________________________ Jamie Heinz, CMC, City Clerk Approved by Finance: ________ Introduced: August 21, 2019 Enacted: September 4, 2019 Effective: September 4, 2019 Page 111 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council THROUGH: Paul Ostrander, City Manager FROM: Scott Curtin, Public Works Director DATE: August 14, 2019 SUBJECT: Ordinance No. 3081 - 2019 ____________________________________________________________________________ The Automated Flight Services Station Renovations Phase 3 Project is nearing final completion. The Federal Aviation Administration (FAA), as Lessee (tenant), has requested some additional work be completed within the project and they have provided their concurrence to pay for the additional work in full. Polar North Construction, Inc. has been providing excellent service to both the FAA and the City in regards to this project. Services provided to date have been satisfactory to all parties. The first and final Change Order on the project to Polar North shall be for $28,651.99, for a total construction contract cost of $210,966.99. The FAA total portion of the project is $72,624.25; the City’s total share is $138,342.74. Administration is requesting appropriation of the additional eligible FAA share and an increase to the authorized Purchase Order Amount to Polar North Construction, Inc. of the same amount, $28,651.99. Final project completion is anticipated for September 2019. Approval of this Ordinance is in the best interest of the City. It shall allow a long term tenant to make more effective use of the space in support of their operations. Council’s approval is respectfully requested. Page 112 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] Sponsored by: City Clerk CITY OF KENAI ORDINANCE NO. 3082-2019 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING KENAI MUNICIPAL CODE CHAPTER 5.35, OIL AND GAS WELLS, TO PROVIDE THAT APPLICATIONS AND SUPPLEMENTAL APPLICATIONS BE FILED WITH THE CITY MANAGER. WHEREAS, the City of Kenai enacted regulations for permitting the drilling of oil and gas in 1967; and, WHEREAS, at that time, the ordinances provided for the City Council to determine compliance and issue permits; and, WHEREAS, because the City Council was the permitting authority, applications were required to be submitted to the City Clerk; and, WHEREAS, in 1982, it was determined that permitting oil and gas drilling was more appropriately a managerial function, exercised by the City Manager, in accordance with policies set by the City Council; and, WHEREAS, it remains today that the applications and supplemental applications be filed with the City Clerk; and, WHEREAS, because the City Clerk is not involved in the processing of the drilling permits, it is in the best interest of the City to require that drilling permit applications and supplemental applications be filed with the City Manager. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. Amendment of Section of the Kenai Municipal Code: That Kenai Municipal Code, Section 5.35.050 – Application and filing fees, is hereby amended as follows: (a) Every application for a permit to drill and operate a well shall be in writing, signed by the applicant or by some person duly authorized to sign same on his or her behalf, and it shall be filed with the City [CLERK] Manager and be accompanied with a filing fee as set forth in the City’s schedule of fees adopted by the City Council. No application shall request a permit to drill and operate more than one (1) well. The said application shall include full information, including the following: (1) The date of said application; (2) Name of the applicant; Page 113 Ordinance 3082-2019 Page 2 of 3 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (3) Address of the applicant; (4) Proposed site of the well, including name of the mineral owner and surface owner name of the lease owner, and brief description of the land; (5) Type of derrick to be used; (6) The proposed depth of the well. Section 2. Amendment of Section of the Kenai Municipal Code: That Kenai Municipal Code, Section 5.35.110 – Deeper drilling, is hereby amended as follows: (a) Once any well has either been completed as a producer or abandoned as a dry hole, it shall be unlawful and an offense for any person to drill such well to a deeper depth than that reached in the prior drilling operations without the permittee as to such well obtaining a supplemental permit after filing a supplemental application with the City [CLERK] Manager specifying: (1) The then condition of the well and the casing therein; (2) The depth to which it is proposed such well be deepened; (3) The proposed casing program to be used in connection with proposed deepening operations; (4) An evidence of adequate current tests showing that the casing strings in said well currently passed the same tests as are in this ordinance provided for in case of the drilling of the original well. (b) In the event the City Manager is satisfied that said well may be deepened with the same degree of safety as existed in the original well, a supplemental permit may be issued without an additional filing fee to the permittee authorizing the deepening and operation of the well to such specified depth as applied for. (c) In any deeper drilling or any deeper completion of any deeper production operations, the permittee shall comply with all other provisions contained in this ordinance and applicable to the drilling, completion, and operation of a well or wells. Section 3. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 4. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect 30 days after enactment. Page 114 Ordinance 3082-2019 Page 3 of 3 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 4th day of September, 2019. BRIAN GABRIEL SR., MAYOR ATTEST: ___________________________________ Jamie Heinz, CMC, City Clerk Introduced: August 21, 2019 Enacted: September 4, 2019 Effective: October 4, 2019 Page 115 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Jamie Heinz, CMC, City Clerk DATE: August 12, 2019 SUBJECT: Ordinance No. 3082-2019 The purpose of this memo is to recommend adoption of Ordinance No. 3082-2019. It was brought to my attention this year that Kenai Municipal Code requires applications and supplemental applications for oil and gas well permits be submitted to the City Clerk. The remainder of the permitting process is conducted by the City Manager. When reviewing the history, I found that the City began permitting oil and gas drilling in 1967 at which time the City Council acted on whether or not the permits should be issued and, as such, the applications and supplemental applications were submitted to the City Clerk. In 1982, it was determined that permitting oil and gas drilling was more appropriately a managerial function and the code was amended to replace “City Council” with “City Manager.” At that time, submission of the applications and supplemental applications to the City Clerk remained. Because the Oil and Gas Permitting records are kept by the City Manager and the City Clerk is not involved in processing the permits, it makes sense that the code be amended to require the applications and supplemental applications be submitted to the City Manager. Thank you for your consideration. Page 116 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] Sponsored by: Councilmember Pettey CITY OF KENAI ORDINANCE NO. 3083-2019 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING KENAI MUNICIPAL CODE 14.20.175 - ADULT BUSINESSES, TO INCREASE THE BUFFER DISTANCES BETWEEN ADULT BUSINESSES AND SENSITIVE USES FROM 500 FEET TO 1000 FEET AND DEFINE SENSITIVE USES. WHEREAS, the City currently permits adult businesses in the Central Commercial, General Commercial, Light Industrial and Heavy Industrial Zones as long as they are located more than 500 feet from other adult businesses, churches or public or private schools; and, WHEREAS, a review of the zoning restrictions on adult businesses in the City show that they are currently inadequate to sufficiently protect the City’s residents, youth, business community and visitors from the convincingly demonstrated secondary effects of adult businesses, which is a compelling government interest; and, WHEREAS, the Alaska Supreme Court recently concluded in Club Sinrock, LLC v. Municipality of Anchorage, Office of the Municipal Clerk, Supreme Court No. S-17068 (Alaska, 2019) that while Alaska’s free speech clause is more protective of individual rights than the federal constitution, the government need not wait for harm to arise before enacting legislation aimed at combating harmful secondary effects of adult businesses, but must approach the issue with an evidence based analysis demonstrating how restrictions are narrowly tailored to meet a compelling government interest; and, WHEREAS, in Club Sinrock, the Court held that restrictions on adult businesses may satisfy the constitutional protections of free speech by relying on solid evidence of other communities experiences or specific studies presented to the legislative body, and, WHEREAS, the U.S. Supreme Court in Young v. American Mini Theatres, Inc., 427 U.S. 50 (1976) and Renton v. Playtime Theatres, 475 U.S. 41 (1886) identified harmful secondary effects of increased crime, decreased property values and urban blight; and, WHEREAS, in Sex, But Not the City: Adult-Entertainment Zoning, the First Amendment, and Residential and Rural Municipalities, Mathew L. McGinnis, 46 B.C.L. Rev. 625 (2005), the Law Review Article cited that rural and predominately residential municipalities are especially susceptible to the negative secondary effects of adult businesses and that adult businesses arguably pose a greater risk to the quality of life in these communities than in larger cities; and, WHEREAS, a 2005 committee report, Adult Entertainment Zoning and Licensing Committee Report to the City of Mount Vernon, identified schools, businesses where or areas where youth are likely to be present and churches, among other uses, as sensitive to the secondary effects of adult businesses; and, Page 117 Ordinance No. 3083-2019 Page 2 of 6 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] WHEREAS, this same report identified secondary negative impacts to include increased crime, creation of an atmosphere for crime, declining property values, deterioration of areas, incompatibility with other uses, negative land use impacts, negative impacts on quality of life, declining tourism, human trafficking associations, and harm to the public’s health safety and welfare; and, WHEREAS, within the American Planning Association’s Report Everything You Always Wanted to Know about Regulating Sex Businesses, xxx Report No. 495/496, by Eric Damian Kelly and Connie Cooper, a survey from Rochester/ Monroe County New York showed the impact from adult entrainment businesses on neighboring properties stopped between 1000 feet and 1500 feet away; and, WHEREAS, the sponsor and City staff have reviewed studies and articles on adult businesses, and made these available to the Council and public, including Sex, But Not the City: Adult- Entertainment Zoning, the First Amendment, and Residential and Rural Municipalities, Mathew L. McGinnis, 46 B.C.L. Rev. 625 (2005), a 2005 committee report, Adult Entertainment Zoning and Licensing Committee Report to the City of Mount Vernon; the American Planning Association’s Report Everything You Always Wanted to Know about Regulating Sex Businesses, xxx Report No. 495/496, by Eric Damian Kelly and Connie Cooper, all of which contain and discuss numerous other studies and reports; and, WHEREAS, the zoning restrictions proposed reduces the available property for adult businesses in the City by less than one percent and leaves sufficient property available within the City, for locating adult businesses, at least five percent, especially given the rural and residential nature of the small community and amount of lands within the City that are unavailable for commercial development; and, WHEREAS, it is in the best interest of the City, and a compelling government interest, to restrict the location of adult businesses due to their demonstrated negative secondary effects to the proposed zones and outside 1000 feet of sensitive uses to protect residents, youth, businesses and visitors from the negative secondary effects of adult businesses; and, WHEREAS, this buffer distance is consistent with other buffer distances from other property uses contained in the City’s code; and, WHEREAS, further limitations may be recommended in the future, but it is difficult to provide reasonable alternative avenues of communication, locations within the City, given the unique rural makeup of the City’s lands, with very limited available commercial space; and, WHEREAS, the restriction imposed are narrowly tailored to meet the City’s compelling government interest as even an increase in law enforcement presence and action at potential adult business sites would not be sufficient to combat many of the negative secondary effects such as declining property values, deterioration of areas, incompatibility with other uses, negative land use impacts, negative impacts on quality of life, protecting youth and declining tourism; and, WHEREAS, many other municipalities in Alaska and across the nation have successfully utilized a 1000 foot buffer from sensitive uses; and, Page 118 Ordinance No. 3083-2019 Page 3 of 6 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] WHEREAS, it is not the intent of this ordinance to suppress any free speech activities protected by the state and federal constitution, but only to enact regulations addressing the secondary effects of adult businesses; and, WHEREAS, at the (date)_____ Planning and Zoning Commission Meeting, the Commission recommended _____________. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. Amendment of Section 14.20.175 of the Kenai Municipal Code: That Kenai Municipal Code, Section 14.20.175 – Adult Businesses, is hereby amended as follows: 14.20.175 Adult businesses. (a) Definitions. For the purpose of this chapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning: (1) “Adult bookstore” means a commercial establishment where at least fifty-one percent (51%) of its interior floor area or retail merchandise is devoted to the sale, rent, lease, inspection, or viewing of books, films, video cassettes, DVDs, magazines, other periodicals or digital presentations whose dominant theme is the actual or simulated specified sexual activities, display or exhibition of specified anatomical areas, removal of articles of clothing, or total nudity. (2) “Adult cabaret” means a restaurant, coffee house, bar or cabaret which features topless dancers, strippers, male or female impersonators, or similar entertainers who provide live adult entertainment for commercial purposes. (3) “Adult entertainment” means any motion picture, live performance, display, or dance of any type whose dominant theme is actual or simulated specified sexual activities, display or exhibition of specified anatomical areas, removal of articles of clothing, or total nudity, offered for commercial purposes. (4) “Adult mini-theater” means an enclosed building with a capacity of less than fifty (50) persons used for displaying adult entertainment through films, video, or other motion pictures for commercial purposes. (5) “Adult motion picture theatre” means an enclosed building with a capacity of fifty (50) or more persons used for displaying adult entertainment through films, video, or other motion pictures for commercial purposes. (6) “Adult business” means any adult bookstore, adult cabaret, adult mini-theater, or adult motion picture theater. (7) “Commission” means the City of Kenai Planning and Zoning Commission. (8) “Operator or manager” means any natural person responsible for the actual operation and management of an adult business. Page 119 Ordinance No. 3083-2019 Page 4 of 6 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (9) “Sexual conduct” means acts of: (i) Sexual intercourse within its ordinary meaning, occurring upon any penetration, however slight; or (ii) Any penetration of the vagina or anus, however slight, by an object; or (iii) Any contact between persons involving the sex organs of one person and the mouth or anus of another; or (iv) Masturbation, manual or instrumental, of oneself or of one person by another; or (v) Touching of the sex organs or anus, whether clothed or unclothed, of oneself or of one person by another. (10) “Specified anatomical areas” means: (i) Less than completely and opaquely covered human genitals, pubic region, buttocks, and female breast below a point immediately above the top of the areola; and (ii) Human male genitals in a discernible erect state, even if opaquely covered. (11) “Specified sexual activities” means simulated or actual: (i) Display of human genitals in a state of sexual stimulation or arousal; (ii) Acts of masturbation, sexual intercourse, sodomy, bestiality, necrophilia, sadomasochistic abuse, fellatio, or cunnilingus; and (iii) Fondling or erotic touching of human genitals, pubic region, buttocks, or female breasts. (12) “Sensitive Use” means a church or other place of worship, a public or private school (licensed pre-K through 12th grade) or businesses where or areas where youth are likely to be present (limited to public parks, youth recreational centers, public playgrounds, public libraries). (b) Location Requirements. (1) Adult businesses may be located only in the CC, CG, IL and HI zones. Additionally, no adult business may be located within one thousand [FIVE HUNDRED FEET] ([5]1000') of another adult business, [A CHURCH OR OTHER PLACE OF WORSHIP OR PUBLIC OR PRIVATE SCHOOL] or sensitive use. (2) The distances specified in this section shall be measured in a straight line, without regard to intervening structures, from the nearest point of the premises in which the proposed adult business is to be established to the nearest property line of a use listed above. Page 120 Ordinance No. 3083-2019 Page 5 of 6 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (c) Development and Operation Standards. The following development and operation standards shall apply to adult businesses: (1) No adult business shall be located in any temporary or portable structure. (2) Trash dumpsters shall be enclosed by a screening enclosure so as not to be accessible to the public. (3) No exterior door or window on the premises shall be propped or kept open at any time while the business is open, and any exterior windows shall be covered with opaque covering at all times. (4) Permanent barriers shall be installed and maintained to screen the interior of the premises from public view for each door used as an entrance or exit to the business. (5) The entire exterior grounds, including the parking lot, shall be lighted in such a manner that all areas are clearly visible at all times. (6) Signage shall be governed by KMC 14.20.220 (Signs). (7) All entrances to an adult business shall be clearly and legibly posted with a notice indicating that persons under eighteen (18) are prohibited from entering the premises. (8) No adult business shall be operated in any manner that permits the observation of any persons or material depicting, describing or related to specified sexual activities or specified anatomical areas, inside the premises, from any public way or from any location outside the building or area of such establishment. This provision shall apply to any merchandise, display, decoration, sign, show window or other opening. (9) Each adult business shall conform to all applicable laws and regulations. (10) The adult business shall not operate or be open between the hours of 2:00 a.m. and 9:00 a.m. (11) Amplified sound may not be broadcast outside the building and structures used for the adult business. (12) No tip or gratuity offered or accepted by an adult entertainer may be offered or accepted prior to any live performance, dance or exhibition provided by the adult entertainer. No adult entertainer performing live upon any stage shall be permitted to accept any form of gratuity offered directly to the entertainer by any member of the public. Any gratuity offered to any adult entertainer performing live upon any stage must be placed into a receptacle provided for receipt of gratuities by the business or through a manager on duty on the premises. Any gratuity or tip offered to any adult entertainer conducting any live performance, dance or exhibition in or about the nonstage area of the adult business shall be placed into the hand of the adult entertainer or into a receptacle provided by the adult entertainer, and not upon the person or into the clothing of the adult entertainer. Page 121 Ordinance No. 3083-2019 Page 6 of 6 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (13) No live entertainer shall engage in acts of sexual conduct. (14) An adult cabaret shall provide separate dressing room facilities for performers, which are exclusively dedicated to the performers’ use. (15) An adult cabaret shall provide an entrance/exit for performers, which is separate from the entrance/exit used by patrons. (16) An adult cabaret shall provide access for performers between the stage and the dressing rooms, which are completely separated from the patrons. If such separate access is not physically feasible, the cabaret shall provide a minimum three (3) foot wide walk aisle for performers between the dressing room area and the stage, with a railing, fence or other barrier separating the patrons and the performers that is capable of preventing any physical contact between patrons and performers. (17) All indoor areas of the adult cabaret where patrons or members of the public are permitted, excluding restrooms, shall be open to view by management at all times. (d) If any portion of this chapter, or its application to any person or circumstances, is held invalid, the validity of this chapter as a whole, or any portion thereof, and its application to other persons or circumstances, shall not be affected. (e) Nonconforming Use. Any adult business operating at the time of the effective date of the ordinance codified in this section shall be considered a nonconforming use under KMC 14.20.050. However, a business that only periodically engages in adult business activity may continue to operate as a nonconforming use at the same level of activity it operated for the one (1) year period prior to the adoption of this ordinance. For example, a bar or restaurant that operated as an adult cabaret five (5) times in the previous one (1) year period would be allowed to operate as a nonconforming use five (5) times per year. Section 2. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 3. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect 30 days after enactment. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 4th day of September, 2019. BRIAN GABRIEL SR., MAYOR ATTEST: ___________________________________ Jamie Heinz, CMC, City Clerk Introduced: August 21, 2019 Enacted: September 4, 2019 Effective: October 4, 2019 Page 122 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Glenese Pettey, Council Member DATE: August 26, 2019 SUBJECT: Ordinance No. 3083-2019 – Adult Businesses ____________________________________________________________________________ I decided to sponsor Ordinance No. 3083-2019 after it became evident that our City Code, as currently written, does not adequately protect our residents from the secondary effects of adult businesses. I have attached an exhibit that provides an example of one area within our City that, as our Code is currently crafted, would allow adult business establishments. While municipalities are mandated to provide sufficient area inside their boundaries where adult business could be located, allowing those businesses close to sensitive uses where the secondary effects would harm other property uses does not support the vision we have for our City. Our Comprehensive Plan – Imagine Kenai 2030 – contains eight primary goals. To successfully implement three of these goals, the Code must be changed as proposed by this Ordinance. Goal 1 – Quality of Life: Promote and encourage quality of life in Kenai, Objective Q-4 states that the City should promote the siting and design of land uses that are in harmony and scale with surrounding uses. Based on the attached exhibit, it is clear that the siting of adult businesses allowed under our current Code is not in harmony with many of our existing land uses. Goal 2 – Economic Development: Provide economic development to support the fiscal health of Kenai, Objective ED-3 states that the City should use regional economic and workforce statistics to match the most suitable type of industry for particular areas and then market those areas. The retail sector of the City of Kenai is the primary driver of sales in the City and is a strong indicator of the economic health of our community. The City should continue to market and incentivize that sector in our core commercial area. Adult entertainment businesses located in this area would limit its attractiveness for many businesses and make incentives and marketing much less effective. Goal 3 – Land Use: Develop land use strategies to implement a forward-looking approach to community growth and development, Objective LU-1 states the City should establish siting and Page 123 Page 2 of 2 Ordinance No. 3083-2019 – Adult Businesses design standards so that development is in harmony and scale with surrounding uses. In addition to quality of life, it is clear the City must consider future growth and development when siting businesses which may share future access by frontage roads or trails with existing uses such as schools, neighborhoods, and other land uses which serve sensitive populations and which may require separation from adult businesses. The proposed Ordinance provides a solution in accordance with the goals of the City’s Comprehensive Plan – Imagine Kenai 2030, while providing sufficient area inside City boundaries where adult business could be located. Your consideration is appreciated. Page 124 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Scott Bloom, City Attorney DATE: March 12, 2019 SUBJECT: Ordinance No. 3083 - 2019 ____________________________________________________________________________ The Alaska Supreme Court recently issued a decision in Club SinRock, providing that Article I, Section 5 of the Alaska Constitution, protecting free speech, includes the protection of nude dancing, and affords more protection in this regard than the federal constitution. The Court held that it will apply strict scrutiny to regulations restricting nude dancing, and that any such regulations must be narrowly tailored to achieve the desired goals. However, the Court recognized that municipalities have a compelling interest in “combating” the secondary effects of adult businesses. The Court requires an evidence based analysis that shows how restrictions are “narrowly tailored to meet specific, compelling government interests.” The Court held that this can be satisfied by relying on “solid” evidence from other communities or studies presented to the Council. Further, in regulating adult businesses, the Council must show evidence of potential harm and how “non-infringing” law enforcement techniques are unavailable or unlikely to be effective. Federal case law also provides guidance, suggesting that under federal law, allowing adult businesses on at least 5% of property within a municipality meets aspects of federal zoning requirements in this regard. The two cases expressing these holdings are presented in your material for your review. Also presented in your material is a Boston College law review article suggesting that the 5% rule is difficult to apply in small rural communities such as Kenai, and should not be applied. A Map created by the Planning Department is attached, showing the zones in which adult businesses are permitted and the current 500 foot buffer and proposed 1000 foot buffer. The increased buffer distance, and proposed new sensitive uses which must be buffered from, reduce the available land for adult businesses by less than 1% in the City, and maintains available land opportunities greater than 5%, in compliance with federal case law. This is true even though large portions of the City are undevelopable, non-commercial or government owned. Page 125 Page 2 of 2 Ordinance 3038 - 2019 Many studies and surveys have shown secondary negative impacts of adult businesses including increased crime, creation of an atmosphere for crime, declining property values, deterioration of areas, incompatibility with other uses, negative land use impacts, negative impacts on quality of life, declining tourism, human trafficking associations, and harm to the public’s health safety and welfare. The Boston Law Review Article in the material provided suggests that rural communities are more susceptible to these negative impacts then larger communities. The case law presented in your material acknowledges many of these secondary effects discussed in the studies and surveys in your material. The intent of this Ordinance is to regulate these effects. In your material for review is a study from other communities showing that the negative secondary effects of adult business often extend from 1000 feet to 1500 feet beyond the business. Buffering adult businesses from 1000 feet of sensitive uses appears reasonable given the rural nature of our community, the walkability and bike friendly nature of our commercial core and surrounding areas, the desire of our community to encourage tourism and effort put into our youth facilities in Kenai. The Ordinance is intended to be narrowly tailored, that is only protecting the City from the negative secondary effects of adult businesses. These negative secondary effects, such as declining property values, deterioration of areas, incompatibility with other uses, negative land use impacts, negative impacts on quality of life, declining tourism and protecting youth cannot reasonably otherwise be prevented by acceptable law enforcement techniques. For example the police can not influence tourist impressions of our community, convince a potential property buyer that their business or property value will not be impacted by negative secondary effects of an adult business. Likewise, the police can not prevent youth in our area, utilizing, schools, libraries, parks and recreational facilities, and walking and riding their bikes back and forth, from many of the secondary effects. I have provided the Council numerous articles and studies discussing adult oriented businesses, other communities experiences with this issue, secondary effects from these businesses, and approaches to zoning for adult oriented businesses. I request Council review this material prior to making a decision on this Ordinance or providing input. Your consideration is appreciated. Page 126 Required Zone Locations forAdult BusinessesThis map is for graphic representationonly and the City of Kenai assumes noresponsibility for errors on this map.It is an approximation of sensitive usesdescribed under Ordinance 3079-2019..August 20190 4,000 8,0002,000FeetLEGENDZones Allowing Adult BusinessesCentral CommercialGeneral CommercialHeavy IndustrialLight IndustrialBuffers Excluding Adult BusinessesCurrent City Code(500 feet from churches and schools)Ordinance 3079-2019(1,000 feet from churches, schools, and sensitive uses)Page 127 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] Sponsored by: Councilmembers Pettey and Knackstedt CITY OF KENAI ORDINANCE NO. 3083-2019 (Substitute) AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING KENAI MUNICIPAL CODE 14.20.175 - ADULT BUSINESSES, TO INCREASE THE BUFFER DISTANCES BETWEEN ADULT BUSINESSES AND SENSITIVE USES FROM 500 FEET TO 1,000 FEET AND DEFINE SENSITIVE USES AND AMEND KENAI MUNICIPAL CODE 14.22.010-LAND USE TABLE, TO ADD ADULT BUSINESSES. WHEREAS, the City currently permits adult businesses in the Central Commercial, General Commercial, Light Industrial and Heavy Industrial Zones as long as they are located more than 500 feet from other adult businesses, churches or public or private schools; and, WHEREAS, a review of the zoning restrictions on adult businesses in the City show that they are currently inadequate to sufficiently protect the City’s residents, youth, business community and visitors from the convincingly demonstrated secondary effects of adult businesses, which is a compelling government interest; and, WHEREAS, the Alaska Supreme Court recently concluded in Club Sinrock, LLC v. Municipality of Anchorage, Office of the Municipal Clerk, Supreme Court No. S-17068 (Alaska, 2019) that while Alaska’s free speech clause is more protective of individual rights than the federal constitution, the government need not wait for harm to arise before enacting legislation aimed at combating harmful secondary effects of adult businesses, but must approach the issue with an evidence based analysis demonstrating how restrictions are narrowly tailored to meet a compelling government interest; and, WHEREAS, in Club Sinrock, the Court held that restrictions on adult businesses may satisfy the constitutional protections of free speech by relying on solid evidence of other communities experiences or specific studies presented to the legislative body, and, WHEREAS, the U.S. Supreme Court in Young v. American Mini Theatres, Inc., 427 U.S. 50 (1976) and Renton v. Playtime Theatres, 475 U.S. 41 (1886) identified harmful secondary effects of increased crime, decreased property values and urban blight; and, WHEREAS, in Sex, But Not the City: Adult-Entertainment Zoning, the First Amendment, and Residential and Rural Municipalities, Mathew L. McGinnis, 46 B.C.L. Rev. 625 (2005), the Law Review Article cited that rural and predominately residential municipalities are especially susceptible to the negative secondary effects of adult businesses and that adult businesses arguably pose a greater risk to the quality of life in these communities than in larger cities; and, WHEREAS, a 2005 committee report, Adult Entertainment Zoning and Licensing Committee Report to the City of Mount Vernon, identified schools, businesses where or areas where youth Page 128 Ordinance No. 3083-2019 Page 2 of 13 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] are likely to be present and churches, among other uses, as sensitive to the secondary effects of adult businesses; and, WHEREAS, this same report identified secondary negative impacts to include increased crime, creation of an atmosphere for crime, declining property values, deterioration of areas, incompatibility with other uses, negative land use impacts, negative impacts on quality of life, declining tourism, human trafficking associations, and harm to the public’s health safety and welfare; and, WHEREAS, within the American Planning Association’s Report Everything You Always Wanted to Know about Regulating Sex Businesses, xxx Report No. 495/496, by Eric Damian Kelly and Connie Cooper, a survey from Rochester/ Monroe County New York showed the impact from adult entrainment businesses on neighboring properties stopped between 1000 feet and 1500 feet away; and, WHEREAS, the sponsor and City staff have reviewed studies and articles on adult businesses, and made these available to the Council and public, including Sex, But Not the City: Adult- Entertainment Zoning, the First Amendment, and Residential and Rural Municipalities, Mathew L. McGinnis, 46 B.C.L. Rev. 625 (2005), a 2005 committee report, Adult Entertainment Zoning and Licensing Committee Report to the City of Mount Vernon; the American Planning Association’s Report Everything You Always Wanted to Know about Regulating Sex Businesses, xxx Report No. 495/496, by Eric Damian Kelly and Connie Cooper, all of which contain and discuss numerous other studies and reports; and, WHEREAS, the zoning restrictions proposed reduces the available property for adult businesses in the City by less than one percent and leaves sufficient property available within the City, for locating adult businesses, at least five percent, especially given the rural and residential nature of the small community and amount of lands within the City that are unavailable for commercial development; and, WHEREAS, it is in the best interest of the City, and a compelling government interest, to restrict the location of adult businesses due to their demonstrated negative secondary effects to the proposed zones and outside 1000 feet of sensitive uses to protect residents, youth, businesses and visitors from the negative secondary effects of adult businesses; and, WHEREAS, this buffer distance is consistent with other buffer distances from other property uses contained in the City’s code; and, WHEREAS, further limitations may be recommended in the future, but it is difficult to provide reasonable alternative avenues of communication, locations within the City, given the unique rural makeup of the City’s lands, with very limited available commercial space; and, WHEREAS, the restriction imposed are narrowly tailored to meet the City’s compelling government interest as even an increase in law enforcement presence and action at potential adult business sites would not be sufficient to combat many of the negative secondary effects such as declining property values, deterioration of areas, incompatibility with other uses, negative land use impacts, negative impacts on quality of life, protecting youth and declining tourism; and, WHEREAS, many other municipalities in Alaska and across the nation have successfully utilized a 1000 foot buffer from sensitive uses; and, Page 129 Ordinance No. 3083-2019 Page 3 of 13 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] WHEREAS, it is not the intent of this ordinance to suppress any free speech activities protected by the state and federal constitution, but only to enact regulations addressing the secondary effects of adult businesses; and, WHEREAS, at the (date) _____ Planning and Zoning Commission Meeting, the Commission recommended _____________. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. Amendment of Section 14.20.175 of the Kenai Municipal Code: That Kenai Municipal Code, Section 14.20.175 – Adult Businesses, is hereby amended as follows: 14.20.175 Adult businesses. (a) Definitions. For the purpose of this chapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning: (1) “Adult bookstore” means a commercial establishment where at least fifty-one percent (51%) of its interior floor area or retail merchandise is devoted to the sale, rent, lease, inspection, or viewing of books, films, video cassettes, DVDs, magazines, other periodicals or digital presentations whose dominant theme is the actual or simulated specified sexual activities, display or exhibition of specified anatomical areas, removal of articles of clothing, or total nudity. (2) “Adult cabaret” means a restaurant, coffee house, bar or cabaret which features topless dancers, strippers, male or female impersonators, or similar entertainers who provide live adult entertainment for commercial purposes. (3) “Adult entertainment” means any motion picture, live performance, display, or dance of any type whose dominant theme is actual or simulated specified sexual activities, display or exhibition of specified anatomical areas, removal of articles of clothing, or total nudity, offered for commercial purposes. (4) “Adult mini-theater” means an enclosed building with a capacity of less than fifty (50) persons used for displaying adult entertainment through films, video, or other motion pictures for commercial purposes. (5) “Adult motion picture theatre” means an enclosed building with a capacity of fifty (50) or more persons used for displaying adult entertainment through films, video, or other motion pictures for commercial purposes. (6) “Adult business” means any adult bookstore, adult cabaret, adult mini-theater, or adult motion picture theater. (7) “Commission” means the City of Kenai Planning and Zoning Commission. (8) “Operator or manager” means any natural person responsible for the actual operation and management of an adult business. Page 130 Ordinance No. 3083-2019 Page 4 of 13 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (9) “Sexual conduct” means acts of: (i) Sexual intercourse within its ordinary meaning, occurring upon any penetration, however slight; or (ii) Any penetration of the vagina or anus, however slight, by an object; or (iii) Any contact between persons involving the sex organs of one person and the mouth or anus of another; or (iv) Masturbation, manual or instrumental, of oneself or of one person by another; or (v) Touching of the sex organs or anus, whether clothed or unclothed, of oneself or of one person by another. (10) “Specified anatomical areas” means: (i) Less than completely and opaquely covered human genitals, pubic region, buttocks, and female breast below a point immediately above the top of the areola; and (ii) Human male genitals in a discernible erect state, even if opaquely covered. (11) “Specified sexual activities” means simulated or actual: (i) Display of human genitals in a state of sexual stimulation or arousal; (ii) Acts of masturbation, sexual intercourse, sodomy, bestiality, necrophilia, sadomasochistic abuse, fellatio, or cunnilingus; and (iii) Fondling or erotic touching of human genitals, pubic region, buttocks, or female breasts. (12) “Sensitive Use” means a church or other place of worship, a public or private school (licensed pre-K through 12th grade) or businesses where or areas where youth are likely to be present (limited to public parks, youth recreational centers, public playgrounds, public libraries). (b) Location Requirements. (1) Adult businesses may be located only in the CC, CG, IL and HI zones. Additionally, no adult business may be located within one thousand [FIVE HUNDRED FEET] ([5]1000') of another adult business, [A CHURCH OR OTHER PLACE OF WORSHIP OR PUBLIC OR PRIVATE SCHOOL] or sensitive use. (2) The distances specified in this section shall be measured in a straight line, without regard to intervening structures, from the nearest point of the premises in which the proposed adult business is to be established to the nearest property line of a use listed above. Page 131 Ordinance No. 3083-2019 Page 5 of 13 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (c) Development and Operation Standards. The following development and operation standards shall apply to adult businesses: (1) No adult business shall be located in any temporary or portable structure. (2) Trash dumpsters shall be enclosed by a screening enclosure so as not to be accessible to the public. (3) No exterior door or window on the premises shall be propped or kept open at any time while the business is open, and any exterior windows shall be covered with opaque covering at all times. (4) Permanent barriers shall be installed and maintained to screen the interior of the premises from public view for each door used as an entrance or exit to the business. (5) The entire exterior grounds, including the parking lot, shall be lighted in such a manner that all areas are clearly visible at all times. (6) Signage shall be governed by KMC 14.20.220 (Signs). (7) All entrances to an adult business shall be clearly and legibly posted with a notice indicating that persons under eighteen (18) are prohibited from entering the premises. (8) No adult business shall be operated in any manner that permits the observation of any persons or material depicting, describing or related to specified sexual activities or specified anatomical areas, inside the premises, from any public way or from any location outside the building or area of such establishment. This provision shall apply to any merchandise, display, decoration, sign, show window or other opening. (9) Each adult business shall conform to all applicable laws and regulations. (10) The adult business shall not operate or be open between the hours of 2:00 a.m. and 9:00 a.m. (11) Amplified sound may not be broadcast outside the building and structures used for the adult business. (12) No tip or gratuity offered or accepted by an adult entertainer may be offered or accepted prior to any live performance, dance or exhibition provided by the adult entertainer. No adult entertainer performing live upon any stage shall be permitted to accept any form of gratuity offered directly to the entertainer by any member of the public. Any gratuity offered to any adult entertainer performing live upon any stage must be placed into a receptacle provided for receipt of gratuities by the business or through a manager on duty on the premises. Any gratuity or tip offered to any adult entertainer conducting any live performance, dance or exhibition in or about the nonstage area of the adult business shall be placed into the hand of the adult entertainer or into a receptacle provided by the adult entertainer, and not upon the person or into the clothing of the adult entertainer. Page 132 Ordinance No. 3083-2019 Page 6 of 13 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (13) No live entertainer shall engage in acts of sexual conduct. (14) An adult cabaret shall provide separate dressing room facilities for performers, which are exclusively dedicated to the performers’ use. (15) An adult cabaret shall provide an entrance/exit for performers, which is separate from the entrance/exit used by patrons. (16) An adult cabaret shall provide access for performers between the stage and the dressing rooms, which are completely separated from the patrons. If such separate access is not physically feasible, the cabaret shall provide a minimum three (3) foot wide walk aisle for performers between the dressing room area and the stage, with a railing, fence or other barrier separating the patrons and the performers that is capable of preventing any physical contact between patrons and performers. (17) All indoor areas of the adult cabaret where patrons or members of the public are permitted, excluding restrooms, shall be open to view by management at all times. (d) If any portion of this chapter, or its application to any person or circumstances, is held invalid, the validity of this chapter as a whole, or any portion thereof, and its application to other persons or circumstances, shall not be affected. (e) Nonconforming Use. Any adult business operating at the time of the effective date of the ordinance codified in this section shall be considered a nonconforming use under KMC 14.20.050. However, a business that only periodically engages in adult business activity may continue to operate as a nonconforming use at the same level of activity it operated for the one (1) year period prior to the adoption of this ordinance. For example, a bar or restaurant that operated as an adult cabaret five (5) times in the previous one (1) year period would be allowed to operate as a nonconforming use five (5) times per year. Section 2. Amendment of Section 14.22.010 of the Kenai Municipal Code: That Kenai Municipal Code, Section 14.22.010 – Land Use Table, is hereby amended as follows: 14.22.010 Land use table. LAND USE TABLE KEY: P = Principal Permitted Use C = Conditional Use S = Secondary Use N = Not Permitted NOTE: Reference footnotes on following pages for additional restrictions Page 133 Ordinance No. 3083-2019 Page 7 of 13 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] ZONING DISTRICTS LAND USES ALI C RR RR- 1 RS RS- 1 RS- 2 RU CC CG IL IH ED R TSH LC CMU RESIDENTIAL One-Family Dwelling N C18 P P P P P P P21 S1 S2 S2 C22 P P P S1/C21 Two-, Three-Family Dwelling N C18 P P P P P P P21 S1 C C C22 P P P S1/C21 Four-Family Dwelling N C18 P C3 , 29 P N N P P21 S1 C C C22 N P C S1/C21 Five-, Six-Family Dwelling N C18 C3 N P N N P P21 S1 C C N N P C S1/C21 Seven- or More Family Dwelling N C18 C3 N C3 N N P P21 S1 C C N N P C S1/C21 Mobile Home Parks6 N N C N C C C C C C C C N C N N C Planned Unit Residential Development7 N C18 C C29 C C C C C C C C N C C C C Townhouses4 N C18 C3 C3 , 29 C3 C3 C3 C3 C C C C C22 C C C C Accessory Building on Parcel Without Main Building or Use (See KMC 14.20.200) N N C C C C C C N N N N N N C N N COMMERCIAL Airport Compatible Uses P N N N N N N N C C C C N N N C C Adult Businesses N N N N N N N N P31 P31 P31 P31 N N N N N Automotive Sales C N C N N N N C P P P P N N N N P Automotive Service Stations C N C N N N N C P P P P N C N N P Banks C N C N C N N C P P P C N C C C P Business/Consumer Services C N C C C N N C P P P C N C C C P Commercial Recreation N N C N C N N C P P C C N P C C P Guide Service C N C N C N N C P P P P N P P C P Hotels/Motels C N C N C N N C P P P C N C P C P Lodge C N C N C N N C P P P C N P P C P Marijuana Cultivation Facility, Standard 30 N N N N N N N N N C C C N N N C N Page 134 Ordinance No. 3083-2019 Page 8 of 13 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] ZONING DISTRICTS LAND USES AL I C R R RR -1 RS RS -1 RS -2 RU C C C G IL IH ED R TS H L C CM U Marijuana Cultivation Facility, Standard 30 N N N N N N N N N C C C N N N C N Marijuana Product Manufacturing Facility 30 N N N N N N N N N C C C N N N N N Marijuana Testing Facility 30 N N N N N N N N C C P P N N N C C Professional Offices C N C C C N N P P P P P N C P P P Restaurants C N C N C N N C P P P C N C C C P Retail Business C N2 6 C N C N N C P P P P S2 4 S2 4 C C P Retail Marijuana Store 30 N N N N N N N N N C C C N N N C C Theaters N N C N C N N C P P C C N P C C P Wholesale Business C N C N C N N C C P P P N S2 4 C C N INDUSTRIAL Airports C P20 C N C N N C C C C C N C N N C Necessary Aviation Facilities P P C C C C C C P P P P C P C P P Automotive Repair P N C N C N N C P P P P N N N N P Gas Manufacturer/Storage C9 N N N C N N N N N C9 C9 N N N N N Manufacturing/Fabricating/Assembl y P N C N C N N C C P P P N C C N C Mini-Storage Facility C N C N C N N C C P P P N N N C C Storage Yard C N C N C N N C C P P P N N N N C Warehouses C N C N C N N C N P P P N C N N N PUBLIC/INSTITUTIONAL Assisted Living N C C C C C C C C C C C C C C C C Churches* N C P10 P10 P1 0 P10 P10 P10 P10 P10 C C P P1 0 P P P Clinics N C C N C C C C P P P C C C C P P Colleges* N C C C29 C C C C P P C C P C C C P Elementary Schools* N C C C29 C C C C P P C C P C C C P Governmental Buildings P C C C29 C C C C P P P C P C C P P High Schools* N C C C29 C C C C P P C C P C C C P Page 135 Ordinance No. 3083-2019 Page 9 of 13 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] ZONING DISTRICTS LAND USES AL I C R R RR -1 RS RS -1 RS -2 RU C C C G IL IH ED R TS H L C CM U Hospitals* N C C N C C C C P P P C C C C C P Libraries* N C C C29 C C C C1 2 P P P C P C P C P Museums C C C C29 C C C C P P P C P C P C P Parks and Recreation N P C C29 C C C C P P P P P P P C P MISCELLANEOUS Animal Boarding/Commercial Kennel13 C C C N C C N N C C C C N C N C C Assemblies15 (Large: Circuses, Fairs, etc.) P C C N C C C C P15 P15 P1 5 P1 5 P1 5 C P N P15 Bed and Breakfasts N C C C C C C C C C C C N P C C P Cabin Rentals N C C N C N N N P P P C N P P C P Cemeteries P C C N C N N N N C C C N C C N N Communications Towers and Antenna(s), Radio/TV Transmitters/Cell Sites** 28 C P C N C C C C P P P P P C C C C Crematories/Funeral Homes N N C N C N N C C C C C N C C C C Day Care Centers12 N C C C29 C C C C P P P C C C C P P Dormitories/Boarding Houses N C C N C C C P P21 S C P P2 3 C C C P Essential Services P P P P P P P P P P P P P P P P P Farming/General Agriculture*** N P P N N N N N N N N P N P N N N Fraternal Organizations/ Private Clubs/Social Halls and Union Halls N N C N C C C C P P P C N C P C P Greenhouses/Tree Nurseries13 N C C N C C C C P P P C N C C C P Gunsmithing, Taxidermy N N C C C C C C P P P P N C P P P Nursing, Convalescent or Rest Homes N N C N C C C C P P C C C C C C P Parking, Public Lots12 C C C N C C C C C C C C C C C C C Page 136 Ordinance No. 3083-2019 Page 10 of 13 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] ZONING DISTRICTS LAND USES ALI C RR RR- 1 RS RS- 1 RS- 2 RU CC CG IL IH ED R TSH LC CMU Personal Services25 N C C N C C C C P P P P C C P P/C27 P Recreational Vehicle Parks N C C N C N N C C C C C N C C N C Subsurface Extraction of Natural Resources16 C C C C C C C C C C C C N C N N N Surface Extraction of Natural Resources17 C C C N C N N C N C C C N C N N N * See 42 USCA Sec. 2000cc (Religious Land Use and Institutionalized Persons Act of 2000) ** See 42 Telecommunications Act of 1996, Sec. 704(a) *** See, however, the limitations imposed under KMC 3.10.070 Footnotes: 1 Allowed as a secondary use except on the ground floor of the part of the building fronting on collector streets and major highways. Commercial or industrial which falls under the landscaping/site plans requirements of KMC Chapter 14.25 shall include any secondary uses in the landscaping and site plans. 2 One (1) single-family residence per parcel, which is part of the main building. 3 Allowed as a conditional use, subject to satisfying the following conditions: a The usable area per dwelling unit shall be the same as that required for dwelling units in the RS Zone; b The site square footage in area must be approved by the Commission; c Yards around the site, off-street parking, and other development requirements shall be the same as for principal uses in the RR Zone; d Water and sewer facilities shall meet the requirements of all applicable health regulations; e The proposed dwelling group will constitute a residential area of sustained desirability and stability, will be in harmony with the character of the surrounding neighborhood, and will not adversely affect surrounding property values; f The buildings shall be used only for residential purposes and customary accessory uses, such as garages, storage spaces, and recreational and community activities; g There shall be provided, as part of the proposed development, adequate recreation areas to serve the needs of the anticipated population; h The development shall not produce a volume of traffic in excess of the capacity for which the access streets are designed; i The property adjacent to the proposed dwelling group will not be adversely affected. 4 See “Townhouses” section. Page 137 Ordinance No. 3083-2019 Page 11 of 13 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 5 See “Mobile Homes” section. 6 Allowed as a conditional use, subject to “Mobile Homes” section; and provided, that any mobile home park meets the minimum Federal Housing Authority requirements. 7 See “Planned Unit Residential Development” section. 8 Allowed as a conditional use; provided, that the proposed location and the characteristics of the site will not destroy the residential character of the neighborhood. 9 Allowed as a conditional use; provided, that all applicable safety and fire regulations are met. 10 Provided that no part of any building is located nearer than thirty (30) feet to any adjoining street or property line. 11 Allowed as a conditional use; provided, that no part of any building is located nearer than thirty (30) feet to any adjoining street or property line; and provided further, that the proposed location and characteristics of the use will not adversely affect the commercial development of the zone. 12 Allowed as a conditional use; provided, that the following conditions are met: a The proposed location of the use and the size and characteristics of the site will maximize its benefit to the public; b Exits and entrances and off-street parking for the use are located to prevent traffic hazards on public streets. 13 Allowed as a conditional use; provided, that setbacks, buffer strips, and other provisions are adequate to assure that the use will not be a nuisance to surrounding properties. The Commission shall specify the conditions necessary to fulfill this requirement. Animal boarding and commercial kennels require a kennel license (see KMC Chapter 3.15). 14 Allowed as a conditional use; provided, that no indication of said use is evident from the exterior of the mortuary. 15 Allowed; provided, that the following conditions are met: a An uncleared buffer strip of at least thirty (30) feet shall be provided between said use and any adjoining property in a residential zone. b Exits and entrances and off-street parking for the use shall be located to prevent traffic hazards on the public streets. 16 See “Conditional Uses” section. 17 See “Conditional Use Permit for Surface Extraction of Natural Resources” section. 18 Conditional use allowed only on privately held property. Not allowed on government lands. 19 Reserved. 20 The airport related uses allowed under this entry are aircraft approach and departure zones pursuant to KMC 14.20.070(a), except that for properties contained inside the airport perimeter fence or having access to aircraft movement areas, taxiways or parking aprons, FAA authorized uses are allowed. Page 138 Ordinance No. 3083-2019 Page 12 of 13 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21 Developments for use shall be the same as those listed in the Development Requirements Table for the RU/TSH Zones. 22 Allowed as a conditional use in conjunction with a permitted use in the ED Zone. For example, housing for teachers or students for a school in the zone. 23 Allowed as an accessory use in conjunction with a permitted use in the ED Zone. For example, a dormitory used to house students for a school or educational facility. 24 Retail businesses allowed as a secondary use in conjunction with the primary use (e.g., a gift shop or coffee shop within another business). 25 Art studios, barbers, beauticians, tattoo parlors, dressmakers, dry cleaners and self- service laundries, fitness centers, photographic studios, tailors, tanning salons and massage therapists. 26 Food services are allowed on a temporary or seasonal basis of not more than four (4) months per year. 27 Personal services not set forth in the below matrix are conditional uses. Limited Commercial Zone Personal Services Permitted (P) Conditional Use (C) Art Studios X Barbers X Beauticians X Dressmakers X Dry Cleaners X Fitness Centers X Massage Therapist X Photographic Studios X Self-Service Laundries X Tailors X Tanning Salons X Tattoo Parlors X 28 Communications tower/antenna(s) allowed as a principal permitted (P) use if the applicable conditions set forth in KMC 14.20.255 are met or a conditional use (C) if the applicable conditions set forth in KMC 14.20.150 and 14.20.255 are met. 29 Use allowed only for those parcels that abut the Kenai Spur Highway. The access to any such parcel must be either from: (a) driveway access on the Kenai Spur Highway; or (b) driveway access from a dedicated right-of-way and that driveway access is not more than two hundred seventy-five (275) feet as measured from the constructed centerline of Page 139 Ordinance No. 3083-2019 Page 13 of 13 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] the Kenai Spur Highway to the center of the driveway access as shown on an as-built drawing/survey of the parcel. 30 See marijuana regulations, KMC 14.20.230—Home Occupations, 14.20.320— Definitions, 14.20.330—Standards for commercial marijuana establishments. 31 See 14.20.175-Adult Businesses, no adult business may be located within one thousand feet (1,000') of another adult business, or sensitive use. “Sensitive Use” means a church or other place of worship, a public or private school (licensed pre-K through 12th grade) or businesses where or areas where youth are likely to be present (limited to public parks, youth recreational centers, public playgrounds, public libraries). Section 3. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 4. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect 30 days after enactment. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this * day of **, 2019. BRIAN GABRIEL SR., MAYOR ATTEST: ___________________________________ Jamie Heinz, CMC, City Clerk Introduced: August 21, 2019 Public Hearing: September 4, 2019 Effective: ***, 2019 Page 140 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Council Members Pettey and Knackstedt DATE: August 29, 2019 SUBJECT: Ordinance No. 3083 – 2019 (Substitute) ____________________________________________________________________________ This Substitute Ordinance adds adult businesses to the Land Use Table. For unknown reasons, adult businesses have never been placed in the Land Use Table similar to other land uses. This amendment will add clarity to the code and make it easier for the public to understand where adult businesses may be located. Your consideration is appreciated. Page 141 _____________________________________________________________________________________ Sponsored by: Administration CITY OF KENAI RESOLUTION NO. 2019-61 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AWARDING A CONSTRUCTION CONTRACT FOR REHABILITATION OF TRAINING PROPS AT THE ALASKA REGIONAL FIRE TRAINING FACILITY. WHEREAS, the Public Works Department released an Invitation to Bid on August 1, 2019 with Bids Due on August 29, 2019; the following Bids were received: Bidder Bid and, WHEREAS, ________________________ was found to be the lowest responsive and responsible bidder and award to this bidder will be in the best interest of the City; and, WHEREAS, the recommendation from the City Administration is to award the agreement to ______________________________ for completion of the Alaska Regional Fire Training Center Training Equipment Rehabilitation Project; and, WHEREAS, sufficient monies are appropriated through passage of Ordinance 3079-2019. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, Section 1. That the City Manager is authorized to execute a construction contract with ____________________________ for $____________. Section 2. That the City Manager is authorized to issue a purchase order to ______________ in the amount of $_______________ for the contract amount of $____________ and $XXX,XXX of contingency funding, which may be authorized for construction change orders during completion of the project. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 4th day of September, 2019. BRIAN GABRIEL SR., MAYOR Page 142 Resolution No. 2019-61 Page 2 of 2 ATTEST: ______________________________________ Jamie Heinz, CMC, City Clerk Approved by Finance: _____________ (Contingent upon passage of Ordinance 3079-2019) Page 143 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council THROUGH: Paul Ostrander, City Manager FROM: Scott Curtin, Public Works Director DATE: August 28, 2019 SUBJECT: Resolution No. 2019 – 61 & Resolution No. 2019 - 62 ____________________________________________________________________________ The Alaska Regional Fire Training Facility located at 450 Daubenspeck is now 20+ years old and is showing signs of wear and tear within the facility as well as on the facilities operational equipment. The City in close coordination with the Federal Aviation Administration (FAA), is working toward bringing the facility back to its original fully operational status. The City of Kenai released a formal Invitation to Bid on August 1, 2019 for the Rehabilitation of the Alaska Regional Fire Training Center. The renovations have been separated into two different projects. The first rehabilitating items associated with the main building, the second rehabilitating items associated with the fire training props and controls. Each project requires unique specialty contractors, as a result the project was split into two parts being bid individually to provide the most competition. Bids were opened on August 29, 2019 at 2:00pm with Orion Construction the apparent low bidder at $1,938,755.00 for the Building Rehabilitation Project and Kirila Fire USA the apparent low bidder at $1,993,000.00 for the Training Equipment Rehabilitation Project. Funding for these projects is being provided by a Federal Aviation Administration (FAA) grant at 93.75% of eligible work; with a City contribution at 6.25%. Ordinance No. 3079-2019 appropriates the funds for these projects. The Public Works Director, Airport Manager and the Administration all agree this work is in the best interest of the City. Council’s approval is respectfully requested. Page 144 _____________________________________________________________________________________ Sponsored by: Administration CITY OF KENAI RESOLUTION NO. 2019-62 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AWARDING A CONSTRUCTION CONTRACT FOR REHABILITATION OF THE ALASKA REGIONAL FIRE TRAINING FACILITY. WHEREAS, the Public Works Department released an Invitation to Bid on August 1, 2019 with Bids Due on August 29, 2019; the following Bids were received: Bidder Bid and, WHEREAS, ________________________ was found to be the lowest responsive and responsible bidder and award to this bidder will be in the best interest of the City; and, WHEREAS, the recommendation from the City Administration is to award the agreement to ______________________________ for completion of the Alaska Regional Fire Training Center Training Equipment Rehabilitation Project; and, WHEREAS, sufficient monies are appropriated through passage of Ordinance 3079-2019. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, Section 1. That the City Manager is authorized to execute a construction contract with ___________ for $____________. Section 2. That the City Manager is authorized to issue a purchase order to ____________ in the amount of $______________ for the contract amount of $______________ and $XXX,XXX of contingency funding, which may be authorized for construction change orders during completion of the project. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 4th day of September, 2019. BRIAN GABRIEL SR., MAYOR Page 145 Resolution No. 2019-62 Page 2 of 2 ATTEST: ______________________________________ Jamie Heinz, CMC, City Clerk Approved by Finance: _____________ (Contingent upon passage of Ordinance 3079-2019) Page 146 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council THROUGH: Paul Ostrander, City Manager FROM: Scott Curtin, Public Works Director DATE: August 28, 2019 SUBJECT: Resolution No. 2019 – 61 & Resolution No. 2019 - 62 ____________________________________________________________________________ The Alaska Regional Fire Training Facility located at 450 Daubenspeck is now 20+ years old and is showing signs of wear and tear within the facility as well as on the facilities operational equipment. The City in close coordination with the Federal Aviation Administration (FAA), is working toward bringing the facility back to its original fully operational status. The City of Kenai released a formal Invitation to Bid on August 1, 2019 for the Rehabilitation of the Alaska Regional Fire Training Center. The renovations have been separated into two different projects. The first rehabilitating items associated with the main building, the second rehabilitating items associated with the fire training props and controls. Each project requires unique specialty contractors, as a result the project was split into two parts being bid individually to provide the most competition. Bids were opened on August 29, 2019 at 2:00pm with Orion Construction the apparent low bidder at $1,938,755.00 for the Building Rehabilitation Project and Kirila Fire USA the apparent low bidder at $1,993,000.00 for the Training Equipment Rehabilitation Project. Funding for these projects is being provided by a Federal Aviation Administration (FAA) grant at 93.75% of eligible work; with a City contribution at 6.25%. Ordinance No. 3079-2019 appropriates the funds for these projects. The Public Works Director, Airport Manager and the Administration all agree this work is in the best interest of the City. Council’s approval is respectfully requested. Page 147 _____________________________________________________________________________________ Sponsored by: Administration CITY OF KENAI RESOLUTION NO. 2019-63 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AUTHORIZING THE USE OF THE STATE OF ALASKA DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES FLEET PROCUREMENT PROGRAM FOR THE PURCHASE OF TWO AIRCRAFT RESCUE AND FIREFIGHTING (ARFF) VEHICLES FOR THE ALASKA REGIONAL TRAINING FACILITY. WHEREAS, the City of Kenai in coordination with the FAA, intend to move forward with the rehabilitation of the Alaska Regional Fire Training Facility; and, WHEREAS, the renovations include rehabilitation of the training props (Resolution No. 2019-61), rehabilitation of the training building (Resolution No. 2019-62), as well as the purchase of two new ARFF Vehicles for training purposes within this Resolution; and, WHEREAS, the purchase of these vehicles will allow for the most realistic and appropriate training opportunities for the long term continued success of facility operations; and, WHEREAS, purchasing through the Alaska Department of Transportation and Public Facilities Fleet Procurement Program assures competitive bidding has taken place, and fulfills all purchasing procurement requirements of the City; and, WHEREAS, procurement through this method is acceptable to the Federal Aviation Administration; and, WHEREAS, the Administration is in support of this method and has determined that this purchase is in the best interest of the City; and, WHEREAS, $1,600,000 was appropriated through passage of Ordinance No. 3079-2019. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, Section 1: That the Administration is authorized to utilize the Alaska Department of Transportation and Public Facilities Fleet Procurement Program for the purchase of two (2) ARFF vehicles for use at the Alaska Fire Training Facility. Section 2: Because the actual purchase price is unknown at this time, purchase orders for the purchase of the vehicles will appear on a future agenda for approval prior to issuance. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 4th day of September, 2019. Page 148 Resolution No. 2019-63 Page 2 of 2 BRIAN GABRIEL SR., MAYOR ATTEST: ______________________________________ Jamie Heinz, CMC, City Clerk Approved by Finance: _____________ Page 149 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council THROUGH: Paul Ostrander, City Manager FROM: Mary L. Bondurant, Airport Manager Scott Curtin, Public Works Director DATE: August 28, 2019 SUBJECT: Resolution 2019-63 – Alaska Fire Training Center ARFF Vehicles A component of the rehabilitation project at the Alaska Regional Fire Training Facility was replacement of the two 1998 Aircraft Rescue and Firefighting Vehicles that are used for firefighter training. These trucks far exceed what the Federal Aviation Administration considers their useful life (15 years), maintenance and repair costs are increasing in frequency and cost, and firefighters are training on ARFF vehicles older that what they operate on their airports. Airport Administration has been working with the FAA on the replacement in anticipation of FY19 discretionary funds. The replacement cost for the two trucks is approximately $1,600,000. The FAA obligation is 93.75% and City obligation of 6.25%. The FAA and the Alaska Department of Transportation have agreed and approved the City utilizing the State’s open competitive bid process and tagging those contracts for both the 3,000 and 1,500 gallon trucks. The 3,000 gallon ARFF vehicle State contract in place with Oshkosh is $ 809,595 (excluding delivery) and the 1,500 gallon ARFF vehicle is bidding in August 2019 (estimate is $850,000). Thank you for your consideration. Page 150 KENAI CITY COUNCIL – REGULAR MEETING AUGUST 21, 2019 – 6:00 P.M. KENAI CITY COUNCIL CHAMBERS 210 FIDALGO AVE., KENAI, AK 99611 MAYOR BRIAN GABRIEL, PRESIDING MINUTES A. CALL TO ORDER A Regular Meeting of the Kenai City Council was held on August 21, 2019, in City Hall Council Chambers, Kenai, AK. Mayor Gabriel called the meeting to order at approximately 6:00 p.m. 1. Pledge of Allegiance Mayor Gabriel led those assembled in the Pledge of Allegiance. 2. Roll Call There were present: Brian Gabriel, Mayor Robert Molloy Henry Knackstedt Tim Navarre Jim Glendening Robert Peterkin (absent) Glenese Pettey A quorum was present. Also in attendance were: Paul Ostrander, City Manager Scott Bloom, City Attorney Jamie Heinz, City Clerk 3. Agenda Approval Mayor Gabriel noted the following revisions to the packet: Add to item D.1. Ordinance No. 3072-2019 • Amendment Memo • Amendment Memo • Forms MOTION: Council Member Molloy MOVED to approve the agenda with the requested revisions to the packet and requested UNANIMOUS CONSENT. Council Member Knackstedt SECONDED the motion. VOTE: There being no objections, SO ORDERED. Page 151 City of Kenai Council Meeting Page 2 of 11 August 21, 2019 4. Consent Agenda MOTION: Council Member Knackstedt MOVED to approve the consent agenda and requested UNANIMOUS CONSENT. Council Member Molloy SECONDED the motion. Mayor Gabriel opened the floor for public comment; there being no one wishing to be heard, the public comment period was closed. VOTE: There being no objections, SO ORDERED. *All items listed with an asterisk (*) are considered to be routine and non-controversial by the council and will be approved by one motion. There will be no separate discussion of these items unless a council member so requests, in which case the item will be removed from the consent agenda and considered in its normal sequence on the agenda as part of the General Orders. B. SCHEDULED PUBLIC COMMENTS 1. Tim Dillon, Executive Director, Kenai Peninsula Economic Development District Overview of New Kenai Peninsula Economic Development District website and resources. Tim Dillon provided a tour and overview of the Kenai Peninsula Economic Development District’s updated website noting they highlight statistical information and link to many other resources including cities on the Kenai Peninsula and other agencies. C. UNSCHEDULED PUBLIC COMMENTS – None. D. PUBLIC HEARINGS 1. Ordinance No. 3072-2019 - Renaming, Repealing and Re-Enacting Kenai Municipal Code Title 22-General Fund Lands, Renaming Title 21-City Airport and Airport Lands, and Repealing Kenai Municipal Code Chapter 21.15-Lease and Sale of Airport Lands Outside of the Airport Reserve to Encourage Responsible Growth and Development to Support a Thriving Business, Residential, Recreational and Cultural Community through Responsible Land Policies and Practices. (Administration) MOTION: Council Member Molloy MOVED to enact Ordinance No. 3072-2019 and Council Member Glendening SECONDED the motion. Mayor Gabriel opened for public hearing; there being no one wishing to be heard, the public hearing was closed. It was noted the ordinance was a good work product; suggested a work session to review it all. It was noted development incentives, the discussion of language such as “included but not Page 152 City of Kenai Council Meeting Page 3 of 11 August 21, 2019 limited to,” and “best interest of the City vs. advantageous,” could also be reviewed at the work session. Clarification was provided Administration put lot of time into the product, and welcomed as many work sessions as necessary to end up with the final product. MOTION TO POSTPONE: Council Member Molloy MOVED to postpone Ordinance No. 3072-2019 to a meeting no later than the first meeting in October where it will be scheduled for a second public hearing, for there to be a work session scheduled at a date to be determined before the first meeting in October, and direct the City Clerk to communicate with the Council Members for their availability and to set the date of the Work Session and Council Member Knackstedt SECONDED the motion. VOTE ON POSTPONEMENT: YEA: Knackstedt, Glendening, Pettey, Navarre, Gabriel, Molloy NAY: MOTION PASSED UNANIMOUSLY. 2. Ordinance No. 3073-2019 - Accepting and Appropriating a Grant from the State of Alaska for the Purpose of Purchasing Books. (Administration) MOTION: Council Member Knackstedt MOVED to enact Ordinance No. 3073-2019 and Council Member Glendening SECONDED the motion. Mayor Gabriel opened for public hearing; there being no one wishing to be heard, the public hearing was closed. The Library Director was thanked for obtaining the grant. VOTE: YEA: Knackstedt, Glendening, Pettey, Navarre, Gabriel, Molloy NAY: MOTION PASSED UNANIMOUSLY. 3. Ordinance No. 3074-2019 - Increasing Estimated Revenues and Appropriations by $1,504.82 in the FY2019 General Fund - Police Department for State Traffic Grant Overtime Expenditures. (Administration) MOTION: Council Member Molloy MOVED to enact Ordinance No. 3074-2019 and Council Member Knackstedt SECONDED the motion. Page 153 City of Kenai Council Meeting Page 4 of 11 August 21, 2019 Mayor Gabriel opened for public hearing; there being no one wishing to be heard, the public hearing was closed. VOTE: YEA: Knackstedt, Glendening, Pettey, Navarre, Gabriel, Molloy NAY: MOTION PASSED UNANIMOUSLY. 4. Ordinance No. 3077-2019 - Increasing Estimated Revenues and Appropriations in the Water & Sewer Special Revenue and Water & Sewer Improvements Capital Project Funds for Engineering and Design Services to Relocate Well House #1 which was Damaged by the November 30, 2018 Magnitude 7.0 Southcentral Alaska Earthquake. (Administration) MOTION: Council Member Knackstedt MOVED to enact Ordinance No. 3077-2019 and Council Member Glendening SECONDED the motion. Mayor Gabriel opened for public hearing; there being no one wishing to be heard, the public hearing was closed. Clarification was provided that the insurance company was covering the costs that were coverable under the insurance policy and the City was responsible for the rest; it was added that this funding was for design only. Clarification was also provided that the plan was to move the well house from Well #1 to the site of W ell #2 where it would be a building supporting the water plant; it was added that Well #1 would be abandoned in the future. VOTE: YEA: Knackstedt, Glendening, Pettey, Navarre, Gabriel, Molloy NAY: MOTION PASSED UNANIMOUSLY. 5. Ordinance No. 3078-2019 - Increasing Estimated Revenues and Appropriations in the Airport Special Revenue and Airport Improvement Capital Project Funds to Provide Supplemental Funding for the 2019 Airfield Marking, Crack Sealing, Seal Coating, and Minor Pavement Repair Project. (Administration) a. Motion for Introduction b. Motion for Second Reading (Requires a Unanimous Vote) c. Motion for Adoption (Requires Five Affirmative Votes) MOTION FOR INTRODUCTION: Council Member Molloy MOVED to introduce Ordinance No. 3078-2019 and Vice Mayor Navarre SECONDED the motion. Page 154 City of Kenai Council Meeting Page 5 of 11 August 21, 2019 Mayor Gabriel opened for public hearing; there being no one wishing to be heard, the public hearing was closed. VOTE ON INTRODUCTION: YEA: Knackstedt, Glendening, Pettey, Navarre, Molloy, Gabriel NAY: MOTION PASSED UNANIMOUSLY. MOTION FOR SECOND READING: Council Member Molloy MOVED to hold the second reading on Ordinance No. 3078-2019 due to the emergent circumstances and Vice Mayor Navarre SECONDED the motion VOTE ON SECOND READING: YEA: Knackstedt, Glendening, Pettey, Navarre, Molloy, Gabriel NAY: MOTION PASSED UNANIMOUSLY. MOTION FOR ENACTMENT: Vice Mayor Navarre MOVED to enact Ordinance No. 3078-2019 and Council Member Molloy SECONDED the motion Mayor Gabriel opened for public hearing; there being no one wishing to be heard, the public hearing was closed. Clarification was provided that the additional damage could have been caused by the earthquake or the additional time between the project design and construction and, given the difficulty in determining the cause, it would be difficult to obtain disaster funds. It was noted that staff acted appropriately to save remobilization funds. It was pointed out that because of actions of staff, the portion of the change order due to FAA’s Certification Inspection, would be eligible for grant funding. VOTE ON ENACTMENT: YEA: Knackstedt, Glendening, Pettey, Navarre, Molloy, Gabriel NAY: MOTION PASSED UNANIMOUSLY. 6. Resolution No. 2019-56 - Stating its Conditional Protest Regarding the Issuance of a New Distillery Liquor License No. 5826, for High Mark Distillery, Inc., DBA High Mark Distillery, Inc., Located at 2270 Royal Street, Warehouse #1, Kenai AK, 99611 Page 155 City of Kenai Council Meeting Page 6 of 11 August 21, 2019 and Authorizing the City Clerk to Notify the Alaska Alcohol and Marijuana Control Office if Conditions are Met. (City Clerk) MOTION: Council Member Glendening MOVED to adopt Resolution No. 2019-56 and requested UNANIMOUS CONSENT. Council Member Knackstedt SECONDED the motion. Mayor Gabriel opened for public hearing; there being no one wishing to be heard, the public hearing was closed. Clarification was provided the conditional protest provided the applicant time to obtain the necessary permits and, once obtained, the City Clerk would lift the protest. There was concern there would be additional delays caused by a need to be revisited by the Alcohol Control Board. It was suggested there were alternative methods available to the City to require the permits prior to opening. Clarification was provided that often, authority was delegated to the Director of the Alcohol and Marijuana Control Office, to issue the licenses once all approvals were received and there was not likely to be an additional delay. It was pointed out there was protection of life safety with an approved Building Permit. VOTE: YEA: Knackstedt, Glendening, Pettey, Gabriel, Molloy NAY: Navarre MOTION PASSED. 7. Resolution No. 2019-57 - Application for Lease of City-owned Land within the Airport Reserve from SOAR International Ministries, Inc. for the Undeveloped Portion of Tract A, General Aviation Subdivision No. 2. (Administration) MOTION: Council Member Knackstedt MOVED to adopt Resolution No. 2019-57 and requested UNANIMOUS CONSENT. Council Member Molloy SECONDED the motion. Mayor Gabriel opened for public hearing; there being no one wishing to be heard, the public hearing was closed. Clarification was provided that required obligations were not completed subsequent to the first lease application and the timeframe wasn’t extended in that process; there were assurances that obligations would be completed with this second process to prevent the property from being held up. It was suggested the development would be a positive addition to the airport. VOTE: There being no objections, SO ORDERED. Page 156 City of Kenai Council Meeting Page 7 of 11 August 21, 2019 8. Resolution No. 2019-58 - Amending its Comprehensive Schedule of Rates, Charges, and Fees to Incorporate Changes to Application Fees for Lands Outside the Airport Reserve. (Administration) MOTION: Council Member Knackstedt MOVED to adopt Resolution No. 2019-58 and requested UNANIMOUS CONSENT. Council Member Molloy SECONDED the motion. Mayor Gabriel opened for public hearing; there being no one wishing to be heard, the public hearing was closed. MOTION TO POSTPONE: Council Member Molloy MOVED to postpone Resolution No. 2019-58 to appear on the same agenda as Ordinance No. 3072-2019. Council Member Knackstedt SECONDED the motion and requested UNANIMOUS CONSENT. VOTE: There being no objections, SO ORDERED. 9. Resolution No. 2019-59 - Approving an Amendment Extending the Agreement for Services to Provide On-Site Facility Management for Vintage Pointe Manor Congregate Housing. (Administration) MOTION: Vice Mayor Navarre MOVED to adopt Resolution No. 2019-59 and requested UNANIMOUS CONSENT. Council Member Glendening SECONDED the motion. Mayor Gabriel opened for public hearing; there being no one wishing to be heard, the public hearing was closed. VOTE: There being no objections, SO ORDERED. E. MINUTES 1. *Regular Meeting of August 7, 2019 Approved by the consent agenda. F. UNFINISHED BUSINESS – None. G. NEW BUSINESS 1. *Action/Approval – Bills to be Ratified. (Administration) Approved by the consent agenda. 2. *Action/Approval – Purchase Orders Over $15,000. (Administration) Page 157 City of Kenai Council Meeting Page 8 of 11 August 21, 2019 Approved by the consent agenda. 3. *Action/Approval - Non-Objection to the Renewal of Limited Marijuana Cultivation Facility Licenses for Peninsula Botanicals, LLC and Herban Extracts, LLC. (City Clerk) Approved by the consent agenda. 4. *Action/Approval - Non-Objection to the renewal of a Retail Marijuana Store Licenses for Kenai River Cannabis Company and Majestic Gardens. (City Clerk) Approved by the consent agenda. 5. *Ordinance No. 3079-2019 - Increasing Estimated Revenues and Appropriations in the Airport Special Revenue and Airport Improvements Capital Project Funds and Accepting a Grant from the Federal Aviation Administration for the Purchase of Two Aircraft Rescue and Firefighting (ARFF) Vehicles, Rehabilitation of the Fire Training Props, and Rehabilitation of the Training Facility for the Alaska Regional Fire Training Facility. (Administration) Introduced by the consent agenda and public hearing set for September 4. 6. *Ordinance No. 3080-2019 - Increasing Estimated Revenues and Appropriations in the Terminal Improvements Capital Fund, and Authorizing an Increase to the Construction Purchase Order to Blazy Construction, Inc. (Administration) Introduced by the consent agenda and public hearing set for September 4. 7. *Ordinance No. 3081-2019 - Increasing Estimated Revenues and Appropriations in the Airport Improvements Capital Project Fund, and Authorizing an Increase to the Construction Purchase Order to Polar North Construction, Inc. (Administration) Introduced by the consent agenda and public hearing set for September 4. 8. *Ordinance No. 3082-2019 - Amending Kenai Municipal Code Chapter 5.35, Oil and Gas Wells, to Provide that Applications and Supplemental Applications be Filed with the City Manager. (City Clerk) Introduced by the consent agenda and public hearing set for September 4. 9. Ordinance No. 3083-2019 - Amending Kenai Municipal Code 14.20.175 - Adult Businesses, To Increase The Buffer Distances Between Adult Businesses And Sensitive Uses From 500 Feet To 1000 Feet And Define Sensitive Uses. (Council Member Pettey) MOTION: Council Member Pettey MOVED to introduce, refer to Planning and Zoning for their August 28 meeting for a recommendation, and set a public hearing before City Council for September 4. Council Member Glendening SECONDED the motion. Page 158 City of Kenai Council Meeting Page 9 of 11 August 21, 2019 Opposition to introduction was expressed. There were differing opinions with the Planning & Zoning Commission reviewing the legislation prior to Council making potential amendments. Council Member Knackstedt requested to divide the question, voting on introduction first and referring to the Planning and Zoning Commission for their August 28 meeting for a recommendation and setting a public hearing for September 4 second. VOTE ON INTRODUCTION: YEA: Knackstedt, Glendening, Pettey, Gabriel, Molloy NAY: Navarre MOTION PASSED. MOTION TO AMEND: Council Member Pettey MOVED to amend by removing the referral to the Planning and Zoning Commission for their August 28 meeting for a recommendation requirement and Council Member Glendening SECONDED the motion. UNANIMOUS CONSENT was requested. VOTE ON THE AMENDMENT: There being no objections, SO ORDERED. MOTION TO AMEND: Vice Mayor Navarre MOVED to amend by changing September 4 to September 18. The motion died for lack of a second. VOTE ON REFERRAL AND SETTING A PUBLIC HEARING AS AMENDED: YEA: Knackstedt, Glendening, Pettey, Gabriel, Molloy, Navarre NAY: MOTION PASSED UNANIMOUSLY. 10. Discussion - Public Notice of City Council Meetings. (City Clerk) The City Clerk provided an overview of the memo provided in the packet noting other communities only publish public hearings in the newspaper and, if the City were to also only publish public hearings, an annual savings of approximately forty-percent could be seen. Cost savings and not limiting to only public hearings were topics discussed. Council Members volunteered to work with the City Clerk to develop an option for noticing requirements. H. COMMISSION/COMMITTEE REPORTS 1. Council on Aging – No report; next meeting September 12. Page 159 City of Kenai Council Meeting Page 10 of 11 August 21, 2019 2. Airport Commission – It was reported the Commission heard updates on the Terminal Rehabilitation Project and the Crack Sealing Project, and recommended approval of Ordinance No. 3072-2019. It was also reported the airport staff was preparing for a mass casualty drill; next meeting September 12. 3. Harbor Commission – It was reported the Commission discussed the land sale and leasing policies and procedures, amendments of the harbor section of Kenai Municipal Code, dredging at the dock, and Dipnet fishery operations; next meeting September 16. 4. Parks and Recreation Commission – It was noted the Commission, along with the Beautification Committee, were attending an upcoming tour of the parks and gardens; next meeting September 5. 5. Planning and Zoning Commission – It was reported that at their August 14 meeting the Commission approved a preliminary plat, a Conditional Use Permit to operate a marijuana retail store, recommended a change to Kenai Municipal Code regarding hours of operation for marijuana retail stores, recommended adoption of Ordinance No. 3072-2019, and recommended approval of the SOAR lease application; next meeting August 28. 6. Beautification Committee – It was noted the Committee would be attending an upcoming tour of the parks and gardens with the Parks & Recreation Commission; next meeting September 10. 7. Mini-Grant Steering Committee – No report. I. REPORT OF THE MAYOR Mayor Gabriel reported on the following: • Attended the summer Alaska Municipal League meetings; • Noted the upcoming Industry Appreciation Day. J. ADMINISTRATION REPORTS 1. City Manager –City Manager P. Ostrander reported on the following: • Attended Alaska Municipal League and Alaska Municipal Manager’s Association meetings; • Met with Kenai Watershed Forum; • Presented the Election Stakeholder Group report to the Borough Assembly and noted a resolution of support was coming forth; • Expecting to conduct an online auction in the near future; • Provided an update on the Sales Tax Working Group within the Alaska Municipal League; • Provided an update on the Airport Terminal Rehabilitation Project; • Noted Senator Murkowski was attempting to appropriate funding for the Bluff Erosion Project in an upcoming energy bill. 2. City Attorney – No Report. Page 160 City of Kenai Council Meeting Page 11 of 11 August 21, 2019 3. City Clerk – City Clerk J. Heinz noted candidates that had been certified for election and provided a reminder of upcoming election dates; also noted when the Deputy Clerk was expected to return to work. K. ADDITIONAL PUBLIC COMMENT 1. Citizens Comments (Public comment limited to five (5) minutes per speaker) None. 2. Council Comments Council Member Pettey noted she attended the Alaska Municipal League meetings and found them to be enriching; also noted the $4,000 donation to Kenai Boys & Girls Club of the Kenai Peninsula and thanked Arby’s for matching and increasing the donation. She added that she was looking forward to running for Council. Council Member Glendening noted he attended the Alaska Municipal League meetings and found them useful; noted he was attending Industry Appreciation Day; encouraged folks to exercise their civic duty; noted the AK LNG Advisory Committee was meeting at the end of the month and deciding whether or not to sunset. Council Member Molloy thanked the Mayor, Councilor Glendening and Councilor Pettey for running for office, suggesting that there being no competition meant the public was not dissatisfied with the work of the body and administration. Council Member Knackstedt wished the candidates for election, good luck; agreed the public was satisfied with the body and how it was functioning; attended Alaska Municipal League and found it educational; discussed the community PFD proposal; noted he was attending Industry Appreciation Day; noted the Kenai Fire Department was providing excellent updates regarding the Swan Lake Fire. L. EXECUTIVE SESSION – None. M. PENDING ITEMS – None. N. ADJOURNMENT There being no further business before the Council, the meeting was adjourned at 8:57 p.m. I certify the above represents accurate minutes of the Kenai City Council meeting of August 21, 2019. _____________________________ Jamie Heinz, CMC City Clerk Page 161 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] Sponsored by: Administration CITY OF KENAI RESOLUTION NO. 2019-58 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING ITS COMPREHENSIVE SCHEDULE OF RATES, CHARGES, AND FEES TO INCORPORATE CHANGES TO APPLICATION FEES FOR LANDS OUTSIDE THE AIRPORT RESERVE. WHEREAS, in 2017, City Administration formed a working group to address the City’s land leasing program and make recommendations that would encourage growth, development, and a thriving business community through reasonable and responsible land policies and practices; and, WHEREAS, Ordinance No. 2998-2018 repealed, renamed and re-acted Kenai Municipal Code (KMC) Chapter 21.10-Leasing of Airport Reserve Lands to encourage growth, development, and a thriving aviation community through responsible land policies and practices; and, WHEREAS, Resolution 2018-09 amended the comprehensive schedule of rates, charges, and fees to incorporate changes to land lease application and renewal application fees for Airport Reserve Land; and, WHEREAS, in 2018, the working group focused its efforts on City-owned lands outside of the Airport Reserve and expanded its scope to recommend land lease and sale policies and practices that encourage responsible growth and development to support a thriving business, residential, recreational and cultural community; and, WHEREAS, Ordinance No. 3072-2019 renamed, repealed and reenacted KMC Title 22-General Fund Lands, Renamed Title 21-City Airport and Airport Lands, and repealed KMC 21.15-Lease and Sale of Airport Lands Outside of the Airport Reserve as part of a City-wide approach to land management; and, WHEREAS, amendments to the City’s Comprehensive Schedule of Rates, Charges and Fees are needed to reflect the recommendations of the City Administration and comply with Ordinance No. 3072-2019. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA: Section 1. The Land Management section of the City’s Comprehensive Schedule of Rates, Charges and Fees be amended as follows: Land Management Fees [LAND LEASE FEES] Page 162 Resolution No. 2019-58 Page 2 of 2 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.10.040 (a) and 21.05.025 (a) [AIRPORT RESERVE]Land Lease Application Fee $100.00 [21.10.050 (a)(1) & 21.10.080] 21.10.070 (a) and 22.05.045 (a) [AIRPORT RESERVE LAND]Land Lease Amendment Application Fee $100.00 21.10.070(a) and 22.05.045 (a) Land Lease Extension[OR RENEWAL] Application Fee $100.00 21.10.070(a) and 22.05.045 (a) Land Lease Renewal Application Fee $100.00 [21.10.070 (a) REQUEST FOR LEASE AMENDMENT FEE $100.00 ] [REQUEST FOR]Consent to Sublease Application Fee $50.00 22.05.045 (a) [REQUEST FOR]Land Lease Assignment Application Fee $100.00 [22.05.030 (a)(1) GENERAL FUND LAND LEASE APPLICATION FEE $100.00 ] 22.05.100 (a) Competitive Land Purchase Application Fee $100.00 22.05.100 (a) Non-Competitive Land Lease or Purchase Fee $100.00 Special Use Permit Application Fee $100.00 Section 2. That this resolution takes effect immediately upon adoption. ADOPTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 21st day of August, 2019. BRIAN GABRIEL SR., MAYOR ATTEST: ______________________________________ Jamie Heinz, CMC, City Clerk Page 163 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Paul Ostrander, City Manager DATE: August 8, 2019 SUBJECT: Resolution No. 2019-58 ____________________________________________________________________________ Resolution 2019-58 amends the City’s fee schedule in conjunction with the amendments to Title 21 and Title 22 for the leasing and sale of City-owned lands included in Ordinance No. 3072- 2019. The proposed fee amounts are competitive with other markets and are similar to fees included in Kenai Municipal Code for the leasing of Airport Reserve properties. Your consideration is appreciated. Page 164 PAYMENTS OVER $15,000.00 WHICH NEED COUNCIL RATIFICATION COUNCIL MEETING OF: SEPTEMBER 4, 2019 VENDOR DESCRIPTION PERS PERS INTEGRITY JANITORIAL JULY SERVICE AT CITY HALL PRECIOUS JANITORIAL JULY SERVICE AT LIBRARY PRECIOUS JANITORIAL JULY SERVICE AT TERMINAL PRECIOUS JANITORIAL JULY SERVICE AT POLICE PRECIOUS JANITORIAL JULY SERVICE AT VISITOR CENTER INVESTMENTS VENDOR DESCRIPTION DEPARTMENT ACCOUNT AMOUNT VARIOUS LIABILITY 90,928.13 NON-DEPARTMENTAL REPAIR & MAINTENANCE 1 ,389.00 LIBRARY REPAIR & MAINTENANCE 2 ,795.00 AIRPORT REPAIR & MAINTENANCE 4 ,495.00 POLICE REPAIR & MAINTENANCE 978.00 VISITOR CENTER REPAIR & MAINTENANCE 928.00 MATURITY DATE AMOUNT Effect. Int. Page 165 PURCHASE ORDERS OVER $15,000.00 WHICH NEED COUNCIL APPROVAL COUNCIL MEETING OF: SEPTEMBER 4, 2019 VENDOR DESCRIPTION INCREASE OF EXISTING PURCHASE ORDER VENDOR DESCRIPTION MORRISON-MAIERLE, INC. PROFESSIONAL SERVICES FOR AK. REGIONAL TRAINING FACILITY DEPT. P.O.# -DEPT. 118152 -NP IMPS. ACCOUNT AMOUNT REASON AMOUNT TOTAL PO AMT AMENDMENT 353 ,000 .00 569,000.00 Page 166 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council THROUGH: Paul Ostrander, City Manager FROM: Scott Curtin, Public Works Director DATE: August 29, 2019 SUBJECT: Purchase Orders over $15K ____________________________________________________________________________ The purpose of this memo is to request approval to increase the existing PO118152 to Morrison- Maierle, Inc. as Design Engineer for the Alaska Regional Fire Training Facility Equipment Rehabilitation and Building Rehabilitation Projects. The Purchase Order was originally opened for $216,000.00 to cover the Design Phase Services. With the pending approval of Ordinance 3079-2019 to accept a grant from the Federal Aviation Administration (FAA) for the completion of the projects, A/E Construction Admin Services through Project Closeout will now be necessary. These costs were anticipated and are included in the Grant from the FAA. These services will require an additional $353,000.00 added to the PO for a total cost of $569,000.00. Services are anticipated to extend through August 31, 2020 for final closeout. The Alaska Regional Fire Training Center Projects have proceeded well through the Design Phase. Bids were opened on August 29, 2019 and are within projections previously reviewed with the FAA. Approval of this PO increase is the next necessary step and is in the best interest of the City. Council’s approval is respectfully requested. Page 167 Sponsored by: Administration CITY OF KENAI ORDINANCE NO. 3084-2019 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, INCREASING ESTIMATED REVENUES AND APPROPRIATIONS IN THE GENERAL FUND FOR REIMBURSEMENT RECEIVED FOR SUPPORT OF THE SWAN LAKE FIRE SUPPRESSION EFFORTS. WHEREAS, Kenai Fire Department personnel have worked in support of the Swan Lake Fire suppression efforts; and, WHEREAS, an agreement between the City and the State of Alaska Department of Natural Resources, Division of Forestry entitles the City to reimbursement of personnel and equipment costs associated with this support; and, WHEREAS, Kenai Fire Department received reimbursement from the State of Alaska Department of Natural Resources, Division of Forestry for personnel and equipment costs associated with this support in the amount of $56,808; and, WHEREAS, the FY20 overtime worked by department staff was not budgeted and the budget is not able to support these expenditures in the amount of $16,400 without appropriation of the proceeds; and, WHEREAS, because of personnel vacancies the department expects higher than budgeted overtime in FY20 from normal operations and is requesting to appropriate the FY19 overtime reimbursement amount of $11,733 for additional FY20 overtime. WHEREAS, the remaining $28,675 in equipment reimbursement is not being appropriated at this time. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. That the estimated revenues and appropriations be increased as follows: General Fund: Increase Estimated Revenues: Miscellaneous Revenue $28,133 Page 168 Ordinance No. 3084-2019 Page 2 of 2 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] Increase Appropriations – Fire – Overtime $20,737 Fire – PERS 6,189 Fire – Workers Compensation 658 Fire – Medicare 408 Fire – Unemployment 141 $28,133 Section 2. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 3. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect immediately upon enactment. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 18th day of September, 2019. BRIAN GABRIEL SR., MAYOR ATTEST: ___________________________________ Jamie Heinz, CMC, City Clerk Approved by Finance: _____________ Introduced: September 4, 2019 Enacted: September 18, 2019 Effective: September 18, 2019 Page 169 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council THROUGH: Paul Ostrander, City Manager FROM: Jeff Tucker, Fire Chief DATE: August 27, 2019 SUBJECT: Ordinance No. 3084-2019 ____________________________________________________________________________ The purpose of this memo is to recommend adoption of Ordinance No. 3084-2019 that will allow appropriation of reimbursement funds received by the fire department for support of the Swan Lake Fire Suppression efforts. The fire department provided a type 6 engine and 2 personnel to the suppression efforts. The fire department received funds in the amount of $28,133 for personnel overtime and $28,675 for equipment. $28,133 is requested to be appropriated to the fire department overtime budget for FY20 and the remaining $28,675 for equipment reimbursement will remain unappropriated. I respectfully request consideration of the ordinance. Page 170 Page 171 Page 172 Page 173 STAFF REPORT To: Planning & Zoning Commission From: Elizabeth Appleby, City Planner Date: August 1, 2019 Subject: Resolution PZ2019-29 - Recommending the Council of the City of Kenai Amend Kenai Municipal Code 14.20.330 - Standards for Commercial Marijuana Establishments, to Incorporate Hours of Operation for Retail Marijuana Establishments into the City of Kenai’s Code of Ordinances. GENERAL INFORMATION The City of Kenai Planning and Zoning Commission acts in an advisory capacity to the Kenai City Council on the City of Kenai Zoning Code as specified in KMC 14.05.010 Duties and powers under Title 14 Planning and Zoning Commission. As requested by the Planning and Zoning Commission, City Staff is providing background information and a recommendation with Resolution PZ2019-## for a change to Kenai Municipal Code that would restrict the operating hours of retail marijuana stores within the City of Kenai. Alaska State Statutes prohibit consumers to access a retail marijuana store’s premises or for business to be conducted between the hours of 5:00 a.m. and 8:00 a.m. each day. Those hours are the current limitation in the City of Kenai on hours of operation for retail marijuana stores. None of the conditional use permits within the City for retail marijuana stores have a condition for a specific hours of operation limitation as part of a conditional use permit. Local governments may enact more stringent regulations on hours of operation than those set by the State of Alaska. City staff recommends prohibiting retail marijuana store sales between the hours of 2:00 a.m. and 8:00 a.m. within the City of Kenai. Public Notice, Public Comment Pursuant to KMC 14.20.280, Public hearing and notifications, City staff published notice of the Planning and Zoning Commission public hearing in the Peninsula Clarion and posted notice in three public places. No public comments have been submitted to the City of Kenai as of August 1, 2019. Page 174 PZ2019-29 Staff Report Page 2 Recommending Amend Kenai Municipal Code – Retail Marijuana Operating Hours ANALYSIS The following is a selection of retail marijuana store hour limitations for other jurisdictions in Alaska to provide comparative information: • Kenai Peninsula Borough – may not operate between 2:00 a.m. and 8:00 a.m. daily • City of Soldotna – may not operate between 12:00 a.m. and 8:00 a.m. daily • City of Seward – may not operate between 2:00 a.m. and 10:00 a.m. daily • Municipality of Anchorage – may not operate between 12:00 a.m. and 8:00 a.m. daily There are currently four permitted retail marijuana stores in the City of Kenai and one pending conditional use permit application that would allow for a fifth retail marijuana store within the City of Kenai. All owners of these stores were contacted by the City Planner to obtain informal feedback on potential hours of operation restrictions via a phone conversation. All retail marijuana store owners voiced support for required retail marijuana store closures between 2:00 a.m. and 8:00 a.m. Most owners said they would also not object to a 1:00 a.m. closure and one store owner would support a midnight closure time. Two owners requested to open earlier than 8:00 a.m., particularly to serve customers fishing early in the morning in summer. State laws, however, prohibit an opening time before 8:00 a.m. RECOMMENDATIONS City staff recommends the Planning and Zoning Commission advise the Kenai City Council to amend Kenai Municipal Code to prohibit retail marijuana stores from operating between 2:00 a.m. and 8:00 a.m. daily through Resolution PZ2019-29. This would not be any more restrictive than neighboring jurisdictions and would not limit the potential commercial activity of retail marijuana store businesses within the City of Kenai. This change to City Code may provide public safety benefits, particularly to discourage late night driving to or from retail marijuana stores within the City. ATTACHMENTS A. Resolution No. PZ2019-29 Page 175 Page 176 Page 177 Page 178 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Jamie Heinz, CMC, City Clerk DATE: August 29, 2019 SUBJECT: Appeal of Planning and Zoning Commission Action Applications appealing the Planning and Zoning Commission’s decision to approve a Conditional Use Permit to applicant, ACG, LLC, to operate an approximately 250 square-foot Retail Marijuana Store within an existing commercial building, located at 12516 Kenai Spur Highway, Lot 2, C Plaza Subdivision have been received. KMC 14.20.290(f)(1), "Appeals - Board of Adjustment" provides, (1) The Board of Adjustment shall ordinarily set a date for and hold a hearing on all appeals within forty-five (45) days of the filing of the appeal. However, should the forty-fifth day fall on a weekend or a municipal holiday, the hearing may be scheduled for the next following weekday which is not a municipal holiday under KMC 23.40.020(a)(1)-(10) and (b). For good cause, the Board of Adjustment may hold the hearing up to sixty (60) days after the filing of the appeal. Notice of the time and place of such hearing shall be mailed to all parties interested and to all property owners within 300 feet of the property involved at least fifteen (15) days prior to the hearing. Notices to the appellant and/or applicant for the action or determination must be sent by certified mail, return receipt requested. The following information is provided to help in setting a Board of Adjustment hearing date: FORTY-FIVE DAY END DATE Thursday, October 10, 2019 COUNCIL MEETING DATES (within 45- day requirement) Wednesday, September 18, 2019 Wednesday, October 2, 2019 SIXTY-DAY END DATE Friday, October 25, 2019 COUNCIL MEETING DATE(S) (within 60- day requirement) Wednesday, September 18, 2019 Wednesday, October 2, 2019 Wednesday, October 16, 2019 Page 179 Page 2 of 2 Board of Adjustment – Kenai Christian Church, David Hall Pursuant to KMC 14.20.290 referenced above, the City is required to provide notice of the hearing at least fifteen (15) days prior to the hearing. As such, to comply with the notice requirements, the hearing must be scheduled no sooner than Friday, September 20, 2019. KMC 14.20.290 allows for an extension, “For good cause, the Board of Adjustment may hold the hearing up to sixty (60) days after the filing of the appeal.” Page 180 KENAI PLANNING & ZONING COMMISSION REGULAR MEETING AUGUST 28, 2019 – 7:00 P.M. KENAI CITY COUNCIL CHAMBERS 210 FIDALGO AVENUE, KENAI, ALASKA CHAIR JEFF TWAIT, PRESIDING MINUTES A. CALL TO ORDER Commission Chair Twait called the meeting to order at 7:00 p.m. 1. Pledge of Allegiance Commission Chair Twait led those assembled in the Pledge of the Allegiance. 2. Roll Call Commissioners present: Chair J. Twait, Vice-Chair D. Fikes, R. Springer, J. Halstead, V. Askin, T. McIntyre, G. Greenberg Commissioners absent: None. Staff/Council Liaison present: City Planner E. Appleby, Planning Assistant W. Anderson, City Clerk J. Heinz, City Attorney S. Bloom, Council Liaison B. Molloy A quorum was present. 3. Agenda Approval The following revisions to the agenda were noted: Move item F.1. to Resolution No. PZ2019-33 H.1. as a discussion item. MOTION: Commissioner Askin MOVED to approve the agenda and Commissioner Fikes SECONDED the motion. MOTION TO AMEND: Commissioner Fikes MOVED to amend the agenda by moving item F.1. to New Business as a discussion item and Commissioner Askin SECONDED the motion. There were no objections on the amendment; SO ORDERED. Page 181 ___________________________________________________________________________________ Planning and Zoning Commission Meeting Page 2 of 4 August 28, 2019 There were no objections on the motion as amended; SO ORDERED. 4. Consent Agenda MOTION: Commissioner Askin MOVED to approve the consent agenda and Commissioner Fikes SECONDED the motion. There were no objections; SO ORDERED. *All items listed with an asterisk (*) are considered to be routine and non-controversial by the Commission and will be approved by one motion. There will be no separate discussion of these items unless a Commission Member so requests, in which case the item will be removed from the Consent Agenda and considered in its normal sequence on the agenda as part of the General Orders. 5. *Excused absences – None. B. APPROVAL OF MINUTES 1. *August 14, 2019 The minutes were approved by the Consent Agenda. C. SCHEDULED PUBLIC COMMENT – None. D. UNSCHEDULED PUBLIC COMMENT – None. E. CONSIDERATION OF PLATS – None. F. PUBLIC HEARINGS 1. Resolution PZ2019-33 - Recommending the Kenai City Council Amend Kenai Municipal Code 14.20.175 – Adult Businesses, to Increase the Buffer Distances Between Adult Businesses and Sensitive Uses from 500 Feet to 1,000 Feet and Define Sensitive Uses. [Clerk’s Note: This item was moved to item H.1. during agenda approval.] G. UNFINISHED BUSINESS – None. H. NEW BUSINESS [Clerk’s Note: This item was moved to item H.1. during agenda approval.] 1. Discussion - Resolution PZ2019-33 - Recommending the Kenai City Council Amend Kenai Municipal Code 14.20.175 – Adult Businesses, to Increase the Buffer Distances Between Adult Businesses and Sensitive Uses from 500 Feet to 1,000 Feet and Define Sensitive Uses. City Attorney Bloom noted an ordinance had been introduced to change the zoning of adult businesses adding that naked dancing was protected under federal and state constitutions as a Page 182 ___________________________________________________________________________________ Planning and Zoning Commission Meeting Page 3 of 4 August 28, 2019 form of expression. He provided an overview of an Alaska Superior Court ruling and the guidance it provided in narrowly tailoring regulations to combat harmful secondary effects of adult oriented businesses which was a compelling government interest and providing an evidence-based analysis demonstrating restriction was combatting harmful secondary effects. He reviewed case law which provided that buffers could not be crafted in a way that less than five percent of property in the City would be available for the use of adult oriented businesses noting that the proposed ordinance increased the buffer from 500 to 1,000-feet which would leave approximately six percent available. He added that, as currently written, the Code provided for adult establishments as an allowed use without a Conditional Use Permit and that would remain the case in the proposed ordinance, which expanded the buffer and provided more defined sensitive uses such as libraries, schools, etc. Mr. Bloom provided examples of evidence based decisions from other cities and a legal review which showed the difficulty in achieving the five percent requirement and why that requirement should not be applied to rural communities such as ours. He noted a report from Mt. Vernon, which discussed the evidence they found, and the process used to obtain the evidence. The final report Mr. Bloom provided showed evidence from New York where the harmful secondary effects can have impacts up to 1,000-feet and more likely even 1,500-feet from adult businesses. Mr. Bloom noted that, when looking at adult oriented businesses in the Kenai Municipal Code, the regulations were detailed, out of date, and a lot potentially need to be changed but Council Member Pettey wanted to propose initial action now and may want to propose additional action later. He added that there was case law where a distinction was made between a business periodically featuring adult oriented material such as an occasional show, and a business which was in the business of featuring adult oriented material. Clarification was provided that a recommendation from the Planning & Zoning Commission was legally required in the amendment of the zoning law. Clarification was also provided on certain constitutional protections and how the percentage of available land was calculated. I. PENDING ITEMS – None. J. REPORTS 1. City Council – Council Member Molloy noted the decisions on Ordinance No. 3083- 2019 relating to the adult oriented businesses discussed and the potential for its referral to the Planning and Zoning Commission, reviewed the action agenda from the August 21 City Council meeting, and noted the recommendation for hours of operation for Marijuana Retail Stores would be a discussion item at Council’s meeting September 4. 2. Borough Planning – Vice-Chair Fikes reported action from the August 26 Borough Planning Commission and Platting Committee meetings. 3. Administration – City Planner Appleby reported on the following: • Noted the department had received two inquiries on the adult business ordinance and if it was related to marijuana; • Noted the supplemental information for the ordinance related to adult businesses was also available online; • Noted an increase in complaints on gravel pits and most were resolved; Page 183 ___________________________________________________________________________________ Planning and Zoning Commission Meeting Page 4 of 4 August 28, 2019 • W ork was ongoing on material for a sign code ordinance and would schedule another work session; and • Work on the Lands Management Plan was also ongoing. K. ADDITIONAL PUBLIC COMMENT – None. L. INFORMATIONAL ITEMS – None. M. NEXT MEETING ATTENDANCE NOTIFICATION – September 11, 2019 Commission Chair Twait and Commissioner Springer noted they would be absent from the September 11 meeting. N. COMMISSION COMMENTS & QUESTIONS Vice Chair Fikes thanked Council and administration for the iPads. O. ADJOURNMENT There being no further business before the Commission, the meeting was adjourned at 7:49 p.m. Minutes prepared and submitted by: ____________________________ Jamie Heinz, CMC City Clerk Page 184 Kenai Chamber of Commerce and Visitor Center Kenai Visitor and Cultural Center Report July 2019 KVCC Walk in Visitor Count Month 2015 2016 2017 2018 2019 July 9,662 10,661 8,523 7,377 8,727* *Of the 8,727 KVCC walk-ins, we estimate 180 attendees for facility rentals. The remaining 8,547 would be July 4th, Saturday Market, and visitor traffic. Official Kenai Guide Mailings Month 2015 2016 2017 2018 2019 July 250 1,765 576 1,100 654 Official Kenai Guide Display Racks Location 2016 2017 2018 2019 Airport Hotel – Kenai - - - - Aspen – Kenai - - - - Aspen – Soldotna - - - - Century 21 Soldotna 96 - - Charlotte’s Restaurant 100 67 City Hall 10 - - - Country Foods/IGA 50 118 32 29 Diamond M Ranch 96 - 100 100 Everything Bagels - 78 48 - Kenai Airport 612 315 538 218 Kenai Wash & Dry 75 Paradisos Restaurant 61 98 100 158 Quality Inn 111 32 32 35 Safeway – Kenai 203 278 23 23 Safeway – Soldotna 37 23 Soldotna Inn 65 100 - Sportsmans Warehouse 261 312 356 135 The Cannery Lodge 0 - Three Bears 181 198 129 185 Veronica’s 125 78 175 - Other July Total Guide Count 1,775 1,603 1,770 1,048 Page 185 Kenai Chamber of Commerce and Visitor Center Kenai Visitor and Cultural Center Report July 2019 *Note: In January, we send guides to Anchorage Brochure Distribution to distribute to the following locations throughout the year. ABD also supplies literature to many hotels and businesses that do not have one of their displays.* Downtown Downtown Tour Group 4th Street Mall Anchorage Guesthouse Anchorage Grand Hotel Anchorage Historic Hotel Clarion Suites Comfort Inn International Auto Logistics Marriott Ramada Ship Creek RV The Aviator Quality Inn JBER Outdoor Rec Ft. Rich Oasis Travel YMCA Outdoor Rec Elm AFB Airforce Inn Whittier/Girdwood Inn at Whittier Portage Train Station Midtown Best Western Golden Lion AAA Travel Clippership RV Extended Stay Golden Nugget RV Cruise America RV Rentals Fairfield Inn Marriott Hilton Garden Inn Home2 by Hilton Marriott Springhill Suites 36th Springhill Suites Providence Spenard ABC Motorhome ALEX Inn & Suites Coast International Inn Comfort Suites Courtyard Marriott Executive Suites Holiday Inn Express La Quinta Midnight Sun Car Rental Rent-A-Subaru Puffin Inn Microtel Barratts Travel Lodge # of guides sent to Anchorage Brochure Distribution in January 5yr Comparison 2015 2016 2017 2018 2019 Anchorage Brochure Distribution 20,000 20,000 15,000 15,000 22,425* *Anchorage Brochure ran out of guides in July. We shipped 7,425. Page 186 Kenai Chamber of Commerce and Visitor Center Kenai Visitor and Cultural Center Report July 2019 Facility Rental/Community Usage Organization/Company Hours of Usage Department of Transportation 3 Kenai Chamber Board Meetings 2 Kenai Chamber of Commerce Luncheons 3 Kenai Saturday Market 28 Zurixx 6 July Facility Usage: 42 Page 187 PURCHASE ORDERS BETWEEN $2,500.00 AND $15,000.00 FOR COUNCIL REVIEW COUNCIL MEETING OF: SEPTEMBER 4, 2019 VENDOR DESCRIPTION DEPT. ACCOUNT MARVIN FREDERICKSON DIPNET SOFTWARE SUPPORT PERSONAL USE FISHERY PROFESSIONAL SERVICES CROWLEY FUEL FOR FLOAT PLANE BASIN AIRPORT OPERATING SUPPLIES PH YSIC-CONTROL ANNUAL SERVICING AGREEMENT FIRE PROFESSIONAL SERVICES THOMSON -REUTERS FY20 LEGAL RESOURCE SUBSCRIPTION LEGAL BOOKS CELLEBRITE REGISTRATION FEE POLICE TRANSPORTATION AMOUNT 5,460.00 4,000 .00 6 ,331 .98 5,055 .72 3,850 .00 Page 188 SEPTEMBER 4, 2019 CITY COUNCIL MEETING ADDITIONAL MATERIAL/REVISIONS REQUESTED REVISIONS TO THE AGENDA/PACKET: ACTION ITEM REQUESTED BY Add to item D.1. Ordinance No. 3072-2019 • Amendment Memo provided at 9/3/19 Work Session City Manager • Substitute Ordinance City Attorney • Substitute Ordinance Memo City Attorney Add to item D.2. Ordinance No. 3079-2019 • Substitute Ordinance City Manager • Memo City Manager Add to item D.5. Ordinance No. 3082-2019 • Amendment Memo City Clerk Add to item D.6. Ordinance No. 3083-2019 • Zoning Map Council Member Molloy Add to item D.7. Resolution No. 2019-61 • Amendment Memo City Manager Add to item D.8. Resolution No. 2019-62 • Amendment Memo City Manager MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Paul Ostrander, City Manager DATE: September 3, 2019 SUBJECT: Ordinance No. 3072-2019 – City Owned Lands ____________________________________________________________________________ Administration has presented the material in this Ordinance to Council to the Planning and Zoning Commission and Airport Commission, and the Ordinance was referred to commissions for recommendations prior to a public hearing. The Airport Commission meets August 8, the Harbor Commission, August 19, and the Planning and Zoning Commission, August 14. Administration has not received any recommended amendments from the commissions at this time, however we recently received the following question related to the City’s land leasing code on the Airport Reserve: How long can a new buyer wait to renew a lease and still be able to use the purchase price as the basis for the term of a renewal after the lease is assigned to the new buyer? The Ordinance provides that appraisals must be completed within one year but does not include a timeframe for the bill of sale or an estimate of remaining useful life for determining the value for a renewal based on the term table. Administration recommends the following amendment – amended text is in red and italicized: 22.05.045 [REVIEW]Application for Lease Amendment, Assignment, Extension or Renewal. (e) An application for a lease renewal must include the following information: (1) For a lease renewal of an existing lease: (iii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of real property improvements on the premises as certified by the current lessee and proposed purchaser in a bill of sale dated within one (1) year of the requested starting date of the renewal; and Page 2 of 91 Page 2 of 2 Ordinance 3072-2019 (2) For a lease renewal of an expiring lease: (ii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of existing real property improvements, as certified by the current lessee and the proposed purchaser in a bill of sale dated within one (1) year of the requested starting date of the renewal and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (iii) If the renewal is based on a professional estimate of the remaining useful life of the real property improvements on the premises, the estimated value dated within one (1) year of the requested starting date of the renewal and how it was determined; (2) For a lease renewal of an expiring lease: (ii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of existing real property improvements, as certified by the current lessee and the proposed purchaser in a bill of sale dated within one (1) year of the requested starting date of the renewal and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (iii) If the renewal is based on a professional estimate of the remaining useful life of the real property improvements on the premises, the estimated value dated within one (1) year of the requested starting date of the renewal and how it was determined; Your consideration is appreciated. Page 3 of 91 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] Sponsored by: Administration CITY OF KENAI ORDINANCE NO. 3072-2019 (SUBSTITUTE) AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, RENAMING, REPEALING AND RE-ENACTING KENAI MUNICIPAL CODE TITLE 22-GENERAL FUND LANDS, RENAMING TITLE 21-CITY AIRPORT AND AIRPORT LANDS, AND REPEALING KENAI MUNICIPAL CODE CHAPTER 21.15-LEASE AND SALE OF AIRPORT LANDS OUTSIDE OF THE AIRPORT RESERVE TO ENCOURAGE RESPONSIBLE GROWTH AND DEVELOPMENT TO SUPPORT A THRIVING BUSINESS, RESIDENTIAL, RECREATIONAL AND CULTURAL COMMUNITY THROUGH RESPONSIBLE LAND POLICIES AND PRACTICES. WHEREAS, amendments to Title 22-General Fund Lands, coupled with the repeal of Chapter 21.15- Lease and Sale of Airport Lands Outside the Airport Reserve, are intended to encourage responsible growth and development to support a thriving business, residential, recreational and cultural community through responsible land policies and practices; and, WHEREAS, combining code provisions for general fund lands, lands outside the airport reserve restricted by the Federal Aviation Administration, and certain tidelands recognizes these are all City-owned lands and should be similarly treated consistent with granting restrictions, if any; and, WHEREAS, the changes provide for development incentives to encourage new development in the City and changes to the term table and ownership of improvements to encourage investment; and, WHEREAS, other changes are focused on providing a City-wide approach to land management and lease and sales policy along with rental rate adjustments based on consumer price indexes protect lessees from unexpected increases and to reduce conflict between the City and current and future lessees; and, WHEREAS, the amendments discourage land speculation on commercial City-owned lands by requiring development for lease or sale; and, WHEREAS, the Planning and Zoning Commission, at its meeting of August 14, 2019, recommended the City Council enact Ordinance No. 3072-2019; and, WHEREAS, the Airport Commission, at its meeting of August 8, 2019, recommended the City Council enact Ordinance No. 3072-2019, and, WHEREAS, the Harbor Commission at its meeting of August 19, 2019, favorably discussed Ordinance No. 3072-2019 and had no recommended amendments. Page 4 of 91 Ordinance 3072-2019 Page 2 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. Renaming Title 21 of the Kenai Municipal Code: That Kenai Municipal Code, Title 21 – City Airport And Airport Lands is hereby renamed as follows: CITY AIRPORT RESERVE [AND AIRPORT] LANDS Section 2. Repealing Chapter 21.15 of the Kenai Municipal Code: That Kenai Municipal Code, Chapter 21.15 – Lease and Sale of Airport Land Outside of the Airport Reserve is hereby repealed as follows: [CHAPTER 21.15 LEASE AND SALE OF AIRPORT LAND OUTSIDE OF THE AIRPORT RESERVE 21.15.010 AIRPORT LAND OUTSIDE OF THE AIRPORT RESERVE. (A) THIS CHAPTER APPLIES TO AIRPORT LAND OUTSIDE OF THE AIRPORT RESERVE. (B) THE CITY MAY SELL, CONVEY, EXCHANGE, TRANSFER, DONATE, DEDICATE, DIRECT, OR ASSIGN TO USE, OR OTHERWISE DISPOSE OF AIRPORT LAND OUTSIDE OF THE AIRPORT RESERVE, INCLUDING PROPERTY ACQUIRED, HELD FOR, OR DEVOTED TO A PUBLIC USE, IN ACCORDANCE WITH THIS CHAPTER. DISPOSAL OR SALE OF LANDS SHALL BE MADE ONLY WHEN, IN THE JUDGMENT OF THE CITY COUNCIL, SUCH LANDS ARE NOT REQUIRED BY THE CITY FOR A PUBLIC PURPOSE, (C) THE CITY MAY LEASE, SELL OR DISPOSE OF REAL PROPERTY BY WARRANTY OR QUIT-CLAIM DEED, EASEMENT, GRANT, PERMIT, LICENSE, DEED OF TRUST, MORTGAGE, CONTRACT FOR SALE OF REAL PROPERTY, PLAT DEDICATION, LEASE, OR ANY OTHER LAWFUL METHOD OR MODE OF CONVEYANCE OR GRANT. ANY INSTRUMENT REQUIRING EXECUTION BY THE CITY SHALL BE SIGNED BY THE CITY MANAGER AND ATTESTED BY THE CITY CLERK. THE FORM OF ANY INSTRUMENT SHALL BE APPROVED BY THE CITY ATTORNEY. (D) THE PROVISIONS OF THIS CHAPTER SHALL NOT ALTER OR AMEND THE TERMS OR RIGHTS GRANTED UNDER LEASES EXISTING PRIOR TO THE EFFECTIVE DATE OF THE ORDINANCE CODIFIED IN THIS CHAPTER. (E) PENDING LEASE APPLICATIONS FOR AIRPORT LAND FILED PRIOR TO THE EFFECTIVE DATE OF THE ORDINANCE CODIFIED IN THIS CHAPTER SHALL BE PROCESSED AND ISSUED UNDER THE PROVISIONS OF KMC TITLES 21 AND 22 IN EXISTENCE IMMEDIATELY PRIOR TO THE EFFECTIVE DATE OF THE ORDINANCE CODIFIED IN THIS CHAPTER. OTHERWISE THE PROVISIONS OF THIS CHAPTER SHALL APPLY. Page 5 of 91 Ordinance 3072-2019 Page 3 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.020 QUALIFICATIONS OF APPLICANTS OR BIDDERS. AN APPLICANT OR BIDDER FOR A LEASE IS QUALIFIED IF THE APPLICANT OR BIDDER: (A) IS AN INDIVIDUAL AT LEAST EIGHTEEN (18) YEARS OF AGE OR OVER; OR (B) IS A GROUP, ASSOCIATION, OR CORPORATION WHICH IS AUTHORIZED TO CONDUCT BUSINESS UNDER THE LAWS OF ALASKA; OR (C) IS ACTING AS AN AGENT FOR ANOTHER AND HAS QUALIFIED BY FILING WITH THE CITY MANAGER A PROPER POWER OF ATTORNEY OR A LETTER OF AUTHORIZATION CREATING SUCH AGENCY. THE AGENT SHALL REPRESENT ONLY ONE (1) PRINCIPAL TO THE EXCLUSION OF HIM OR HERSELF. THE TERM “AGENT” INCLUDES REAL ESTATE BROKERS AND AGENTS. 21.15.030 APPLICATIONS. (A) ALL APPLICATIONS FOR LEASE OF LANDS SHALL BE FILED WITH THE CITY MANAGER ON FORMS PROVIDED BY THE CITY AVAILABLE AT CITY HALL. APPLICATIONS SHALL BE DATED ON RECEIPT AND PAYMENT OF FILING FEE AND DEPOSIT. NO APPLICATION WILL BE ACCEPTED BY THE CITY MANAGER UNLESS IT APPEARS TO THE CITY MANAGER TO BE COMPLETE. FILING FEES ARE NOT REFUNDABLE. (B) WITH EVERY APPLICATION, THE APPLICANT SHALL SUBMIT A DEVELOPMENT PLAN, SHOWING AND STATING: (1) THE PURPOSE OF THE PROPOSED LEASE; (2) THE USE, VALUE AND NATURE OF IMPROVEMENTS TO BE CONSTRUCTED; (3) THE TYPE OF CONSTRUCTION; (4) THE DATES CONSTRUCTION IS ESTIMATED TO COMMENCE AND BE COMPLETED (ORDINARILY A MAXIMUM OF TWO (2) YEARS); AND (5) WHETHER INTENDED USE COMPLIES WITH THE ZONING ORDINANCE AND COMPREHENSIVE PLAN OF THE CITY. APPLICATIONS SHALL BECOME A PART OF THE LEASE. 21.15.040 FILING FEE AND DEPOSIT. (A) WHEN SUBMITTING AN APPLICATION FOR LEASE OF LAND, THE APPLICANT SHALL PAY THE CITY THE FOLLOWING AS SET FORTH IN THE CITY’S SCHEDULE OF FEES ADOPTED BY THE CITY COUNCIL: (1) PAY A NON-REFUNDABLE FILING FEE; AND (2) A DEPOSIT TO SHOW GOOD FAITH AND SECURE THE CITY IN PAYMENT OF ANY COSTS, INCLUDING: (A) AN APPRAISAL COST RECOVERY DEPOSIT; AND Page 6 of 91 Ordinance 3072-2019 Page 4 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (B) AN ENGINEERING, SURVEYING AND CONSULTING COST RECOVERY DEPOSIT. (B) IF THE CITY DECIDES TO REJECT THE APPLICANT’S APPLICATION AND NOT ENTER INTO A LEASE WITH THE APPLICANT THROUGH NO FAULT OF THE APPLICANT OR FAILURE OF THE APPLICANT TO COMPLY WITH ANY REQUIREMENT OF THIS CHAPTER, ANY DEPOSIT MADE UNDER SUBSECTION (A)(2) OF THIS SECTION WILL BE RETURNED TO THE APPLICANT. (C) IF THE CITY ENTERS INTO A LEASE WITH THE APPLICANT ANY DEPOSIT MADE BY THE APPLICANT UNDER SUBSECTION (A)(2) OF THIS SECTION WILL BE APPLIED TO THE CITY’S ENGINEERING, APPRAISAL, AND CONSULTING COSTS RELATED TO THE PROCESSING OF THE APPLICANT’S APPLICATION AND ENTERING INTO THE LEASE. THE CITY WILL APPLY ANY UNUSED BALANCE OF A DEPOSIT TO THE RENT PAYABLE UNDER THE LEASE. IF THE CITY’S COSTS EXCEED THE AMOUNT OF ANY DEPOSIT, THE APPLICANT SHALL PAY THE SHORTAGE TO THE CITY AS A CONDITION OF THE LEASE. (D) IF THE APPLICANT FAILS TO COMPLY WITH ANY REQUIREMENT OF THIS CHAPTER, CAUSES INORDINATE DELAY, AS DETERMINED BY THE CITY MANAGER, OR REFUSES TO SIGN A LEASE OFFERED TO THE APPLICANT, THE CITY MANAGER WILL REJECT THE APPLICANT’S APPLICATION AND APPLY ANY DEPOSIT MADE BY THE APPLICANT UNDER SUBSECTION (A) OF THIS SECTION TO THE CITY’S APPRAISAL, ENGINEERING, AND CONSULTING COSTS INCURRED IN CONNECTION WITH THE APPLICANT’S APPLICATION. IF THE CITY’S COSTS FOR APPRAISAL, ENGINEERING AND CONSULTING COSTS EXCEED THE DEPOSITS, THE APPLICANT WILL BE RESPONSIBLE FOR THESE COSTS. THE CITY WILL RETURN ANY UNUSED DEPOSIT BALANCE TO THE APPLICANT. 21.15.050 RIGHTS PRIOR TO LEASING. THE FILING OF AN APPLICATION FOR A LEASE SHALL GIVE THE APPLICANT NO RIGHT TO LEASE OR TO THE USE OF THE LAND FOR WHICH THE APPLICANT APPLIED. THE APPLICATION SHALL EXPIRE WITHIN TWELVE (12) MONTHS AFTER THE APPLICATION HAS BEEN MADE IF A LEASE HAS NOT BEEN ENTERED INTO BETWEEN THE CITY AND THE APPLICANT BY THAT TIME UNLESS THE CITY COUNCIL FOR GOOD CAUSE GRANTS AN EXTENSION. NO EXTENSION MAY BE GRANTED FOR A PERIOD LONGER THAN SIX (6) ADDITIONAL MONTHS. LEASE RATES ARE SUBJECT TO CHANGE ON THE BASIS OF AN APPRAISAL DONE EVERY TWELVE (12) MONTHS ON THE PROPERTY APPLIED FOR. Page 7 of 91 Ordinance 3072-2019 Page 5 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.060 PROCESSING PROCEDURE. (A) APPLICATIONS SHALL BE FORWARDED TO THE PLANNING AND ZONING COMMISSION UPON RECEIPT. THE PLANNING AND ZONING COMMISSION SHALL NORMALLY CONSIDER APPLICATIONS FOR SPECIFIC LANDS ON A FIRST-COME, FIRST-SERVED BASIS IF THE COMMISSION FINDS THAT THE APPLICATION IS COMPLETE AND CONFORMS TO THE COMPREHENSIVE PLAN AND THE KENAI ZONING CODE. WHERE THERE IS DIFFICULTY IN OBTAINING A PERFECTED APPLICATION, DETAILS AS TO DEVELOPMENT PLANS, ETC., OR WHERE THE APPLICANT FAILS TO COMPLY WITH DIRECTIONS OR REQUESTS OF THE PLANNING AND ZONING COMMISSION, ANY SUCH PRIORITY WILL BE LOST. IF AN APPLICATION FOR THE PURCHASE OF CITY-OWNED LANDS, PREVIOUSLY AUTHORIZED FOR SALE BY THE COUNCIL, IS RECEIVED BY THE CITY PRIOR TO THE KENAI PLANNING AND ZONING COMMISSION MAKING AN AFFIRMATIVE OR NEGATIVE RECOMMENDATION TO THE COUNCIL REGARDING THE LEASE APPLICATION FOR THE SAME PROPERTY, THE CITY MAY ELECT TO SELL SAID PROPERTY IN ACCORDANCE WITH THE PROVISIONS OF THE CODE. (B) THE CITY COUNCIL SHALL NORMALLY CONSIDER A LEASE PROPOSAL ONLY AFTER APPROVAL OF THE PLANNING AND ZONING COMMISSION. HOWEVER, APPEALS OF PLANNING AND ZONING COMMISSION DISAPPROVAL MAY BE MADE TO THE CITY COUNCIL. COMPLETED LEASE APPLICATIONS MUST BE PRESENTED TO THE CITY COUNCIL WITHIN THIRTY (30) DAYS AFTER APPROVAL BY THE PLANNING AND ZONING COMMISSION. (C) WHERE THERE ARE TWO (2) OR MORE APPLICATIONS FOR THE SAME AIRPORT LANDS FOR DIFFERENT USES, THEN IF THE PLANNING AND ZONING COMMISSION MAKES A FINDING THAT A SUBSEQUENT APPLICATION WOULD RESULT IN USE OF THE LANDS FOR A HIGHER AND BETTER PURPOSE WITH A GREATER BENEFIT TO THE CITY OF KENAI AND THE CITIZENS THEREOF, THEN THE LEASE WILL BE ISSUED TO SUCH APPLICANT NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (A) IN THIS SECTION WHICH PROVIDE FOR LEASING ON A FIRST-COME, FIRST-SERVED BASIS. ANY APPLICANT MAY APPEAL TO THE CITY COUNCIL FROM A FINDING OR A REFUSAL TO FIND BY THE PLANNING AND ZONING COMMISSION BY FILING AN APPEAL WITH THE CITY CLERK WITHIN SEVEN (7) DAYS AFTER THE FINDING IS MADE OR REFUSED BY THE PLANNING AND ZONING COMMISSION. (D) THE DECISION WHETHER OR NOT TO LEASE LAND RESTS IN THE SOLE DISCRETION OF THE CITY COUNCIL. Page 8 of 91 Ordinance 3072-2019 Page 6 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.070 REVIEW. NO LEASED LAND MAY BE CHANGED IN USE, NOR MAY ANY RENEWAL LEASE BE ISSUED UNTIL THE PROPOSED USE OR RENEWAL HAS BEEN REVIEWED BY THE PLANNING COMMISSION AND APPROVED BY THE COUNCIL. 21.15.080 APPRAISAL. NO LAND SHALL BE SOLD, LEASED, OR A RENEWAL OF LEASE ISSUED, UNLESS THE SAME HAS BEEN APPRAISED WITHIN A TWELVE (12) MONTH PERIOD PRIOR TO THE SALE OR DATE FIXED FOR BEGINNING OF THE TERM OF THE LEASE OR RENEWAL LEASE. NO LAND SHALL BE LEASED FOR LESS THAN THE APPROVED APPRAISED ANNUAL RENTAL. APPRAISALS SHALL REFLECT THE NUMBER AND VALUE OF CITY SERVICES RENDERED THE LAND IN QUESTION. 21.15.090 TERMS OF LEASE. ALL LEASES SHALL BE APPROVED BY THE CITY COUNCIL BEFORE THE SAME SHALL BECOME EFFECTIVE. THE TERM OF ANY GIVEN LEASE SHALL DEPEND UPON THE DURABILITY OF THE PROPOSED USE, THE AMOUNT OF INVESTMENT IN IMPROVEMENT PROPOSED AND MADE, AND THE NATURE OF THE IMPROVEMENT PROPOSED WITH RESPECT TO DURABILITY AND TIME REQUIRED TO AMORTIZE THE PROPOSED INVESTMENT. 21.15.100 ANNUAL MINIMUM RENTAL. (A) ANNUAL MINIMUM RENTALS SHALL BE COMPUTED FROM THE APPROVED APPRAISED MARKET VALUE UTILIZING THE METHOD AS DESCRIBED IN KMC 21.15.120 OF THIS CHAPTER. (B) UPON EXECUTION OF THE LEASE, THE LANDS BECOME TAXABLE TO THE EXTENT OF ITS LEASEHOLD INTEREST AND LESSEE SHALL PAY ALL REAL PROPERTY TAXES LEVIED UPON SUCH LEASEHOLD INTEREST IN THESE LANDS, AND SHALL PAY ANY SPECIAL ASSESSMENTS AND TAXES AS IF LESSEE WERE THE OWNER OF SAID LAND. (C) RENT SHALL BE PAID ANNUALLY IN ADVANCE. SAID PAYMENTS SHALL BE PRORATED TO CONFORM TO THE CITY OF PAYMENT EXCEEDS TWO HUNDRED DOLLARS ($200.00), THEN THE LESSEE SHALL HAVE THE OPTION OF Kenai’s fiscal year BEGINNING JULY 1 AND ENDING JUNE 30. IF THE EQUIVALENT MONTHLY MAKING PAYMENTS ON A MONTHLY BASIS. (D) LESSEE SHALL BE RESPONSIBLE FOR ALL SALES TAXES APPLICABLE TO ITS OPERATIONS. Page 9 of 91 Ordinance 3072-2019 Page 7 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.110 BIDDING PROCEDURE. AS AN EXCEPTION TO GENERAL POLICY LISTED ABOVE, THE CITY COUNCIL MAY DESIGNATE A SPECIFIC LOT OR LOTS TO BE MADE AVAILABLE ONLY FOR BID. THIS PROVISION SHALL APPLY ONLY WHEN THERE IS NO OUTSTANDING APPLICATION PENDING ON THE LOT OR LOTS. AS DESIGNATED, SEALED BIDS SHALL BE RECEIVED OFFERING A ONE-TIME PREMIUM IN ADDITION TO THE ESTABLISHED LEASE RATE. HIGHEST BID, HOWEVER, SHALL BE SUBJECT TO ALL PROVISIONS OF REVIEW AND APPROVAL ESTABLISHED FOR ALL OTHER LEASE APPLICATIONS. 21.15.120 PRINCIPLES AND POLICY OF LEASE RATES. (A) A FAIR RETURN TO THE AIRPORT SYSTEM IS MANDATED BY THE TERMS AND CONDITIONS OF THE QUITCLAIM DEED AND APPROPRIATE DEEDS OF RELEASE, GRANTING THESE LANDS TO THE AIRPORT SYSTEM BY THE FEDERAL GOVERNMENT. TO ENSURE A FAIR RETURN, ALL LEASES FOR A PERIOD IN EXCESS OF FIVE (5) YEARS SHALL INCLUDE A REDETERMINATION CLAUSE AS OF THE FIFTH ANNIVERSARY, AND ALL LANDS FOR LEASE SHALL BE APPRAISED PRIOR TO LEASE AND AGAIN PRIOR TO REDETERMINATION. LEASE RATES: (1) SHALL BE BASED ON FAIR MARKET VALUE OF THE LAND, INCLUDING AN APPROPRIATE CONSIDERATION OF FACILITIES AND SERVICES AVAILABLE (PUBLIC WATER, PUBLIC SEWER, STORM SEWERS, AND OTHER PUBLIC UTILITIES) AS DETERMINED BY A QUALIFIED INDEPENDENT APPRAISER, CONSIDERING THE BEST USE OF THE SPECIFIED LAND; AND, (2) SHALL BE EIGHT PERCENT (8%) OF FAIR MARKET VALUE. (B) FOR LEASES IN EXISTENCE PRIOR TO THE EFFECTIVE DATE OF THIS CHAPTER, THE LEASE RATE REDETERMINATION SHALL BE AS PROVIDED IN THE LEASE. (C) THE CITY MANAGER SHALL CHANGE THE RENT IN A LEASE BY GIVING THE LESSEE WRITTEN NOTICE AT LEAST THIRTY (30) DAYS IN ADVANCE OF THE EFFECTIVE DATE OF THE CHANGE. (D) THE “FAIR MARKET VALUE” OF THE PREMISES SHALL BE EQUAL TO THE THEN- FAIR MARKET RATE FOR SIMILAR COMMERCIAL PROPERTY IN THE CITY OF KENAI, ALASKA (THE “RELEVANT AREA”). CITY SHALL GIVE NOTICE TO LESSEE OF CITY’S ESTIMATION OF THE FAIR MARKET VALUE NOT LATER THAN THIRTY (30) DAYS PRIOR TO THE EXPIRATION OF THE THEN-APPLICABLE FIVE (5) YEAR PERIOD, AS EVIDENCED AND SUPPORTED BY THE WRITTEN OPINION OF AN INDEPENDENT REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87, SELECTED AND PAID FOR BY THE CITY, FAMILIAR WITH THE RELEVANT AREA (THE “FIRST APPRAISER”). IF LESSEE DISAGREES WITH SUCH ESTIMATE, IT SHALL ADVISE THE CITY IN WRITING THEREOF WITHIN THIRTY (30) DAYS OF LESSEE’S RECEIPT OF Page 10 of 91 Ordinance 3072-2019 Page 8 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] SUCH ESTIMATE, AS EVIDENCED AND SUPPORTED BY THE WRITTEN OPINION OF A REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 (SELECTED AND PAID FOR BY LESSEE) FAMILIAR WITH THE RELEVANT AREA (THE “SECOND APPRAISER”). THE PARTIES SHALL PROMPTLY MEET TO ATTEMPT TO RESOLVE THEIR DIFFERENCES BETWEEN THE FIRST APPRAISER AND THE SECOND APPRAISER CONCERNING THE FAIR MARKET VALUE OF THE PREMISES. IF CITY AND LESSEE CANNOT AGREE UPON SUCH VALUE THEN, WITH ALL DELIBERATE SPEED, THEY SHALL DIRECT THE FIRST APPRAISER AND THE SECOND APPRAISER TO EXPEDITIOUSLY AND MUTUALLY SELECT A THIRD REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 (SELECTED AND PAID FOR JOINTLY BY THE PARTIES) FAMILIAR WITH THE RELEVANT AREA (THE “THIRD APPRAISER”). WITHIN THIRTY (30) DAYS AFTER THE THIRD APPRAISER HAS BEEN APPOINTED, THE THIRD APPRAISER SHALL DECIDE WHICH OF THE TWO (2) RESPECTIVE APPRAISALS FROM THE FIRST APPRAISER AND THE SECOND APPRAISER MOST CLOSELY REFLECTS THE FAIR MARKET VALUE OF THE PREMISES. THE FAIR MARKET VALUE OF THE PREMISES SHALL IRREBUTTABLY BE PRESUMED TO BE THE VALUE CONTAINED IN SUCH APPRAISAL SELECTED BY THE THIRD APPRAISER, AND THE RENTAL SHALL BE REDETERMINED BASED ON SUCH VALUE. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, RENT SHALL CONTINUE TO BE PAID AT THE THEN-APPLICABLE RATE UNTIL ANY SUCH NEW RENTAL RATE IS ESTABLISHED, AND LESSEE AND CITY SHALL PROMPTLY PAY OR REFUND, AS THE CASE MAY BE, ANY VARIANCE IN THE RENT, WITHOUT INTEREST THEREON ACCRUING TO THE EXTENT TO BE PAID/REFUNDED IN A TIMELY FASHION. 21.15.130 REIMBURSEMENT FOR CITY-CONSTRUCTED IMPROVEMENTS. (A) THE CITY MANAGER MAY INCLUDE IN A LEASE A REQUIREMENT FOR THE LESSEE TO REIMBURSE THE CITY FOR THE CITY’S COST OF: (1) LAND CLEARING, GRAVEL FILL, UTILITY EXTENSIONS AND OTHER IMPROVEMENTS OR AMENITIES ON OR IN DIRECT CONNECTION WITH THE PREMISES, CONSTRUCTED BY THE CITY PRIOR TO THE EFFECTIVE DATE OF THE LEASE; OR (2) LAND CLEARING, GRAVEL FILL, UTILITY EXTENSIONS AND OTHER IMPROVEMENTS OR AMENITIES ON OR IN DIRECT CONNECTION WITH THE PREMISES, WHICH THE CITY AGREES TO CONSTRUCT AS A CONDITION OF THE LEASE, SUBJECT TO CITY COUNCIL APPROVAL. (B) THE LESSEE SHALL REIMBURSE THE CITY FOR THE CITY’S COST OF CONSTRUCTING THE IMPROVEMENTS IN TEN (10) EQUAL ANNUAL PAYMENTS, Page 11 of 91 Ordinance 3072-2019 Page 9 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] PLUS INTEREST AT EIGHT PERCENT (8%) PER YEAR ON THE UNPAID BALANCE OR UNDER SUCH TERMS AND CONDITIONS AS THE COUNCIL MAY SET BY RESOLUTION. IF THE LEASE IS FOR LESS THAN TEN (10) YEARS, THE REPAYMENT SCHEDULE MAY NOT BE LONGER THAN THE TERM OF THE LEASE. THE LESSEE MAY PAY THE ENTIRE REMAINING BALANCE TO THE CITY AT ANY TIME DURING THE TERM OF THE LEASE. 21.15.140 LEASE EXECUTION. THE LEASE APPLICANT SHALL EXECUTE AND RETURN THE APPROPRIATE LEASE AGREEMENT WITH THE CITY OF KENAI WITHIN THIRTY (30) DAYS OF MAILING THE AGREEMENT TO SAID APPLICANT. THE LEASE AGREEMENT SHALL BE PREPARED IN ACCORDANCE WITH THE REQUIREMENTS OF THIS TITLE. FAILURE TO EXECUTE AND RETURN THE LEASE AGREEMENT WITHIN THE SPECIFIED PERIOD SHALL RESULT IN THE FORFEITURE OF ALL LEASING RIGHTS. 21.15.150 LEASE UTILIZATION. LEASED LANDS SHALL BE UTILIZED FOR PURPOSES WITHIN THE TERMS OF THE LEASE AND IN CONFORMITY WITH THE ORDINANCES OF THE CITY, AND IN SUBSTANTIAL CONFORMITY WITH THE COMPREHENSIVE PLAN. UTILIZATION OR DEVELOPMENT FOR OTHER THAN THE ALLOWED USES SHALL CONSTITUTE A VIOLATION OF THE LEASE AND SUBJECT THE LEASE TO CANCELLATION AT ANY TIME. FAILURE TO SUBSTANTIALLY COMPLETE THE DEVELOPMENT PLAN FOR THE LAND, CONSISTENT WITH THE PROPOSED USE AND TERMS OF THE LEASE, SHALL CONSTITUTE GROUNDS FOR CANCELLATION. 21.15.160 FORM OF LEASE. (A) WHEN LEASING LAND UNDER THIS CHAPTER, THE CITY MANAGER SHALL USE A STANDARD LEASE FORM THAT IS: (1) DRAFTED TO: (I) PROVIDE A REASONABLE BASIS FOR THE LESSEE’S USE OF THE PREMISES, (II) FOSTER THE SAFE, EFFECTIVE, AND EFFICIENT OPERATION OF THE AIRPORT, (III) CONFORM WITH THE APPLICABLE REQUIREMENTS OF THE KMC, INCLUDING THIS CHAPTER, ALASKA STATUTES, FEDERAL AVIATION ADMINISTRATION REGULATIONS, AND OTHER APPLICABLE FEDERAL LAW, AND (Iv) PROVIDE FOR THE BEST INTEREST OF THE CITY. Page 12 of 91 Ordinance 3072-2019 Page 10 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (2) APPROVED AS TO FORM BY THE CITY ATTORNEY; AND (3) ADOPTED BY RESOLUTION OF THE CITY COUNCIL. (B) THE CITY MANAGER MAY ENTER INTO A LAND LEASE THAT DEVIATES FROM THE STANDARD FORM ADOPTED UNDER SUBSECTION (A) OF THIS SECTION, IF: (1) THE MANAGER BELIEVES THE ACTION IS IN THE BEST INTEREST OF THE CITY; AND (2) THE LEASE IS APPROVED AS TO FORM BY THE CITY ATTORNEY; AND (3) THE LEASE IS APPROVED BY RESOLUTION OF THE CITY COUNCIL. 21.15.170 CONVEYANCE TO ENCOURAGE NEW ENTERPRISES. (A) NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS CHAPTER, WHERE IT IS FOUND THAT ENCOURAGEMENT OF A NEW COMMERCIAL OR INDUSTRIAL ENTERPRISE WOULD BE BENEFICIAL TO THE CITY OF KENAI, THE CITY COUNCIL BY ORDINANCE SO FINDING MAY DIRECT CONVEYANCE OF ONE OR MORE PARCELS OF CITY LAND BY THE CITY MANAGER TO SUCH ENTERPRISE UPON SUCH TERMS AS TO PRICE, CONDITIONS OF CONVEYANCE, AND WITH SUCH CONTINGENCIES AS MAY BE SET FORTH IN SAID ORDINANCE. (B) IN THE EVENT THE LAND DIRECTED TO BE CONVEYED UNDER SUBSECTION (A) OF THIS SECTION CONSISTS IN PART OR IN WHOLE OF AIRPORT LANDS, THEN THE ORDINANCE ORDERING ITS CONVEYANCE. WILL NOT BE EFFECTIVE UNTIL THE CITY COUNCIL BY ORDINANCE HAS APPROPRIATED FROM THE GENERAL FUND TO BE DEDICATED TO THE AIRPORT THE DIFFERENCE BETWEEN THE APPRAISED FAIR MARKET VALUE OF SAID AIRPORT LANDS AND THE PURCHASE PRICE, IF ANY, SET FORTH IN SAID ORDINANCE. 21.15.180 SALE. (A) AIRPORT LAND OUTSIDE THE AIRPORT RESERVE TO WHICH THE CITY OF KENAI HOLDS TITLE WHICH ARE NOT RESTRICTED FROM SALE BY THE DEED OF CONVEYANCE TO THE CITY, OR WHICH HAVE BEEN RELEASED FROM SUCH RESTRICTIONS, WHICH THE CITY COUNCIL HAS DETERMINED ARE NOT REQUIRED FOR A PUBLIC PURPOSE, MAY BE LISTED FOR SALE BY THE CITY MANAGER, EXCEPT THAT LANDS WHICH HAVE BEEN LEASED SHALL NOT BE SOLD UNLESS THE LESSEE HAS MADE A W RITTEN REQUEST TO THE CITY TO PLACE THE LAND FOR SALE. THE DECISION WHETHER OR NOT TO SELL THE LAND RESTS IN THE SOLE DISCRETION OF THE CITY. (B) SALES OF LAND PURSUANT TO SUBSECTION (A) OF THIS SECTION SHALL BE MADE AT NOT LESS THAN FAIR MARKET VALUE. THE PURCHASER SHALL EXECUTE Page 13 of 91 Ordinance 3072-2019 Page 11 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] THE “AGREEMENT FOR SALE OF LAND” WITHIN ONE (1) YEAR OF THE DATE OF APPRAISAL. THE CITY MANAGER HAS THE OPTION TO DISPOSE OF SUCH PROPERTIES IN ACCORDANCE WITH THE SALE PROCEDURES SET OUT IN THIS TITLE: (1) BY NEGOTIATED SALE; OR (2) BY OUTCRY AUCTION TO THE HIGHEST RESPONSIBLE BIDDER; OR (3) BY COMPETITIVE SEALED BIDS TO THE HIGHEST RESPONSIBLE BIDDER. IN THE EVENT THAT THE SALE IS NOT CLOSED WITHIN ONE (1) YEAR OF THE DATE OF APPRAISAL, THE BUYER WILL BE CHARGED, UPON CLOSING, INTEREST COMPUTED IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE KENAI MUNICIPAL CODE, BASED UPON THE TOTAL SALES PRICE FOR THE NUMBER OF DAYS PAST THE EXPIRATION OF THE SIX (6) MONTH PERIOD. 21.15.190 SALE PROCEDURE. (A) THE CITY MANAGER WILL OBTAIN SUCH AN APPRAISAL FOR A DETERMINATION OF THE MINIMUM PRICE ON SAID LAND. (B) WHERE ANY PARTY, HEREINAFTER CALLED “APPLICANT,” REQUESTS THAT A TRACT OR TRACTS OF LAND BE SOLD FOR WHICH AN APPRAISAL WILL BE REQUIRED, WHICH WILL REQUIRE SUBDIVIDING, PLATTING, OR SURVEYING AND STAKING, OR WHICH WILL REQUIRE ADVERTISING OR INCURRING ANY OTHER EXPENDITURES BY THE CITY PRIOR TO SALE, (1) NO ACTIONS IN PREPARATION FOR SALE WILL BE TAKEN BY THE CITY UNTIL AN AGREEMENT TO PURCHASE SHALL BE PROPERLY EXECUTED AND FILED WITH THE CITY MANAGER FOR THE PURCHASE OF SUCH LAND WITH PAYMENT OF SUFFICIENT GOOD FAITH DEPOSIT, WHICH SHALL CONSIST OF CASH OR ITS EQUIVALENT DEPOSITED WITH THE FINANCE OFFICER OF THE CITY OF KENAI, AS MAY BE DETERMINED BY THE CITY MANAGER, TO COVER ALL EXPENSES OF THE CITY AND SUCH AGREEMENT TO PURCHASE SHALL FURTHER CONTAIN THE AGREEMENT BY APPLICANT TO PAY ANY ADDITIONAL COSTS IF SUCH GOOD FAITH DEPOSIT IS INSUFFICIENT TO PAY ALL COSTS INCURRED BY THE CITY. (2) IF AT ANY TIME DURING THE PROCESS OF PREPARING FOR SALE, THE APPLICANT GIVES NOTICE TO THE CITY MANAGER OF WITHDRAWAL OF THE REQUEST FOR SALE, THE CITY MANAGER SHALL STOP ALL PROCEDURES, SHALL PAY EXPENSES INCURRED PRIOR TO TERMINATION OF SALE PROCEDURES, AND SHALL REIMBURSE APPLICANT FOR ANY GOOD FAITH DEPOSIT ADVANCED IN EXCESS OF ALL EXPENSES INCURRED. (HOWEVER, IF ANOTHER PARTY DESIRES THE SALE TO PROCEED, FILES AN APPLICATION Page 14 of 91 Ordinance 3072-2019 Page 12 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] FOR SALE, EXECUTES AND FILES AN AGREEMENT TO PURCHASE, AND ADVANCES SUFFICIENT FUNDS THEREFOR, THEN THE PRIOR APPLICANT WILL BE REIMBURSED FOR EXPENSES CHARGES WHICH CAN BE ATTRIBUTED TO THE SUBSEQUENT APPLICANT.) (3) IF ALL ACTIONS NECESSARY FOR PREPARATION FOR SALE HAVE BEEN ACCOMPLISHED, AND IF NEITHER THE APPLICANT NOR ANY OTHER PARTY PURCHASES SAID LAND WHEN FIRST OFFERED FOR SALE AFTER SUCH REQUEST, THEN ALL EXPENSES INCURRED IN PREPARATION FOR THE SALE WILL BE PAID FROM THE GOOD FAITH DEPOSIT, AND THE BALANCE, IF ANY, SHALL BE RETURNED TO THE APPLICANT. IF THE SUMS ADVANCED AS GOOD FAITH DEPOSIT ARE INSUFFICIENT TO PAY ALL OF THE COSTS, THE APPLICANT WILL BE BILLED FOR THE BALANCE DUE AND NORMAL COLLECTION PROCEDURES FOLLOWED. (4) IF THE LAND APPLIED FOR IS SOLD ON PUBLIC SALE SET IN RESPONSE TO SUCH REQUEST TO ANYONE OTHER THAN APPLICANT, THEN ON CLOSING OF THE SALE, THE GOOD FAITH DEPOSIT WILL BE REFUNDED IN TOTAL TO THE APPLICANT. THE CITY’S EXPENSES WILL BE FIRST DEDUCTED FROM THE DEPOSIT OF THE SUCCESSFUL BIDDER. (5) IF THE LAND IN QUESTION IS SOLD TO APPLICANT, THE GOOD FAITH DEPOSIT ADVANCED, AFTER DEDUCTING THE CITY’S EXPENSES, WILL BE APPLIED ON THE PAYMENT DUE AT CLOSING. (6) IF THE LAND IN QUESTION IS TO BE SOLD BY SEALED BID AND THE APPLICANT HAS SUBMITTED A VALID BID, BUT THE APPLICANT IS NOT THE HIGH BIDDER, HE OR SHE MAY PURCHASE THE LAND BY TENDERING THE CITY A BID EQUAL TO THE HIGH BID WITHIN FIVE (5) DAYS OF THE BID OPENING. IF THE LAND SALE IS INITIATED IN ACCORDANCE WITH KMC 21.15.060(A), THE APPLICANT SHALL BE DEFINED AS THAT PARTY SUBMITTING THE INITIAL LEASE APPLICATION. (C) IF THE TRACT OF LAND PROPOSED TO BE SOLD IS LEASED LAND, THE LESSEE MAY REQUEST THE SALE OF THE LAND AT NOT LESS THAN THE FAIR MARKET VALUE. THE CURRENT LESSEE MAY REQUEST TO NEGOTIATE A SALE ONLY AFTER, TO THE SATISFACTION OF THE CITY MANAGER, DEVELOPMENT HAS BEEN COMPLETED AS DETAILED IN THE DEVELOPMENT SCHEDULE WHICH HAS BEEN INCORPORATED INTO THE LEASE AGREEMENT. IF THERE IS NO DEVELOPMENT SCHEDULE, THE LESSEE MAY REQUEST TO PURCHASE THE PROPERTY IF THERE HAVE BEEN SUBSTANTIAL IMPROVEMENTS AS DETERMINED BY THE CITY MANAGER. THE DECISION WHETHER OR NOT TO SELL THE LAND TO THE LESSEE RESTS IN THE SOLE DISCRETION OF THE CITY. Page 15 of 91 Ordinance 3072-2019 Page 13 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (D) AN APPLICANT MAY REQUEST THE LEASE OF CITY LAND INCLUDE A RIGHT TO PURCHASE THE LEASED LAND WITHIN TWELVE (12) MONTHS OF THE COMPLETION OF THE DEVELOPMENT AS DETAILED IN THE DEVELOPMENT SCHEDULE. A SALE UNDER THIS SUBSECTION SHALL BE AT NOT LESS THAN FAIR MARKET VALUE AS DETERMINED BY AN APPRAISER QUALIFIED UNDER AS 8.87. THE CITY MAY CHARGE ADDITIONAL CONSIDERATION FOR GRANTING THE RIGHT TO PURCHASE THE PROPERTY. THE LAND MUST BE APPRAISED WITHIN TWELVE (12) MONTHS OF SALE AS REQUIRED UNDER KMC 21.15.070. AN APPLICANT’S REQUEST TO HAVE A CONTRACTUAL RIGHT TO PURCHASE THE LEASE PROPERTY MUST BE APPROVED BY AN ORDINANCE OF THE COUNCIL. THE COUNCIL MAY GRANT THE REQUEST IF IT DETERMINES IT IS IN THE BEST INTEREST OF THE CITY. (E) IF THE TRACT OF LAND PROPOSED TO BE SOLD IS NOT LEASED LAND, OR IS LEASED LAND WITHOUT SUBSTANTIAL IMPROVEMENTS, THEN THE TRACT OF LAND MAY ONLY BE SOLD BY OUTCRY AUCTION OR BY COMPETITIVE SEALED BIDS. THE DECISION WHETHER OR NOT TO SELL THE LAND RESTS IN THE SOLE DISCRETION OF THE CITY. IF THE TRACT IS TO BE PUT UP FOR SUCH COMPETITIVE AUCTION OR SEALED BID SALE, NOTICE OF SALE AND THE MANNER IN WHICH THE LAND IS TO BE SOLD SHALL BE PUBLISHED IN A NEWSPAPER OF GENERAL CIRCULATION WITHIN THE CITY ONCE EACH WEEK FOR TWO (2) SUCCESSIVE WEEKS NOT LESS THAN THIRTY (30) DAYS PRIOR TO THE DATE OF SALE; SUCH NOTICE SHALL ALSO BE POSTED IN AT LEAST THREE PUBLIC PLACES WITHIN THE CITY AT LEAST THIRTY (30) DAYS PRIOR TO THE DATE OF SALE, AND SUCH OTHER NOTICE MAY BE GIVEN BY SUCH OTHER MEANS AS MAY BE CONSIDERED ADVISABLE BY THE CITY MANAGER. SUCH NOTICE MUST CONTAIN: (1) THE LEGAL DESCRIPTION OF THE LAND; (2) A BRIEF PHYSICAL DESCRIPTION OF THE LAND; (3) THE AREA AND GENERAL LOCATION OF THE LAND; (4) THE MINIMUM ACCEPTABLE OFFER FOR THE LAND (WHICH SHALL BE ITS APPRAISED FAIR MARKET VALUE); (5) THE TERMS UNDER WHICH THE LAND WILL BE SOLD; (6) ANY LIMITATIONS ON THE SALE OF THE LAND; (7) THE TIME AND PLACE SET FOR THE AUCTION OR BID OPENING; (8) THE AMOUNT OF DEPOSIT TO BE SUBMITTED W ITH EACH BID IN ORDER TO COVER THE CITY’S EXPENSES SUCH AS SURVEY, APPRAISAL, AND REVIEWS; (9) ANY OTHER MATTERS CONCERNING THE SALE OF WHICH THE CITY MANAGER BELIEVES THE PUBLIC SHOULD BE INFORMED. (F) WHERE A REAL ESTATE AGENT FURNISHES A BUYER FOR CITY LAND, THE CLOSING AGENT SHALL BE AUTHORIZED TO PAY THE AGENT A REAL ESTATE Page 16 of 91 Ordinance 3072-2019 Page 14 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] COMMISSION OF FIVE PERCENT (5%) OF THE PURCHASE PRICE FOR THE LAND OR FIVE PERCENT (5%) OF THE APPRAISED FAIR MARKET VALUE OF THE LAND, WHICHEVER IS LOWER, UNDER THE FOLLOWING TERMS AND CONDITIONS: (1) THE CITY MANAGER SHALL PROVIDE A NON-EXCLUSIVE LISTING OF LANDS AVAILABLE FOR SALE. (2) NO COMMISSION SHALL BE PAID TO AN AGENT WHERE SAID AGENT IS A PARTY, OR IN PRIVITY WITH A PARTY, TO THE SALE. (G) CLOSING OF SALE OF CITY LANDS SHALL BE HANDLED BY A TITLE OR ESCROW COMPANY WITHIN THE CITY WHICH SPECIALIZES IN CLOSING OF REAL ESTATE SALES. (H) CONVEYANCE OF CITY LANDS SHALL BE BY QUIT CLAIM OR WARRANTY DEED FURNISHED BY THE CITY, AND BUYERS ARE ADVISED THAT ALL SUCH CONVEYANCES ARE SUBJECT TO ALL LIENS, ENCUMBRANCES, RESTRICTIONS, AND COVENANTS OF RECORD AND ARE SPECIFICALLY, WITHOUT BEING LIMITED THERETO, SUBJECT TO ANY UNRELEASED RESTRICTIONS CONTAINED IN THE DEED OR DEEDS BY WHICH THE CITY RECEIVED TITLE TO THE LAND. THE DEED SHALL BE SIGNED BY THE CITY MANAGER AND ATTESTED BY THE CITY CLERK. THE FORM OF THE DEED SHALL BE APPROVED BY THE CITY ATTORNEY. (I) IF A BUYER DESIRES TO OBTAIN A PRELIMINARY COMMITMENT FOR TITLE INSURANCE OR TITLE INSURANCE TO THE LAND, THEN IT SHALL BE THE RESPONSIBILITY OF THE BUYER TO OBTAIN SUCH COMMITMENT OR INSURANCE AND TO PAY FOR THE SAME. (J) IF THE TRACT OR TRACTS OF LAND ARE SOLD UNDER TERMS BY WHICH THE CITY IS TO ACCEPT A NOTE AS A PORTION OF THE PURCHASE PRICE, THE NOTE AND ACCOMPANYING DEED OF TRUST MUST BE PREPARED BY AN ATTORNEY, BUT MUST BE APPROVED BY THE CITY ATTORNEY PRIOR TO CLOSING. (K) THE NOTE SHALL BE PLACED FOR COLLECTION W ITH A BANK SELECTED BY THE CITY MANAGER, WHICH MAY BE CHANGED FROM TIME TO TIME, AND WHICH SHALL BE THE BANK IN WHICH CITY FUNDS ARE DEPOSITED. THE SET-UP FEE TO INITIATE COLLECTION MAY BE NEGOTIATED, AND THE BUYER SHALL PAY THE ANNUAL COLLECTION FEES FOR SUCH BANK COLLECTION. (L) TO ENABLE THE CITY TO COMPETE ON AN EQUAL BASIS WITH PRIVATE ENTERPRISE IN LANDS DISPOSAL, THE CITY MANAGER IS AUTHORIZED TO NEGOTIATE A DIVISION OF THE COSTS OF SALE LISTED IN KMC 21.15.190(F) (G), (H), (I) AND (J) TO A MAXIMUM OF FIFTY PERCENT (50%) OF THE REQUIRED COSTS BEING BORNE BY THE CITY. Page 17 of 91 Ordinance 3072-2019 Page 15 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.200 TERMS FOR FINANCING SALE OF CITY LAND s. (A) IN ORDER TO EXPEDITE AND FACILITATE THE SALE OF CITY LANDS, THE CITY MANAGER IS AUTHORIZED TO ACCEPT TERMS FOR SAID SALES AND MAY ACCEPT A NOTE SECURED BY A DEED OF TRUST FOR A PORTION OF THE PURCHASE PRICE THEREOF, SUBJECT TO THE FOLLOWING RESTRICTIONS: (1) IF THE SALE IS TO A LESSEE WHO HAS PLACED A LIEN FOR FINANCING UPON THE LAND OR IMPROVEMENTS, THEN THE CITY MANAGER IS NOT AUTHORIZED TO SELL THE LAND EXCEPT FOR TOTAL CASH PAYMENT, PROVIDED; HOWEVER, THAT THE CITY MANAGER MAY ACCEPT A NOTE SECURED BY A DEED OF TRUST SUBORDINATE TO THE EXISTING SECURITY INTEREST IF THE AMOUNT OF THE NOTE THEREBY SECURED IS WITHIN THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE OF THE LAND WITH IMPROVEMENTS, AND THE SUM OF ALL PRIOR SECURITY INTERESTS. THE SALE DOCUMENTS SHALL BE SUBJECT TO THE SAME RESTRICTIONS CONTAINED IN THE LEASE AS THE LEASE PROVIDES AT THE TIME OF SALE. (2) PRIOR TO MAKING A DETERMINATION TO ACCEPT A NOTE AND DEED OF TRUST FROM A PROSPECTIVE PURCHASER, THE CITY MANAGER SHALL SECURE A PRELIMINARY COMMITMENT FOR TITLE INSURANCE (AT PURCHASER’S EXPENSE) AND A REVIEW OF THE GRANTEE INDEX COVERING THE PARTY DESIRING TO PURCHASE THE LAND FROM THE TITLE COMPANY IN THE LOCAL RECORDING DISTRICT, AND NO CREDIT WILL BE ADVANCED ON SUCH SALE IF THERE ARE ANY DELINQUENT LIENS OR UNPAID JUDGMENTS FOUND IN THE TITLE COMPANY REPORT UNTIL ANY SUCH JUDGMENTS OR LIENS ARE PAID AND RELEASES THEREFORE HAVE BEEN FILED. (3) IN THE EVENT OF A CREDIT SALE, THE DOWN PAYMENT REQUIRED SHALL BE DETERMINED BY THE CITY MANAGER, BUT SHALL NOT BE LESS THAN FIFTEEN PERCENT (15%) OF THE SALES PRICE. (B) IF THE CITY MANAGER DETERMINES THAT IT IS IN THE CITY’S INTEREST TO SELL CITY LANDS, THE SALE SHALL BE EITHER A CASH TRANSACTION OR BY A NOTE SECURED BY A DEED OF TRUST, SUBJECT TO SUBSECTION (A) OF THIS SECTION, AND BY NO OTHER MEANS. THE NOTE AND DEED OF TRUST SHALL CARRY TERMS AS FOLLOWS: (1) THE TERM OF SUCH NOTE MAY BE SET BY THE CITY MANAGER, BUT IT SHALL PROVIDE FOR MONTHLY PAYMENTS AND NOT EXCEED TWENTY (20) YEARS UNLESS A LONGER PERIOD FOR A SPECIFIC SALE OF LAND IS APPROVED BY RESOLUTION OF THE CITY COUNCIL. (2) SUCH NOTE SHALL BEAR INTEREST AT A RATE TO BE DETERMINED BY THE CITY COUNCIL BY RESOLUTION. Page 18 of 91 Ordinance 3072-2019 Page 16 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.210 DETERMINATION AS TO NEED FOR PUBLIC USE. (A) WHETHER LAND SHALL BE ACQUIRED, RETAINED, DEVOTED, OR DEDICATED TO A PUBLIC USE SHALL BE DETERMINED BY ORDINANCE WHICH SHALL CONTAIN THE PUBLIC USE FOR WHICH SAID PROPERTY IS TO BE DEDICATED, THE LEGAL DESCRIPTION OF THE PROPERTY, AND THE ADDRESS OR A GENERAL DESCRIPTION OF THE PROPERTY SUFFICIENT TO PROVIDE THE PUBLIC WITH NOTICE OF ITS LOCATION. (B) WHETHER LAND PREVIOUSLY DEDICATED TO A PUBLIC USE SHOULD BE DEDICATED TO A DIFFERENT PUBLIC USE OR SHOULD NO LONGER BE NEEDED BY THE CITY FOR PUBLIC USE SHALL BE DETERMINED BY THE CITY COUNCIL BY ORDINANCE WHICH SHALL CONTAIN THE NEW PUBLIC USE FOR WHICH SAID PROPERTY IS TO BE DEDICATED OR THE REASON THE LAND IS NO LONGER NEEDED FOR PUBLIC USE, THE LEGAL DESCRIPTION OF THE PROPERTY, AND THE ADDRESS OR A GENERAL DESCRIPTION OF THE PROPERTY SUFFICIENT TO PROVIDE THE PUBLIC W ITH NOTICE OF ITS LOCATION. 21.15.220 PROPERTY EXCHANGES. THE COUNCIL MAY APPROVE, BY RESOLUTION, AFTER PUBLIC NOTICE AND AN OPPORTUNITY FOR PUBLIC HEARING, THE CONVEYANCE AND EXCHANGE OF A PARCEL OF CITY PROPERTY FOR PROPERTY OWNED BY ANOTHER PERSON SUBJECT TO SUCH CONDITIONS AS COUNCIL MAY IMPOSE ON THE EXCHANGE, WHENEVER IN THE JUDGMENT OF THE CITY COUNCIL IT IS ADVANTAGEOUS TO THE CITY TO MAKE THE PROPERTY EXCHANGE AND THE CITY SHALL RECEIVE PROPERTY (INCLUDING A PORTION OF MONEY) AT LEAST EQUIVALENT TO THE VALUE OF THE PROPERTY EXCHANGED BY THE CITY. 21.15.230 PROPERTY SALE TO ADJACENT OWNERS. THE COUNCIL MAY APPROVE, BY RESOLUTION, AFTER PUBLIC NOTICE AND AN OPPORTUNITY FOR PUBLIC HEARING, THE SALE AND CONVEYANCE OF A PARCEL OF CITY PROPERTY AT ITS APPRAISED VALUE TO THE OWNER OF ADJACENT LAND WHENEVER, IN THE JUDGMENT OF THE CITY COUNCIL, THE PARCEL OF LAND IS OF SUCH SMALL SIZE, SHAPE, OR LOCATION THAT IT COULD NOT BE PUT TO PRACTICAL USE BY ANY OTHER PARTY AND, IN ADDITION THERETO, WHERE THERE IS NO FORESEEABLE NEED OF THE LAND FOR ANY FUTURE USE BY THE CITY. Page 19 of 91 Ordinance 3072-2019 Page 17 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 21.15.240 GRANT OR DEVOTION. (A) THE COUNCIL, BY ORDINANCE, MAY LEASE, GRANT OR DEVOTE REAL PROPERTY NO LONGER NEEDED BY THE CITY FOR A PUBLIC PURPOSE TO THE UNITED STATES, THE STATE OF ALASKA, A LOCAL POLITICAL SUBDIVISION OF THE STATE OF ALASKA (INCLUDING THE CITY OF KENAI GENERAL FUND), OR ANY AGENCY OF ANY OF THESE GOVERNMENTS OR NON-PROFIT CORPORATION, FOR A CONSIDERATION AGREED UPON BETWEEN THE CITY AND GRANTEE WITHOUT A PUBLIC SALE IF THE GRANT OR DEVOTION IS ADVANTAGEOUS TO THE CITY. (B) IN THE EVENT THE LAND DIRECTED TO BE CONVEYED UNDER SUBSECTION (A) OF THIS SECTION CONSISTS IN PART OR IN WHOLE OF AIRPORT LANDS, THEN THE ORDINANCE ORDERING ITS CONVEYANCE WILL NOT BE EFFECTIVE UNTIL THE CITY COUNCIL BY ORDINANCE HAS APPROPRIATED FROM THE GENERAL FUND TO BE DEDICATED TO THE AIRPORT THE DIFFERENCE BETWEEN THE APPRAISED FAIR MARKET VALUE OF SAID AIRPORT LANDS AND THE PURCHASE PRICE, IF ANY, SET FORTH IN SAID ORDINANCE. 21.15.250 USE PERMITS. THE COUNCIL MAY AUTHORIZE THE CITY MANAGER TO GRANT PERMITS FOR THE TEMPORARY USE OF REAL PROPERTY OWNED BY THE CITY FOR A PERIOD NOT TO EXCEED ONE (1) YEAR, WITHOUT APPRAISAL OF THE VALUE OF THE PROPERTY OR PUBLIC AUCTION, FOR ANY PURPOSE COMPATIBLE WITH THE ZONING OF THE LAND, AND ON SUCH TERMS AND FOR SUCH RENTALS AS THE COUNCIL SHALL DETERMINE. 21.15.260 ACQUISITION OF REAL PROPERTY. (A) THE CITY, BY AUTHORIZATION OF THE CITY COUNCIL, EXPRESSED IN A RESOLUTION FOR SUCH PURPOSE, MAY PURCHASE OR ACQUIRE AN INTEREST IN, OR LEASE REAL PROPERTY NEEDED FOR A PUBLIC USE WITHIN OR OUTSIDE THE AIRPORT RESERVE ON SUCH TERMS AND CONDITIONS AS THE COUNCIL SHALL DETERMINE, BUT NO PURCHASE SHALL BE MADE UNTIL A QUALIFIED APPRAISER HAS APPRAISED THE PROPERTY AND GIVEN THE COUNCIL AN INDEPENDENT OPINION AS TO THE FULL AND TRUE VALUE THEREOF; (B) BECAUSE OF THE UNIQUE VALUE OF REAL PROPERTY, THE CITY NEED NOT ACQUIRE OR LEASE REAL PROPERTY BY COMPETITIVE BIDDING. Section 3. Repealing, Renaming and Re-enacting Title 22 of the Kenai Municipal Code: That Kenai Municipal Code, Title 22 – General Fund Lands is hereby repealed, renamed, and re- enacted as follows: Page 20 of 91 Ordinance 3072-2019 Page 18 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] [TITLE 22 GENERAL FUND LANDS CHAPTER 22.05 DISPOSITION OF CITY GENERAL FUND LANDS 22.05.010 POWER TO DISPOSE OF REAL PROPERTY. (A) THE PROVISIONS OF THIS CHAPTER APPLY TO GENERAL FUND REAL PROPERTY. (B) THE CITY MAY SELL, CONVEY, EXCHANGE, TRANSFER, DONATE, DEDICATE, DIRECT, OR ASSIGN TO USE, OR OTHERWISE DISPOSE OF CITY-OWNED REAL PROPERTY, INCLUDING PROPERTY ACQUIRED, HELD FOR, OR DEVOTED TO A PUBLIC USE, ONLY IN ACCORDANCE WITH THIS CHAPTER, AND, WITH RESPECT TO PROPERTIES ACQUIRED THROUGH FORECLOSURE FOR TAXES, IN COMPLIANCE WITH THOSE TERMS AND PROVISIONS OF AS 29 Which Home-Rule Municipalities Are Required To Comply With. DISPOSAL OR SALE OF LANDS SHALL BE MADE ONLY WHEN, IN THE JUDGMENT OF THE CITY COUNCIL, SUCH LANDS ARE NOT REQUIRED FOR A PUBLIC PURPOSE. 22.05.015 SALE OR DISPOSAL. THE CITY MAY SELL OR DISPOSE OF REAL PROPERTY BY WARRANTY OR QUIT-CLAIM DEED, EASEMENT, LEASE, GRANT, PERMIT, LICENSE, DEED OF TRUST, MORTGAGE CONTRACT OF SALE OF REAL PROPERTY, PLAT DEDICATION, TAX DEED, OR ANY OTHER LAWFUL METHOD OR MODE OF CONVEYANCE OR GRANT. ANY INSTRUMENT REQUIRING EXECUTION BY THE CITY SHALL BE SIGNED BY THE CITY MANAGER AND ATTESTED BY THE CITY CLERK. THE FORM OF ANY INSTRUMENT SHALL BE APPROVED BY THE CITY ATTORNEY. 22.05.020 QUALIFICATIONS OF APPLICANTS OR BIDDERS. AN APPLICANT OR BIDDER FOR A LEASE IS QUALIFIED IF THE APPLICANT OR BIDDER: (A) IS AN INDIVIDUAL AT LEAST EIGHTEEN (18) YEARS OF AGE OR OVER; OR (B) IS A GROUP, ASSOCIATION, OR CORPORATION WHICH IS AUTHORIZED TO CONDUCT BUSINESS UNDER THE LAWS OF ALASKA; OR (C) IS ACTING AS AN AGENT FOR ANOTHER AND HAS QUALIFIED BY FILING WITH THE CITY MANAGER A PROPER POWER OF ATTORNEY OR A LETTER OF AUTHORIZATION CREATING SUCH AGENCY. THE AGENT SHALL REPRESENT ONLY ONE (1) PRINCIPAL TO THE EXCLUSION OF HIMSELF OR HERSELF. THE TERM “AGENT” INCLUDES REAL ESTATE BROKERS AND AGENTS. Page 21 of 91 Ordinance 3072-2019 Page 19 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 22.05.025 APPLICATIONS. (A) ALL APPLICATIONS FOR LEASE OF LANDS SHALL BE FILED WITH THE CITY MANAGER ON FORMS PROVIDED BY THE CITY AVAILABLE AT CITY HALL. APPLICATIONS SHALL BE DATED ON RECEIPT AND PAYMENT OF FILING FEE AND DEPOSIT. NO APPLICATION WILL BE ACCEPTED BY THE CITY MANAGER UNLESS IT APPEARS TO THE CITY MANAGER TO BE COMPLETE. FILING FEES ARE NOT REFUNDABLE. (B) WITH EVERY APPLICATION, THE APPLICANT SHALL SUBMIT A DEVELOPMENT PLAN, SHOWING AND STATING: (1) THE PURPOSE OF THE PROPOSED LEASE; (2) THE USE, VALUE AND NATURE OF IMPROVEMENTS TO BE CONSTRUCTED; (3) THE TYPE OF CONSTRUCTION; (4) THE DATES CONSTRUCTION IS ESTIMATED TO COMMENCE AND BE COMPLETED (ORDINARILY A MAXIMUM OF TWO (2) YEARS); AND (5) WHETHER INTENDED USE COMPLIES WITH THE ZONING ORDINANCE AND COMPREHENSIVE PLAN OF THE CITY. APPLICATIONS SHALL BECOME A PART OF THE LEASE. 22.05.030 FILING FEE AND DEPOSIT. (A) WHEN SUBMITTING AN APPLICATION FOR LEASE OF LAND, THE APPLICANT SHALL PAY THE CITY THE FOLLOWING AS SET FORTH IN THE CITY’S SCHEDULE OF FEES ADOPTED BY THE CITY COUNCIL: (1) PAY A NON-REFUNDABLE FILING FEE IN THE AMOUNT; AND (2) A DEPOSIT TO SHOW GOOD FAITH AND SECURE THE CITY IN PAYMENT OF ANY COSTS, INCLUDING: (A) AN APPRAISAL COST RECOVERY DEPOSIT; AND (B) AN ENGINEERING, SURVEYING AND CONSULTING COST RECOVERY DEPOSIT. (B) IF THE CITY DECIDES TO REJECT THE APPLICANT’S APPLICATION AND NOT ENTER INTO A LEASE WITH THE APPLICANT THROUGH NO FAULT OF THE APPLICANT OR FAILURE OF THE APPLICANT TO COMPLY WITH ANY REQUIREMENT OF THIS CHAPTER, ANY DEPOSIT MADE UNDER SUBSECTION (A)(2) OF THIS SECTION WILL BE RETURNED TO THE APPLICANT. (C) IF THE CITY ENTERS INTO A LEASE WITH THE APPLICANT ANY DEPOSIT MADE BY THE APPLICANT UNDER SUBSECTION (A)(2) OF THIS SECTION WILL BE APPLIED TO THE CITY’S ENGINEERING, APPRAISAL, AND CONSULTING COSTS RELATED TO THE PROCESSING OF THE APPLICANT’S APPLICATION AND ENTERING INTO THE Page 22 of 91 Ordinance 3072-2019 Page 20 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] LEASE. THE CITY WILL APPLY ANY UNUSED BALANCE OF A DEPOSIT TO THE RENT PAYABLE UNDER THE LEASE. IF THE CITY’S COSTS EXCEED THE AMOUNT OF ANY DEPOSIT, THE APPLICANT SHALL PAY THE SHORTAGE TO THE CITY AS A CONDITION OF THE LEASE. (D) IF THE APPLICANT FAILS TO COMPLY WITH ANY REQUIREMENT OF THIS CHAPTER, CAUSES INORDINATE DELAY, AS DETERMINED BY THE CITY MANAGER, OR REFUSES TO SIGN A LEASE OFFERED TO THE APPLICANT, THE CITY MANAGER WILL REJECT THE APPLICANT’S APPLICATION AND APPLY ANY DEPOSIT MADE BY THE APPLICANT UNDER SUBSECTION (A) OF THIS SECTION TO THE CITY’S APPRAISAL, ENGINEERING, AND CONSULTING COSTS INCURRED IN CONNECTION WITH THE APPLICANT’S APPLICATION. IF THE CITY’S COSTS FOR APPRAISAL, ENGINEERING AND CONSULTING COSTS EXCEED THE DEPOSITS, THE APPLICANT WILL BE RESPONSIBLE FOR THESE COSTS. THE CITY WILL RETURN ANY UNUSED DEPOSIT BALANCE TO THE APPLICANT. 22.05.035 RIGHTS PRIOR TO LEASING. THE FILING OF AN APPLICATION FOR A LEASE SHALL GIVE THE APPLICANT NO RIGHT TO LEASE OR TO THE USE OF THE LAND FOR WHICH THEY HAVE APPLIED. THE APPLICATION SHALL EXPIRE WITHIN TWELVE (12) MONTHS AFTER THE APPLICATION HAS BEEN MADE IF A LEASE HAS NOT BEEN ENTERED INTO BETWEEN THE CITY AND THE APPLICANT BY THAT TIME UNLESS THE CITY COUNCIL FOR GOOD CAUSE GRANTS AN EXTENSION. NO EXTENSION MAY BE GRANTED FOR A PERIOD LONGER THAN SIX (6) ADDITIONAL MONTHS. LEASE RATES ARE SUBJECT TO CHANGE ON THE BASIS OF AN APPRAISAL DONE EVERY TWELVE (12) MONTHS ON THE PROPERTY APPLIED FOR. 22.05.040 PROCESSING PROCEDURE. (A) APPLICATIONS SHALL BE FORWARDED TO THE PLANNING AND ZONING COMMISSION UPON RECEIPT. THE PLANNING AND ZONING COMMISSION SHALL NORMALLY CONSIDER APPLICATIONS FOR SPECIFIC LANDS ON A FIRST-COME, FIRST-SERVED BASIS IF THE COMMISSION FINDS THAT THE APPLICATION IS COMPLETE AND CONFORMS TO THE COMPREHENSIVE PLAN AND THE KENAI ZONING CODE. WHERE THERE IS DIFFICULTY IN OBTAINING A PERFECTED APPLICATION, DETAILS AS TO DEVELOPMENT PLANS, ETC., OR WHERE THE APPLICANT FAILS TO COMPLY WITH DIRECTIONS OR REQUESTS OF THE PLANNING AND ZONING COMMISSION, ANY SUCH PRIORITY WILL BE LOST. IF AN APPLICATION FOR THE PURCHASE OF CITY-OWNED LANDS, PREVIOUSLY AUTHORIZED FOR SALE BY THE COUNCIL, IS RECEIVED BY THE CITY PRIOR TO THE KENAI PLANNING AND ZONING COMMISSION MAKING AN AFFIRMATIVE OR NEGATIVE RECOMMENDATION Page 23 of 91 Ordinance 3072-2019 Page 21 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] TO THE COUNCIL REGARDING THE LEASE APPLICATION FOR THE SAME PROPERTY, THE CITY MAY ELECT TO SELL THE PROPERTY IN ACCORDANCE WITH THE PROVISIONS OF THE CODE. (B) THE CITY COUNCIL SHALL NORMALLY CONSIDER A LEASE PROPOSAL ONLY AFTER APPROVAL OF THE PLANNING AND ZONING COMMISSION. HOWEVER, APPEALS OF PLANNING AND ZONING COMMISSION DISAPPROVAL MAY BE MADE TO THE CITY COUNCIL. COMPLETED LEASE APPLICATIONS MUST BE PRESENTED TO THE CITY COUNCIL WITHIN THIRTY (30) DAYS AFTER APPROVAL BY THE PLANNING AND ZONING COMMISSION. (C) WHERE THERE ARE TWO (2) OR MORE APPLICATIONS FOR THE SAME LANDS FOR DIFFERENT USES, THEN IF THE PLANNING AND ZONING COMMISSION MAKES A FINDING THAT A SUBSEQUENT APPLICATION WOULD RESULT IN USE OF THE LANDS FOR A HIGHER AND BETTER PURPOSE WITH A GREATER BENEFIT TO THE CITY OF KENAI AND THE CITIZENS THEREOF, THEN THE LEASE MAY BE ISSUED TO SUCH APPLICANT NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (A) IN THIS SECTION WHICH PROVIDE FOR LEASING ON A FIRST-COME, FIRST-SERVED BASIS. ANY APPLICANT MAY APPEAL TO THE CITY COUNCIL FROM A FINDING OR A REFUSAL TO FIND BY THE PLANNING AND ZONING COMMISSION BY FILING AN APPEAL WITH THE CITY CLERK WITHIN SEVEN (7) DAYS AFTER THE FINDING IS MADE OR REFUSED BY THE PLANNING AND ZONING COMMISSION. (D) THE DECISION WHETHER OR NOT TO LEASE LAND RESTS IN THE SOLE DISCRETION OF THE CITY COUNCIL. 22.05.045 REVIEW. NO LEASED LAND MAY BE CHANGED IN USE, NOR MAY ANY RENEWAL LEASE BE ISSUED UNTIL THE PROPOSED USE OR RENEWAL HAS BEEN REVIEWED BY THE PLANNING COMMISSION AND APPROVED BY THE COUNCIL. 22.05.050 APPRAISAL. NO LAND SHALL BE SOLD, LEASED, OR A RENEWAL OF LEASE ISSUED, UNLESS THE SAME HAS BEEN APPRAISED WITHIN A TWELVE (12) MONTH PERIOD PRIOR TO THE SALE OR DATE FIXED FOR BEGINNING OF THE TERM OF THE LEASE OR RENEWAL LEASE. NO LAND SHALL BE LEASED FOR LESS THAN THE APPROVED APPRAISED ANNUAL RENTAL. APPRAISALS SHALL REFLECT THE NUMBER AND VALUE OF CITY SERVICES RENDERED THE LAND IN QUESTION. Page 24 of 91 Ordinance 3072-2019 Page 22 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 22.05.055 TERMS OF LEASE. ALL LEASES SHALL BE APPROVED BY THE CITY COUNCIL BEFORE THE SAME SHALL BECOME EFFECTIVE. THE TERM OF ANY GIVEN LEASE SHALL DEPEND UPON THE DURABILITY OF THE PROPOSED USE, THE AMOUNT OF INVESTMENT IN IMPROVEMENT PROPOSED AND MADE, AND THE NATURE OF THE IMPROVEMENT PROPOSED WITH RESPECT TO DURABILITY AND TIME REQUIRED TO AMORTIZE THE PROPOSED INVESTMENT. (ORD. 2200-2006) 22.05.060 ANNUAL MINIMUM RENTAL. (A) ANNUAL MINIMUM RENTALS SHALL BE COMPUTED FROM THE APPROVED APPRAISED MARKET VALUE UTILIZING THE METHOD AS DESCRIBED IN KMC 22.05.070 OF THIS CHAPTER. (B) UPON EXECUTION OF THE LEASE, THE LANDS BECOME TAXABLE TO THE EXTENT OF ITS LEASEHOLD INTEREST AND LESSEE SHALL PAY ALL REAL PROPERTY TAXES LEVIED UPON SUCH LEASEHOLD INTEREST IN THESE LANDS, AND SHALL PAY ANY SPECIAL ASSESSMENTS AND TAXES AS IF HE OR SHE WERE THE OWNER OF THE LAND. (C) RENT SHALL BE PAID ANNUALLY IN ADVANCE. PAYMENTS SHALL BE PRORATED TO CONFORM TO THE CITY OF KENAI’S FISCAL YEAR BEGINNING JULY 1ST AND ENDING JUNE 30TH. IF THE EQUIVALENT MONTHLY PAYMENT EXCEEDS TWO HUNDRED DOLLARS ($200.00), THEN THE LESSEE SHALL HAVE THE OPTION OF MAKING PAYMENTS ON A MONTHLY BASIS. (D) LESSEE SHALL BE RESPONSIBLE FOR ALL SALES TAXES APPLICABLE TO ITS OPERATIONS. 22.05.065 BIDDING PROCEDURE. AS AN EXCEPTION TO GENERAL POLICY LISTED ABOVE, THE CITY COUNCIL MAY DESIGNATE A SPECIFIC LOT OR LOTS TO BE MADE AVAILABLE ONLY FOR BID. THIS PROVISION SHALL APPLY ONLY WHEN THERE IS NO OUTSTANDING APPLICATION PENDING ON THE LOT OR LOTS. AS DESIGNATED, SEALED BIDS SHALL BE RECEIVED OFFERING A ONE (1) TIME PREMIUM IN ADDITION TO THE ESTABLISHED LEASE RATE. HIGHEST BID, HOWEVER, SHALL BE SUBJECT TO ALL PROVISIONS OF REVIEW AND APPROVAL ESTABLISHED FOR ALL OTHER LEASE APPLICATIONS. 22.05.070 PRINCIPLES AND POLICY OF LEASE RATES. (A) A FAIR RETURN TO THE GENERAL FUND IS THE POLICY OF THE CITY, UNLESS DEVIATION FROM THAT POLICY IS IN THE BEST INTEREST OF THE CITY AS DETERMINED BY THE CITY COUNCIL. TO ENSURE A FAIR RETURN, ALL LEASES FOR Page 25 of 91 Ordinance 3072-2019 Page 23 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] A PERIOD IN EXCESS OF FIVE (5) YEARS SHALL INCLUDE A REDETERMINATION CLAUSE AS OF THE FIFTH ANNIVERSARY OF THE LEASE AND EVERY FIVE (5) YEARS THEREAFTER, AND ALL LANDS FOR LEASE SHALL BE APPRAISED PRIOR TO LEASE AND AGAIN PRIOR TO REDETERMINATION. LEASE RATES: (1) SHALL BE BASED ON FAIR MARKET VALUE OF THE LAND, INCLUDING AN APPROPRIATE CONSIDERATION OF FACILITIES AND SERVICES AVAILABLE (PUBLIC WATER, PUBLIC SEWER, STORM SEWERS, AND OTHER PUBLIC UTILITIES) AS DETERMINED BY A QUALIFIED INDEPENDENT APPRAISER, CONSIDERING THE BEST USE OF THE SPECIFIED LAND; AND (2) SHALL BE EIGHT PERCENT (8%) OF FAIR MARKET VALUE. (B) FOR LEASES IN EXISTENCE PRIOR TO THE EFFECTIVE DATE OF THE ORDINANCE CODIFIED IN THIS CHAPTER, THE LEASE RATE REDETERMINATION SHALL BE AS PROVIDED IN THE LEASE. (C) THE CITY MANAGER SHALL CHANGE THE RENT IN A LEASE BY GIVING THE LESSEE WRITTEN NOTICE AT LEAST THIRTY (30) DAYS IN ADVANCE OF THE EFFECTIVE DATE OF THE CHANGE. (D) THE “FAIR MARKET VALUE” OF THE PREMISES SHALL BE EQUAL TO THE THEN FAIR MARKET RATE FOR SIMILAR COMMERCIAL PROPERTY IN THE CITY OF KENAI, ALASKA (THE “RELEVANT AREA”). CITY SHALL GIVE NOTICE TO LESSEE OF CITY’S ESTIMATION OF THE FAIR MARKET VALUE NOT LATER THAN THIRTY (30) DAYS PRIOR TO THE EXPIRATION OF THE THEN-APPLICABLE FIVE (5) YEAR PERIOD, AS EVIDENCED AND SUPPORTED BY THE WRITTEN OPINION OF AN INDEPENDENT REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87, SELECTED AND PAID FOR BY THE CITY, FAMILIAR WITH THE RELEVANT AREA (THE “FIRST APPRAISER”). IF LESSEE DISAGREES WITH SUCH ESTIMATE, IT SHALL ADVISE THE CITY IN WRITING THEREOF WITHIN THIRTY (30) DAYS OF LESSEE’S RECEIPT OF SUCH ESTIMATE, AS EVIDENCED AND SUPPORTED BY THE WRITTEN OPINION OF A REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 (SELECTED AND PAID FOR BY LESSEE) FAMILIAR WITH THE RELEVANT AREA (THE “SECOND APPRAISER”). THE PARTIES SHALL PROMPTLY MEET TO ATTEMPT TO RESOLVE THEIR DIFFERENCES BETWEEN THE FIRST APPRAISER AND THE SECOND APPRAISER CONCERNING THE FAIR MARKET VALUE OF THE PREMISES. IF CITY AND LESSEE CANNOT AGREE UPON SUCH VALUE THEN, WITH ALL DELIBERATE SPEED, THEY SHALL DIRECT THE FIRST APPRAISER AND THE SECOND APPRAISER TO EXPEDITIOUSLY AND MUTUALLY SELECT A THIRD REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 (SELECTED AND PAID FOR JOINTLY BY THE PARTIES) FAMILIAR WITH THE RELEVANT AREA (THE “THIRD APPRAISER”). WITHIN THIRTY (30) DAYS AFTER THE THIRD APPRAISER HAS BEEN APPOINTED, Page 26 of 91 Ordinance 3072-2019 Page 24 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] THE THIRD APPRAISER SHALL DECIDE WHICH OF THE TWO (2) RESPECTIVE APPRAISALS FROM THE FIRST APPRAISER AND THE SECOND APPRAISER MOST CLOSELY REFLECTS THE FAIR MARKET VALUE OF THE PREMISES. THE FAIR MARKET VALUE OF THE PREMISES SHALL IRREBUTTABLY BE PRESUMED TO BE THE VALUE CONTAINED IN SUCH APPRAISAL SELECTED BY THE THIRD APPRAISER, AND THE RENTAL SHALL BE REDETERMINED BASED ON SUCH VALUE. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, RENTAL SHALL CONTINUE TO BE PAID AT THE THEN-APPLICABLE RATE UNTIL ANY SUCH NEW RENTAL RATE IS ESTABLISHED, AND LESSEE AND CITY SHALL PROMPTLY PAY OR REFUND, AS THE CASE MAY BE, ANY VARIANCE IN THE RENTAL, WITHOUT INTEREST THEREON ACCRUING TO THE EXTENT TO PAID/REFUNDED IN A TIMELY FASHION. 22.05.075 REIMBURSEMENT FOR CITY-CONSTRUCTED IMPROVEMENTS. (A) THE CITY MANAGER MAY INCLUDE IN A LEASE A REQUIREMENT FOR THE LESSEE TO REIMBURSE THE CITY FOR THE CITY’S COST OF: (1) LAND CLEARING, GRAVEL FILL, UTILITY EXTENSIONS AND OTHER IMPROVEMENTS OR AMENITIES ON OR IN DIRECT CONNECTION WITH THE PREMISES, CONSTRUCTED BY THE CITY PRIOR TO THE EFFECTIVE DATE OF THE LEASE; OR (2) LAND CLEARING, GRAVEL FILL, UTILITY EXTENSIONS AND OTHER IMPROVEMENTS OR AMENITIES ON OR IN DIRECT CONNECTION WITH THE PREMISES, WHICH THE CITY AGREES TO CONSTRUCT AS A CONDITION OF THE LEASE, SUBJECT TO CITY COUNCIL APPROVAL. (B) THE LESSEE SHALL REIMBURSE THE CITY FOR THE CITY’S COST OF CONSTRUCTING THE IMPROVEMENTS IN TEN (10) EQUAL ANNUAL PAYMENTS, PLUS INTEREST AT EIGHT PERCENT (8%) PER YEAR ON THE UNPAID BALANCE. IF THE LEASE IS FOR LESS THAN TEN (10) YEARS, THE REPAYMENT SCHEDULE MAY NOT BE LONGER THAN THE TERM OF THE LEASE. THE LESSEE MAY PAY THE ENTIRE REMAINING BALANCE TO THE CITY AT ANY TIME DURING THE TERM OF THE LEASE. 22.05.080 LEASE EXECUTION. THE LEASE APPLICANT SHALL EXECUTE AND RETURN THE APPROPRIATE LEASE AGREEMENT WITH THE CITY OF KENAI WITHIN THIRTY (30) DAYS OF MAILING THE AGREEMENT TO THE APPLICANT. THE LEASE AGREEMENT SHALL BE PREPARED IN ACCORDANCE WITH THE REQUIREMENTS OF THIS TITLE. FAILURE TO EXECUTE AND Page 27 of 91 Ordinance 3072-2019 Page 25 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] RETURN THE LEASE AGREEMENT WITHIN THE SPECIFIED PERIOD SHALL RESULT IN THE FORFEITURE OF ALL LEASING RIGHTS. 22.05.085 LEASE UTILIZATION. LEASED LANDS SHALL BE UTILIZED FOR PURPOSES WITHIN THE SCOPE OF THE APPLICATION, THE TERMS OF THE LEASE AND IN CONFORMITY WITH THE ORDINANCES OF THE CITY, AND IN SUBSTANTIAL CONFORMITY WITH THE COMPREHENSIVE PLAN. UTILIZATION OR DEVELOPMENT FOR OTHER THAN THE ALLOWED USES SHALL CONSTITUTE A VIOLATION OF THE LEASE AND SUBJECT THE LEASE TO CANCELLATION AT ANY TIME. FAILURE TO SUBSTANTIALLY COMPLETE THE DEVELOPMENT PLAN FOR THE LAND SHALL CONSTITUTE GROUNDS FOR CANCELLATION. 22.05.090 CONVEYANCE TO ENCOURAGE NEW ENTERPRISES. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS CHAPTER, WHERE IT IS FOUND THAT ENCOURAGEMENT OF A NEW COMMERCIAL OR INDUSTRIAL ENTERPRISE WOULD BE BENEFICIAL TO THE CITY OF KENAI, THE CITY COUNCIL BY ORDINANCE SO FINDING MAY DIRECT CONVEYANCE OF ONE OR MORE PARCELS OF CITY LAND BY THE CITY MANAGER TO SUCH ENTERPRISE UPON SUCH TERMS AS TO PRICE, CONDITIONS OF CONVEYANCE, AND WITH SUCH CONTINGENCIES AS MAY BE SET FORTH IN THE ORDINANCE. 22.05.095 SALE. (A) LANDS, TO WHICH THE CITY OF KENAI HOLDS TITLE WHICH ARE NOT RESTRICTED FROM SALE BY THE DEED OF CONVEYANCE TO THE CITY, OR WHICH HAVE BEEN RELEASED FROM SUCH RESTRICTIONS, WHICH THE CITY COUNCIL HAS DETERMINED ARE NOT REQUIRED FOR A PUBLIC PURPOSE, MAY BE LISTED FOR SALE BY THE CITY MANAGER, EXCEPT THAT LANDS WHICH HAVE BEEN LEASED SHALL NOT BE SOLD UNLESS THE LESSEE HAS MADE A WRITTEN REQUEST TO THE CITY TO PLACE THE LAND FOR SALE. (B) SALES OF LAND PURSUANT TO SUBSECTION (A) OF THIS SECTION SHALL BE MADE AT NOT LESS THAN FAIR MARKET VALUE. THE PURCHASER SHALL EXECUTE THE “AGREEMENT FOR SALE OF LAND” WITHIN ONE (1) YEAR OF THE DATE OF APPRAISAL. THE CITY MANAGER HAS THE OPTION TO DISPOSE OF SUCH PROPERTIES IN ACCORDANCE WITH THE SALE PROCEDURES SET OUT IN THIS TITLE: (1) BY NEGOTIATED SALE; OR (2) BY OUTCRY AUCTION TO THE HIGHEST RESPONSIBLE BIDDER; OR (3) BY COMPETITIVE SEALED BIDS TO THE HIGHEST RESPONSIBLE BIDDER. Page 28 of 91 Ordinance 3072-2019 Page 26 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] IN THE EVENT THAT THE SALE IS NOT CLOSED WITHIN SIX (6) MONTHS OF THE DATE OF APPRAISAL, THE BUYER WILL BE CHARGED, UPON CLOSING, INTEREST COMPUTED IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE KENAI MUNICIPAL CODE, BASED UPON THE TOTAL SALES PRICE FOR THE NUMBER OF DAYS PAST THE EXPIRATION OF THE SIX (6) MONTH PERIOD. 22.05.100 SALE PROCEDURE. (A) THE CITY MANAGER WILL OBTAIN SUCH AN APPRAISAL FOR A DETERMINATION OF THE MINIMUM PRICE ON THE LAND. (B) WHERE ANY PARTY, HEREINAFTER CALLED “APPLICANT,” REQUESTS THAT A TRACT OR TRACTS OF LAND BE SOLD FOR W HICH AN APPRAISAL WILL BE REQUIRED, WHICH WILL REQUIRE SUBDIVIDING, PLATTING, OR SURVEYING AND STAKING, OR WHICH WILL REQUIRE ADVERTISING OR INCURRING ANY OTHER EXPENDITURES BY THE CITY PRIOR TO SALE. (1) NO ACTIONS IN PREPARATION FOR SALE WILL BE TAKEN BY THE CITY UNTIL AN AGREEMENT TO PURCHASE SHALL BE PROPERLY EXECUTED AND FILED WITH THE CITY MANAGER FOR THE PURCHASE OF SUCH LAND WITH PAYMENT OF SUFFICIENT GOOD FAITH DEPOSIT, WHICH SHALL CONSIST OF CASH OR ITS EQUIVALENT DEPOSITED WITH THE FINANCE OFFICER OF THE CITY OF KENAI, AS MAY BE DETERMINED BY THE CITY MANAGER, TO COVER ALL EXPENSES OF THE CITY AND SUCH AGREEMENT TO PURCHASE SHALL FURTHER CONTAIN THE AGREEMENT BY APPLICANT TO PAY ANY ADDITIONAL COSTS IF SAID GOOD FAITH DEPOSIT IS INSUFFICIENT TO PAY ALL COSTS INCURRED BY THE CITY. (2) IF AT ANY TIME DURING THE PROCESS OF PREPARING FOR SALE, THE APPLICANT GIVES NOTICE TO THE CITY MANAGER OF WITHDRAWAL OF THE REQUEST FOR SALE, THE CITY MANAGER SHALL STOP ALL PROCEDURES, SHALL PAY EXPENSES INCURRED PRIOR TO TERMINATION OF SALE PROCEDURES, AND SHALL REIMBURSE APPLICANT FOR ANY GOOD FAITH DEPOSIT ADVANCED IN EXCESS OF ALL EXPENSES INCURRED. (HOWEVER, IF ANOTHER PARTY DESIRES THE SALE TO PROCEED, FILES AN APPLICATION FOR SALE, EXECUTES AND FILES AN AGREEMENT TO PURCHASE, AND ADVANCES SUFFICIENT FUNDS THEREFOR, THEN THE PRIOR APPLICANT WILL BE REIMBURSED FOR EXPENSES CHARGES WHICH CAN BE ATTRIBUTED TO THE SUBSEQUENT APPLICANT.) (3) IF ALL ACTIONS NECESSARY FOR PREPARATION FOR SALE HAVE BEEN ACCOMPLISHED, AND IF NEITHER THE APPLICANT NOR ANY OTHER PARTY PURCHASES SAID LAND WHEN FIRST OFFERED FOR SALE AFTER SUCH Page 29 of 91 Ordinance 3072-2019 Page 27 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] REQUEST, THEN ALL EXPENSES INCURRED IN PREPARATION FOR THE SALE WILL BE PAID FROM THE GOOD FAITH DEPOSIT, AND THE BALANCE, IF ANY, SHALL BE RETURNED TO THE APPLICANT. IF THE SUMS ADVANCED AS GOOD FAITH DEPOSIT ARE INSUFFICIENT TO PAY All Of THE COSTS, THE APPLICANT WILL BE BILLED FOR THE BALANCE DUE AND NORMAL COLLECTION PROCEDURES FOLLOWED. (4) IF THE LAND APPLIED FOR IS SOLD ON PUBLIC SALE SET IN RESPONSE TO SUCH REQUEST TO ANYONE OTHER THAN APPLICANT, THEN ON CLOSING OF THE SALE, THE GOOD FAITH DEPOSIT WILL BE REFUNDED IN TOTAL TO THE APPLICANT. THE CITY’S EXPENSES WILL BE FIRST DEDUCTED FROM THE DEPOSIT OF THE SUCCESSFUL BIDDER. (5) IF THE LAND IN QUESTION IS SOLD TO APPLICANT, THE GOOD FAITH DEPOSIT ADVANCED, AFTER DEDUCTING THE CITY’S EXPENSES, WILL BE APPLIED ON THE PAYMENT DUE AT CLOSING. (6) IF THE LAND IN QUESTION IS TO BE SOLD BY SEALED BID AND THE APPLICANT HAS SUBMITTED A VALID BID, BUT THE APPLICANT IS NOT THE HIGH BIDDER, HE OR SHE MAY PURCHASE THE LAND BY TENDERING THE CITY A BID EQUAL TO THE HIGH BID WITHIN FIVE (5) DAYS OF THE BID OPENING. IF THE LAND SALE IS INITIATED IN ACCORDANCE WITH KMC 22.05.040(A), THE APPLICANT SHALL BE DEFINED AS THAT PARTY SUBMITTING THE INITIAL LEASE APPLICATION. (C) IF THE TRACT OF LAND PROPOSED TO BE SOLD IS LEASED LAND, THE LESSEE MAY REQUEST THE SALE OF THE LAND AT NOT LESS THAN THE FAIR MARKET VALUE. THE CURRENT LESSEE OBTAINS THIS RIGHT TO REQUEST A SALE ONLY AFTER, TO THE SATISFACTION OF THE CITY MANAGER, DEVELOPMENT HAS BEEN COMPLETED AS DETAILED IN THE DEVELOPMENT SCHEDULE WHICH HAS BEEN INCORPORATED INTO THE LEASE AGREEMENT. IF THERE IS NO DEVELOPMENT SCHEDULE, THE LESSEE MAY PURCHASE THE PROPERTY IF THERE HAVE BEEN SUBSTANTIAL IMPROVEMENTS AS DETERMINED BY THE CITY MANAGER. THE DECISION WHETHER OR NOT TO SELL THE LAND TO THE LESSEE RESTS WITH THE SOLD DISCRETION OF THE CITY. (D) IF THE TRACT OF LAND PROPOSED TO BE SOLD IS NOT LEASED LAND, OR IS LEASED LAND WITHOUT SUBSTANTIAL IMPROVEMENTS, THEN THE TRACT OF LAND MAY ONLY BE SOLD BY OUTCRY AUCTION OR BY COMPETITIVE SEALED BIDS. IF THE TRACT IS TO BE PUT UP FOR SUCH COMPETITIVE AUCTION OR SEALED BID SALE, NOTICE OF SALE AND THE MANNER IN WHICH THE LAND IS TO BE SOLD SHALL BE PUBLISHED IN A NEWSPAPER OF GENERAL CIRCULATION WITHIN THE CITY ONCE EACH WEEK FOR TWO (2) SUCCESSIVE WEEKS NOT LESS THAN THIRTY Page 30 of 91 Ordinance 3072-2019 Page 28 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (30) DAYS PRIOR TO THE DATE OF SALE; SUCH NOTICE SHALL ALSO BE POSTED IN AT LEAST THREE (3) PUBLIC PLACES WITHIN THE CITY AT LEAST THIRTY (30) DAYS PRIOR TO THE DATE OF SALE, AND SUCH OTHER NOTICE MAY BE GIVEN BY SUCH OTHER MEANS AS MAY BE CONSIDERED ADVISABLE BY THE CITY MANAGER. SUCH NOTICE MUST CONTAIN: (1) THE LEGAL DESCRIPTION OF THE LAND; (2) A BRIEF PHYSICAL DESCRIPTION OF THE LAND; (3) THE AREA AND GENERAL LOCATION OF THE LAND; (4) THE MINIMUM ACCEPTABLE OFFER FOR THE LAND (WHICH SHALL BE ITS APPRAISED FAIR MARKET VALUE); (5) THE TERMS UNDER WHICH THE LAND WILL BE SOLD; (6) ANY LIMITATIONS ON THE SALE OF THE LAND; (7) THE TIME AND PLACE SET FOR THE AUCTION OR BID OPENING; (8) THE AMOUNT OF DEPOSIT TO BE SUBMITTED WITH EACH BID IN ORDER TO COVER THE CITY’S EXPENSES SUCH AS SURVEY, APPRAISAL, AND REVIEWS; (9) ANY OTHER MATTERS CONCERNING THE SALE OF WHICH THE CITY MANAGER BELIEVES THE PUBLIC SHOULD BE INFORMED. (E) IF NO OFFERS ARE SUBMITTED MEETING THE MINIMUM ACCEPTABLE OFFER (OR APPRAISED VALUATION), THE CITY MANAGER MAY NEGOTIATE FOR SALE OF THE TRACT OR TRACTS OF LAND WITH A MODIFICATION OF PROPOSED TERMS OR FOR LESS THAN THE APPRAISED VALUATION PROVIDED THAT NO SUCH NEGOTIATED SALE FOR LESS THAN APPRAISED VALUE SHALL BE BINDING UPON THE CITY UNLESS THE TERMS AND PRICE THEREIN ARE APPROVED BY RESOLUTION OF THE CITY COUNCIL. (F) WHERE A REAL ESTATE AGENT FURNISHES A BUYER FOR CITY LAND, THE CLOSING AGENT SHALL BE AUTHORIZED TO PAY THE AGENT A REAL ESTATE COMMISSION OF FIVE PERCENT (5%) OF THE PURCHASE PRICE FOR THE LAND OR FIVE PERCENT (5%) OF THE APPRAISED FAIR MARKET VALUE OF THE LAND, WHICHEVER IS LOWER, UNDER THE FOLLOWING TERMS AND CONDITIONS: (1) THE CITY MANAGER SHALL PROVIDE A NON-EXCLUSIVE LISTING OF LANDS AVAILABLE FOR SALE. (2) NO COMMISSION SHALL BE PAID TO AN AGENT WHERE THE AGENT IS A PARTY, OR IN PRIVITY WITH A PARTY, TO THE SALE. (G) CLOSING OF SALE OF CITY LANDS SHALL BE HANDLED BY A TITLE OR ESCROW COMPANY. (H) CONVEYANCE OF CITY LANDS SHALL BE BY QUIT CLAIM OR WARRANTY DEED FURNISHED BY THE CITY, AND BUYERS ARE ADVISED THAT ALL SUCH CONVEYANCES ARE SUBJECT TO ALL LIENS, ENCUMBRANCES, RESTRICTIONS, Page 31 of 91 Ordinance 3072-2019 Page 29 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] AND COVENANTS OF RECORD AND ARE SPECIFICALLY, WITHOUT BEING LIMITED THERETO, SUBJECT TO ANY UNRELEASED RESTRICTIONS CONTAINED IN THE DEED OR DEEDS BY WHICH THE CITY RECEIVED TITLE TO THE LAND. (I) IF A BUYER DESIRES TO OBTAIN A PRELIMINARY COMMITMENT FOR TITLE INSURANCE OR TITLE INSURANCE TO THE LAND, THEN IT SHALL BE THE RESPONSIBILITY OF THE BUYER TO OBTAIN SUCH COMMITMENT OR INSURANCE AND TO PAY FOR THE SAME. (J) IF THE TRACT OR TRACTS OF LAND ARE SOLD UNDER TERMS BY WHICH THE CITY IS TO ACCEPT A NOTE AS A PORTION OF THE PURCHASE PRICE, THE NOTE AND ACCOMPANYING DEED OF TRUST MUST BE PREPARED BY AN ATTORNEY, BUT MUST BE APPROVED BY THE CITY ATTORNEY PRIOR TO CLOSING. (K) THE NOTE SHALL BE PLACED FOR COLLECTION WITH A BANK SELECTED BY THE CITY MANAGER, WHICH MAY BE CHANGED FROM TIME TO TIME, AND WHICH SHALL BE THE BANK IN WHICH CITY FUNDS ARE DEPOSITED. THE SET-UP FEE TO INITIATE COLLECTION MAY BE NEGOTIATED AS SPECIFIED IN KMC 22.05.100(L), AND THE BUYER SHALL PAY THE ANNUAL COLLECTION FEES FOR SUCH BANK COLLECTION. (l) THE CITY MANAGER IS AUTHORIZED TO NEGOTIATE A DIVISION OF THE COSTS OF SALE LISTED IN KMC 22.05.100(G) (H), (I), (J) AND (K) TO A MAXIMUM OF FIFTY PERCENT (50%) OF THE REQUIRED COSTS BEING BORNE BY THE CITY, PROVIDED HOWEVER THAT NO COSTS OF SALE WILL BE PAID BY THE CITY WHERE A SALE IS NEGOTIATED AT A PRICE BELOW APPRAISED FAIR MARKET VALUE. 22.05.105 TERMS FOR FINANCING SALE OF CITY LANDS. (A) IN ORDER TO EXPEDITE AND FACILITATE THE SALE OF CITY LANDS, THE CITY MANAGER IS AUTHORIZED TO ACCEPT TERMS FOR SALES AND MAY ACCEPT A NOTE SECURED BY A DEED OF TRUST FOR A PORTION OF THE PURCHASE PRICE THEREOF, SUBJECT TO THE FOLLOWING RESTRICTIONS: (1) IF THE SALE IS TO A LESSEE WHO HAS PLACED A LIEN FOR FINANCING UPON THE LAND OR IMPROVEMENTS, THEN THE CITY MANAGER IS NOT AUTHORIZED TO SELL THE LAND EXCEPT FOR TOTAL CASH PAYMENT, PROVIDED, HOWEVER, THAT THE CITY MANAGER MAY ACCEPT A NOTE SECURED BY A DEED OF TRUST SUBORDINATE TO THE EXISTING SECURITY INTEREST IF THE AMOUNT OF THE NOTE THEREBY SECURED IS WITHIN THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE OF THE LAND WITH IMPROVEMENTS, AND THE SUM OF ALL PRIOR SECURITY INTERESTS. THE SALE DOCUMENTS SHALL BE SUBJECT TO THE SAME RESTRICTIONS CONTAINED IN THE LEASE AS THE LEASE PROVIDES AT THE TIME OF SALE. Page 32 of 91 Ordinance 3072-2019 Page 30 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (2) EXCEPT FOR PROPERTY SOLD BY THE CITY SUBSEQUENT TO FORECLOSURE FOR DELINQUENT TAXES OR ASSESSMENTS, PRIOR TO MAKING A DETERMINATION TO ACCEPT A NOTE AND DEED OF TRUST FROM A PROSPECTIVE PURCHASER, THE CITY MANAGER SHALL SECURE A PRELIMINARY COMMITMENT FOR TITLE INSURANCE AND A REVIEW OF THE GRANTEE INDEX COVERING THE PARTY DESIRING TO PURCHASE THE LAND FROM THE TITLE COMPANY IN THE LOCAL RECORDING DISTRICT, AND NO CREDIT WILL BE ADVANCED ON SUCH SALE IF THERE ARE ANY DELINQUENT LIENS OR UNPAID JUDGMENTS FOUND IN THE TITLE COMPANY REPORT UNTIL ANY SUCH JUDGMENTS OR LIENS ARE PAID AND RELEASES THEREFOR HAVE BEEN FILED. (3) IN THE EVENT OF A CREDIT SALE, THE DOWN PAYMENT REQUIRED SHALL BE DETERMINED BY THE CITY MANAGER, BUT SHALL NOT BE LESS THAN FIFTEEN PERCENT (15%) OF THE SALES PRICE. (4) THE CITY MANAGER IS NOT AUTHORIZED TO ACCEPT TERMS FOR THE SALE OF TAX-FORECLOSED LANDS UNLESS THE DOWN PAYMENT TO BE RECEIVED THEREUNDER, OR OTHER SUMS APPROPRIATED FOR THE PURPOSE, ARE SUFFICIENT TO MAKE IMMEDIATE PAYMENT TO THE KENAI PENINSULA BOROUGH AND THE FORMER RECORD OWNER OF THE SUMS WHICH ARE, OR MAY BECOME, DUE TO THEM PURSUANT TO THE PROVISIONS OF AS 29. (B) IF THE CITY MANAGER DETERMINES THAT IT IS IN THE CITY’S INTEREST TO SELL CITY LANDS, THE SALE SHALL BE EITHER A CASH TRANSACTION OR BY A NOTE SECURED BY A DEED OF TRUST, SUBJECT TO SUBSECTION (A) OF THIS SECTION, AND BY NO OTHER MEANS. THE NOTE AND DEED OF TRUST SHALL CARRY TERMS AS FOLLOWS: (1) THE TERM OF SUCH NOTE MAY BE SET BY THE CITY MANAGER, BUT IT SHALL PROVIDE FOR MONTHLY PAYMENTS AND NOT EXCEED TWENTY (20) YEARS UNLESS A LONGER PERIOD FOR A SPECIFIC SALE OF LAND IS APPROVED BY RESOLUTION OF THE CITY COUNCIL. (2) SUCH NOTE SHALL BEAR INTEREST AT A RATE TO BE DETERMINED BY THE CITY COUNCIL BY RESOLUTION. 22.05.110 DETERMINATION AS TO NEED FOR PUBLIC USE. (A) WHETHER LAND SHALL BE ACQUIRED, RETAINED, DEVOTED, OR DEDICATED TO A PUBLIC USE SHALL BE DETERMINED BY ORDINANCE WHICH SHALL CONTAIN THE PUBLIC USE FOR WHICH THE PROPERTY IS TO BE DEDICATED, THE LEGAL DESCRIPTION OF THE PROPERTY, AND THE ADDRESS OR A GENERAL Page 33 of 91 Ordinance 3072-2019 Page 31 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] DESCRIPTION OF THE PROPERTY SUFFICIENT TO PROVIDE THE PUBLIC WITH NOTICE OF ITS LOCATION. THIS REQUIREMENT DOES NOT APPLY TO RIGHTS-OF- WAY OR EASEMENTS DEDICATED THROUGH THE CITY AND BOROUGH PLATTING PROCESS. (B) WHETHER LAND PREVIOUSLY DEDICATED TO A PUBLIC USE SHOULD BE DEDICATED TO A DIFFERENT PUBLIC USE OR SHOULD NO LONGER BE NEEDED FOR PUBLIC USE SHALL BE DETERMINED BY THE CITY COUNCIL BY ORDINANCE, EXCEPT IN CASES OF VACATION OF RIGHTS-OF-WAY OR EASEMENTS WHICH MAY BE DETERMINED BY RESOLUTION, EITHER OF WHICH SHALL CONTAIN THE NEW PUBLIC USE FOR WHICH THE PROPERTY IS TO BE DEDICATED OR THE REASON THE LAND IS NO LONGER NEEDED FOR PUBLIC USE, THE LEGAL DESCRIPTION OF THE PROPERTY, AND THE ADDRESS OR A GENERAL DESCRIPTION OF THE PROPERTY SUFFICIENT TO PROVIDE THE PUBLIC WITH NOTICE OF ITS LOCATION. 22.05.115 PROPERTY EXCHANGES. THE COUNCIL MAY APPROVE, BY ORDINANCE, AFTER PUBLIC NOTICE AND AN OPPORTUNITY FOR PUBLIC HEARING, THE CONVEYANCE AND EXCHANGE OF A PARCEL OF CITY PROPERTY FOR PROPERTY OWNED BY ANOTHER PERSON SUBJECT TO SUCH CONDITIONS AS COUNCIL MAY IMPOSE ON THE EXCHANGE, WHENEVER IN THE JUDGMENT OF THE CITY COUNCIL IT IS ADVANTAGEOUS TO THE CITY TO MAKE THE PROPERTY EXCHANGE. 22.05.120 PROPERTY SALE TO ADJACENT OWNERS. THE COUNCIL MAY APPROVE, BY ORDINANCE, AFTER PUBLIC NOTICE AND AN OPPORTUNITY FOR PUBLIC HEARING, THE SALE AND CONVEYANCE OF A PARCEL OF CITY PROPERTY AT ITS APPRAISED VALUE TO THE OWNER OF ADJACENT LAND WHENEVER, IN THE JUDGMENT OF THE CITY COUNCIL, THE PARCEL OF LAND IS OF SUCH SMALL SIZE, SHAPE, OR LOCATION THAT IT COULD NOT BE PUT TO PRACTICAL USE BY ANY OTHER PARTY AND, IN ADDITION THERETO, WHERE THERE IS NO FORESEEABLE NEED OF THE LAND FOR ANY FUTURE USE BY THE CITY. 22.05.125 GRANT OR DEVOTION. THE COUNCIL, BY ORDINANCE, MAY WAIVE THE PROVISIONS OF THIS CHAPTER AND LEASE, GRANT OR DEVOTE REAL PROPERTY NO LONGER NEEDED BY THE CITY FOR PUBLIC PURPOSE TO THE UNITED STATES, THE STATE OF ALASKA, A LOCAL POLITICAL SUBDIVISION OF THE STATE OF ALASKA, OR ANY AGENCY OF ANY OF THESE GOVERNMENTS OR A NON-PROFIT CORPORATION, FOR A CONSIDERATION AGREED Page 34 of 91 Ordinance 3072-2019 Page 32 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] UPON BETWEEN THE CITY AND GRANTEE WITHOUT A PUBLIC SALE IF THE GRANT, DEVOTION OR LEASE IS ADVANTAGEOUS TO THE CITY. 22.05.130 USE PERMITS. THE COUNCIL MAY AUTHORIZE THE CITY MANAGER TO GRANT PERMITS FOR THE TEMPORARY USE OF REAL PROPERTY OWNED BY THE CITY FOR A PERIOD NOT TO EXCEED FIVE (5) YEARS, WITHOUT APPRAISAL OF THE VALUE OF THE PROPERTY OR PUBLIC AUCTION, FOR ANY PURPOSE COMPATIBLE WITH THE ZONING OF THE LAND, AND ON SUCH TERMS AND FOR SUCH RENTALS AS THE COUNCIL SHALL DETERMINE. 22.05.135 ACQUISITION OF REAL PROPERTY. (A) THE CITY, BY AUTHORIZATION OF THE CITY COUNCIL, EXPRESSED IN A RESOLUTION FOR SUCH PURPOSE, MAY LEASE, PURCHASE OR ACQUIRE AN INTEREST IN REAL PROPERTY NEEDED FOR A PUBLIC USE ON SUCH TERMS AND CONDITIONS AS THE COUNCIL SHALL DETERMINE. NO PURCHASE SHALL BE MADE UNTIL A QUALIFIED APPRAISER HAS APPRAISED THE PROPERTY AND GIVEN THE COUNCIL AN INDEPENDENT OPINION AS TO THE FULL AND TRUE VALUE THEREOF UNLESS THE COUNCIL, UPON RESOLUTION SO FINDING, DETERMINES THAT THE PUBLIC INTEREST WILL NOT BE SERVED BY AN APPRAISAL. (B) BECAUSE OF THE UNIQUE VALUE OF REAL PROPERTY, THE CITY NEED NOT ACQUIRE OR LEASE REAL PROPERTY BY COMPETITIVE BIDDING. (C) RIGHTS-OF-WAY AND EASEMENTS MAY BE ACCEPTED OR ISSUED BY THE CITY MANAGER AFTER APPROVAL BY THE CITY COUNCIL FOR UTILITY LINES AND SERVICES OF ALL TYPES AND FOR NECESSARY RIGHTS-OF-WAY EASEMENTS.] Title 22 CITY-OWNED LANDS Chapter 22.05 DISPOSITION OF CITY LANDS 22.05.05 Definitions. When used in this chapter, the following terms shall have the meaning given below: “Amendment” means a formal change to a lease of lands other than a lease extension or renewal. “Annual rent” means an amount paid to the City annually according to the terms of the lease and Kenai Municipal Code. “Assignment” means the transfer of all interest in a lease from one person or entity to another. “City” means the City of Kenai, its elected officials, officers, employees or agents. “Consumer Price Index (CPI)” means the annual CPI for all urban consumers (CPI-U) for Anchorage, Alaska. “Existing lease” means a lease with at least one (1) year of term remaining. “Expiring lease” means a lease with less than one (1) year of term remaining. Page 35 of 91 Ordinance 3072-2019 Page 33 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] “Fair market value” means the most probable price which a property should bring in a competitive and open market as determined by a qualified independent appraiser, or the value as determined by the latest appraisal adjusted by the change in Consumer Price Index from the date of the latest appraisal. “Lease extension” means extending the term of an existing lease. “Lease rate percent” means a percentage that when applied to the fair market value of land establishes a rate of rent commensurate with rental rates prevalent in the local area as determined by a qualified real estate appraiser. “Lease renewal” means a new lease of property currently under an existing or expiring lease to an existing lessee or a purchaser. “Market analysis” means an analysis of data collected from other land leases to determine whether a market adjustment in either fair market value or lease rate percentage reflects the market. “Permanent improvement” means a fixed addition or change to land that is not temporary or portable, including a building, building addition, retaining wall, storage tank, earthwork, fill material, gravel, and pavement, and remediation of contamination for which the applicant is not responsible and excluding items of ordinary maintenance, such as glass replacement, painting, roof repairs, door repairs, plumbing repairs, floor covering replacement, or pavement patching. “Professional estimate of the remaining useful life of the principal improvement” means an estimate of the number of remaining years that the principal improvement will be able to function in accordance with its intended purpose prepared by a qualified real estate appraiser, engineer, or architect licensed in Alaska. “Qualified independent appraiser” means a general real estate appraiser certified by the State of Alaska under AS 08.87. “Site development materials” means materials used for preparing a lease site for building construction or to provide a firm surface on which to operate a vehicle or aircraft, including geotextile, fill, gravel, paving, utilities and pavement reinforcement materials. “Site preparation work” means work on the leased premises to include clearing and grubbing, unclassified excavation, classified fill and back fill, a crushed aggregate base course and utility extensions. 22.05.010 Authority and Intent. (a) The provisions of this chapter apply to City-owned real property other than lands within the Airport Reserve as described in KMC 21.10 and the leasing of tidelands for shore fisheries. (b) The City may sell, convey, exchange, transfer, donate, dedicate, direct, assign to use, or otherwise dispose of City-owned real property, including property acquired, held for, or previously devoted to a public purpose, only in accordance with this chapter, and, with respect to properties acquired through foreclosure for taxes, in compliance with those terms and provisions of AS 29 which apply to home-rule municipalities. Disposal or sale of lands shall be made only when, in the judgment of the City Council, such lands are not or are no longer required for a public purpose. (c) It is the intent of this chapter to provide land policies and practices that encourage responsible growth and development to support a thriving business, residential, recreational and cultural community. (d) It is not the intent of this chapter to allow for speculation on City-owned lands. All leases, sales, and other disposals of City-owned land must meet the intent of this chapter. (e) The provisions of this chapter shall not alter or amend the terms or rights granted under leases existing prior to the effective date of the ordinances codified in this chapter. Page 36 of 91 Ordinance 3072-2019 Page 34 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 22.05.015 Lands Available for Lease, Sale or Disposal. (a) The City may lease, sell or dispose of real property not restricted from lease or sale which the City Council has determined is not required for a public purpose by any lawful method or mode of conveyance or grant. Any instrument requiring execution by the City shall be signed by the City Manager and attested by the City Clerk. The form of any instrument shall be approved by the City Attorney. Lands leased, sold or disposed of must be of appropriate size for the intended development or use to meet the intent of this Chapter. Council may require a subdivision prior to lease, sale or disposal of lands. 22.05.020 Qualifications of Lease Applicants or Bidders. An applicant or bidder for a lease is qualified if the applicant or bidder: (a) Is an individual at least eighteen (18) years of age; or (b) Is a legal entity which is authorized to conduct business under the laws of Alaska; or (c) Is acting as an agent for another meeting the requirements of subsection (a) or (b) of this section and has qualified by filing with the City a proper power of attorney or a letter of authorization creating such agency. 22.05.025 Initial Lease Application. (a) All applications for lease of lands must be submitted to the City Manager or designee on an application form provided by the City. Applications will be dated on receipt and must include payment of the nonrefundable application fee as set forth in the City’s schedule of fees approved by the City Council. (b) The application form must include the following information: (1) The purpose of the proposed lease; (2) The use, nature, type, and estimated cost of improvements to be constructed; (3) The dates construction is estimated to commence and be completed. Construction must be completed within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council; and (4) A comprehensive description of the proposed business or activity intended; (5) Whether the applicant requests a lease with an option to purchase; and (6) How the proposed lease meets the intent of this chapter. (c) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to any new appraisal, engineering services, surveying and consulting costs, unless in the sole discretion of the City Council, it is determined that the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a lease with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will apply to the rent payable under the lease. Page 37 of 91 Ordinance 3072-2019 Page 35 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the lease. (5) If the application is rejected or if the applicant withdraws the application or fails to sign a lease offered to the applicant, the City will return any unused deposit balance to the applicant. (d) Applications for lands which have not been appraised within one (1) year of the requested starting date of the lease require the applicant to be responsible for all costs associated with appraisal. The cost of the appraisal shall be credited or refunded to the lessee once development is completed as required by the lease, extension or renewal. (e) Applications which result in a lease agreement with the City require the lessee to be responsible for all recording costs and any other fees associated with execution of the lease including a preliminary commitment for title insurance and fifty percent (50%) of the required costs associated with a sale of leased land in which the lease contains an option to purchase once the minimum development requirements have been met. (f) Anytime during the processing of a lease application, the City may request, and the applicant must supply, any clarification or additional information that the City reasonably determines is necessary for the City to make a final decision on the application. 22.05.035 No Right of Occupancy – Lease Application Expiration. (a) Submitting an application for a lease does not give the applicant a right to lease or use City-owned land. (b) The application shall expire upon execution of a lease or rejection of a lease application by the City Council or within twelve (12) months after the date the application has been submitted. 22.05.040 Lease Application Review. (a) Applications shall be reviewed by City staff for application completeness and conformance with City ordinances. (b) Based on the initial review, if the City Manager determines the application is complete, the application shall be referred to the Planning and Zoning Commission and any other applicable commissions for review and comment, together with the City Manager’s recommendation for approval or rejection. The recommendation may include a recommendation for a subdivision to reduce or enlarge a parcel to meet the intended development or use. (c) Notice of complete applications for new leases, renewals or extensions shall be published in a newspaper of general circulation within the City and posted on the property. The notice must contain the name of the applicant, a brief description of the land, whether the applicant requests a lease with an option to purchase, and the date upon which any competing applications must be submitted (thirty (30) days from the date of publication). (d) The recommendations of the City Manager, Planning and Zoning Commission, and any other applicable commissions shall be provided to the City Council. The City Council shall determine whether the lease, renewal, amendment or extension is consistent with the intent of this Chapter and in the best interest of the City. The decision whether or not to lease land or authorize a lease extension, renewal, amendment or assignment rests in the sole discretion of the City Council. Page 38 of 91 Ordinance 3072-2019 Page 36 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (e) If the applicant is in default of any charges, fees, rents, taxes, or other sums due and payable to the City or the applicant is in default of a requirement of any lease or contract with the City a lease shall not be entered into until the deficiencies are remedied . 22.05.045 Application for Lease Amendment, Assignment, Extension or Renewal. (a) A request from an existing lessee for a lease amendment, assignment, extension or renewal of the lease must be submitted to the City Manager or designee on an application form provided by the City. Applications must be complete and dated on receipt and include payment of the nonrefundable application fee and applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. (b) An application for an amendment must include the following information: (1) The purpose of the proposed amendment; (2) The proposed change in use or activity, if any; (3) A comprehensive description of the proposed business or activity, if applicable; and (4) How the proposed amendment meets the intent of this chapter. (c) An application for a lease assignment must include the following: (1) The name of the individual or legal entity to which the lessee requests to assign the lease. (d) An application for a lease extension must include the following information: (1) The use, nature, type and estimated cost of additional improvements to be constructed; (2) The dates new construction is estimated to commence and be completed; and (3) How the proposed lease extension meets the intent of this chapter. (e) An application for a lease renewal must include the following information: (1) For a lease renewal of an existing lease: (i) The use, nature, type and estimated cost of additional investment in the construction of new permanent improvements; (ii) The dates new construction is estimated to commence and be completed; (iii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of real property improvements on the premises as certified by the current lessee and proposed purchaser in a bill of sale or purchase agreement dated within one (1) year of the requested starting date of the renewal; and (iv) How the proposed lease renewal meets the intent of this chapter. (2) For a lease renewal of an expiring lease: (i) A fair market value appraisal of the existing principal improvement on the property, paid for by the applicant, and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (ii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of existing real property improvements, as certified by the current lessee and the proposed purchaser in a bill of sale or purchase agreement dated within one (1) year of the requested starting date of the renewal and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (iii) If the renewal is based on a professional estimate of the remaining useful life of the real property improvements on the premises, the estimated value dated within one (1) year of the requested starting date of the renewal and how it was determined; (iv) The use, nature, type and estimated cost of any additional improvements to be constructed, if applicable; Page 39 of 91 Ordinance 3072-2019 Page 37 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (v) The dates any new construction is estimated to commence and be completed; and (vi) How the proposed lease meets the intent of this chapter. (f) Applications for amendment, assignment, extension or renewal shall be processed in accordance with the lease application review provisions of this chapter, except that applications for assignment shall not be referred to the Planning and Zoning Commission. The City has no obligation to amend, assign, renew or extend a lease and may decline to do so upon making specific findings as to why a lease amendment, assignment, renewal, or extension is not in the best interest of the City. 22.05.050 Competing Lease Applications. If another application for a new lease, extension or a renewal is received for the same property within thirty (30) days from the notice of application publication date by a different applicant, City staff shall process the application and forward the application, the City Manager’s recommendation and applicable commission recommendations to the City Council for approval of the application anticipated to best serve the interest of the City. The City Council may approve one (1) of the applications, reject all the applications or direct the City Manager to award a lease of the property by sealed bid. An applicant for a renewal or extension may withdraw an application for a renewal or extension at any time prior to a decision by the City Council whether or not to approve such a renewal or extension. 22.05.055 Length of Lease Term. (a) The length of term for an initial lease shall be based on the amount of investment the applicant proposes to make in the construction of new permanent improvements on the premises as provided in the application. The City Council may offer a shorter lease term, if the City Council makes specific findings that a shorter lease term is in the best interest of the City. (b) The maximum term of a lease shall be determined according to the following term table and cannot exceed forty-five (45) years: Term Table APPLICANT’S INVESTMENT/VALUE MAXIMUM TERM OF YEARS $7,500 5 15,000 6 22,500 7 30,000 8 37,500 9 45,000 10 52,500 11 60,000 12 67,500 13 75,000 14 82,500 15 90,000 16 97,500 17 105,000 18 112,500 19 120,000 20 127,500 21 135,000 22 Page 40 of 91 Ordinance 3072-2019 Page 38 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 142,500 23 150,000 24 157,500 25 165,000 26 172,500 27 180,000 28 187,500 29 195,000 30 202,500 31 210,000 32 217,500 33 225,000 34 232,500 35 240,000 36 247,500 37 255,000 38 262,500 39 270,000 40 277,500 41 285,000 42 292,500 43 300,000 44 307,500 45 (c) Lease extension. The length of term for a lease extension shall be determined based on the remaining term of the initial lease and the estimated cost of new investment the applicant proposes to make in the construction of new permanent improvements on the premises according to the term table and provided no extension shall extend a lease term past forty- five (45) years. (d) Lease renewal for an existing lease. A renewal for an existing lease requires the construction of new permanent improvements, and the length of term for a lease renewal for an existing lease shall be determined as follows: (1) Based on the remaining term of the initial lease according to the term table and the estimated cost of new investment the applicant proposes to make in the construction of new permanent improvements on the premises according to the term table; or (2) Pursuant to a transaction between the current lessee and a new buyer and prospective lessee and based on the purchase price of existing real property improvements on the premises, as certified by the current lessee and the proposed purchaser in the bill of sale or purchase agreement, to be executed at closing of the transaction and the estimated cost of new investment in the construction of new permanent improvements on the premises according to the term table. (3) The term for renewal of an existing lease cannot exceed forty-five (45) years. (e) Lease renewal for an expiring lease. The length of term for a lease renewal of an expiring lease shall be determined as follows: (1) The purchase price of existing real property improvements on the premises, as certified by the current lessee and the proposed purchaser in the bill of sale or purchase agreement, to be executed at closing of the transaction and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table; or (2) A professional estimate of the remaining useful life of the real property improvements on the premises, paid for by the applicant and the estimated cost of any new investment Page 41 of 91 Ordinance 3072-2019 Page 39 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] in the construction of new permanent improvements on the premises according to the term table; or (3) A fair market value appraisal of the existing real property improvements on the premises, paid for by the applicant and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table. (4) The term for renewal of an existing lease cannot exceed forty-five (45) years. (f) If the initial lease, term extension, or lease renewal granted to the applicant requires construction of new permanent improvements, the lease or term extension shall be subject to the following conditions: (1) The lessee to complete the proposed permanent improvements within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council. (2) The lessee to provide a performance bond, deposit, personal guarantee, or other security if the City Council determines security is necessary or prudent to ensure the applicant’s completion of the permanent improvements required in the lease, renewal, or extension. The City Council shall determine the form and amount of the security according to the best interest of the City, after a recommendation by the City Manager considering the nature and scope of the proposed improvements and the financial responsibility of the applicant. (3) At no expense to the City, the lessee must obtain and keep in force during the term of the lease, insurance of the type and limits required by the City for the activities on the premises. (4) Within thirty (30) days after completion of the permanent improvements, the lessee shall submit to the City written documentation that the improvements have been completed as required. The City Manager shall make a report to the City Council of completion as soon as reasonably practical. (5) If the applicant shows good cause and the City Council determines the action is in the best interest of the City, the City Council may grant an extension of the time allowed to complete permanent improvements by resolution that is sufficient to allow for the completion of the permanent improvements or for submission of documentation that the permanent improvements have been completed. (6) If, within the time required, the applicant fails to complete the required permanent improvements, the City shall: (i) If the application is for a new lease or lease renewal, execute the forfeiture of the performance bond, deposit, personal guarantee, or other security posted by the applicant under subsection (f)(2) of this section to the extent necessary to reimburse the City for all costs and damages, including administrative and legal costs, arising from the applicant’s failure to complete the required improvements, and/or initiate cancellation of the lease or reduce the term of the lease to a period consistent with the portion of the improvements substantially completed in a timely manner according to the best interest of the City. (ii) If the application is for a lease extension, the City shall terminate the amendment extending the term of the lease or reduce the term of the extension at the City’s sole discretion. 22.05.060 Principles and Policy of Lease Rates. (a) Annual rent shall be computed by multiplying the fair market value of the land by a lease rate percentage of eight percent (8%) for each parcel; and Page 42 of 91 Ordinance 3072-2019 Page 40 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (b) The City will determine the fair market value of the land requested to be leased based on an appraisal conducted for the City by an independent real estate appraiser certified under Alaska State statutes and ordered by the City for the purpose of determining annual rent. The appraisal shall be paid for by the applicant, and the cost of the appraisal shall be credited or refunded to the lessee once development is completed as required by the lease. The fair market value of the land will be adjusted annually based on the rate of inflation determined by the consumer price index (CPI) to determine annual rent; and (c) The City will conduct a land market analysis of City-owned land under lease once every ten (10) years to determine whether a market adjustment in either fair market value of land or lease rate percentage is justified; and (d) If the City determines from the market analysis that a market adjustment to the lease rate percentage is in the best interest of the City, the new lease percentage must be approved by an ordinance and utilized to compute annual rents for the next fiscal year; and (e) If the market analysis or extraordinary circumstances determine a fair market value adjustment is in the best interest of the City, the City shall retain the services of an independent, real estate appraiser certified under Alaska State statutes to determine the fair market value of all leased land and shall use these values to compute annual rents for the next fiscal year; and (f) The City shall adjust the annual rent of a lease by giving the lessee written notice at least thirty (30) days prior to application of a new annual rent determination; and (g) If a lessee disagrees with the proposed change in the fair market value of land or lease rate percent (excluding CPI determinations, which cannot be appealed) and cannot informally resolve the issue with the City, the lessee must: (1) Provide notice of appeal in writing within ninety (90) days of notification supported by the written appraisal of a qualified real estate appraiser, selected and paid for by lessee (the “second appraiser”); and (2) The City and the lessee will meet to attempt to resolve the differences between the first appraiser and the second appraiser concerning the fair market value of the land or lease rate percent; and (3) If the City and lessee cannot agree upon the fair market value or lease rate percent then they shall direct the first appraiser and the second appraiser to mutually select a third qualified real estate appraiser, paid for jointly by the parties (the “third appraiser”); and (4) Within thirty (30) days after the third appraiser has been appointed, the third appraiser shall decide which of the two (2) respective appraisals from the first appraiser and the second appraiser most closely reflects the fair market value of the land or lease rate percent; and (5) The fair market value of the land or lease rate percent shall irrefutably be presumed to be the value(s) contained in such appraisal selected by the third appraiser, and the rent shall be redetermined based on such value(s); and (6) Rent shall continue to be paid at the then-applicable rate until any such new rental rate is established, and lessee and the City shall promptly pay or refund, as the case may be, any variance in the rent, without interest accruing to the extent to be paid/refunded. 22.05.065 Lease Bidding Procedure. With the approval of the City Council, the City Manager may designate a specific lot or lots to be leased through competitive sealed bid. The City Manager shall award the lease to the qualified bidder utilizing a procurement procedure which may consider qualitative factors in addition to the amount of any one (1) time premium payment to be paid by the successful bidder; provided, Page 43 of 91 Ordinance 3072-2019 Page 41 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] however, that the high bidder and the bidder’s lease proposal shall be subject to all provisions of lease application review and approval under this chapter. 22.05.070 Development Incentives. (a) The City Council may include a lease rent incentive to encourage commercial investment as follows: (1) A credit may be applied toward rent for a maximum of five (5) years. The credit may only include the value of site preparation work on the leased premises to include clearing and grubbing, unclassified excavation, classified fill and back fill, crushed aggregate base course, and utility extensions. (2) An estimate of the value of the work, including a scope of work, prepared by a qualified engineer licensed to work in Alaska must be provided to the City and accepted prior to work being performed. (3) Any changes to the estimate of the value of the work or scope of work must be provided to the City and accepted prior to work being performed to be eligible for the credit. (4) For the credit to be applied, the approved scope of work must be completed. (5) A certification from a qualified engineer that the accepted scope of work has been completed must be provided to the City and accepted at the completion of the site preparation work. (6) Credit will be limited to original qualified engineer’s estimate unless another amount is accepted by the City in advance of work being completed. (7) Once the work is completed as proposed and the qualified engineer’s certification of completion has been received, a credit shall be applied to the lease payments, prorated as necessary for a maximum of five (5) years. (8) Rent shall be paid at the then-applicable rate until any such credit toward rent has been approved by the City Manager or designee, and the City shall apply a credit to lease payments prorated as necessary or promptly pay or refund, as the case may be, any variance between the credit applied and the rent paid, without interest accruing to the extent to be paid/refunded. 22.05.075 Ownership of Improvements. (a) Permanent improvements on the premises, excluding site development materials, constructed, placed, or purchased by the lessee remain the lessee’s property as long as a lease for the premises remains in effect with the lessee, including renewals, any period of extension approved by the City pursuant to the provisions of this chapter, or any period of holdover. (b) Unless otherwise provided in a land lease, at the expiration, cancellation, or termination of a lease that is extended or followed by a successive lease, the departing lessee may do one (1) or more of the following: (1) Remove lessee-owned permanent improvements from the premises, remediate any contamination for which the lessee is responsible, and restore the premises to a clean and neat physical condition acceptable to the City within ninety (90) days after the expiration, cancellation, or termination date of the lease; or (2) Sell lessee-owned permanent improvements to the succeeding lessee, remove all personal property, remediate any contamination for which the lessee is responsible, and leave the premises in a clean and neat physical condition acceptable to the City within sixty (60) days after notice from the City that the City has approved an application for a lease of the premises by another person or such longer period specified in the notice, but Page 44 of 91 Ordinance 3072-2019 Page 42 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] in no event more than one hundred eighty (180) days after the expiration, termination, or cancellation date of the lease; or (3) Purchase the property in which the lease contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. (c) If the lessee does not timely remove or sell the lessee-owned permanent improvements on a premises in accordance with the requirements of this section, any remaining permanent improvements and any remaining personal property of the departing lessee will be considered permanently abandoned. The City may sell, lease, demolish, dispose of, remove, or retain the abandoned property for use as the City determines is in the best interest of the City. The lessee shall, within thirty (30) days after being billed by the City, reimburse the City for any costs reasonably incurred by the City, including legal and administrative costs, to demolish, remove, dispose, clear title to, or sell the abandoned property and to remediate any contamination and restore the premises. (d) Site development materials that a lessee places on a premises become part of the City- owned real property and property of the City upon placement. The lessee: (1) Must maintain the site development work and site development materials throughout the term of the lease or successive lease, including any extensions and periods of holdover; and (2) May not remove the site development materials unless the City approves in writing. 22.05.080 Lease Execution. The lease applicant shall execute and return the appropriate lease agreement with the City of Kenai within thirty (30) days of mailing the agreement to the applicant. The lease agreement shall be prepared in accordance with the requirements of this title. Failure to execute and return the lease agreement within the specified period shall result in the forfeiture of all leasing rights. 22.05.085 Lease Utilization. Leased lands shall be utilized for purposes within the scope of the application, the terms of the lease and in conformity with the ordinances of the City, and in substantial conformity with the Comprehensive Plan. Utilization or development for other than the allowed uses shall constitute a material breach of the lease and subject the lease to cancellation at any time. Failure to substantially complete the development plan for the land shall constitute grounds for cancellation. 22.05.086 Form of Lease. (a) When leasing land under this chapter, the City Manager shall use a standard lease form that: (1) Provides a reasonable basis for the lessee’s use of the premises, (2) Complies with the intent of this chapter, and (3) Provides for the best interest of the City. (4) Approved as to form by the City Attorney; and (5) Adopted by resolution of the City Council. (b) The City Manager may enter into a land lease that deviates from the standard form adopted under subsection (a) of this section, if: (1) The City Manager believes the action is in the best interest of the City; (2) The lease is approved as to form by the City Attorney; and (3) The lease is approved by resolution of the City Council. Page 45 of 91 Ordinance 3072-2019 Page 43 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 22.05.087 Lease Payments. (a) Upon execution of the lease, the land becomes taxable to the extent of the lessee’s leasehold interest and lessee shall pay all real property taxes levied upon such leasehold interest in these lands, and shall pay any special assessments and taxes. (b) Rent shall be paid annually in advance unless the lessee submits a written request to the City to pay on a quarterly or monthly basis. The payments shall be prorated to conform to the City of Kenai’s fiscal year beginning July 1st and ending June 30th. (c) Lessee shall be responsible for all sales taxes due on payments under the lease. 22.05.095 Methods of Sale or Disposal. (a) Lands to which the City of Kenai holds title which are not restricted from sale by the deed of conveyance to the City or which have been released from such restrictions and that the City Council has determined are not required for a public purpose, may be listed for sale by the City Manager. The decision whether or not to sell the land rests in the sole discretion of the City Council. (b) The City Council may by ordinance authorize the City Manager to dispose of such properties in accordance with the intent of this chapter as follows: (1) Non-competitive process: (i) Conveyance to encourage new enterprises where it is found that encouragement of a new commercial or industrial enterprise would be in the best interest of the City, one or more parcels of City land may be sold upon such terms as to price, conditions of conveyance, and with such contingencies as may be set forth in the ordinance. (ii) Property sale to adjacent owners for the conveyance of a parcel of City property at fair market value to the owner of adjacent land whenever, in the judgment of the City Council, the parcel of land is of such small size, shape, or location that it could not be put to practical use by any other party. (iii) Grant or devotion of real property to the United States, the State of Alaska, a local political subdivision of the State of Alaska, or any agency of any of these governments or a non-profit corporation, for a consideration agreed upon between the City and grantee without a public sale if the grant, devotion or lease is in the best interest of the City. (iv) Conveyance of land to resolve a land use conflict. (2) Competitive process: (i) Public outcry auction to the highest responsible bidder. (ii) Sealed bid to the highest responsible bidder. (iii) Over-the-Counter sale after a public outcry auction or sealed bid process on a first- come basis, provided minimum development requirements are met within two (2) years of sale and the land is sold for fair market value. An appraisal to determine fair market value must be completed within a one (1) year period prior to the date of sale. (iv) Leased land in which the lease was subject to competition through the lease application review process and which contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. An appraisal to determine fair market value must be completed within a one (1) year period prior to the sale. (3) Property exchange: Property exchanges for the conveyance and exchange of a parcel of City-owned property, including lands held for the use and benefit of the Airport for Page 46 of 91 Ordinance 3072-2019 Page 44 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] property owned by another individual or legal entity subject to such conditions as Council may impose on the exchange, whenever the City Council makes findings it is in the best interest of the City to make the property exchange. (c) Any sale of land owned by the City of Kenai and held by it for the use or benefit of the Kenai Municipal Airport must include in any instrument conveying title to the property restrictions accepted by the City under the terms of the 1963 Quitclaim Deed from the United States of America recorded at Book 27, Page 303 at the Kenai Recording District, Kenai Alaska or any other land owned by the City and acquired with Airport funds which may include similar restrictions. Additionally, any sale or disposal of the aforementioned lands for less than fair market value or exchange for less than equal value shall require a deposit in the amount of the difference to the Airport Land Sale Permanent Fund for the benefit of the Kenai Municipal Airport. 22.05.100 Sale Procedure. (a) All requests to purchase City land must be submitted to the City Manager or designee on approved forms provided by the City. Applications will be dated on receipt and payment of the nonrefundable application fee and must include applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. The City Council may decide to sell lands consistent with the intent of this Chapter after a recommendation from the City Manager and any appropriate City commission. The City Council may always recommend a lease as opposed to a sale when in the best interest of the City and consistent with the intent of this Chapter. (b) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to engineering services, surveying and consulting costs, unless in the sole discretion of the City Council it is determined the subdivision serves other City purposes. Sales of parcels must be of appropriate size to meet the needs of the proposed development or use to meet the intent of this Chapter. The sale of excess acreage not needed for the intended development or use does not meet the intent of this Chapter. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a sale with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will be credited toward the purchaser at closing. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the sale. (5) If the application is rejected or if the applicant withdraws the application or fails to enter into a sale offered to the applicant, the City will return any unused deposit balance to the applicant. (c) The City will retain the services of an independent, real estate appraiser certified under Alaska State statutes to determine the fair market value for a determination of the minimum price on the land to be paid for from the deposit made by the applicant unless such an appraisal has been obtained within one (1) year prior to the date of sale. The cost of the appraisal will be credited toward the purchaser at closing. Page 47 of 91 Ordinance 3072-2019 Page 45 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] (d) If at any time during the process of preparing for sale, the applicant withdraws the application for sale, the City shall stop all procedures, pay expenses incurred prior to withdrawal of the application for sale, and reimburse applicant for any deposit advanced in excess of expenses incurred. However, if another party desires the sale to proceed, files an application for sale, executes and files an agreement to purchase, and deposits sufficient funds, then the prior applicant will be reimbursed for expenses which can be attributed to the subsequent applicant. (e) If all actions necessary for preparation for sale have been accomplished, and if neither the applicant nor any other party purchases said land when first offered for sale after such request, then all expenses incurred in preparation for the sale will be paid from the applicant’s deposit, and the balance, if any, shall be returned to the applicant. If the amount of the deposit is insufficient to pay all of the costs, the applicant will be billed for the balance due. (f) If the land is sold in a competitive public sale set in response to such request to anyone other than the applicant, the applicant’s deposit will be refunded in total to the applicant. The City’s expenses will be first deducted from the deposit of the successful bidder. (g) If the land is sold to the applicant, any deposit advanced, after deducting the City’s expenses, will be credited to the purchaser at closing. (h) If the land is leased land in which the lease contains an option to purchase once the minimum development requirements have been met, the lessee may request the sale of the land at not less than the fair market value. (i) If the land is to be sold through a competitive process, notice of sale and the manner in which the land is to be sold must be posted to the extent possible to be visible from each improved street adjacent to the property and published in a newspaper of general circulation within the City. The published notice must contain: (1) The legal description of the land; (2) A brief physical description of the land; (3) The area and general location of the land; (4) The minimum acceptable offer for the land (which shall be the fair market value); (5) The terms under which the land will be sold; (6) Any limitations on the sale of the land; (7) The time and place set for the auction or bid opening; (8) The amount of deposit to be submitted with each bid in order to cover the City’s expenses such as survey, appraisal, and reviews; (9) Any other matters concerning the sale of which the City Manager believes the public should be informed. (j) If a buyer desires to obtain a preliminary commitment for title insurance or title insurance to the land, it shall be the responsibility of the buyer to obtain and pay for such commitment or insurance. (k) The City Manager is authorized to negotiate a division of the costs of sale to a maximum of fifty percent (50%) of the required costs being borne by the City, provided however that no costs of sale will be paid by the City where a sale is negotiated at a price below the fair market value of the land. 22.05.101 No Right of Occupancy – Land Purchase Application Expiration. (a) Submitting an application to purchase land does not give the applicant a right to purchase or use City-owned land. (b) The application shall expire upon closing of the sale or rejection of a land purchase application by the City Council or within twelve (12) months after the date the application has been submitted. Page 48 of 91 Ordinance 3072-2019 Page 46 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] 22.05.105 Terms for Financing Sale of City-Owned Lands. (a) In order to expedite and facilitate the sale of City lands, the City Manager is authorized to accept terms for sales and may accept a note secured by a deed of trust for a portion of the purchase price thereof, subject to the following restrictions: (1) Except for property sold by the City subsequent to foreclosure for delinquent taxes or assessments, prior to making a determination to accept a note and deed of trust from a prospective purchaser, the City shall order a preliminary commitment for title insurance and a review of the grantee index covering the party desiring to purchase the land at the cost of the party requesting to purchase the land, and no credit will be advanced on such sale if there are any delinquent liens or unpaid judgments found in the title company report until any such judgments or liens are paid and releases therefor have been filed. (2) In the event of a credit sale, terms shall be approved by the City Council in the Ordinance approving the sale, as follows: (i) The down payment required, which shall not be less than fifteen percent (15%) of the sales price; and (ii) The length of the note; and (iii) A fixed or variable interest rate. 22.05.110 Determination as to Need for Public Purpose. (a) Whether land shall be acquired, retained, devoted, or dedicated to a public purpose shall be determined by ordinance which shall contain the public purpose for which the property is to be dedicated, the legal description of the property, and the address or a general description of the property sufficient to provide the public with notice of its location. This requirement does not apply to rights-of-way or easements dedicated through the City and Borough platting process. (b) Whether land previously dedicated to a public purpose should be dedicated to a different public purpose or should no longer be needed for public purpose shall be determined by the City Council by ordinance, except in cases of vacation of rights-of-way or easements which may be determined by resolution, either of which shall contain the new public purpose for which the property is to be dedicated or the reason the land is no longer needed for public purpose, the legal description of the property, and the address or a general description of the property sufficient to provide the public with notice of its location. 22.05.130 Special Use Permits. The City Council may authorize the City Manager to grant special use permits for the temporary use of real property owned by the City for a period not to exceed one (1) year, without appraisal of the value of the property or public auction, for any purpose compatible with the zoning of the land, and on such terms and for such rentals as the Council shall determine. 22.05.135 Acquisition of Real Property. (a) The City, by authorization of the City Council, expressed in a resolution for such purpose, may lease, purchase or acquire an interest in real property needed for a public purpose on such terms and conditions as the Council shall determine. No purchase shall be made until a qualified independent appraiser has appraised the property and given the Council an opinion Page 49 of 91 Ordinance 3072-2019 Page 47 of 47 _____________________________________________________________________________________ New Text Underlined; [DELETED TEXT BRACKETED] as to the fair market value of the land unless the Council, upon resolution so finding, determines that the best interest of the City will not be served by an appraisal. (b) Rights-of-way and easements may be accepted or issued by the City Manager after approval by the City Council for utility lines and services of all types and for necessary rights- of-way easements. This requirement does not apply to rights-of-way or easements dedicated through the City and Borough platting process. Section 4. Leaseholders of existing leases may convert their current lease to a new lease form approved by the City Council and governed by the Kenai Municipal Code Enacted by this Ordinance, except that the existing lease terms will not be entered only by virtue of the lease conversion. Section 5. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 6. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect 30 days after enactment. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 21st day of August, 2019. BRIAN GABRIEL SR., MAYOR ATTEST: ___________________________________ Jamie Heinz, CMC, City Clerk Introduced: August 7, 2019 Enacted: August 21, 2019 Effective: September 21, 2019 Page 50 of 91 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Paul Ostrander, City manager and Scott Bloom, City Attorney DATE: September 4, 2019 SUBJECT: Ordinance No. 3072 – 2019 (Substitute) ____________________________________________________________________________ This memorandum discusses recommended changes to Ordinance No. 3072-2019 from previous amendment memos and Council’s work session on September 3, 2019. Recommended changes are shown in red. The recommended amendments are incorporated into the Substitute Ordinance. Your consideration is appreciated. 1. Including “purchase agreement” where a “bill of sale” is referenced. When there is a transaction between a current lessee and purchaser of the lessee’s interest on leased City land, the proposed Code allows for the lease to be renewed and the new term for the purchaser to be based on the sales price of the existing lessee’s improvements on the premises. The term of the renewed lease offered by the City was proposed to be based on a bill of sale. The issue was raised that there may not be a bill of sale until a renewal is approved by the City, as the transaction between the private parties may be contingent on a renewal. This issue is addressed by allowing the City to base the term of a renewed lease on a bill of sale or a purchase agreement. These changes are in the Substitute in 22.05.045 and 22.05.055 as shown below. 22.05.045 Application for Lease Amendment, Assignment, Extension or Renewal. (a) A request from an existing lessee for a lease amendment, assignment, extension or renewal of the lease must be submitted to the City on an application form provided by the City. Applications must be complete and dated on receipt and include payment of the nonrefundable application fee and applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. (b) An application for an amendment must include the following information: (1) The purpose of the proposed amendment; (2) The proposed change in use or activity, if any; (3) A comprehensive description of the proposed business or activity, if applicable; and Page 51 of 91 Page 2 of 27 Ord. No. 3072-2019 (4) How the proposed amendment meets the intent of this chapter. (c) An application for a lease assignment must include the following: (1) The name of the individual or legal entity to which the lessee requests to assign the lease. (d) An application for a lease extension must include the following information: (1) The use, nature, type and estimated cost of additional improvements to be constructed; (2) The dates new construction is estimated to commence and be completed; and (3) How the proposed lease extension meets the intent of this chapter. (e) An application for a lease renewal must include the following information: (1) For a lease renewal of an existing lease: (i) The use, nature, type and estimated cost of additional investment in the construction of new permanent improvements; (ii) The dates new construction is estimated to commence and be completed; (iii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of real property improvements on the premises as certified by the current lessee and proposed purchaser in a bill of sale or purchase agreement; and (iv) How the proposed lease renewal meets the intent of this chapter. (2) For a lease renewal of an expiring lease: (i) A fair market value appraisal of the existing principal improvement on the property, paid for by the applicant, and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (ii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of existing real property improvements, as certified by the current lessee and the proposed purchaser in a bill of sale or purchase agreement and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (iii) If the renewal is based on a professional estimate of the remaining useful life of the real property improvements on the premises, the estimated value and how it was determined; (iv) The use, nature, type and estimated cost of any additional improvements to be constructed, if applicable; (v) The dates any new construction is estimated to commence and be completed; and (vi) How the proposed lease meets the intent of this chapter. (f) Applications for amendment, assignment, extension or renewal shall be processed in accordance with the lease application review provisions of this chapter, except that applications for assignment shall not be referred to the Planning and Zoning Commission. The City has no obligation to amend, assign, renew or extend a lease and may decline to do so upon making specific findings as to why a lease amendment, assignment, renewal, or extension is not in the best interest of the City. 22.05.055 Length of Lease Term. (a) The length of term for an initial lease shall be based on the amount of investment the applicant proposes to make in the construction of new permanent improvements on the premises as provided in the application. The City Council may offer a shorter lease term, if the City Council makes specific findings that a shorter lease term is in the best interest of the City. (b) The maximum term of a lease shall be determined according to the following term table and cannot exceed forty-five (45) years: Page 52 of 91 Page 3 of 27 Ord. No. 3072-2019 Term Table APPLICANT’S INVESTMENT/VALUE MAXIMUM TERM OF YEARS $7,500 5 15,000 6 22,500 7 30,000 8 37,500 9 45,000 10 52,500 11 60,000 12 67,500 13 75,000 14 82,500 15 90,000 16 97,500 17 105,000 18 112,500 19 120,000 20 127,500 21 135,000 22 142,500 23 150,000 24 157,500 25 165,000 26 172,500 27 180,000 28 187,500 29 195,000 30 202,500 31 210,000 32 217,500 33 225,000 34 232,500 35 240,000 36 247,500 37 255,000 38 262,500 39 270,000 40 277,500 41 285,000 42 292,500 43 300,000 44 307,500 45 (c) Lease extension. The length of term for a lease extension shall be determined based on the remaining term of the initial lease and the estimated cost of new investment the applicant proposes to make in the construction of new permanent improvements on the premises according to the term table and provided no extension shall extend a lease term past forty- five (45) years. Page 53 of 91 Page 4 of 27 Ord. No. 3072-2019 (d) Lease renewal for an existing lease. A renewal for an existing lease requires the construction of new permanent improvements, and the length of term for a lease renewal for an existing lease shall be determined as follows: (1) Based on the remaining term of the initial lease according to the term table and the estimated cost of new investment the applicant proposes to make in the construction of new permanent improvements on the premises according to the term table; or (2) Pursuant to a transaction between the current lessee and a new buyer and prospective lessee and based on the purchase price of existing real property improvements on the premises, as certified by the current lessee and the proposed purchaser in the bill of sale or purchase agreement, to be executed at closing of the transaction and the estimated cost of new investment in the construction of new permanent improvements on the premises according to the term table. (3) The term for renewal of an existing lease cannot exceed forty-five (45) years. (e) Lease renewal for an expiring lease. The length of term for a lease renewal of an expiring lease shall be determined as follows: (1) The purchase price of existing real property improvements on the premises, as certified by the current lessee and the proposed purchaser in the bill of sale or purchase agreement, to be executed at closing of the transaction and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table; or (2) A professional estimate of the remaining useful life of the real property improvements on the premises, paid for by the applicant and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table; or (3) A fair market value appraisal of the existing real property improvements on the premises, paid for by the applicant and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table. (4) The term for renewal of an existing lease cannot exceed forty-five (45) years. (f) If the initial lease, term extension, or lease renewal granted to the applicant requires construction of new permanent improvements, the lease or term extension shall be subject to the following conditions: (1) The lessee to complete the proposed permanent improvements within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council. (2) The lessee to provide a performance bond, deposit, personal guarantee, or other security if the City Council determines security is necessary or prudent to ensure the applicant’s completion of the permanent improvements required in the lease, renewal, or extension. The City Council shall determine the form and amount of the security according to the best interest of the City, after a recommendation by the City Manager considering the nature and scope of the proposed improvements and the financial responsibility of the applicant. (3) At no expense to the City, the lessee must obtain and keep in force during the term of the lease, insurance of the type and limits required by the City for the activities on the premises. (4) Within thirty (30) days after completion of the permanent improvements, the lessee shall submit to the City written documentation that the improvements have been completed as required. The City Manager shall make a report to the City Council of completion as soon as reasonably practical. (5) If the applicant shows good cause and the City Council determines the action is in the best interest of the City, the City Council may grant an extension of the time allowed to complete permanent improvements by resolution that is sufficient to allow for the Page 54 of 91 Page 5 of 27 Ord. No. 3072-2019 completion of the permanent improvements or for submission of documentation that the permanent improvements have been completed. (6) If, within the time required, the applicant fails to complete the required permanent improvements, the City shall: (i) If the application is for a new lease or lease renewal, execute the forfeiture of the performance bond, deposit, personal guarantee, or other security posted by the applicant under subsection (f)(2) of this section to the extent necessary to reimburse the City for all costs and damages, including administrative and legal costs, arising from the applicant’s failure to complete the required improvements, and/or initiate cancellation of the lease or reduce the term of the lease to a period consistent with the portion of the improvements substantially completed in a timely manner according to the best interests of the City. (ii) If the application is for a lease extension, the City shall terminate the amendment extending the term of the lease or reduce the term of the extension at the City’s sole discretion. 2. Clarifying that applications for a lease or purchase need to be provided to the City Manager or designee. It was brought to Administration’s attention that the proposed Ordinance provides for applications for lease or purchase to be submitted to the “City”, which by definition includes its elected officials, whom should not be accepting applications. To address this, the Substitute provides for applications to be submitted to City Manager or designee. 22.05.025 Initial Lease Application. (a) All applications for lease of lands must be submitted to the City Manager or designee on an application form provided by the City. Applications will be dated on receipt and must include payment of the nonrefundable application fee as set forth in the City’s schedule of fees approved by the City Council. (b) The application form must include the following information: (1) The purpose of the proposed lease; (2) The use, nature, type, and estimated cost of improvements to be constructed; (3) The dates construction is estimated to commence and be completed. Construction must be completed within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council; and (4) A comprehensive description of the proposed business or activity intended; (5) Whether the applicant requests a lease with an option to purchase; and (6) How the proposed lease meets the intent of this chapter. (c) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to any new appraisal, engineering services, surveying and consulting costs, unless in the sole discretion of the City Council, it is determined that the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. Page 55 of 91 Page 6 of 27 Ord. No. 3072-2019 (3) If the City enters into a lease with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will apply to the rent payable under the lease. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the lease. (5) If the application is rejected or if the applicant withdraws the application or fails to sign a lease offered to the applicant, the City will return any unused deposit balance to the applicant. (d) Applications for lands which have not been appraised within one (1) year of the requested starting date of the lease require the applicant to be responsible for all costs associated with appraisal. The cost of the appraisal shall be credited or refunded to the lessee once development is completed as required by the lease, extension or renewal. (e) Applications which result in a lease agreement with the City require the lessee to be responsible for all recording costs and any other fees associated with execution of the lease including a preliminary commitment for title insurance and fifty percent (50%) of the required costs associated with a sale of leased land in which the lease contains an option to purchase once the minimum development requirements have been met. (f) Anytime during the processing of a lease application, the City may request, and the applicant must supply, any clarification or additional information that the City reasonably determines is necessary for the City to make a final decision on the application. 22.05.045 Application for Lease Amendment, Assignment, Extension or Renewal. (a) A request from an existing lessee for a lease amendment, assignment, extension or renewal of the lease must be submitted to the City Manager or designee on an application form provided by the City. Applications must be complete and dated on receipt and include payment of the nonrefundable application fee and applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. (b) An application for an amendment must include the following information: (1) The purpose of the proposed amendment; (2) The proposed change in use or activity, if any; (3) A comprehensive description of the proposed business or activity, if applicable; and (4) How the proposed amendment meets the intent of this chapter. (c) An application for a lease assignment must include the following: (1) The name of the individual or legal entity to which the lessee requests to assign the lease. (d) An application for a lease extension must include the following information: (1) The use, nature, type and estimated cost of additional improvements to be constructed; (2) The dates new construction is estimated to commence and be completed; and (3) How the proposed lease extension meets the intent of this chapter. (e) An application for a lease renewal must include the following information: (1) For a lease renewal of an existing lease: (i) The use, nature, type and estimated cost of additional investment in the construction of new permanent improvements; (ii) The dates new construction is estimated to commence and be completed; (iii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of real property improvements on the premises as certified by the current lessee and proposed purchaser in a bill of sale; and Page 56 of 91 Page 7 of 27 Ord. No. 3072-2019 (iv) How the proposed lease renewal meets the intent of this chapter. (2) For a lease renewal of an expiring lease: (i) A fair market value appraisal of the existing principal improvement on the property, paid for by the applicant, and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (ii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of existing real property improvements, as certified by the current lessee and the proposed purchaser in a bill of sale and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (iii) If the renewal is based on a professional estimate of the remaining useful life of the real property improvements on the premises, the estimated value and how it was determined; (iv) The use, nature, type and estimated cost of any additional improvements to be constructed, if applicable; (v) The dates any new construction is estimated to commence and be completed; and (vi) How the proposed lease meets the intent of this chapter. (f) Applications for amendment, assignment, extension or renewal shall be processed in accordance with the lease application review provisions of this chapter, except that applications for assignment shall not be referred to the Planning and Zoning Commission. The City has no obligation to amend, assign, renew or extend a lease and may decline to do so upon making specific findings as to why a lease amendment, assignment, renewal, or extension is not in the best interest of the City. 22.05.100 Sale Procedure. (a) All requests to purchase City land must be submitted to the City Manager or designee on approved forms provided by the City. Applications will be dated on receipt and payment of the nonrefundable application fee and must include applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. (b) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to engineering services, surveying and consulting costs, unless in the sole discretion of the City Council it is determined the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a sale with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will be credited toward the purchaser at closing. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the sale. (5) If the application is rejected or if the applicant withdraws the application or fails to enter into a sale offered to the applicant, the City will return any unused deposit balance to the applicant. (c) The City will retain the services of an independent, real estate appraiser certified under Alaska State statutes to determine the fair market value for a determination of the minimum Page 57 of 91 Page 8 of 27 Ord. No. 3072-2019 price on the land to be paid for from the deposit made by the applicant unless such an appraisal has been obtained within one (1) year prior to the date of sale. The cost of the appraisal will be credited toward the purchaser at closing. (d) If at any time during the process of preparing for sale, the applicant withdraws the application for sale, the City shall stop all procedures, pay expenses incurred prior to withdrawal of the application for sale, and reimburse applicant for any deposit advanced in excess of expenses incurred. However, if another party desires the sale to proceed, files an application for sale, executes and files an agreement to purchase, and deposits sufficient funds, then the prior applicant will be reimbursed for expenses which can be attributed to the subsequent applicant. (e) If all actions necessary for preparation for sale have been accomplished, and if neither the applicant nor any other party purchases said land when first offered for sale after such request, then all expenses incurred in preparation for the sale will be paid from the applicant’s deposit, and the balance, if any, shall be returned to the applicant. If the amount of the deposit is insufficient to pay all of the costs, the applicant will be billed for the balance due. (f) If the land is sold in a competitive public sale set in response to such request to anyone other than the applicant, the applicant’s deposit will be refunded in total to the applicant. The City’s expenses will be first deducted from the deposit of the successful bidder. (g) If the land is sold to the applicant, any deposit advanced, after deducting the City’s expenses, will be credited to the purchaser at closing. (h) If the land is leased land in which the lease contains an option to purchase once the minimum development requirements have been met, the lessee may request the sale of the land at not less than the fair market value. (i) If the land is to be sold through a competitive process, notice of sale and the manner in which the land is to be sold must be posted to the extent possible to be visible from each improved street adjacent to the property and published in a newspaper of general circulation within the City. The published notice must contain: (1) The legal description of the land; (2) A brief physical description of the land; (3) The area and general location of the land; (4) The minimum acceptable offer for the land (which shall be the fair market value); (5) The terms under which the land will be sold; (6) Any limitations on the sale of the land; (7) The time and place set for the auction or bid opening; (8) The amount of deposit to be submitted with each bid in order to cover the City’s expenses such as survey, appraisal, and reviews; (9) Any other matters concerning the sale of which the City Manager believes the public should be informed. (j) If a buyer desires to obtain a preliminary commitment for title insurance or title insurance to the land, it shall be the responsibility of the buyer to obtain and pay for such commitment or insurance. (k) The City Manager is authorized to negotiate a division of the costs of sale to a maximum of fifty percent (50%) of the required costs being borne by the City, provided however that no costs of sale will be paid by the City where a sale is negotiated at a price below the fair market value of the land. 3. Providing consistency in the use of the term “best interest.” The Ordinance uses the terms “best interest”, “best interests”, “advantageous”, “beneficial” and “serves other City purposes” to guide the City Council in making decisions whether to lease or sell land, or share in subdivision costs. In order to provide consistency, the Substitute proposes Page 58 of 91 Page 9 of 27 Ord. No. 3072-2019 to uses the term “best interest” except in reference to sharing subdivision costs. When the question is whether the City should share in costs of a subdivision proposed by the applicant lessee or purchaser, the relevant question is, does the subdivision benefit the City beyond facilitating the sale? In cases of sharing subdivision costs, there is not a recommended change from “other City purposes” to “best interest” Where the term “best interest” is already used and where “other City purpose” is used, the language is provided below in blue to show how the terms are used throughout the Ordinance. 22.05.025 Initial Lease Application. (a) All applications for lease of lands must be submitted to the City on an application form provided by the City. Applications will be dated on receipt and must include payment of the nonrefundable application fee as set forth in the City’s schedule of fees approved by the City Council. (b) The application form must include the following information: (1) The purpose of the proposed lease; (2) The use, nature, type, and estimated cost of improvements to be constructed; (3) The dates construction is estimated to commence and be completed. Construction must be completed within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council; and (4) A comprehensive description of the proposed business or activity intended; (5) Whether the applicant requests a lease with an option to purchase; and (6) How the proposed lease meets the intent of this chapter. (c) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to any new appraisal, engineering services, surveying and consulting costs, unless in the sole discretion of the City Council, it is determined that the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a lease with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will apply to the rent payable under the lease. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the lease. (5) If the application is rejected or if the applicant withdraws the application or fails to sign a lease offered to the applicant, the City will return any unused deposit balance to the applicant. (d) Applications for lands which have not been appraised within one (1) year of the requested starting date of the lease require the applicant to be responsible for all costs associated with appraisal. The cost of the appraisal shall be credited or refunded to the lessee once development is completed as required by the lease, extension or renewal. (e) Applications which result in a lease agreement with the City require the lessee to be responsible for all recording costs and any other fees associated with execution of the lease including a preliminary commitment for title insurance and fifty percent (50%) of the required Page 59 of 91 Page 10 of 27 Ord. No. 3072-2019 costs associated with a sale of leased land in which the lease contains an option to purchase once the minimum development requirements have been met. (f) Anytime during the processing of a lease application, the City may request, and the applicant must supply, any clarification or additional information that the City reasonably determines is necessary for the City to make a final decision on the application. 22.05.045 Application for Lease Amendment, Assignment, Extension or Renewal. (a) A request from an existing lessee for a lease amendment, assignment, extension or renewal of the lease must be submitted to the City on an application form provided by the City. Applications must be complete and dated on receipt and include payment of the nonrefundable application fee and applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. (b) An application for an amendment must include the following information: (1) The purpose of the proposed amendment; (2) The proposed change in use or activity, if any; (3) A comprehensive description of the proposed business or activity, if applicable; and (4) How the proposed amendment meets the intent of this chapter. (c) An application for a lease assignment must include the following: (1) The name of the individual or legal entity to which the lessee requests to assign the lease. (d) An application for a lease extension must include the following information: (1) The use, nature, type and estimated cost of additional improvements to be constructed; (2) The dates new construction is estimated to commence and be completed; and (3) How the proposed lease extension meets the intent of this chapter. (e) An application for a lease renewal must include the following information: (1) For a lease renewal of an existing lease: (i) The use, nature, type and estimated cost of additional investment in the construction of new permanent improvements; (ii) The dates new construction is estimated to commence and be completed; (iii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of real property improvements on the premises as certified by the current lessee and proposed purchaser in a bill of sale; and (iv) How the proposed lease renewal meets the intent of this chapter. (2) For a lease renewal of an expiring lease: (i) A fair market value appraisal of the existing principal improvement on the property, paid for by the applicant, and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (ii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of existing real property improvements, as certified by the current lessee and the proposed purchaser in a bill of sale and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (iii) If the renewal is based on a professional estimate of the remaining useful life of the real property improvements on the premises, the estimated value and how it was determined; (iv) The use, nature, type and estimated cost of any additional improvements to be constructed, if applicable; (v) The dates any new construction is estimated to commence and be completed; and Page 60 of 91 Page 11 of 27 Ord. No. 3072-2019 (vi) How the proposed lease meets the intent of this chapter. (f) Applications for amendment, assignment, extension or renewal shall be processed in accordance with the lease application review provisions of this chapter, except that applications for assignment shall not be referred to the Planning and Zoning Commission. The City has no obligation to amend, assign, renew or extend a lease and may decline to do so upon making specific findings as to why a lease amendment, assignment, renewal, or extension is not in the best interest of the City. 22.05.050 Competing Lease Applications. If another application for a new lease, extension or a renewal is received for the same property within thirty (30) days from the notice of application publication date by a different applicant, City staff shall process the application and forward the application, the City Manager’s recommendation and applicable commission recommendations to the City Council for approval of the application anticipated to best serve the interests of the City. The City Council may approve one (1) of the applications, reject all the applications or direct the City Manager to award a lease of the property by sealed bid. An applicant for a renewal or extension may withdraw an application for a renewal or extension at any time prior to a decision by the City Council whether or not to approve such a renewal or extension. 22.05.055 Length of Lease Term. (a) The length of term for an initial lease shall be based on the amount of investment the applicant proposes to make in the construction of new permanent improvements on the premises as provided in the application. The City Council may offer a shorter lease term, if the City Council makes specific findings that a shorter lease term is in the best interest of the City. (b) The maximum term of a lease shall be determined according to the following term table and cannot exceed forty-five (45) years: Term Table APPLICANT’S INVESTMENT/VALUE MAXIMUM TERM OF YEARS $7,500 5 15,000 6 22,500 7 30,000 8 37,500 9 45,000 10 52,500 11 60,000 12 67,500 13 75,000 14 82,500 15 90,000 16 97,500 17 105,000 18 112,500 19 120,000 20 127,500 21 135,000 22 142,500 23 150,000 24 Page 61 of 91 Page 12 of 27 Ord. No. 3072-2019 157,500 25 165,000 26 172,500 27 180,000 28 187,500 29 195,000 30 202,500 31 210,000 32 217,500 33 225,000 34 232,500 35 240,000 36 247,500 37 255,000 38 262,500 39 270,000 40 277,500 41 285,000 42 292,500 43 300,000 44 307,500 45 (c) Lease extension. The length of term for a lease extension shall be determined based on the remaining term of the initial lease and the estimated cost of new investment the applicant proposes to make in the construction of new permanent improvements on the premises according to the term table and provided no extension shall extend a lease term past forty- five (45) years. (d) Lease renewal for an existing lease. A renewal for an existing lease requires the construction of new permanent improvements, and the length of term for a lease renewal for an existing lease shall be determined as follows: (1) Based on the remaining term of the initial lease according to the term table and the estimated cost of new investment the applicant proposes to make in the construction of new permanent improvements on the premises according to the term table; or (2) Pursuant to a transaction between the current lessee and a new buyer and prospective lessee and based on the purchase price of existing real property improvements on the premises, as certified by the current lessee and the proposed purchaser in the bill of sale, to be executed at closing of the transaction and the estimated cost of new investment in the construction of new permanent improvements on the premises according to the term table. (3) The term for renewal of an existing lease cannot exceed forty-five (45) years. (e) Lease renewal for an expiring lease. The length of term for a lease renewal of an expiring lease shall be determined as follows: (1) The purchase price of existing real property improvements on the premises, as certified by the current lessee and the proposed purchaser in the bill of sale, to be executed at closing of the transaction and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table; or (2) A professional estimate of the remaining useful life of the real property improvements on the premises, paid for by the applicant and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table; or Page 62 of 91 Page 13 of 27 Ord. No. 3072-2019 (3) A fair market value appraisal of the existing real property improvements on the premises, paid for by the applicant and the estimated cost of any new investment in the construction of new permanent improvements on the premises according to the term table. (4) The term for renewal of an existing lease cannot exceed forty-five (45) years. (f) If the initial lease, term extension, or lease renewal granted to the applicant requires construction of new permanent improvements, the lease or term extension shall be subject to the following conditions: (1) The lessee to complete the proposed permanent improvements within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council. (2) The lessee to provide a performance bond, deposit, personal guarantee, or other security if the City Council determines security is necessary or prudent to ensure the applicant’s completion of the permanent improvements required in the lease, renewal, or extension. The City Council shall determine the form and amount of the security according to the best interest of the City, after a recommendation by the City Manager considering the nature and scope of the proposed improvements and the financial responsibility of the applicant. (3) At no expense to the City, the lessee must obtain and keep in force during the term of the lease, insurance of the type and limits required by the City for the activities on the premises. (4) Within thirty (30) days after completion of the permanent improvements, the lessee shall submit to the City written documentation that the improvements have been completed as required. The City Manager shall make a report to the City Council of completion as soon as reasonably practical. (5) If the applicant shows good cause and the City Council determines the action is in the best interest of the City, the City Council may grant an extension of the time allowed to complete permanent improvements by resolution that is sufficient to allow for the completion of the permanent improvements or for submission of documentation that the permanent improvements have been completed. (6) If, within the time required, the applicant fails to complete the required permanent improvements, the City shall: (i) If the application is for a new lease or lease renewal, execute the forfeiture of the performance bond, deposit, personal guarantee, or other security posted by the applicant under subsection (f)(2) of this section to the extent necessary to reimburse the City for all costs and damages, including administrative and legal costs, arising from the applicant’s failure to complete the required improvements, and/or initiate cancellation of the lease or reduce the term of the lease to a period consistent with the portion of the improvements substantially completed in a timely manner according to the best interests of the City. (ii) If the application is for a lease extension, the City shall terminate the amendment extending the term of the lease or reduce the term of the extension at the City’s sole discretion. 22.05.060 Principles and Policy of Lease Rates. (a) Annual rent shall be computed by multiplying the fair market value of the land by a lease rate percentage of eight percent (8%) for each parcel; and (b) The City will determine the fair market value of the land requested to be leased based on an appraisal conducted for the City by an independent real estate appraiser certified under Alaska State statutes and ordered by the City for the purpose of determining annual rent. The Page 63 of 91 Page 14 of 27 Ord. No. 3072-2019 appraisal shall be paid for by the applicant, and the cost of the appraisal shall be credited or refunded to the lessee once development is completed as required by the lease. The fair market value of the land will be adjusted annually based on the rate of inflation determined by the consumer price index (CPI) to determine annual rent; and (c) The City will conduct a land market analysis of City-owned land under lease once every ten (10) years to determine whether a market adjustment in either fair market value of land or lease rate percentage is justified; and (d) If the City determines from the market analysis that a market adjustment to the lease rate percentage is in the best interests of the City, the new lease percentage must be approved by an ordinance and utilized to compute annual rents for the next fiscal year; and (e) If the market analysis or extraordinary circumstances determine a fair market value adjustment is in the best interests of the City, the City shall retain the services of an independent, real estate appraiser certified under Alaska State statutes to determine the fair market value of all leased land and shall use these values to compute annual rents for the next fiscal year; and (f) The City shall adjust the annual rent of a lease by giving the lessee written notice at least thirty (30) days prior to application of a new annual rent determination; and (g) If a lessee disagrees with the proposed change in the fair market value of land or lease rate percent (excluding CPI determinations, which cannot be appealed) and cannot informally resolve the issue with the City, the lessee must: (1) Provide notice of appeal in writing within ninety (90) days of notification supported by the written appraisal of a qualified real estate appraiser, selected and paid for by lessee (the “second appraiser”); and (2) The City and the lessee will meet to attempt to resolve the differences between the first appraiser and the second appraiser concerning the fair market value of the land or lease rate percent; and (3) If the City and lessee cannot agree upon the fair market value or lease rate percent then they shall direct the first appraiser and the second appraiser to mutually select a third qualified real estate appraiser, paid for jointly by the parties (the “third appraiser”); and (4) Within thirty (30) days after the third appraiser has been appointed, the third appraiser shall decide which of the two (2) respective appraisals from the first appraiser and the second appraiser most closely reflects the fair market value of the land or lease rate percent; and (5) The fair market value of the land or lease rate percent shall irrefutably be presumed to be the value(s) contained in such appraisal selected by the third appraiser, and the rent shall be redetermined based on such value(s); and (6) Rent shall continue to be paid at the then-applicable rate until any such new rental rate is established, and lessee and the City shall promptly pay or refund, as the case may be, any variance in the rent, without interest accruing to the extent to be paid/refunded. 22.05.075 Ownership of Improvements. (a) Permanent improvements on the premises, excluding site development materials, constructed, placed, or purchased by the lessee remain the lessee’s property as long as a lease for the premises remains in effect with the lessee, including renewals, any period of extension approved by the City pursuant to the provisions of this chapter, or any period of holdover. (b) Unless otherwise provided in a land lease, at the expiration, cancellation, or termination of a lease that is extended or followed by a successive lease, the departing lessee may do one (1) or more of the following: Page 64 of 91 Page 15 of 27 Ord. No. 3072-2019 (1) Remove lessee-owned permanent improvements from the premises, remediate any contamination for which the lessee is responsible, and restore the premises to a clean and neat physical condition acceptable to the City within ninety (90) days after the expiration, cancellation, or termination date of the lease; or (2) Sell lessee-owned permanent improvements to the succeeding lessee, remove all personal property, remediate any contamination for which the lessee is responsible, and leave the premises in a clean and neat physical condition acceptable to the City within sixty (60) days after notice from the City that the City has approved an application for a lease of the premises by another person or such longer period specified in the notice, but in no event more than one hundred eighty (180) days after the expiration, termination, or cancellation date of the lease; or (3) Purchase the property in which the lease contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. (c) If the lessee does not timely remove or sell the lessee-owned permanent improvements on a premises in accordance with the requirements of this section, any remaining permanent improvements and any remaining personal property of the departing lessee will be considered permanently abandoned. The City may sell, lease, demolish, dispose of, remove, or retain the abandoned property for use as the City determines is in the best interest of the City. The lessee shall, within thirty (30) days after being billed by the City, reimburse the City for any costs reasonably incurred by the City, including legal and administrative costs, to demolish, remove, dispose, clear title to, or sell the abandoned property and to remediate any contamination and restore the premises. (d) Site development materials that a lessee places on a premises become part of the City- owned real property and property of the City upon placement. The lessee: (1) Must maintain the site development work and site development materials throughout the term of the lease or successive lease, including any extensions and periods of holdover; and (2) May not remove the site development materials unless the City approves in writing. 22.05.086 Form of Lease. (a) When leasing land under this chapter, the City Manager shall use a standard lease form that: (1) Provides a reasonable basis for the lessee’s use of the premises, (2) Complies with the intent of this chapter, and (3) Provides for the best interest of the City. (4) Approved as to form by the City Attorney; and (5) Adopted by resolution of the City Council. (b) The City Manager may enter into a land lease that deviates from the standard form adopted under subsection (a) of this section, if: (1) The City Manager believes the action is in the best interest of the City; (2) The lease is approved as to form by the City Attorney; and (3) The lease is approved by resolution of the City Council. 22.05.095 Methods of Sale or Disposal. (a) Lands to which the City of Kenai holds title which are not restricted from sale by the deed of conveyance to the City or which have been released from such restrictions and that the City Council has determined are not required for a public purpose, may be listed for sale by Page 65 of 91 Page 16 of 27 Ord. No. 3072-2019 the City Manager. The decision whether or not to sell the land rests in the sole discretion of the City Council. (b) The City Council may by ordinance authorize the City Manager to dispose of such properties in accordance with the intent of this chapter as follows: (1) Non-competitive process: (i) Conveyance to encourage new enterprises where it is found that encouragement of a new commercial or industrial enterprise would be beneficial in the best interest of to the City of Kenai, one or more parcels of City land may be sold upon such terms as to price, conditions of conveyance, and with such contingencies as may be set forth in the ordinance. (ii) Property sale to adjacent owners for the conveyance of a parcel of City property at fair market value to the owner of adjacent land whenever, in the judgment of the City Council, the parcel of land is of such small size, shape, or location that it could not be put to practical use by any other party. (iii) Grant or devotion of real property to the United States, the State of Alaska, a local political subdivision of the State of Alaska, or any agency of any of these governments or a non-profit corporation, for a consideration agreed upon between the City and grantee without a public sale if the grant, devotion or lease is advantageous to in the best interest of the City. (iv) Conveyance of land to resolve a land use conflict. (2) Competitive process: (i) Public outcry auction to the highest responsible bidder. (ii) Sealed bid to the highest responsible bidder. (iii) Over-the-Counter sale after a public outcry auction or sealed bid process on a first- come basis, provided minimum development requirements are met within two (2) years of sale and the land is sold for fair market value. An appraisal to determine fair market value must be completed within a one (1) year period prior to the date of sale. (iv) Leased land in which the lease was subject to competition through the lease application review process and which contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. An appraisal to determine fair market value must be completed within a one (1) year period prior to the sale. (3) Property exchange: Property exchanges for the conveyance and exchange of a parcel of City-owned property for property owned by another individual or legal entity subject to such conditions as Council may impose on the exchange, whenever the City Council makes findings it is advantageous to in the best interest of the City to make the property exchange. (c) Any sale of land owned by the City of Kenai and held by it for the use or benefit of the Kenai Municipal Airport must include in any instrument conveying title to the property restrictions accepted by the City under the terms of the 1963 Quitclaim Deed from the United States of America recorded at Book 27, Page 303 at the Kenai Recording District, Kenai Alaska or any other land owned by the City and acquired with Airport funds which may include similar restrictions. Additionally, any sale or disposal of the aforementioned lands for less than fair market value shall require a deposit in the amount of the difference between fair market value and the sale price to the Airport Land Sale Permanent Fund for the benefit of the Kenai Municipal Airport. Page 66 of 91 Page 17 of 27 Ord. No. 3072-2019 22.05.100 Sale Procedure. (a) All requests to purchase City land must be submitted to the City on approved forms provided by the City. Applications will be dated on receipt and payment of the nonrefundable application fee and must include applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. (b) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to engineering services, surveying and consulting costs, unless in the sole discretion of the City Council it is determined the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a sale with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will be credited toward the purchaser at closing. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the sale. (5) If the application is rejected or if the applicant withdraws the application or fails to enter into a sale offered to the applicant, the City will return any unused deposit balance to the applicant. (c) The City will retain the services of an independent, real estate appraiser certified under Alaska State statutes to determine the fair market value for a determination of the minimum price on the land to be paid for from the deposit made by the applicant unless such an appraisal has been obtained within one (1) year prior to the date of sale. The cost of the appraisal will be credited toward the purchaser at closing. (d) If at any time during the process of preparing for sale, the applicant withdraws the application for sale, the City shall stop all procedures, pay expenses incurred prior to withdrawal of the application for sale, and reimburse applicant for any deposit advanced in excess of expenses incurred. However, if another party desires the sale to proceed, files an application for sale, executes and files an agreement to purchase, and deposits sufficient funds, then the prior applicant will be reimbursed for expenses which can be attributed to the subsequent applicant. (e) If all actions necessary for preparation for sale have been accomplished, and if neither the applicant nor any other party purchases said land when first offered for sale after such request, then all expenses incurred in preparation for the sale will be paid from the applicant’s deposit, and the balance, if any, shall be returned to the applicant. If the amount of the deposit is insufficient to pay all of the costs, the applicant will be billed for the balance due. (f) If the land is sold in a competitive public sale set in response to such request to anyone other than the applicant, the applicant’s deposit will be refunded in total to the applicant. The City’s expenses will be first deducted from the deposit of the successful bidder. (g) If the land is sold to the applicant, any deposit advanced, after deducting the City’s expenses, will be credited to the purchaser at closing. (h) If the land is leased land in which the lease contains an option to purchase once the minimum development requirements have been met, the lessee may request the sale of the land at not less than the fair market value. Page 67 of 91 Page 18 of 27 Ord. No. 3072-2019 (i) If the land is to be sold through a competitive process, notice of sale and the manner in which the land is to be sold must be posted to the extent possible to be visible from each improved street adjacent to the property and published in a newspaper of general circulation within the City. The published notice must contain: (1) The legal description of the land; (2) A brief physical description of the land; (3) The area and general location of the land; (4) The minimum acceptable offer for the land (which shall be the fair market value); (5) The terms under which the land will be sold; (6) Any limitations on the sale of the land; (7) The time and place set for the auction or bid opening; (8) The amount of deposit to be submitted with each bid in order to cover the City’s expenses such as survey, appraisal, and reviews; (9) Any other matters concerning the sale of which the City Manager believes the public should be informed. (j) If a buyer desires to obtain a preliminary commitment for title insurance or title insurance to the land, it shall be the responsibility of the buyer to obtain and pay for such commitment or insurance. (k) The City Manager is authorized to negotiate a division of the costs of sale to a maximum of fifty percent (50%) of the required costs being borne by the City, provided however that no costs of sale will be paid by the City where a sale is negotiated at a price below the fair market value of the land. 22.05.135 Acquisition of Real Property. (a) The City, by authorization of the City Council, expressed in a resolution for such purpose, may lease, purchase or acquire an interest in real property needed for a public purpose on such terms and conditions as the Council shall determine. No purchase shall be made until a qualified independent appraiser has appraised the property and given the Council an opinion as to the fair market value of the land unless the Council, upon resolution so finding, determines that the public interest best interest of the City will not be served by an appraisal. (b) Rights-of-way and easements may be accepted or issued by the City Manager after approval by the City Council for utility lines and services of all types and for necessary rights- of-way easements. This requirement does not apply to rights-of-way or easements dedicated through the City and Borough platting process. 4. Clarifying when appraisals must be obtained and how long they are valid for. City land must generally be leased or sold at not less than fair market value. In order to ensure this occurs, the Code requires a recent appraisal, within one year. An appraisal is required by the FAA for land exchanges, typically the FAA requires review of sale or lease of properties one year from the date of submission of the appraisal. Banks and other lenders consider six months to be the optimum timeframe for appraisals pertaining to commercial property and three months for residential property. Because the City’s standard in already generous in allowing an appraisal up to one year from the date of sale, costs of the appraisal are refunded to the applicant upon execution of a lease or sale, and the provision is consistent with other Code chapters, administration does not recommend any changes. The sections below show in blue where the one year requirement is contained in the Chapter for Council’s review. 22.05.025 Initial Lease Application. Page 68 of 91 Page 19 of 27 Ord. No. 3072-2019 (a) All applications for lease of lands must be submitted to the City on an application form provided by the City. Applications will be dated on receipt and must include payment of the nonrefundable application fee as set forth in the City’s schedule of fees approved by the City Council. (b) The application form must include the following information: (1) The purpose of the proposed lease; (2) The use, nature, type, and estimated cost of improvements to be constructed; (3) The dates construction is estimated to commence and be completed. Construction must be completed within two (2) years except in special circumstances, that require a longer period of time and which must be approved by the City Council; and (4) A comprehensive description of the proposed business or activity intended; (5) Whether the applicant requests a lease with an option to purchase; and (6) How the proposed lease meets the intent of this chapter. (c) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to any new appraisal, engineering services, surveying and consulting costs, unless in the sole discretion of the City Council, it is determined that the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a lease with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will apply to the rent payable under the lease. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the lease. (5) If the application is rejected or if the applicant withdraws the application or fails to sign a lease offered to the applicant, the City will return any unused deposit balance to the applicant. (d) Applications for lands which have not been appraised within one (1) year of the requested starting date of the lease require the applicant to be responsible for all costs associated with appraisal. The cost of the appraisal shall be credited or refunded to the lessee once development is completed as required by the lease, extension or renewal. (e) Applications which result in a lease agreement with the City require the lessee to be responsible for all recording costs and any other fees associated with execution of the lease including a preliminary commitment for title insurance and fifty percent (50%) of the required costs associated with a sale of leased land in which the lease contains an option to purchase once the minimum development requirements have been met. (f) Anytime during the processing of a lease application, the City may request, and the applicant must supply, any clarification or additional information that the City reasonably determines is necessary for the City to make a final decision on the application. 22.05.095 Methods of Sale or Disposal. (a) Lands to which the City of Kenai holds title which are not restricted from sale by the deed of conveyance to the City or which have been released from such restrictions and that the City Council has determined are not required for a public purpose, may be listed for sale by the City Manager. The decision whether or not to sell the land rests in the sole discretion of the City Council. Page 69 of 91 Page 20 of 27 Ord. No. 3072-2019 (b) The City Council may by ordinance authorize the City Manager to dispose of such properties in accordance with the intent of this chapter as follows: (1) Non-competitive process: (i) Conveyance to encourage new enterprises where it is found that encouragement of a new commercial or industrial enterprise would be beneficial to the City of Kenai, one or more parcels of City land may be sold upon such terms as to price, conditions of conveyance, and with such contingencies as may be set forth in the ordinance. (ii) Property sale to adjacent owners for the conveyance of a parcel of City property at fair market value to the owner of adjacent land whenever, in the judgment of the City Council, the parcel of land is of such small size, shape, or location that it could not be put to practical use by any other party. (iii) Grant or devotion of real property to the United States, the State of Alaska, a local political subdivision of the State of Alaska, or any agency of any of these governments or a non-profit corporation, for a consideration agreed upon between the City and grantee without a public sale if the grant, devotion or lease is advantageous to the City. (iv) Conveyance of land to resolve a land use conflict. (2) Competitive process: (i) Public outcry auction to the highest responsible bidder. (ii) Sealed bid to the highest responsible bidder. (iii) Over-the-Counter sale after a public outcry auction or sealed bid process on a first- come basis, provided minimum development requirements are met within two (2) years of sale and the land is sold for fair market value. An appraisal to determine fair market value must be completed within a one (1) year period prior to the date of sale. (iv) Leased land in which the lease was subject to competition through the lease application review process and which contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. An appraisal to determine fair market value must be completed within a one (1) year period prior to the sale. (3) Property exchange: Property exchanges for the conveyance and exchange of a parcel of City-owned property for property owned by another individual or legal entity subject to such conditions as Council may impose on the exchange, whenever the City Council makes findings it is advantageous to the City to make the property exchange. (c) Any sale of land owned by the City of Kenai and held by it for the use or benefit of the Kenai Municipal Airport must include in any instrument conveying title to the property restrictions accepted by the City under the terms of the 1963 Quitclaim Deed from the United States of America recorded at Book 27, Page 303 at the Kenai Recording District, Kenai Alaska or any other land owned by the City and acquired with Airport funds which may include similar restrictions. Additionally, any sale or disposal of the aforementioned lands for less than fair market value shall require a deposit in the amount of the difference between fair market value and the sale price to the Airport Land Sale Permanent Fund for the benefit of the Kenai Municipal Airport. 22.05.100 Sale Procedure. (a) All requests to purchase City land must be submitted to the City on approved forms provided by the City. Applications will be dated on receipt and payment of the nonrefundable application fee and must include applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. Page 70 of 91 Page 21 of 27 Ord. No. 3072-2019 (b) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to engineering services, surveying and consulting costs, unless in the sole discretion of the City Council it is determined the subdivision serves other City purposes. (1) If the Council determines that other City purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in an amount the City Council determines is reasonable given the benefit to the City. (2) If the Council does not make a determination that other City purposes are served by the subdivision, the applicant must submit a deposit to cover the estimated costs associated with the subdivision. (3) If the City enters into a sale with the applicant, any unused balance of the deposit made to cover costs associated with subdivision will be credited toward the purchaser at closing. (4) If the City’s costs exceed the amount of any deposit made to cover costs associated with subdivision, the applicant must pay the shortage to the City as a condition of the sale. (5) If the application is rejected or if the applicant withdraws the application or fails to enter into a sale offered to the applicant, the City will return any unused deposit balance to the applicant. (c) The City will retain the services of an independent, real estate appraiser certified under Alaska State statutes to determine the fair market value for a determination of the minimum price on the land to be paid for from the deposit made by the applicant unless such an appraisal has been obtained within one (1) year prior to the date of sale. The cost of the appraisal will be credited toward the purchaser at closing. (d) If at any time during the process of preparing for sale, the applicant withdraws the application for sale, the City shall stop all procedures, pay expenses incurred prior to withdrawal of the application for sale, and reimburse applicant for any deposit advanced in excess of expenses incurred. However, if another party desires the sale to proceed, files an application for sale, executes and files an agreement to purchase, and deposits sufficient funds, then the prior applicant will be reimbursed for expenses which can be attributed to the subsequent applicant. (e) If all actions necessary for preparation for sale have been accomplished, and if neither the applicant nor any other party purchases said land when first offered for sale after such request, then all expenses incurred in preparation for the sale will be paid from the applicant’s deposit, and the balance, if any, shall be returned to the applicant. If the amount of the deposit is insufficient to pay all of the costs, the applicant will be billed for the balance due. (f) If the land is sold in a competitive public sale set in response to such request to anyone other than the applicant, the applicant’s deposit will be refunded in total to the applicant. The City’s expenses will be first deducted from the deposit of the successful bidder. (g) If the land is sold to the applicant, any deposit advanced, after deducting the City’s expenses, will be credited to the purchaser at closing. (h) If the land is leased land in which the lease contains an option to purchase once the minimum development requirements have been met, the lessee may request the sale of the land at not less than the fair market value. (i) If the land is to be sold through a competitive process, notice of sale and the manner in which the land is to be sold must be posted to the extent possible to be visible from each improved street adjacent to the property and published in a newspaper of general circulation within the City. The published notice must contain: (1) The legal description of the land; (2) A brief physical description of the land; (3) The area and general location of the land; Page 71 of 91 Page 22 of 27 Ord. No. 3072-2019 (4) The minimum acceptable offer for the land (which shall be the fair market value); (5) The terms under which the land will be sold; (6) Any limitations on the sale of the land; (7) The time and place set for the auction or bid opening; (8) The amount of deposit to be submitted with each bid in order to cover the City’s expenses such as survey, appraisal, and reviews; (9) Any other matters concerning the sale of which the City Manager believes the public should be informed. (j) If a buyer desires to obtain a preliminary commitment for title insurance or title insurance to the land, it shall be the responsibility of the buyer to obtain and pay for such commitment or insurance. (k) The City Manager is authorized to negotiate a division of the costs of sale to a maximum of fifty percent (50%) of the required costs being borne by the City, provided however that no costs of sale will be paid by the City where a sale is negotiated at a price below the fair market value of the land. 5. Clarifying that decisions to lease or sell property are legislative decision made in the sole discretion of the City Council. The intent of the Ordinance is that before land can be leased or sold, the Council must first determine that the lease or sale meets the intent of the Chapter, that the lease or sale encourages responsible growth and development to support a thriving business, residential, recreational and cultural community. If this determination is made, then Council can decide whether the lease or sale is in the best interest of the City. The following amendments clarify this are incorporated in the Ordinance: 22.05.040 Lease Application Review. (a) Applications shall be reviewed by City staff for application completeness and conformance with City ordinances. (b) Based on the initial review, if the City Manager determines the application is complete, the application shall be referred to the Planning and Zoning Commission and any other applicable commissions for review and comment, together with the City Manager’s recommendation for approval or rejection. (c) Notice of complete applications for new leases, renewals or extensions shall be published in a newspaper of general circulation within the City and posted on the property. The notice must contain the name of the applicant, a brief description of the land, whether the applicant requests a lease with an option to purchase, and the date upon which any competing applications must be submitted (thirty (30) days from the date of publication). (d) The recommendations of the City Manager, Planning and Zoning Commission, and any other applicable commissions shall be provided to the City Council. The City Council shall determine whether the lease, renewal, amendment or extension is consistent with the intent of this Chapter and in the best interest of the City. The decision whether or not to lease land or authorize a lease extension, renewal, amendment or assignment rests in the sole discretion of the City Council. (e) If the applicant is in default of any charges, fees, rents, taxes, or other sums due and payable to the City or the applicant is in default of a requirement of any lease or contract with the City a lease shall not be entered into until the deficiencies are remedied . Page 72 of 91 Page 23 of 27 Ord. No. 3072-2019 6. Providing consistency in the terms “Public Purpose” and “Public Use.” The Ordinance uses the terms “public purpose” and “public use.” While public use can be different from a public purpose, for example, a buffer or future use could be for a public purpose, but not necessarily public use, public purpose includes all public uses. The Substitute uses only the term “public purpose” as shown below (red indicates changes, blue shows where the term is already used): 22.05.010 Authority and Intent. (a) The provisions of this chapter apply to City-owned real property other than lands within the Airport Reserve as described in KMC 21.10 and the leasing of tidelands for shore fisheries. (b) The City may sell, convey, exchange, transfer, donate, dedicate, direct, assign to use, or otherwise dispose of City-owned real property, including property acquired, held for, or previously devoted to a public use, purpose only in accordance with this chapter, and, with respect to properties acquired through foreclosure for taxes, in compliance with those terms and provisions of AS 29 which apply to home-rule municipalities. Disposal or sale of lands shall be made only when, in the judgment of the City Council, such lands are not or are no longer required for a public purpose. (c) It is the intent of this chapter to provide land policies and practices that encourage responsible growth and development to support a thriving business, residential, recreational and cultural community. (d) It is not the intent of this chapter to allow for speculation on City-owned lands. All leases, sales, and other disposals of City-owned land must meet the intent of this chapter. (e) The provisions of this chapter shall not alter or amend the terms or rights granted under leases existing prior to the effective date of the ordinances codified in this chapter. 22.05.015 Lands Available for Lease, Sale or Disposal. (a) The City may lease, sell or dispose of real property not restricted from lease or sale which the City Council has determined is not required for a public purpose by any lawful method or mode of conveyance or grant. Any instrument requiring execution by the City shall be signed by the City Manager and attested by the City Clerk. The form of any instrument shall be approved by the City Attorney. 22.05.095 Methods of Sale or Disposal. (a) Lands to which the City of Kenai holds title which are not restricted from sale by the deed of conveyance to the City or which have been released from such restrictions and that the City Council has determined are not required for a public purpose, may be listed for sale by the City Manager. The decision whether or not to sell the land rests in the sole discretion of the City Council. (b) The City Council may by ordinance authorize the City Manager to dispose of such properties in accordance with the intent of this chapter as follows: (1) Non-competitive process: (i) Conveyance to encourage new enterprises where it is found that encouragement of a new commercial or industrial enterprise would be beneficial to the City of Kenai, one or more parcels of City land may be sold upon such terms as to price, conditions of conveyance, and with such contingencies as may be set forth in the ordinance. (ii) Property sale to adjacent owners for the conveyance of a parcel of City property at fair market value to the owner of adjacent land whenever, in the judgment of the Page 73 of 91 Page 24 of 27 Ord. No. 3072-2019 City Council, the parcel of land is of such small size, shape, or location that it could not be put to practical use by any other party. (iii) Grant or devotion of real property to the United States, the State of Alaska, a local political subdivision of the State of Alaska, or any agency of any of these governments or a non-profit corporation, for a consideration agreed upon between the City and grantee without a public sale if the grant, devotion or lease is advantageous to the City. (iv) Conveyance of land to resolve a land use conflict. (2) Competitive process: (i) Public outcry auction to the highest responsible bidder. (ii) Sealed bid to the highest responsible bidder. (iii) Over-the-Counter sale after a public outcry auction or sealed bid process on a first- come basis, provided minimum development requirements are met within two (2) years of sale and the land is sold for fair market value. An appraisal to determine fair market value must be completed within a one (1) year period prior to the date of sale. (iv) Leased land in which the lease was subject to competition through the lease application review process and which contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. An appraisal to determine fair market value must be completed within a one (1) year period prior to the sale. (3) Property exchange: Property exchanges for the conveyance and exchange of a parcel of City-owned property for property owned by another individual or legal entity subject to such conditions as Council may impose on the exchange, whenever the City Council makes findings it is advantageous to the City to make the property exchange. (c) Any sale of land owned by the City of Kenai and held by it for the use or benefit of the Kenai Municipal Airport must include in any instrument conveying title to the property restrictions accepted by the City under the terms of the 1963 Quitclaim Deed from the United States of America recorded at Book 27, Page 303 at the Kenai Recording District, Kenai Alaska or any other land owned by the City and acquired with Airport funds which may include similar restrictions. Additionally, any sale or disposal of the aforementioned lands for less than fair market value shall require a deposit in the amount of the difference between fair market value and the sale price to the Airport Land Sale Permanent Fund for the benefit of the Kenai Municipal Airport. 22.05.110 Determination as to Need for Public Use Purpose. (a) Whether land shall be acquired, retained, devoted, or dedicated to a public purpose use shall be determined by ordinance which shall contain the public purpose use for which the property is to be dedicated, the legal description of the property, and the address or a general description of the property sufficient to provide the public with notice of its location. This requirement does not apply to rights-of-way or easements dedicated through the City and Borough platting process. (b) Whether land previously dedicated to a public purpose use should be dedicated to a different public purpose use or should no longer be needed for public purpose use shall be determined by the City Council by ordinance, except in cases of vacation of rights-of-way or easements which may be determined by resolution, either of which shall contain the new public purpose use for which the property is to be dedicated or the reason the land is no longer needed for public purpose use, the legal description of the property, and the address or a general description of the property sufficient to provide the public with notice of its location. Page 74 of 91 Page 25 of 27 Ord. No. 3072-2019 22.05.135 Acquisition of Real Property. (a) The City, by authorization of the City Council, expressed in a resolution for such purpose, may lease, purchase or acquire an interest in real property needed for a public purpose on such terms and conditions as the Council shall determine. No purchase shall be made until a qualified independent appraiser has appraised the property and given the Council an opinion as to the fair market value of the land unless the Council, upon resolution so finding, determines that the public interest will not be served by an appraisal. (b) Rights-of-way and easements may be accepted or issued by the City Manager after approval by the City Council for utility lines and services of all types and for necessary rights- of-way easements. This requirement does not apply to rights-of-way or easements dedicated through the City and Borough platting process. 7. . Clarifying that ‘Airport Land’ can be exchanged. There were questions whether the Ordinance clearly indicates that ‘Airport’ lands or lands restricted by the FAA can be exchanged. The intent is to allow for Airport land exchanges subject to FAA rules and regulations. The following changes in the substitute clarify this: 22.05.095 Methods of Sale or Disposal. (a) Lands to which the City of Kenai holds title which are not restricted from sale by the deed of conveyance to the City or which have been released from such restrictions and that the City Council has determined are not required for a public purpose, may be listed for sale by the City Manager. The decision whether or not to sell the land rests in the sole discretion of the City Council. (b) The City Council may by ordinance authorize the City Manager to dispose of such properties in accordance with the intent of this chapter as follows: (1) Non-competitive process: (i) Conveyance to encourage new enterprises where it is found that encouragement of a new commercial or industrial enterprise would be beneficial to the City of Kenai, one or more parcels of City land may be sold upon such terms as to price, conditions of conveyance, and with such contingencies as may be set forth in the ordinance. (ii) Property sale to adjacent owners for the conveyance of a parcel of City property at fair market value to the owner of adjacent land whenever, in the judgment of the City Council, the parcel of land is of such small size, shape, or location that it could not be put to practical use by any other party. (iii) Grant or devotion of real property to the United States, the State of Alaska, a local political subdivision of the State of Alaska, or any agency of any of these governments or a non-profit corporation, for a consideration agreed upon between the City and grantee without a public sale if the grant, devotion or lease is advantageous to the City. (iv) Conveyance of land to resolve a land use conflict. (2) Competitive process: (i) Public outcry auction to the highest responsible bidder. (ii) Sealed bid to the highest responsible bidder. (iii) Over-the-Counter sale after a public outcry auction or sealed bid process on a first- come basis, provided minimum development requirements are met within two (2) years of sale and the land is sold for fair market value. An appraisal to determine fair market value must be completed within a one (1) year period prior to the date of sale. Page 75 of 91 Page 26 of 27 Ord. No. 3072-2019 (iv) Leased land in which the lease was subject to competition through the lease application review process and which contains an option to purchase once the minimum development requirements have been met for the fair market value of the land excluding permanent improvements made by the lessee. An appraisal to determine fair market value must be completed within a one (1) year period prior to the sale. (3) Property exchange: Property exchanges for the conveyance and exchange of a parcel of City-owned property, including lands held for the use and benefit of the Airport, for property owned by another individual or legal entity subject to such conditions as Council may impose on the exchange, whenever the City Council makes findings it is advantageous to the City to make the property exchange. (c) Any sale of land owned by the City of Kenai and held by it for the use or benefit of the Kenai Municipal Airport must include in any instrument conveying title to the property restrictions accepted by the City under the terms of the 1963 Quitclaim Deed from the United States of America recorded at Book 27, Page 303 at the Kenai Recording District, Kenai Alaska or any other land owned by the City and acquired with Airport funds which may include similar restrictions. Additionally, any sale or disposal of the aforementioned lands for less than fair market value or exchange for less than equal value shall require a deposit in the amount of the difference between fair market value and the sale price to the Airport Land Sale Permanent Fund for the benefit of the Kenai Municipal Airport. 8. Clarifying that a bill of sale, purchase agreement, or estimate of remaining useful life can only be used within one year of a transaction for purposes of a renewal of a lease. A lease renewal can be approved along with a new lease term based on a bill of sale, purchase agreement (new in Substitute) or professional estimate of the remaining useful life of an existing improvement. The amendment below clarifies that the renewal must occur within one year of the bill of sale, purchase agreement, or professional estimate to be used to determine the term as shown below: 22.05.045 Application for Lease Amendment, Assignment, Extension or Renewal. (e) An application for a lease renewal must include the following information: (1) For a lease renewal of an existing lease: (iii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of real property improvements on the premises as certified by the current lessee and proposed purchaser in a bill of sale dated within one (1) year of the requested starting date of the renewal; and (2) For a lease renewal of an expiring lease: (ii) If the renewal is pursuant to a transaction between the current lessee and a new buyer and prospective lessee, the estimated purchase price of existing real property improvements, as certified by the current lessee and the proposed purchaser in a bill of sale dated within one (1) year of the requested starting date of the renewal and the estimated cost of any additional investment in the construction of permanent improvements on the premises, if applicable; (iii) If the renewal is based on a professional estimate of the remaining useful life of the real property improvements on the premises, the estimated value dated within one (1) year of the requested starting date of the renewal and how it was determined; 9. Clarifying that the City should not sell large parcels of land when only a portion is needed for the intended use. Page 76 of 91 Page 27 of 27 Ord. No. 3072-2019 The following amendments are intended to clarify that the City should not sell large parcels of land when only a portion is needed for the intended use or development. For example, if a parcel is five acres and only one acre is needed for the development, the City should require a subdivision and only sell an acre parcel to be consistent with the intent of the Chapter and discourage land speculation. The amendments also attempt to clarify that land should only be sold when it is in the best interest of the City, and even if someone requests a sale, it may be more appropriate in certain cases for the City to pursue a lease with the interested party. 22.05.015 Lands Available for Lease, Sale or Disposal. (a) The City may lease, sell or dispose of real property not restricted from lease or sale which the City Council has determined is not required for a public purpose by any lawful method or mode of conveyance or grant. Any instrument requiring execution by the City shall be signed by the City Manager and attested by the City Clerk. The form of any instrument shall be approved by the City Attorney. Lands leased, sold or disposed of must be of appropriate size for the intended development or use to meet the intent of this Chapter. Council may require a subdivision prior to lease, sale or disposal of lands. 22.05.040 Lease Application Review. (b) Based on the initial review, if the City Manager determines the application is complete, the application shall be referred to the Planning and Zoning Commission and any other applicable commissions for review and comment, together with the City Manager’s recommendation for approval or rejection. The recommendation may include a recommendation for a subdivision to reduce or enlarge a parcel to meet the intended development or use. 22.05.100 Sale Procedure. (a) All requests to purchase City land must be submitted to the City on approved forms provided by the City. Applications will be dated on receipt and payment of the nonrefundable application fee and must include applicable deposit as set forth in the City’s schedule of fees adopted by the City Council. The City Council may decide to sell lands consistent with the intent of this Chapter after a recommendation from the City Manager and any appropriate City commission. The City Council may always recommend a lease as opposed to a sale when in the best interest of the City and consistent with the intent of this Chapter. (b) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to engineering services, surveying and consulting costs, unless in the sole discretion of the City Council it is determined the subdivision serves other City purposes. Sales of parcels must be of appropriate size to meet the needs of the proposed development or use to meet the intent of this Chapter. The sale of excess acreage not needed for the intended development or use does not meet the intent of this Chapter. Page 77 of 91 Sponsored by: Administration CITY OF KENAI ORDINANCE NO. 3079-2019 SUBSTITUTE INCREASING ESTIMATED REVENUES AND APPROPRIATIONS IN THE AIRPORT SPECIAL REVENUE AND AIRPORT IMPROVEMENTS CAPITAL PROJECT FUNDS AND ACCEPTING A GRANT FROM THE FEDERAL AVIATION ADMINISTRATION FOR THE PURCHASE OF TWO AIRCRAFT RESCUE AND FIREFIGHTING (ARFF) VEHICLES, REHABILITATION OF THE FIRE TRAINING PROPS, AND REHABILITATION OF THE TRAINING FACILITY FOR THE ALASKA REGIONAL FIRE TRAINING FACILITY. WHEREAS, the Federal Aviation Administration (FAA) is providing one combined grant for the Alaska Regional Fire Training Facility for the purchase of two new Aircraft Rescue and Fire Fighting (ARFF) Vehicles, Rehabilitation of the Training Equipment Props, and Rehabilitation of the Training Facility Building; and, WHEREAS, the two 1998 Aircraft Rescue & Firefighting (ARFF) Vehicles used for training at the Alaska Regional Fire Training Facility have far exceeded what the Federal Aviation Administration considers their useful life and do not satisfy requirements for airport rescue vehicles; and, WHEREAS, new ARFF vehicles designed and manufactured in accordance with FAA Advisory Circular 150/5220-10 will allow airport firefighters to train and meet the 49 CFR 139 certification requirements for all levels of FAA indexed airports from A-E at the Alaska Regional Fire Training Facility; and, WHEREAS, KMC 17.15.070 (b) allows the City to purchase equipment under a contract of another governmental agency in which contract the City is authorized to participate and the FAA has approved the procurement process; and, WHEREAS, the cost to replace the aging ARFF vehicles is $1,600,000.00 and funding to be provided by FAA grant funding of $1,500,000.00, 93.75% and required local match of $100,000.00, 6.25%; and, WHEREAS, the Alaska Regional Fire Training Facility was originally constructed twenty years ago and is in need of rehabilitation to the Facility’s operations equipment and controls; and, WHEREAS, the Federal Aviation Administration has expressed their interest in seeing the facility’s operations brought back to current standards; and, WHEREAS, the Design and Construction Costs for this work will be eligible under the grant from the Federal Aviation Administration; and, WHEREAS, on March 14, 2019 the City of Kenai released a Request for Proposals (RFP) where Morrison-Maierle was determined to be the successful proposer; and, Page 78 of 91 Ordinance 3079-2019 SUBSTITUTE Page 2 of 3 WHEREAS, on August 1, 2019 a formal Invitation to Bid was released for rehabilitation of the training equipment and training facility, with bids due on August 29, 2019; and, WHEREAS, the cost to rehabilitate the Training Facility’s Props is $1,993,000 and funding to be provided by FAA grant funding of $1,868,437.00, 93.75% and required local match of $124,563.00, 6.25% and an additional $150,000.00 in project contingency to be initially funded by the airport; and, WHEREAS, the cost to rehabilitate the Training Facility is $1,938,755.00 and funding to be provided by FAA grant funding of $1,817,582.00, 93.75% and required local match of $121,173.00, 6.25% and an additional $150,000.00 in project contingency to be initially funded by the airport; and; and, WHEREAS, with future concurrence from the FAA, contingency amounts will become eligible for 93.75% reimbursement; and, WHEREAS, sufficient funds are available in the Airport Special Revenue Fund to provide the required $384,735.00 local match. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. That the City Manager is authorized to accept grant funding in the amount of $5,771,020.00 from the Federal Aviation Administration and to execute a grant agreement and to expend grant funds to fulfill the purpose and intent of this ordinance. Section 2. That the estimated revenues and appropriations be increased as follows: Airport Special Revenue Fund Increase Estimated Revenues – Appropriation of Fund Balance $468,735.00 Increase Appropriations - Airport Training Facility - Transfer to Other Funds $468,735.00 Section 3. That the estimated revenues and appropriations be increased as follows: Airport Improvement Capital Project Fund Increase Estimated Revenues: FAA Grants $5,771,020.00 Transfer from Other Funds $468,735.00 $6,239,755.00 Increase Appropriations - Fire Training Center ARFF Vehicle Purchase - Machinery & Equipment $1,605,000.00 Fire Training Center Training Prop Rehabilitation – Construction $2,168,000.00 Page 79 of 91 Ordinance 3079-2019 SUBSTITUTE Page 3 of 3 Fire Training Center Training Facility Rehabilitation – Construction $2,113,755.00 $5,886,755.00 Section 3. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 4. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect upon adoption. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 4th day of September 2019. BRIAN GABRIEL SR., MAYOR ATTEST: ___________________________________ Jamie Heinz, CMC, City Clerk Approved by Finance: Introduced: August 21, 2019 Enacted: September 4, 2019 Effective: September 4, 2019 Page 80 of 91 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council THROUGH: Paul Ostrander, City Manager FROM: Scott Curtin, Public Works Director DATE: September 3, 2019 SUBJECT: Ordinance No. 3079 – 2019 Amendments ____________________________________________________________________________ On August 29, 2019 the City opened bids for the Alaska Regional Fire Training Center Building and Equipment Rehabilitation Projects. The Following Bids were received: Alaska Regional Fire Training Building Rehabilitation Project Contractor Bid Orion Construction, Inc $1,938,755.00 Blazy Construction, Inc $2,453,446.00 Alaska Regional Fire Training Equipment Rehabilitation Project Contractor Bid Kirila Fire, Inc $1,993,000.00 Alpine Metal, Inc $2,767,428.00 Blazy Construction, Inc $4,505,246.00 The Bid totals cover all Bid schedules with Additive Alternates included. Orion Construction, Inc. and Kirila Fire, Inc. were found to be the lowest responsive and responsible bidders; and it is the Administration’s recommendation that an Award to both Contractors is in the best interest of the City. Procurement of the ARFF Vehicles will be through State Contract purchasing. As the State finalizes these contracts it will be the City’s intent to quickly get them on order, as the vehicles may take as long as a year to build. Page 81 of 91 Page 2 of 2 Ordinance 3079-2019 With the information above now available the Ordinance No. 3079-2019 costs are now available. The FAA Grant shall be in the amount of $6,155,755 with the Federal share being $5,771,020 and the City of Kenai’s local share being $384,735. These amounts cover costs for Admin, Design, Construction, Equipment and Permits. The City’s total cost share for this project, including our required 6.25% match of $384,735, and the $300,000 in contingency, is $684,735. The City has previously appropriated $216,000 for Design Services under Ordinance 3059-2019 so the additional match required under this ordinance is $468,735. It is anticipated that any contingency that is required for the project will be eligible for a 93.75% federal match. Contingency funds are being appropriated at this time for the processing of change orders as they arise. Council will continue to be notified of any change orders through the Public Works Director Mid-Month Reports. Acceptance of this Grant and completion of this project is a great opportunity for the community, it will restore a City asset, and allow for continued and improved operations at the facility. Because of the number of amendments requested, a substitute ordinance has been provided to allow the amendments to be made in one motion. A tracked changes version of the ordinance is attached to this memo for informational purposes. Council’s approval is respectfully requested. Page 82 of 91 New Text Underlined [Deleted text bracketed] Sponsored by: Administration CITY OF KENAI ORDINANCE NO. 3079-2019 INCREASING ESTIMATED REVENUES AND APPROPRIATIONS IN THE AIRPORT SPECIAL REVENUE AND AIRPORT IMPROVEMENTS CAPITAL PROJECT FUNDS AND ACCEPTING A GRANT FROM THE FEDERAL AVIATION ADMINISTRATION FOR THE PURCHASE OF TWO AIRCRAFT RESCUE AND FIREFIGHTING (ARFF) VEHICLES, REHABILITATION OF THE FIRE TRAINING PROPS, AND REHABILITATION OF THE TRAINING FACILITY FOR THE ALASKA REGIONAL FIRE TRAINING FACILITY. WHEREAS, the Federal Aviation Administration (FAA) is providing one combined grant for the Alaska Regional Fire Training Facility for the purchase of two new Aircraft Rescue and Fire Fighting (ARFF) Vehicles, Rehabilitation of the Training Equipment Props, and Rehabilitation of the Training Facility Building; and, WHEREAS, the two 1998 Aircraft Rescue & Firefighting (ARFF) Vehicles used for training at the Alaska Regional Fire Training Facility have far exceeded what the Federal Aviation Administration considers their useful life and do not satisfy requirements for airport rescue vehicles; and, WHEREAS, new ARFF vehicles designed and manufactured in accordance with FAA Advisory Circular 150/5220-10 will allow airport firefighters to train and meet the 49 CFR 139 certification requirements for all levels of FAA indexed airports from A-E at the Alaska Regional Fire Training Facility; and, WHEREAS, KMC 17.15.070 (b) allows the City to purchase equipment under a contract of another governmental agency in which contract the City is authorized to participate and the FAA has approved the procurement process; and, WHEREAS, the cost to replace the aging ARFF vehicles is $1,600,000.00 and funding to be provided by FAA grant funding of $1,500,000.00, 93.75% and required local match of $100,000.00, 6.25%; and, WHEREAS, the Alaska Regional Fire Training Facility was originally constructed twenty years ago and is in need of rehabilitation to the Facility’s operations equipment and controls; and, WHEREAS, the Federal Aviation Administration has expressed their interest in seeing the facility’s operations brought back to current standards; and, WHEREAS, the Design and Construction Costs for this work will be eligible under the grant from the Federal Aviation Administration; and, WHEREAS, on March 14, 2019 the City of Kenai released a Request for Proposals (RFP) where Morrison-Maierle was determined to be the successful proposer; and, Page 83 of 91 Ordinance 3079-2019 Page 2 of 3 New Text Underlined [Deleted text bracketed] WHEREAS, on August 1, 2019 a formal Invitation to Bid was released for rehabilitation of the training equipment and training facility, with bids due on August 29, 2019; and, WHEREAS, the cost to rehabilitate the training facility’s props is estimated to be $1,993,000 and funding to be provided by FAA grant funding of $1,868,437.00, 93.75% and required local match of $124,563.00, 6.25% and an additional $150,000.00 in project contingency to be initially funded by the airport; and, WHEREAS, the cost to rehabilitate the Training Facility is $1,938,755.00 and funding to be provided by FAA grant funding of $1,817,582.00, 93.75% and required local match of $121,173.00, 6.25% and an additional $150,000.00 in project contingency to be initially funded by the airport; and; and, WHEREAS, with future concurrence from the FAA, contingency amounts will become eligible for 93.75% reimbursement; and, WHEREAS, sufficient funds are available in the Airport Special Revenue Fund to provide the required $384,735.00 local match. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. That the City Manager is authorized to accept grant funding in the amount of $5,771,020.00 from the Federal Aviation Administration and to execute a grant agreement and to expend grant funds to fulfill the purpose and intent of this ordinance. Section 2. That the estimated revenues and appropriations be increased as follows: Airport Special Revenue Fund Increase Estimated Revenues – Appropriation of Fund Balance $468,735.00 Increase Appropriations - Airport Training Facility - Transfer to Other Funds $468,735.00 Section 3. That the estimated revenues and appropriations be increased as follows: Airport Improvement Capital Project Fund Increase Estimated Revenues: FAA Grants $5,771,020.00 Transfer from Other Funds $468,735.00 $6,239,755.00 Increase Appropriations - Fire Training Center ARFF Vehicle Purchase - Machinery & Equipment $1,605,000.00 Page 84 of 91 Ordinance 3079-2019 Page 3 of 3 New Text Underlined [Deleted text bracketed] Fire Training Center Training Prop Rehabilitation – Construction $2,168,000.00 Fire Training Center Training Facility Rehabilitation – Construction $2,113,755.00 $5,886,755.00 Section 3. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 4. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect upon adoption. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 4th day of September 2019. BRIAN GABRIEL SR., MAYOR ATTEST: ___________________________________ Jamie Heinz, CMC, City Clerk Approved by Finance: Introduced: August 21, 2019 Enacted: September 4, 2019 Effective: September 4, 2019 Page 85 of 91 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Jamie Heinz, CMC, City Clerk DATE: September 4, 2019 SUBJECT: Ordinance No. 3082 – 2019 ____________________________________________________________________________ The following amendments are intended to clarify that drilling permits should be submitted to the City Manager or their designee. Your consideration is appreciated, and the following motions would be appropriate to move the amendments: I move to amend Section 1 of Ordinance No. 3082-2019 by adding “or their designee” after City Manager in section (a). I move to amend Section 2 of Ordinance No. 3082-2019 by adding “or their designee” after City Manager in section (a). Page 86 of 91 NETCTTOUTSIDE WAYRIVERVIEW DRCOHOE AVESALMON CTBALEEN AVESUNSET BLVDSUNSET BLVDAUGUSTINE WAYB A C H D R ILIAMNA RDWILDWOOD DRS A D IYA D R WINDFLOWER DRHOMER AVEO R C H ID W A Y D E L G A M M A D R ALPINE AVEBLUEBELL LNBORGEN AVEDATION DRWELLS WAYSELDOVIA AVEBORGEN AVESUNSET BLVDMcCOY STSANAK AVE20' ALLEY 20' ALLEYAEAWELLS WAYRG E R D IN E W AY MLMWELLS WAYD20' ALLEY 20' ALLEY GDWELLS WAYN IN IL C H IK D R K E N A I S P U R H W Y SEWARD AVELENNA AVELILAC LNCOOK INLET VIEW DRPETERKIN PLILIAMNA RDBACH DRB A C H D R SITKIN CIAKUTAN CIW IN D F L O W E R D R KORPI AVEMcCOY STGISHA LNBRUSH STBRUSH STFLORIDA AVEFLORIDA AVEELYIN WAYALLEYGISHA LNS AD IY A D R D A L IK A D R BACH DRC HU L IN DR CH ULIN DR D A LIK A DRK E N A I S P U R H W Y CHULIN DRD UJE MI DRM ES A L P SPUR DRFIRST STSECOND STTHIRD STREDOUBT AVEFOURTH STCALIFORNIA AVEFIRST STSECOND STTHIRD STTEXAS AVEASPEN STTHIRD AVESECOND AVENORTH SPRUCE STFLOATPLANE RDSYCAMORE STCTALDER PETERSEN WAYMISSION STDMAIN STMAIN STCORAL STCOLUMBIA STRCANDLELIGHT DRCANDLELIGHT DRCUNNINGHAM CTERVIN STSPUR DRBOWPICKER LNS ET N ET D R SAND DOLLAR DRBOWPICKER LNTTPA DGAMES RDANGLER DRBEAVER LOOP RDMINCHUMINA AVEEAGLE STPTARMIGAN STALEENE WAYTIDAL STJULIU S SEN STDOLCHOK LNCUB C T KIM-N-ANG CTCREEK AVETOGIAK STRAVEN STSEELMO'BRIEN CTDCOTTONWOODPINE AVEWINDWARD DRTANAGA AVECOHOE CITO YON W AYSALMO CI HAIDA DRSOUTH GILL STSTELLAR DRFATHOM DRSTELLAR DRTOYON WAYEADIE'S WAYKENAI SPUR HWYFOURTH AVESECOND AVENIGHTINGALE STMcKINLEY STMC KINLEY STHALLER STSECOND AVEWESBET CTGRANT PLTHIRD AVEHALLER STEVERGREEN STJEFFERSON STREDOUBT AVESKYLER LNMIRANDA CTCOURTNEY DRMADISON LNHALLER STJ U L IE A N N A D R MC KINLEY STNORTH GILL STCOOLIDGE LNOWEDGELTRSYEEQUINOX WAYCHANNEL WAYIWWOIH OW IEQUINOX WAYTHIRD AVEKOA CICINORTH GILL STFIFTH AVEWEST WOOD CIPONDEROSA STSILVER PINES RDBACKWOOD AVEHEDLEY DRMEANDER LNDRLEEWARD DRINLET WOODS DRWOODSIDE AVESOUTH FOREST DRCHANNEL WAYNORTH FOREST DRDRNORTH FOREST DRUN MISSION AVEHIGHLAND AVECOOK AVEOVERLAND AVESEA CATCH DRBOWPICKER LNKENAI AVEUPLAND STSOUTH SPRUCE STCHAR CIOANLRMSGARDENUPLAND STMI SSION AVEOVERLAND AVELAND STINLET STKENAI AVEWESTWARD STAV EINLET STCORAL STC O HO E AV E DRAGNET CTROYAL STOLD CANNERY RDOVERLAND AVEAL ASKA AVE MISSI ON AVEFIRST AVEBIRCH STBIRCH STFIFTH CTEVA HIK VAEA ECAR GILBERTSON STNL MOPAVVEAEDLSH EFIRST AVECHERYL STPINE CIFIFTH AVEAVE E CEDAR DRBEEC H AVE FIR DRMAPLE DRWALNUT AVELAUREL DROAK AVELARCH AVECYPRESS DRMAPLE DRREDOUBT AVEJUNIPER CTSYCAMORE CIPOPLAR CIFOURTH AVECINDY LNCINDY CIDORENDACTSUSIEANA LNWINDJAMMER CIWATERGATE WAYSET NET DRSET NET DR40 -FOOT R OWCHILDS AVEBOAT LAUNCH RDBOAT LAUNCH RDCHILDS AVEKALIFORNSKY BEACH RDSEINE STNS CEIE BALEEN AVET MUIR AVELORA DRVIP DRVIP DRWATERGATE WAY PIRATE LNBALEEN AVESCHOONER CIWATERGATE WAYKETCH STCLIPPER CITRADING BAY RDSENIOR CTGRANITE POINT STPENINSULA AVEMARINE AVEKENAI SPUR HWYVIP D RRIVERVIEW DRATTLA WAYBARNACLE WAYBLUFF STBROAD STBROAD WAYBROADWAY CTPENINSULA AVECOOK AVEMAIN SREET LOOP RDFRONTAGE RDCAVIAR STSOUTH WILLOW STLAKE STFILDAGO AVEBIDARKA STMAIN STREET LOOP RDBIDARKA STFBO RDNORTH WILLOW STGRANITE POINT CTMAIN STREET LOOP RDSPU R VI EW DRMAGIC CT.WEST TERN AVESPRUCEWOO D R D STPOLOKTSTERLING CTSTERLING CTRCFRONTAGE RDBR IDG E AC C ES S R D SPUR V IEW DRTERN AVEHARBOR AVEKENAI SPUR HWYWALKER LNAIRPORT WAYNORTH WILLOW STBARON PARK LNHEA ACCESS RDMARATHON RDGEEBEE AVEBRIDGE A CCESS RD NBRIDGE AC CESS RD ROGERS RDPAULA STLAWTON DRNO R MAN ST PAMELA CT M St.BRIDGE ACCESS ROADVAN ANTWERP AVEBELUGA DRPRINCESS STMAGIC AVECRYSTAL STHUTTO STROGERS RDL O EWD G O D CINDERELLA STCINDERELLA STEPENNY CITERESA STSHELIKOFF STSOUTH TINKER LNNORTH TINKER LNCOLONIAL DRALIAK DRLINWOOD LNLAWTON DRBARABARA DRTCAUK STDEEPWOOD CTALIAK DRMc COLLUM DRCHINIAK STCOLONIAL DRSILVERSMITH LNPINEWOOD LNLINWOOD LNKIANA LNJAMES STLINWOOD LNFOX AVEDOLLY VARDEN STKULILA PLKENAI SPUR HWYSTEELHEAD CTCROW CTKAKNU WAYCHINITNA PLALIAK DRCHINIAK STJAPONSKI DRCOTTAGE CICASTLE STLANTERN CIKAKNU WAYKENAI SPUR HWYTUNDRA ROSE LNCOPPER LNBAKER STCOPPER LNCANDLELIGHT DRKIANA LNHIGHBUSH LNLAWTON DRGLACIER STBAKER STDAVIDSON DRRAINBOW DRHIGHBUSH LNALIAK DRBLARNEYROY WAYSHAMROCKSALMON STALIAK DRCLIFFORD AVEGIBSON WAYBUMBLEBEE AVECLIFFORD AVEMISTY HAVEN LNHIGHBUSH LNMISTY HAVEN LNRANDEE LNHIGHBUSH LNBAKER STCICIBIGHORN CI PEBBLE BEACH CTINDIANWELLS CTBRANNIGANSHILLELAHCICICONE AVEGRAVEL STDEAN STMARGINAL ACCESS RDCONE CIWYATT WAYSWIRES RDMAPES DRSWIRES RDWYATT WAYHOLLIER STDOLCHOK LNBASIN VIEW WAYAMES RDAMES RDBEAVER LOOP RDANGLER DRMUDHEN DREAGLE STRAVEN STSTRAWBERRY RDCHINOOK DRFRONTAG E RDNORTH FERN STPARKSIDE DRFORGET-MEPRIMROSE PLPRIMROSE PLLUPINE DR-NOT RDFERN STDOGWOOD RDWILDROSE AVEIOWA STNEVADA STEISENHOWER LNTOGIAK STK E N AI S P U R H WY FIR E W EE D LNSHOTGUN DRNORTH FERN STDEVRAY STDEVRAY STSHELL DRNORTH DOGWOOD RDWOLFE STTTERN PL I ST. SEVALHALLA LNEAST RICHFIELD DRBWRTCJOHNISRRREEAYSEIRNOBDP H IL L IP S DR NORTH LUPINE DRS TA NDA R D D RRICHFIELD DRSHANE CTWORTHAM AVEROSS STRANCE CTW OR TH A M A VE KENAITZE CTDEAGLE ROCK DRS A NDP IP E R L NRTHOMPSON PLSHELL DRSOCKEYE CIKING SALMON DRRIDGEVIEW CTT KIAKITCHISIK STNIGHTHAWK LNLNMINK CTE SWALLOW DRCTWMARTIN CT M U S KRA T WAYNORTH STRAWBERRY RDK E N A I SPUR HWYCHINOOK CTSILVER SALMON DRSTRAWBERRY RDSILVER SALMON DRMOCKINGBIRDaccess/water easement 2006-011437-0 REECE STBRYSON AVEROW issuesee bldg file66' VACATE ROW2009-006759-0 2009-009059-0SEWER EASEMENT2006-011437-02009-011422-0 VACATE 50' ROWBEAVER LOOP ROADCOLE DRCANDLELIGHT DRPEARSON AVE.Utility Easement2012-012093-0COMMERCIAL LOOPBREE AVEPE Y D R KE E 'S TE R N W AYSTANDARD CTCity of Kenai Zoning MapThis map is for graphic representationonly and the City of Kenai assumes noresponsibility for errors on this map..ZoningAirport Light Industrial (ALI)Conservation (C)Education (ED)Rural Residential (RR)Rural Residential 1 (RR-1)Suburban Residential (RS)Suburban Residential 1 (RS-1)Suburban Residential 2 (RS-2)Urban Residential (RU)Townsite Historic (TSH)Central Commercial (CC)Limited Commercial (LC)General Commercial (CG)Central Mixed Use (CMU)Light Industrial (IL)Heavy Industrial (IH)Recreational (R)March 2019Page 87 of 91 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Paul Ostrander, City Manager DATE: September 3, 2019 SUBJECT: Resolution 2019-61 Amendments ____________________________________________________________________________ On August 29, 2019 the City opened bids for the Alaska Regional Fire Training Equipment Rehabilitation Project requiring the following amendments to Resolution 2019-61: In the first whereas, the blank bid table should be replaced with the following bid table: Alaska Regional Fire Training Equipment Rehabilitation Project Contractor Bid Kirila Fire, Inc $1,993,000.00 Alpine Metal, Inc $2,767,428.00 Blazy Construction, Inc $4,505,246.00 The second whereas should now read: WHEREAS, Kirila Fire, Inc was found to be the lowest responsive and responsible bidder and award to this bidder will be in the best interest of the City; and, The third whereas should now read: WHEREAS, the recommendation from the City Administration is to award the agreement to Kirila Fire Inc for completion of the Alaska Regional Fire Training Equipment Rehabilitation Project; and, Section 1 should now read: Section 1. That the City Manager is authorized to execute a construction contract with Kirila Fire, Inc for $1,993,000. Page 88 of 91 Page 2 of 2 Resolution 2019-61 Amendments Section 2 should now read: Section 2. That the City Manager is authorized to issue a purchase order to Kirila Fire, Inc in the amount of $2,143,000 for the contract amount of $1,993,000 and $150,000 of contingency funding, which may be authorized for construction change orders during completion of the project. Council’s approval is respectfully requested. Page 89 of 91 MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council FROM: Paul Ostrander, City Manager DATE: September 3, 2019 SUBJECT: Resolution 2019-62 Amendments ____________________________________________________________________________ On August 29, 2019 the City opened bids for the Alaska Regional Fire Training Center Building requiring the following amendments to Resolution 2019-62: In the first whereas, the blank bid table should be replaced with the following bid table: Alaska Regional Fire Training Center Building Rehabilitation Project Contractor Bid Orion Construction, Inc $1,938,755.00 Blazy Construction, Inc $2,453,446.00 The second whereas should now read: WHEREAS, Orion Construction, Inc was found to be the lowest responsive and responsible bidder and award to this bidder will be in the best interest of the City; and, The third whereas should now read: WHEREAS, the recommendation from the City Administration is to award the agreement to Orion Construction, Inc for completion of the Alaska Regional Fire Training Center Building Rehabilitation Project; and, Section 1 should now read: Section 1. That the City Manager is authorized to execute a construction contract with Orion Construction Inc for $1,938,755. Section 2 should now read: Page 90 of 91 Page 2 of 2 Resolution 2019-62 Amendments Section 2. That the City Manager is authorized to issue a purchase order to Orion Construction, Inc in the amount of $2,088,755 for the contract amount of $1,938,755 and $150,000 of contingency funding, which may be authorized for construction change orders during completion of the project. Council’s approval is respectfully requested. Page 91 of 91 Kenai City Council - Regular Meeting Page 1 of 4 September 04, 2019 Kenai City Council - Regular Meeting September 04, 2019 – 6:00 PM Kenai City Council Chambers 210 Fidalgo Avenue, Kenai, Alaska www.kenai.city ACTION AGENDA A. CALL TO ORDER 1. Pledge of Allegiance 2. Roll Call 3. Agenda Approval 4. Consent Agenda (Public comment limited to three (3) minutes) per speaker; thirty (30) minutes aggregated) *All items listed with an asterisk (*) are considered to be routine and non-controversial by the council and will be approved by one motion. There will be no separate discussion of these items unless a council member so requests, in which case the item will be removed from the consent agenda and considered in its normal sequence on the agenda as part of the General Orders. B. SCHEDULED PUBLIC COMMENTS (Public comment limited to ten (10) minutes per speaker) C. UNSCHEDULED PUBLIC COMMENTS (Public comment limited to three (3) minutes per speaker; thirty (30) minutes aggregated) D. PUBLIC HEARINGS 1. POSTPONED AS AMENDED TO 10/2/19. Ordinance No. 3072-2019 - Renaming, Repealing and Re-Enacting Kenai Municipal Code Title 22-General Fund Lands, Renaming Title 21-City Airport and Airport Lands, and Repealing Kenai Municipal Code Chapter 21.15-Lease and Sale of Airport Lands Outside of the Airport Reserve to Encourage Responsible Growth and Development to Support a Thriving Business, Residential, Recreational and Cultural Community through Responsible Land Policies and Practices. (Administration) [Clerk’s Note: At the 08/21/19 Meeting, this Item was Postponed to the Meeting After a Work Session was Held Regarding the Matter for a Second Public Hearing. A Work Session was Held On 09/03/19. A Motion to Enact is On the Floor.] 2. ENACTED UNANIMOUSLY AS AMENDED. Ordinance No. 3079-2019 - Increasing Estimated Revenues and Appropriations in the Airport Special Revenue Kenai City Council - Regular Meeting Page 2 of 4 September 04, 2019 and Airport Improvements Capital Project Funds and Accepting a Grant from the Federal Aviation Administration for the Purchase of Two Aircraft Rescue and Firefighting (ARFF) Vehicles, Rehabilitation of the Fire Training Props, and Rehabilitation of the Training Facility for the Alaska Regional Fire Training Facility. (Administration) 3. ENACTED UNANIMOUSLY. Ordinance No. 3080-2019 - Increasing Estimated Revenues and Appropriations in the Terminal Improvements Capital Fund, and Authorizing an Increase to the Construction Purchase Order to Blazy Construction, Inc. (Administration) 4. ENACTED UNANIMOUSLY. Ordinance No. 3081-2019 - Increasing Estimated Revenues and Appropriations in the Airport Improvements Capital Project Fund, and Authorizing an Increase to the Construction Purchase Order to Polar North Construction, Inc. (Administration) 5. ENACTED UNANIMOUSLY AS AMENDED. Ordinance No. 3082-2019 - Amending Kenai Municipal Code Chapter 5.35, Oil and Gas Wells, to Provide that Applications and Supplemental Applications be Filed with the City Manager. (City Clerk) 6. REFERRED AS AMENDED TO PLANNING & ZONING/SECOND PUBLIC HEARING SET FOR 10/2/19. Ordinance No. 3083-2019 - Amending Kenai Municipal Code 14.20.175 - Adult Businesses, To Increase The Buffer Distances Between Adult Businesses And Sensitive Uses From 500 Feet To 1000 Feet And Define Sensitive Uses. (Council Member Pettey) • Substitute Ordinance No. 3083-2019 - Amending Kenai Municipal Code 14.20.175 - Adult Businesses, To Increase The Buffer Distances Between Adult Businesses And Sensitive Uses From 500 Feet To 1000 Feet And Define Sensitive Uses and Amend Kenai Municipal Code 14.22.010 – Land Use Table, to Add Adult Businesses. (Council Members Pettey and Knackstedt) 7. ADOPTED UNANIMOUSLY AS AMENDED. Resolution No. 2019-61 - Awarding a Construction Contract for Rehabilitation of Training Props at the Alaska Regional Fire Training Facility. (Administration) 8. ADOPTED UNANIMOUSLY AS AMENDED. Resolution No. 2019-62 - Awarding a Construction Contract for Rehabilitation of the Alaska Regional Fire Training Facility. (Administration) 9. ADOPTED UNANIMOUSLY. Resolution No. 2019-63 - Authorizing the Use of the State of Alaska Department of Transportation and Public Facilities Fleet Procurement Program for the Purchase of Two Aircraft Rescue and Firefighting (ARFF) Vehicles for the Alaska Regional Fire Training Facility. (Administration) E. MINUTES 1. APPROVED BY THE CONSENT AGENDA. *Action/Approval - Regular Meeting of August 21, 2019 Kenai City Council - Regular Meeting Page 3 of 4 September 04, 2019 F. UNFINISHED BUSINESS 1. POSTPONED TO 10/2/19. Resolution No. 2019-58 - Amending its Comprehensive Schedule of Rates, Charges, and Fees to Incorporate Changes to Application Fees for Lands Outside the Airport Reserve. (Administration) [Clerk’s Note: At the 08/21/19 Meeting, this Item was Postponed to the Meeting which Ordinance No. 3072-2019 was Scheduled for its Second Public Hearing; a Motion to Enact is On the Floor.] G. NEW BUSINESS 1. APPROVED BY THE CONSENT AGENDA. *Action/Approval - Bills to be Ratified. (Administration) 2. APPROVED BY THE CONSENT AGENDA. *Action/Approval - Purchase Orders Exceeding $15,000. (Administration) 3. INTRODUCED BY THE CONSENT AGENDA/PUBLIC HEARING SET FOR 10/2/19. *Ordinance No. 3084-2019 - Increasing Estimated Revenues and Appropriations in the General Fund for Reimbursement Received for Support of the Swan Lake Fire Suppression Efforts. (Administration) 4. DIRECTION GIVEN TO ADMINISTRATION TO DRAFT AN ORDINANCE. Discussion – Amending Kenai Municipal Code 14.20.330 - Standards for Commercial Marijuana Establishments, to Incorporate Hours of Operation for Retail Marijuana Establishments into the City of Kenai’s Code of Ordinances as Recommended by the Planning and Zoning Commission. (Council Member Molloy) 5. HEARING SET FOR 10/7/19 AT 6:00 P.M. Discussion - Set a Board of Adjustment Hearing Date. (City Clerk) H. COMMISSION / COMMITTEE REPORTS 1. Council on Aging 2. Airport Commission 3. Harbor Commission 4. Parks and Recreation Commission 5. Planning and Zoning Commission 6. Beautification Committee 7. Mini-Grant Steering Committee I. REPORT OF THE MAYOR J. ADMINISTRATION REPORTS Kenai City Council - Regular Meeting Page 4 of 4 September 04, 2019 1. City Manager 2. City Attorney 3. City Clerk K. ADDITIONAL PUBLIC COMMENT 1. Citizens Comments (Public comment limited to five (5) minutes per speaker) 2. Council Comments L. EXECUTIVE SESSION M. PENDING ITEMS N. ADJOURNMENT O. INFORMATION ITEMS 1. Purchase Orders between $2,500 and $15,000. The agenda and supporting documents are posted on the City’s website at www.kenai.city. Copies of resolutions and ordinances are available at the City Clerk’s Office or outside the Council Chamber prior to the meeting. For additional information, please contact the City Clerk’s Office at 907-283-8231. MEMO: TO: File FROM: Jamie Heinz, City Clerk DATE: September 18, 2019 SUBJECT: Supplemental Material Supplemental material was presented to the Council regarding Ordinance No. 3083- 2019. That material is provided behind this memo. For more information, contact me at 907-283-8231 or visit with me at City Hall, Office of the City Clerk. 210 Fidalgo Avenue, Kenai, Alaska 99611-7794 Telephone: 907-283-7535 / FAX: 907-283-3014 [PAGE LEFT BLANK INTENTIONALLY] Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER. Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email corrections@akcourts.us. THE SUPREME COURT OF THE STATE OF ALASKA CLUB SINROCK, LLC, Appellant, v. MUNICIPALITY OF ANCHORAGE, OFFICE OF THE MUNICIPAL CLERK, Appellee. ) ) Supreme Court No. S-17068 Superior Court No. 3AN-16-10280 CI O P I N I O N No. 7392 – August 2, 2019 ) ) ) ) ) ) ) ) ) Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Eric A. Aarseth, Judge. Appearances: Susan Orlansky and Brian Stibitz, Reeves Amodio LLC, Anchorage, for Appellant. Todd K. Sherwood, Assistant Municipal Attorney, and Rebecca A. Windt Pearson, Municipal Attorney, Anchorage, for Appellee. Before: Bolger, Chief Justice, Winfree, Stowers, Maassen, and Carney, Justices. WINFREE, Justice. I. INTRODUCTION Like the United States Constitution, the Alaska Constitution generally guarantees citizens the right to free speech without governmental infringement. Defining speech broadly, as does the United States Supreme Court with respect to the federal constitution, we have held that the Alaska free speech clause protects nude dancing as a form of expression. In this case an adult cabaret featuring nude dancing challenges a municipal code provision prohibiting adult-oriented establishments from operating during early morning hours, arguing that if the provision applies to adult cabarets, it is unconstitutional under the federal and Alaska constitutional free speech provisions. We conclude that the current municipal closing-hours restriction applies to adult cabarets, but, applying strict scrutiny, that it may not be enforced against adult cabarets in light of the Alaska Constitution’s free speech clause. We leave open the possibility that local governments may enact constitutional closing-hours restrictions for adult cabarets, but we must prohibit enforcement of this particular restriction because the municipal assembly failed to appropriately justify its imposition. II. FACTS AND PROCEEDINGS Club SinRock,LLCoperates an adult cabaret featuring fully nude dancing. Because SinRock does not serve alcohol, the Municipality of Anchorage licenses and regulates it under the Anchorage Municipal Code (AMC) as an adult-oriented business.1 Since 2007 SinRock has received adult-oriented establishment licenses from the Municipality. In January 2016 the Municipal Clerk received a complaint that SinRock was violating AMC 10.40.015(A), mandating that adult-oriented establishments close between 2:00 a.m. and 6:00 a.m., by staying open until 4:00 a.m. SinRock’s owner acknowledged that the club regularly remains open past 2:00 a.m., and the Clerk determined that SinRock was violating the closing-hours restriction. In March, after 1 See AMC 10.40.050 (listing “[a]dult-oriented establishment” businesses, including adult cabarets, and defining “[a]dult cabaret” as “a cabaret which features topless dancers, strippers, male or female impersonators, or similar entertainers” and which is not “licensed for sale of alcoholic beverages,”); AMC 10.40.015 (regulating adult-oriented establishments, including adult cabarets). -2-7392 SinRock’s owner applied for a license renewal, the Municipal Clerk issued a notice stating that SinRock’s license would be conditionally renewed “provided that [it] abides by the provisions of the Municipal Code.” SinRock challenged the Municipal Clerk’s decision, and the Municipality held administrative hearings in March and September. SinRock argued that, based on the ordinance’s legislative history, the closing-hours restriction does not apply to adult cabarets and that applying the restriction would create a conflict with another municipal code section prohibiting adult-oriented establishments from intentionally exposing genitals to business invitees. SinRock also argued that the closing-hours restriction violates its free speech rights under the United States and Alaska Constitutions. In October a hearing officer determined that she had no authority to decide SinRock’s constitutionalclaimsandrecommended theMunicipality concludethattheclosing-hours restriction applies to adult cabarets, that Sinrock violated the restriction, and that no conflict exists in the code provisions (but also that any potential conflict did not need to be decided). The Municipal Clerk adopted the recommendations a few days later. SinRock appealed to the superior court, and in March 2018 the superior court affirmed the Municipal Clerk’s decision. The superior court concluded that the ordinance’s plain language and legislative history indicate the closing-hours restriction applies to adult cabarets. The court also concluded that any potential conflict with the ordinanceprohibiting genital exposure —aprohibition theMunicipalitywasnotseeking to enforce — does not mean the closing-hours restriction was impliedly repealed or otherwise unenforceable; the court noted that any potential conflict is not relevant to deciding this case. And the court concluded that the closing-hours restriction does not violate SinRock’s free speech rights under either the United States or Alaska Constitution. -3-7392 SinRock appeals, arguing that the superior court erred by determining that the closing-hours restriction applies to adult cabaretsor,alternatively,byholding that the restriction is constitutional under the federal and Alaska constitutional free speech provisions. III. STANDARD OF REVIEW “When the superior court has acted as an intermediate court of appeal, we review the merits of the administrative agency’s decision without deference to the superior court’s decision.”2 When “statutory interpretation does not involve agency expertise, or the agency’s specialized knowledge and experience would not be particularly probative,” we substitute our own judgment and review de novo.3 “Questions of constitutional interpretation are also reviewed de novo under the substitution of judgment standard.”4 “ ‘Ordinary principles of statutory interpretation apply’ to municipal ordinances.”5 We therefore interpret municipal ordinances “according to reason, practicality, and common sense, considering the meaning of the [ordinance’s] language, 2 Studley v. Alaska Pub. Offices Comm’n, 389 P.3d 18, 22 (Alaska 2017) (quoting Tolbert v. Alascom, Inc., 973 P.2d 603, 606-07 (Alaska 1999), superseded by statute on other grounds as stated in Huit v. Ashwater Burns, Inc., 372 P.3d 904 (Alaska 2016)). 3 Id. (quoting Lakloey, Inc. v. Univ. of Alaska, 141 P.3d 317, 320 (Alaska 2006)). 4 Id. at 22-23. 5 Rosauer v. Manos, 440 P.3d 145, 147 (Alaska 2019) (quoting S. Anchorage Concerned Coal., Inc. v. Municipality of Anchorage Bd. of Adjustment, 172 P.3d 768, 771 (Alaska 2007)). -4-7392 its legislative history, and its purpose.”6 “We ‘use a sliding scale approach . . . in which “the plainer the [ordinance’s] language is, the more convincing the evidence of contrary legislative purpose or intent must be.” ’ ”7 IV. DISCUSSION A. The Closing-Hours Restriction Applies To Adult Cabarets. Anchorage Municipal Code 10.40.015 lists four “[p]rohibited acts by holders of adult-oriented establishment license[s] or massage practitioner license[s]”; license-holders may not: A. Operate the business or engage in the licensed activity between the hours of 2:00 a.m. and 6:00 a.m. B. Lock patrons inside any part of the premises during business hours. C. Solicit for another person, engage in or offer to engage in an act of prostitution, cunnilingus, or fellatio with a business invitee. D. Intentionally expose their genitals to a business invitee or intentionally touch the genitals of a business invitee.[8] Section10.40.050(A) lists adult-orientedestablishments,including adultcabarets,which then are defined as follows: “Adult cabaret means a cabaret which features topless dancers, strippers, male or female impersonators, or similar entertainers. An adult cabaret does not include an establishment licensed for sale of alcoholic beverages.” 6 Attorneys Liab. Prot. Soc’y, Inc., v. Ingaldson Fitzgerald, P.C., 370 P.3d 1101,1105(Alaska2016) (quoting Municipalityof Anchoragev.Stenseth, 361 P.3d898, 905 (Alaska 2015)). 7 Id. (quoting Stenseth, 361 P.3d at 905). 8 AMC 10.40.015. -5-7392 Based on this plain language, the closing-hours restriction applies to adult cabarets. SinRock “acknowledges that the plain language of [these sections] standing alone is clear.” But SinRock argues that the legislative history demonstrates that the Anchorage Municipal Assembly did not intend for the closing-hours restriction to apply to adult cabarets because it was enacted originally to address problems attributable to massage parlors. Anchorage Municipal Code 10.40.015 was enacted in 1977 and amended in 1978.9 The original ordinance contained the same restrictions as the current version, but applied only to physical culture studios and massage parlors.10 The enacting Assembly wasconcerned primarily about prostitution, noise, and trafficcongestion from these businesses.11 There was evidence that “massage parlors were generally found in more residential areas and presented distinct problems through flashing neon signs, increased noise and traffic” and that “substantial prostitution activities occurred during the period of 2 a.m. to 6 a.m.”12 The Assembly revisited the ordinance in 1994, creating a broad licensing and regulatory scheme for adult-oriented establishments and, relevant to this case, enacting AMC 10.40.050 and amending AMC 10.40.015. This version of AMC10.40.050defined“adult-orientedestablishment”toincludeadult bookstores, adult motion picture theaters, adult mini-motion picture establishments, physical culture 9 Hilbers v. Municipality of Anchorage, 611 P.2d 31, 34 n.1 (Alaska 1980). 10 Id. at 34. 11 Id. at 37; see also id. at 40 (“The two purposes of AMC 10.40.015 as already noted are the reduction of adverse environmental effects and control of prostitution.”). 12 Id. at 40-41. -6-7392 studios, massage parlors, and escort services. But the ordinance expressly exempted adult cabarets from the “adult-oriented establishment” definition. Although the ordinance didnot explain why adult cabarets were exempted, an assembly member noted that the exclusion “mean[t] that businesses conducting topless dancing or similar shows [could] not be regulated by th[e] ordinance unless the enterprise also falls into one of the other classifications.” The ordinance amending AMC 10.40.050 included a “whereas” clause, providing: [A]dult businesses have been determined, by court accepted independent studies, to produce secondary impacts on surrounding land uses. The impacts include a decline in property values, and increase in the level of criminal activity including prostitution, rape, and assaults in the vicinity of these types of enterprises, and the degradation of the community standard of morality by including a loss of sensitivity to the adverse effect of pornography upon children, upon established family relations, and upon respect for marital relationships.[13] This amendment brought most adult entertainment businesses — but not adult cabarets — within AMC 10.40.015’s scope. In 2003 an assembly member proposed amending AMC 10.40.050 to include adult cabarets in the list of businesses required to be licensed, “in furtherance of the protection of the public’s health, safety, and welfare.” The proposal reiterated that “secondary impacts” associated with adult-oriented establishments “affect[] the quality of life in neighborhoods” by “increas[ing] crime rates, declining property values,” and by causing “disinvestment and decline in economic and pedestrian activity.” 13 AO No. 93-157(S-6) (Feb. 15, 1994). -7-7392 The Assembly held a public hearing on the proposal. A community member testified that research showed a direct correlation between sexually oriented businesses and sexual assaults, prostitution, lower property values, and lower morality; that community member expressed concern over the absence of closing times at these businesses. Another community member testified that girls were being exploited at adult cabarets where there were unhealthy working conditions and underage employment. Others, mostly associated with a local adult cabaret, contested these reports; the minutes reflect their testimonies that young female employees were able to grow into “competent” women “able to support themselves and their families without assistance from government or welfare.” Professional dancers also testified to their independence as a result of working at adult cabarets. Some testimony evidenced a misunderstanding about AMC 10.40.050’s previousexemptionofadultcabaretsfromthedefinition ofadult-oriented businesses and the potential impact of including them. One person testified that she had been on the Assembly when the original ordinance was passed and did not know how it had excluded adult cabarets. She believed adult cabarets should conform to the same regulations as other adult-oriented establishments. The minutes indicate that the amendment’s sponsor summarized the ordinance as “simply correcting an error in the original law, since cabaretshad been overlooked when licensingfor adult-orientedbusinesseshadoriginally been addressed.” And despite AMC 10.40.015(D) prohibiting intentional genital exposure at adult-oriented businesses, the minutes reflect one assembly member’s statement that the proposed “ordinance did not prohibit nudity or sexual activity.” The minutes show another assembly member advocating postponing the vote because “many questions had been raised about how this ordinance fit into the larger scheme of Municipal regulations”; he also “voiced his concern over possible unfair labor acts -8-7392 within these clubs.” The Assembly passed the ordinance, and the amended law became effective in January 2004. SinRock argues that “the 2003 ordinance that added adult cabarets to the municipal licensing scheme explicitly addressed only AMC 10.40.050.” SinRock contends that the Assembly, therefore, did not realize that defining and licensing adult cabaretsas adult-oriented businesses under AMC10.40.050would subjectadult cabarets to AMC 10.40.015’s prohibitions. SinRock relies on assembly member comments indicating unawareness that adding adult cabarets would subject them to these prohibitions, including thetestimonythatthe“ordinancedid notprohibitnudityorsexual activity” and that there remained many questions about how the amended ordinance would fit into the larger regulatory structure. Although thislegislativehistoryindicatesthatthe2003Assemblymayhave misunderstood the original intentional exclusion of adult cabarets from licensing and been unaware of all the ordinance’s consequences, SinRock’s argument that the 2003 Assembly did not intend to subject adult cabarets to the closing-hours restriction is unpersuasive. Whether the Assembly considered the ramifications of applying the ordinance to adult cabarets is irrelevant; the minutes reflect the 2003 ordinance’s sponsor’s indication that the ordinance “was simply correcting an error in the original law.” The 2003 Assembly thus clearly intended to subject adult cabarets to the same regulations as other adult-oriented businesses. SinRock additionally argues that AMC 10.40.015(D), prohibiting intentional genital exposure, is unconstitutional as applied to adult cabarets and, therefore, that the Assembly could not have intended for subsection (A) to apply to adult cabarets. Even assuming subsection (D)’s unconstitutionality, there is no indication the Assembly intended that AMC 10.40.015(A)’s closing-hours restriction not apply. We therefore decline to consider in this case whether subsection (D)’s potential -9-7392 unconstitutionality, as a proxy for legislative intent, renders subsection (A) inapplicable to adult cabarets. In conclusion, we hold that AMC 10.40.015(A)’s and AMC 10.40.050’s plain language makes the closing-hours restriction applicable to adult cabarets; no legislativehistoryevidencesacontraryintentcompellingadifferentresult. Wetherefore affirm the superior court’s decision upholding the Municipal Clerk’s conclusion that — as a matter of statutory interpretation — adult cabarets are prohibited from operating between 2:00 a.m. and 6:00 a.m. under the adult-oriented establishment regulations. B. Applying This Particular Closing-Hours Restriction To Adult Cabarets Is An Impermissible Government Suppression Of Free Speech Under The Alaska Constitution. SinRock challenges as unconstitutional, under the federal and Alaska constitutional free speech provisions, the closing-hours restriction as applied to adult cabarets. SinRock argues we should conclude that the closing-hours ordinance is a content-based restriction burdening the right to free speech, subject the ordinance to strict scrutiny, and hold that it cannot stand. SinRock accurately notes that, on questions arising under Alaska’s Constitution, we are not bound by decisions of the United States Supreme Court on similar federal provisions but may determine that Alaska provides greater protection for individual rights.14 Because we hold that Alaska’s free speech 14 See Baker v. City of Fairbanks, 471 P.2d 386, 402 n.26 (Alaska 1970) (“We again iterate our position . . . that ‘(w)e are not bound in expounding the Alaska Constitution’s Declaration of Rights by the decisions of the United States Supreme Court, past or future, which expound identical or closely similar provisions of the United States Constitution.’ ”) (alterations in original) (quoting Roberts v. State, 458 P.2d 340, 342 (Alaska 1969)); see also State, Div. of Elections v. Green Party of Alaska, 118 P.3d 1054, 1060 (Alaska 2005) (explaining “we have often held that Alaska’s [C]onstitution is more protective of rights and liberties than is the United States Constitution”); Malabed v. N. Slope Borough, 70 P.3d 416, 420 (Alaska 2003) (stating that “the Alaska (continued...) -10- 7392 clause is more protective of individual rights than its federal counterpart in the present context, we focus our analysis on the Alaska Constitution.15 1. As a content-based restriction on free speech, the closing-hours ordinance is subject to strict scrutiny. In arguing that we should apply strict scrutiny to the ordinance as a matter of Alaska constitutional law, SinRock notes the fractured federal precedent in this area. Although the United States Supreme Court long has construed expressive dancing as falling under the First Amendment’s purview, a plurality of the court has held that nude dancing “falls only within the outer ambit of the First Amendment’s protection.”16 Subjecting sexual speech to a lesser degree of free speech protection, the Supreme Court has reviewed otherwise content-based restrictions as content-neutral under intermediate scrutiny when the primary motivation behind their enactment is to prevent negative secondary effects.17 14 (...continued) Constitution’s equal protection clause affords greater protection to individual rights than the United States Constitution’s Fourteenth Amendment”); State v. Jones, 706 P.2d 317, 324 (Alaska 1985) (reading Alaska Constitution’s prohibition on unreasonable search and seizures more expansively than federal prohibition); State v. Browder, 486 P.2d 925, 935-36 (Alaska 1971) (interpreting right to jury trial in criminal contempt cases more broadly than federal right). 15 Cf. Mickens v. City of Kodiak, 640 P.2d 818, 820 (Alaska 1982) (holding that Alaska’s free speech clause “was meant to be at least as protective of expression as the First Amendment to the United States Constitution”). 16 City of Erie v. Pap’s A.M., 529 U.S. 277, 289 (2000). 17 City of Los Angelesv. Alameda Books, Inc., 535 U.S. 425, 434 (2002); Erie, 529 U.S. at 293; City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 47-48, 50 (1986). -11- 7392 We previously have not designated sexually oriented speech as less worthy of protection than other types of speech, and we decline to do so now. Article I, section 5 of Alaska’s Constitution provides that “[e]very person may freely speak . . . being responsible for the abuse of that right.” We held in Mickens v. City of Kodiak that this clause protects nude dancing and that “[l]aws prohibiting free expression, based on the content of the expression, are sustainable only for the most compelling of reasons.”18 And we stated that “it is not permissible to suppress constitutionally protected forms of expression . . . to curb the lawless conduct of some of those who are reacting to it, unless other law enforcement techniques which do not infringe first amendment freedoms are unavailable or likely to be ineffective.”19 We long have held that Alaska’s constitutional heritage may require individual protections over and above federal guarantees: [W]e are free, and we are under a duty, to develop additional constitutional rights and privileges under our Alaska Constitutionifwefind suchfundamentalrightsandprivileges to be within the intention and spirit of our local constitutional language and to be necessary for the kind of civilized life and ordered liberty which is at the core of our constitutional heritage.[20] These additional state constitutional guarantees have compelled us to balance an individual’s right to liberty against “society’s right to impose some limitation on the individual liberty” under a strict scrutiny standard,21 holding: 18 640 P.2d at 820-21. 19 Id. at 822. 20 Baker v. City of Fairbanks, 471 P.2d 386, 402 (Alaska 1970). 21 Messerli v. State, 626 P.2d 81, 84 (Alaska 1980). -12-7392 Once a fundamental right under the constitution of Alaska has been shown to be involved and it has been further shown that this constitutionally protected right has been impaired by governmental action, then the government must come forward and meet its substantial burden of establishing that the abridgement in question was justified by a compelling governmental interest.[22] And we have held that the “adoption of the compelling interest standard best comports with the kind of ordered liberty which represents the core of Alaska’s constitutional heritage.”23 Based on the strong constitutional protections afforded Alaska citizens, we confirmthatlawsregulatingthesexual contentofmessages, and therebyrestricting one’s right to liberty, are content-based and that we will apply strict scrutiny to determine their constitutionality.24 Applying the closing-hours restriction to adult cabarets is content- based; determining whether the restriction applies to a particular business requires 22 Id. (quoting Breese v. Smith, 501 P.2d 159, 171 (Alaska 1972)). 23 Id. (quoting Breese, 501 P.2d at 172). 24 We note the Massachusetts Supreme Court likewise has recognized that the “[f]ederal rule does not adequately protect the rights of the citizens” under its state constitution. Mendoza v. Licensing Bd. of Fall River, 827 N.E.2d 180, 191 (Mass. 2005). Other state supreme courts, including Pennsylvania and New York, have reached similar conclusions. Pap’s A.M. v. City of Erie, 812 A.2d 591 (Pa. 2002) (on remand from United States Supreme Court, court invalidated on state constitutional grounds ordinance proscribing nudity in public places); Bellanca v. N.Y. State Liquor Auth., 429 N.E.2d 765 (N.Y. 1981) (on remand from United States Supreme Court, court invalidated on state constitutional grounds complete ban on topless dancing in establishments serving alcohol). At least one federal circuit court also has questioned the secondary-effects doctrine’s continued validity. See Free Speech Coal. v. Attorney Gen. U.S., 825 F.3d 149, 164 (3d Cir. 2016) (stating that “we can no longer look to the purpose of a law that draws a content-based distinction on its face in determining what level of scrutiny to apply”). -13-7392 considering whether it is an “adult-oriented establishment,”25 and then a business is “burdened only if its expressive products have adult content.”26 We thereforeapply strict scrutiny, and we will uphold the ordinance only if it is “narrowly tailored to promote a compelling governmental interest” and if it is “the least restrictive means available to vindicate that interest.”27 2. The closing-hours restriction as applied to adult cabarets is not sufficiently narrowly tailored to achieve its ends. The parties do not dispute that in general the Municipality’s interests in regulating the “negative effects of cabarets on the community” — including potential “increased crime rates, declining property values, disinvestment[,] . . . decline in economic and pedestrian activity,”28 and “the harmful effects of cabarets on young girls in the community” — are compelling. But the critical issue is whether the Municipality has met its burden ofevidence demonstrating that theclosing-hours restriction as applied to adult cabarets is narrowly drawn to achieve those interests. We conclude that the 25 AMC 10.40.015(A); AMC 10.40.050(A). 26 City of Los Angeles v. Alameda Books, Inc., 535 U.S. 425, 457 (2002) (Souter, J., dissenting). See also Gammoh v. City of La Habra, 395 F.3d 1114, 1123 (9th Cir. 2005) (“[T]he Supreme Court has recognized that virtually all regulation of adult businesses is content-based.” (citing Alameda Books, 535 U.S. at 448 (Kennedy J., concurring))). 27 See Alaskans for a Common Language, Inc. v. Kritz, 170 P.3d 183, 207-08 (Alaska 2007). 28 When the licensing structure originally was enacted in 1977, there was evidence that massage parlors and physical culture studios produced negative secondary effects including prostitution, noise, and traffic congestion. Hilbers v. Municipality of Anchorage, 611 P.2d 31, 40-41 (Alaska 1980). We assume, without deciding, that adult cabarets might produce similar negative secondary effects. -14- 7392 Municipality has not met this burden and that the closing-hours restriction, therefore, is constitutionally invalid. The Municipality argues that it has “specific evidence to support a compelling reason” to uphold AMC 10.40.015(A). The Municipality contends that the public hearing minutes evidence testimony about adult cabarets’ negative effects. Even assuming the limited testimony was sufficient to demonstrate secondary effects from adult cabarets, the Municipality fails to offer specific evidence that forcing adult cabarets to close in the early morning was designed to help reduce these negative effects. The restriction’s pre-enactment record consists entirely of private individuals’ and assembly members’testimoniesdiscussinginageneralconclusorysenseperceived negativeeffects of adult cabarets on surrounding communities. The minutes reflect that one person mentioned closing hours but only as having “concerns” that none existed. There was no evidence, direct or indirect, connecting forced early morning closures with reducing these secondary effects. As we stated in Mickens v. City of Kodiak, suppressing constitutional speech is impermissible “to curb the lawless conduct of some of those who are reacting to it, unless other law enforcement techniques which do not infringe first amendment freedoms are unavailable or likely to be ineffective.”29 The Municipality has not shown that it could not effectively reduce secondary effects without infringing on otherwise constitutional speech, and we therefore find no basis for concluding that the current closing-hours restriction is constitutional. Despite the Municipality not meeting its burden of demonstrating narrow tailoring in this case, we do not foreclose the possibility that a similar ordinance may be constitutional. We recognize that the government has compelling interests in combating 29 640 P.2d 818, 822 (Alaska 1982). -15-7392 potential harmful secondary effects. But we require, in all cases, an evidence-based analysisdemonstratinghowarestriction is narrowly tailored to meetspecific,compelling government interests. This may be satisfied, for example, by relying on solid evidence ofother communities’ experiencesor by specific studies presented to thelegislatureprior to enactment; the government need not wait for harm to arise before enacting legislation aimed at combating potential harmful secondary effects. And the government must demonstrate both that there is evidence of potential harm and that non-infringing law enforcement techniques “are unavailable or likely to be ineffective.”30 A connection between negative secondary effects and the lack of closing hours for adult cabarets may exist, but the Municipality has failed to meet its burden of demonstratingthatconnection. Wethereforereversethesuperiorcourt’sdecisiononthis issue. V. CONCLUSION WeREVERSEthesuperior court’s decision denyingSinRock’sappealand hold that, under article I, section 5 of Alaska’s Constitution, AMC 10.40.015(A)’s closing-hours restriction is unconstitutional as applied to adult cabarets. 30 Id. -16-7392 [PAGE LEFT BLANK INTENTIONALLY] U.S. Supreme Court City of Renton v. Playtime Theatres, 475 U.S. 41 (1986) City of Renton v. Playtime Theatres, Inc. No. 84-1360 Argued November 12, 1985 Decided February 25, 1986 475 U.S. 41 APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Syllabus Respondents purchased two theaters in Renton, Washington, with the intention of exhibiting adult films and, at about the same time, filed suit in Federal District Court, seeking injunctive relief and a declaratory judgment that the First and Fourteenth Amendments were violated by a city ordinance that prohibits adult motion picture theaters from locating within 1,000 feet of any residential zone, single- or multiple-family dwelling, church, park, or school. The District Court ultimately entered summary judgment in the city's favor, holding that the ordinance did not violate the First Amendment. The Court of Appeals reversed, holding that the ordinance constituted a substantial restriction on First Amendment interests, and remanded the case for reconsideration as to whether the city had substantial governmental interests to support the ordinance. Held: The ordinance is a valid governmental response to the serious problems created by adult theaters and satisfies the dictates of the First Amendment. Cf. Young v. American Mini Theatres, Inc., 427 U. S. 50. Pp. 475 U. S. 46-55. (a) Since the ordinance does not ban adult theaters altogether, it is properly analyzed as a form of time, place, and manner regulation. "Content-neutral" time, place, and manner regulations are acceptable so long as they are designed to serve a substantial governmental interest and do not unreasonably limit alternative avenues of communication. Pp. 475 U. S. 46-47. (b) The District Court found that the Renton City Council's "predominate" concerns were with the secondary effects of adult theaters on the surrounding community, not with the content of adult films themselves. This finding is more than adequate to establish that the city's pursuit of its zoning interests was unrelated to the suppression of free expression, and thus the ordinance is a "content-neutral" speech regulation. Pp. 475 U. S. 47-50. (c) The Renton ordinance is designed to serve a substantial governmental interest while allowing for reasonable alternative avenues of communication. A city's interest in attempting to preserve the quality of urban life, as here, must be accorded high respect. Although the ordinance was enacted without the benefit of studies specifically relating to Page 475 U. S. 42 Renton's particular problems, Renton was entitled to rely on the experiences of, and studies produced by, the nearby city of Seattle and other cities. Nor was there any constitutional defect in the method chosen by Renton to further its substantial interests. Cities may regulate adult theaters by dispersing them, or by effectively concentrating them, as in Renton. Moreover, the ordinance is not "underinclusive" for failing to regulate other kinds of adult businesses, since there was no evidence that, at the time the ordinance was enacted, any other adult business was located in, or was contemplating moving into, Renton. Pp. 50-53. (d) As required by the First Amendment, the ordinance allows for reasonable alternative avenues of communication. Although respondents argue that, in general, there are no "commercially viable" adult theater sites within the limited area of land left open for such theaters by the ordinance, the fact that respondents must fend for themselves in the real estate market, on an equal footing with other prospective purchasers and lessees, does not give rise to a violation of the First Amendment, which does not compel the Government to ensure that adult theaters, or any other kinds of speech-related businesses, will be able to obtain sites at bargain prices. Pp. 53-54. 748 F.2d 527, reversed. REHNQUIST, J., delivered the opinion of the Court, in which BURGER, C.J., and WHITE, POWELL, STEVENS, and O'CONNOR, JJ., joined. BLACKMUN, J., concurred in the result. BRENNAN, J., filed a dissenting opinion, in which MARSHALL, J., joined, post, p. 475 U. S. 55. Page 475 U. S. 43 JUSTICE REHNQUIST delivered the opinion of the Court. This case involves a constitutional challenge to a zoning ordinance, enacted by appellant city of Renton, Washington, that prohibits adult motion picture theaters from locating within 1,000 feet of any residential zone, single- or multiple-family dwelling, church, park, or school. Appellees, Playtime Theatres, Inc., and Sea-First Properties, Inc., filed an action in the United States District Court for the Western District of Washington seeking a declaratory judgment that the Renton ordinance violated the First and Fourteenth Amendments, and a permanent injunction against its enforcement. The District Court ruled in favor of Renton and denied the permanent injunction, but the Court of Appeals for the Ninth Circuit reversed and remanded for reconsideration. 748 F.2d 527 (1984). We noted probable jurisdiction, 471 U.S. 1013 (1985), and now reverse the judgment of the Ninth Circuit. [Footnote 1] Page 475 U. S. 44 In May 1980, the Mayor of Renton, a city of approximately 32,000 people located just south of Seattle, suggested to the Renton City Council that it consider the advisability of enacting zoning legislation dealing with adult entertainment uses. No such uses existed in the city at that time. Upon the Mayor's suggestion, the City Council referred the matter to the city's Planning and Development Committee. The Committee held public hearings, reviewed the experiences of Seattle and other cities, and received a report from the City Attorney's Office advising as to developments in other cities. The City Council, meanwhile, adopted Resolution No. 2368, which imposed a moratorium on the licensing of "any business . . . which . . . has as its primary purpose the selling, renting or showing of sexually explicit materials." App. 43. The resolution contained a clause explaining that such businesses "would have a severe impact upon surrounding businesses and residences." Id. at 42. In April, 1981, acting on the basis of the Planning and Development Committee's recommendation, the City Council enacted Ordinance No. 3626. The ordinance prohibited any "adult motion picture theater" from locating within 1,000 feet of any residential zone, single- or multiple-family dwelling, church, or park, and within one mile of any school. App. to Juris. Statement 79a. The term "adult motion picture theater" was defined as "[a]n enclosed building used for presenting motion picture films, video cassettes, cable television, or any other such visual media, distinguished or characteri[zed] by an emphasis on matter depicting, describing or relating to 'specified sexual activities' or 'specified anatomical areas' . . . for observation by patrons therein." Id. at 78a. Page 475 U. S. 45 In early 1982, respondents acquired two existing theaters in downtown Renton, with the intention of using them to exhibit feature-length adult films. The theaters were located within the area proscribed by Ordinance No. 3526. At about the same time, respondents filed the previously mentioned lawsuit challenging the ordinance on First and Fourteenth Amendment grounds, and seeking declaratory and injunctive relief. While the federal action was pending, the City Council amended the ordinance in several respects, adding a statement of reasons for its enactment and reducing the minimum distance from any school to 1,000 feet. In November, 1982, the Federal Magistrate to whom respondents' action had been referred recommended the entry of a preliminary injunction against enforcement of the Renton ordinance and the denial of Renton's motions to dismiss and for summary judgment. The District Court adopted the Magistrate's recommendations and entered the preliminary injunction, and respondents began showing adult films at their two theaters in Renton. Shortly thereafter, the parties agreed to submit the case for a final decision on whether a permanent injunction should issue on the basis of the record as already developed. The District Court then vacated the preliminary injunction, denied respondents' requested permanent injunction, and entered summary judgment in favor of Renton. The court found that the Renton ordinance did not substantially restrict First Amendment interests, that Renton was not required to show specific adverse impact on Renton from the operation of adult theaters, but could rely on the experiences of other cities, that the purposes of the ordinance were unrelated to the suppression of speech, and that the restrictions on speech imposed by the ordinance were no greater than necessary to further the governmental interests involved. Relying on Young v. American Mini Theatres, Inc., 427 U. S. 50 (1976), and United States v. O'Brien, 391 U. S. 367 (1968), the court held that the Renton ordinance did not violate the First Amendment. Page 475 U. S. 46 The Court of Appeals for the Ninth Circuit reversed. The Court of Appeals first concluded, contrary to the finding of the District Court, that the Renton ordinance constituted a substantial restriction on First Amendment interests. Then, using the standards set forth in United States v. O'Brien, supra, the Court of Appeals held that Renton had improperly relied on the experiences of other cities in lieu of evidence about the effects of adult theaters on Renton, that Renton had thus failed to establish adequately the existence of a substantial governmental interest in support of its ordinance, and that, in any event, Renton's asserted interests had not been shown to be unrelated to the suppression of expression. The Court of Appeals remanded the case to the District Court for reconsideration of Renton's asserted interests. In our view, the resolution of this case is largely dictated by our decision in Young v. American Mini Theatres, Inc., supra. There, although five Members of the Court did not agree on a single rationale for the decision, we held that the city of Detroit's zoning ordinance, which prohibited locating an adult theater within 1,000 feet of any two other "regulated uses" or within 600 feet of any residential zone, did not violate the First and Fourteenth Amendments. Id. at 427 U. S. 72-73 (plurality opinion of STEVENS, J., joined by BURGER, C.J., and WHITE and REHNQUIST, JJ.); id. at 427 U. S. 84 (POWELL, J., concurring). The Renton ordinance, like the one in American Mini Theatres, does not ban adult theaters altogether, but merely provides that such theaters may not be located within 1,000 feet of any residential zone, single- or multiple-family dwelling, church, park, or school. The ordinance is therefore properly analyzed as a form of time, place, and manner regulation. Id. at 427 U. S. 63, and n. 18; id. at 427 U. S. 78-79 (POWELL, J., concurring). Describing the ordinance as a time, place, and manner regulation is, of course, only the first step in our inquiry. This Court has long held that regulations enacted for the Page 475 U. S. 47 purpose of restraining speech on the basis of its content presumptively violate the First Amendment. See Carey v. Brown, 447 U. S. 455, 447 U. S. 462-463, and n. 7 (1980); Police Dept. of Chicago v. Mosley, 408 U. S. 92, 408 U. S. 95, 408 U. S. 98-99 (1972). On the other hand, so-called "content-neutral" time, place, and manner regulations are acceptable so long as they are designed to serve a substantial governmental interest and do not unreasonably limit alternative avenues of communication. See Clark v. Community for Creative Non-Violence, 468 U. S. 288, 468 U. S. 293 (1984); City Council of Los Angeles v. Taxpayers for Vincent, 466 U. S. 789, 466 U. S. 807 (1984); Heffron v. International Society for Krishna Consciousness, Inc., 452 U. S. 640, 452 U. S. 647-648 (1981). At first glance, the Renton ordinance, like the ordinance in American Mini Theatres, does not appear to fit neatly into either the "content-based" or the "content- neutral" category. To be sure, the ordinance treats theaters that specialize in adult films differently from other kinds of theaters. Nevertheless, as the District Court concluded, the Renton ordinance is aimed not at the content of the films shown at "adult motion picture theatres," but rather at the secondary effects of such theaters on the surrounding community. The District Court found that the City Council's "predominate concerns" were with the secondary effects of adult theaters, and not with the content of adult films themselves. App. to Juris. Statement 31a (emphasis added). But the Court of Appeals, relying on its decision in Tovar v. Billmeyer, 721 F.2d 1260, 1266 (CA9 1983), held that this was not enough to sustain the ordinance. According to the Court of Appeals, if "a motivating factor" in enacting the ordinance was to restrict respondents' exercise of First Amendment rights, the ordinance would be invalid, apparently no matter how small a part this motivating factor may have played in the City Council's decision. 748 F.2d at 537 (emphasis in original). This view of the law was rejected in United States v. O'Brien, 391 U.S. at 391 U. S. 382-386, the very case that the Court of Appeals said it was applying: Page 475 U. S. 48 "It is a familiar principle of constitutional law that this Court will not strike down an otherwise constitutional statute on the basis of an alleged illicit legislative motive. . . ." "* * * *" ". . . What motivates one legislator to make a speech about a statute is not necessarily what motivates scores of others to enact it, and the stakes are sufficiently high for us to eschew guesswork." Id. at 391 U. S. 383-384. The District Court's finding as to "predominate" intent, left undisturbed by the Court of Appeals, is more than adequate to establish that the city's pursuit of its zoning interests here was unrelated to the suppression of free expression. The ordinance, by its terms, is designed to prevent crime, protect the city's retail trade, maintain property values, and generally "protec[t] and preserv[e] the quality of [the city's] neighborhoods, commercial districts, and the quality of urban life," not to suppress the expression of unpopular views. See App. to Juris. Statement 90a. As JUSTICE POWELL observed in American Mini Theatres, "[i]f [the city] had been concerned with restricting the message purveyed by adult theaters, it would have tried to close them or restrict their number, rather than circumscribe their choice as to location." 427 U.S. at 427 U. S. 82, n. 4. In short, the Renton ordinance is completely consistent with our definition of "content- neutral" speech regulations as those that "are justified without reference to the content of the regulated speech." Virginia Pharmacy Board v. Virginia Citizens Consumer Council, Inc., 425 U. S. 748, 425 U. S. 771 (1976) (emphasis added); Community for Creative NonViolence, supra, at 468 U. S. 293; International Society for Krishna Consciousness, supra, at 452 U. S. 648. The ordinance does not contravene the fundamental principle that underlies our concern about "content-based" speech regulations: that "government may not grant the use of a forum to people whose views it finds acceptable, but deny use to those wishing to express Page 475 U. S. 49 less favored or more controversial views." Mosley, supra, at 408 U. S. 95-96. It was with this understanding in mind that, in American Mini Theatres, a majority of this Court decided that, at least with respect to businesses that purvey sexually explicit materials, [Footnote 2] zoning ordinances designed to combat the undesirable secondary effects of such businesses are to be reviewed under the standards applicable to "content-neutral" time, place, and manner regulations. JUSTICE STEVENS, writing for the plurality, concluded that the city of Detroit was entitled to draw a distinction between adult theaters and other kinds of theaters "without violating the government's paramount obligation of neutrality in its regulation of protected communication," 427 U.S. at 427 U. S. 70, noting that "[i]t is th[e] secondary effect which these zoning ordinances attempt to avoid, not the dissemination of offensive' speech," id. at 427 U. S. 71, n. 34. JUSTICE POWELL, in concurrence, elaborated: "[The] dissent misconceives the issue in this case by insisting that it involves an impermissible time, place, and manner restriction based on the content of expression. It involves nothing of the kind. We have here merely a decision by the city to treat certain movie theaters differently because they have markedly different effects upon their surroundings. . . . Moreover, even if this were a case involving a special governmental response to the content of one type of movie, it is possible that the result would be supported by a line of cases recognizing that the government can tailor its reaction to different types of speech according to the degree to which its special and overriding interests are implicated. Page 475 U. S. 50 See, e.g., Tinker v. Des Moines School Dist., 393 U. S. 503, 393 U. S. 509-511 (1969); Procunier v. Martinez, 416 U. S. 396, 416 U. S. 413-414 (1974); Greer v. Spock, 424 U. S. 828, 424 U. S. 842-844 (1976) (POWELL, J., concurring); cf. CSC v. Letter Carriers, 413 U. S. 548 (1973)." Id. at 427 U. S. 82, n. 6. The appropriate inquiry in this case, then, is whether the Renton ordinance is designed to serve a substantial governmental interest and allows for reasonable alternative avenues of communication. See Community for Creative NonViolence, 468 U.S. at 468 U. S. 293; International Society for Krishna Consciousness, 452 U.S. at 452 U. S. 649, 452 U. S. 654. It is clear that the ordinance meets such a standard. As a majority of this Court recognized in American Mini Theatres, a City's "interest in attempting to preserve the quality of urban life is one that must be accorded high respect." 427 U.S. at 427 U. S. 71 (plurality opinion); see id. at 427 U. S. 80 (POWELL, J., concurring) ("Nor is there doubt that the interests furthered by this ordinance are both important and substantial"). Exactly the same vital governmental interests are at stake here. The Court of Appeals ruled, however, that, because the Renton ordinance was enacted without the benefit of studies specifically relating to "the particular problems or needs of Renton," the city's justifications for the ordinance were "conclusory and speculative." 748 F.2d at 537. We think the Court of Appeals imposed on the city an unnecessarily rigid burden of proof. The record in this case reveals that Renton relied heavily on the experience of, and studies produced by, the city of Seattle. In Seattle, as in Renton, the adult theater zoning ordinance was aimed at preventing the secondary effects caused by the presence of even one such theater in a given neighborhood. See Northend Cinema, Inc. v. Seattle, 90 Wash.2d 709, 585 P.2d 1153 (1978). The opinion of the Supreme Court of Washington in Northend Cinema, which Page 475 U. S. 51 was before the Renton City Council when it enacted the ordinance in question here, described Seattle's experience as follows: "The amendments to the City's zoning code which are at issue here are the culmination of a long period of study and discussion of the problems of adult movie theaters in residential areas of the City. . . . [T]he City's Department of Community Development made a study of the need for zoning controls of adult theaters. . . . The study analyzed the City's zoning scheme, comprehensive plan, and land uses around existing adult motion picture theaters. . . ." Id. at 711, 585 P.2d at 1155. "[T]he [trial] court heard extensive testimony regarding the history and purpose of these ordinances. It heard expert testimony on the adverse effects of the presence of adult motion picture theaters on neighborhood children and community improvement efforts. The court's detailed findings, which include a finding that the location of adult theaters has a harmful effect on the area and contribute to neighborhood blight, are supported by substantial evidence in the record." Id. at 713, 585 P.2d at 1156. "The record is replete with testimony regarding the effects of adult movie theater locations on residential neighborhoods." Id. at 719, 585 P.2d at 1159. We hold that Renton was entitled to rely on the experiences of Seattle and other cities, and in particular on the "detailed findings" summarized in the Washington Supreme Court's Northend Cinema opinion, in enacting its adult theater zoning ordinance. The First Amendment does not require a city, before enacting such an ordinance, to conduct new studies or produce evidence independent of that already generated by other cities, so long as whatever evidence the city relies upon is reasonably believed to be relevant to the Page 475 U. S. 52 problem that the city addresses. That was the case here. Nor is our holding affected by the fact that Seattle ultimately chose a different method of adult theater zoning than that chosen by Renton, since Seattle's choice of a different remedy to combat the secondary effects of adult theaters does not call into question either Seattle's identification of those secondary effects or the relevance of Seattle's experience to Renton. We also find no constitutional defect in the method chosen by Renton to further its substantial interests. Cities may regulate adult theaters by dispersing them, as in Detroit, or by effectively concentrating them, as in Renton. "It is not our function to appraise the wisdom of [the city's] decision to require adult theaters to be separated, rather than concentrated in the same areas. . . . [T]he city must be allowed a reasonable opportunity to experiment with solutions to admittedly serious problems." American Mini Theatres, 427 U.S. at 427 U. S. 71 (plurality opinion). Moreover, the Renton ordinance is "narrowly tailored" to affect only that category of theaters shown to produce the unwanted secondary effects, thus avoiding the flaw that proved fatal to the regulations in Schad v. Mount Ephraim, 452 U. S. 61 (1981), and Erznoznik v. City of Jacksonville, 422 U. S. 205 (1975). Respondents contend that the Renton ordinance is "underinclusive," in that it fails to regulate other kinds of adult businesses that are likely to produce secondary effects similar to those produced by adult theaters. On this record, the contention must fail. There is no evidence that, at the time the Renton ordinance was enacted, any other adult business was located in, or was contemplating moving into, Renton. In fact, Resolution No. 2368, enacted in October, 1980, states that "the City of Renton does not, at the present time, have any business whose primary purpose is the sale, rental, or showing of sexually explicit materials." App. 42. That Renton chose first to address the potential problems created Page 475 U. S. 53 by one particular kind of adult business in no way suggests that the city has "singled out" adult theaters for discriminatory treatment. We simply have no basis on this record for assuming that Renton will not, in the future, amend its ordinance to include other kinds of adult businesses that have been shown to produce the same kinds of secondary effects as adult theaters. See Williamson v. Lee Optical Co., 348 U. S. 483, 348 U. S. 488-489 (1955). Finally, turning to the question whether the Renton ordinance allows for reasonable alternative avenues of communication, we note that the ordinance leaves some 520 acres, or more than five percent of the entire land area of Renton, open to use as adult theater sites. The District Court found, and the Court of Appeals did not dispute the finding, that the 520 acres of land consists of "[a]mple, accessible real estate," including "acreage in all stages of development from raw land to developed, industrial, warehouse, office, and shopping space that is Criss-Crossed by freeways, highways, and roads." App. to Juris. Statement 28a. Respondents argue, however, that some of the land in question is already occupied by existing businesses, that "practically none" of the undeveloped land is currently for sale or lease, and that, in general, there are no "commercially viable" adult theater sites within the 520 acres left open by the Renton ordinance. Brief for Appellees 34-37. The Court of Appeals accepted these arguments, [Footnote 3] concluded that Page 475 U. S. 54 the 520 acres was not truly "available" land, and therefore held that the Renton ordinance "would result in a substantial restriction" on speech. 748 F.2d at 534. We disagree with both the reasoning and the conclusion of the Court of Appeals. That respondents must fend for themselves in the real estate market, on an equal footing with other prospective purchasers and lessees, does not give rise to a First Amendment violation. And although we have cautioned against the enactment of zoning regulations that have "the effect of suppressing, or greatly restricting access to, lawful speech," American Mini Theatres, 427 U.S. at 427 U. S. 71, n. 35 (plurality opinion), we have never suggested that the First Amendment compels the Government to ensure that adult theaters, or any other kinds of speech-related businesses for that matter, will be able to obtain sites at bargain prices. See id. at 427 U. S. 78 (POWELL, J., concurring) ("The inquiry for First Amendment purposes is not concerned with economic impact"). In our view, the First Amendment requires only that Renton refrain from effectively denying respondents a reasonable opportunity to open and operate an adult theater within the city, and the ordinance before us easily meets this requirement. In sum, we find that the Renton ordinance represents a valid governmental response to the "admittedly serious problems" created by adult theaters. See id. at 427 U. S. 71 (plurality opinion). Renton has not used "the power to zone as a pretext for suppressing expression," id. at 427 U. S. 84 (POWELL, J., concurring), but rather has sought to make some areas available for adult theaters and their patrons, while at the same time preserving the quality of life in the community at large by preventing those theaters from locating in other areas. This, after all, is the essence of zoning. Here, as in American Mini Theatres, the city has enacted a zoning ordinance that meets these goals while also satisfying the dictates of the Page 475 U. S. 55 First Amendment. [Footnote 4] The judgment of the Court of Appeals is therefore Reversed. JUSTICE BLACKMUN concurs in the result. [Footnote 1] This appeal was taken under 28 U.S.C. § 1254(2), which provides this Court with appellate jurisdiction at the behest of a party relying on a state statute or local ordinance held unconstitutional by a court of appeals. As we have previously noted, there is some question whether jurisdiction under § 1254(2) is available to review a nonfinal judgment. See South Carolina Electric & Gas Co. v. Flemming, 351 U.S. 901 (1956); Slaker v. O'Connor, 278 U. S. 188 (1929). But see Chicago v. Atchison, T. & S.F. R. Co., 357 U. S. 77, 357 U. S. 82-83 (1958). The present appeal seeks review of a judgment remanding the case to the District Court. We need not resolve whether this appeal is proper under § 1254(2), however, because, in any event we have certiorari jurisdiction under 28 U.S.C. § 2103. As we have previously done in equivalent situations, see El Paso v. Simmons, 379 U. S. 497, 379 U. S. 503-503 (1965); Doran v. Salem Inn, Inc., 422 U. S. 922, 422 U. S. 927 (1975), we dismiss the appeal and, treating the papers as a petition for certiorari, grant the writ of certiorari. Henceforth, we shall refer to the parties as "petitioners" and "respondents." [Footnote 2] See American Mini Theatres, 427 U.S. at 427 U. S. 70 (plurality opinion) ("[I]t is manifest that society's interest in protecting this type of expression is of a wholly different, and lesser, magnitude than the interest in untrammeled political debate. . . ."). [Footnote 3] The Court of Appeals' rejection of the District Court's findings on this issue may have stemmed in part from the belief, expressed elsewhere in the Court of Appeals' opinion, that, under Bose Corp. v. Consumers Union of United States, Inc., 466 U. S. 485 (1984), appellate courts have a duty to review de novo all mixed findings of law and fact relevant to the application of First Amendment principles. See 748 F.2d 527, 535 (1984). We need not review the correctness of the Court of Appeals' interpretation of Bose Corp., since we determine that, under any standard of review, the District Court's findings should not have been disturbed. [Footnote 4] Respondents argue, as an "alternative basis" for affirming the decision of the Court of Appeals, that the Renton ordinance violates their rights under the Equal Protection Clause of the Fourteenth Amendment. As should be apparent from our preceding discussion, respondents can fare no better under the Equal Protection Clause than under the First Amendment itself. See Young v. American Mini Theatres, Inc., 427 U.S. at 427 U. S. 63-73. Respondents also argue that the Renton ordinance is unconstitutionally vague. More particularly, respondents challenge the ordinance's application to buildings "used" for presenting sexually explicit films, where the term "used" describes "a continuing course of conduct of exhibiting [sexually explicit films] in a manner which appeals to a prurient interest." App. to Juris. Statement 96a. We reject respondents' "vagueness" argument for the same reasons that led us to reject a similar challenge in American Mini Theatres, supra. There, the Detroit ordinance applied to theaters "used to present material distinguished or characterized by an emphasis on [sexually explicit matter]." Id. at 427 U. S. 63. We held that "even if there may be some uncertainty about the effect of the ordinances on other litigants, they are unquestionably applicable to these respondents." Id. at 427 U. S. 68-69. We also held that the Detroit ordinance created no "significant deterrent effect" that might justify invocation of the First Amendment "overbreadth" doctrine. Id. at 427 U. S. 69-61. JUSTICE BRENNAN, with whom JUSTICE MARSHALL joins, dissenting. Renton's zoning ordinance selectively imposes limitations on the location of a movie theater based exclusively on the content of the films shown there. The constitutionality of the ordinance is therefore not correctly analyzed under standards applied to content- neutral time, place, and manner restrictions. But even assuming that the ordinance may fairly be characterized as content-neutral, it is plainly unconstitutional under the standards established by the decisions of this Court. Although the Court's analysis is limited to Page 475 U. S. 56 cases involving "businesses that purvey sexually explicit materials," ante at 475 U. S. 49, and n. 2, and thus does not affect our holdings in cases involving state regulation of other kinds of speech, I dissent. I "[A] constitutionally permissible time, place, or manner restriction may not be based upon either the content or subject matter of speech." Consolidated Edison Co. v. Public Service Comm'n of N.Y., 447 U. S. 530, 447 U. S. 536 (1980). The Court asserts that the ordinance is "aimed not at the content of the films shown at 'adult motion picture theatres,' but rather at the secondary effects of such theaters on the surrounding community," ante at 475 U. S. 47 (emphasis in original), and thus is simply a time, place, and manner regulation. [Footnote 2/1] This analysis is misguided. The fact that adult movie theaters may cause harmful "secondary" land use effects may arguably give Renton a compelling reason to regulate such establishments; it does not mean, however, that such regulations are content-neutral. Page 475 U. S. 57 Because the ordinance imposes special restrictions on certain kinds of speech on the basis of content, I cannot simply accept, as the Court does, Renton's claim that the ordinance was not designed to suppress the content of adult movies. "[W]hen regulation is based on the content of speech, governmental action must be scrutinized more carefully to ensure that communication has not been prohibited 'merely because public officials disapprove the speaker's views.'" Consolidated Edison Co., supra, at 447 U. S. 536 (quoting Niemotko v. Maryland, 340 U. S. 268, 340 U. S. 282 (1951) (Frankfurter, J., concurring in result)). "[B]efore deferring to [Renton's] judgment, [we] must be convinced that the city is seriously and comprehensively addressing" secondary land use effects associated with adult movie theaters. Metromedia, Inc. v. San Diego, 453 U. S. 490, 453 U. S. 531 (1981) (BRENNAN, J., concurring in judgment). In this case, both the language of the ordinance and its dubious legislative history belie the Court's conclusion that "the city's pursuit of its zoning interests here was unrelated to the suppression of free expression." Ante at 475 U. S. 48. A The ordinance discriminates on its face against certain forms of speech based on content. Movie theaters specializing in "adult motion pictures" may not be located within 1,000 feet of any residential zone, single- or multiple-family dwelling, church, park, or school. Other motion picture theaters, and other forms of "adult entertainment," such as bars, massage parlors, and adult bookstores, are not subject to the same restrictions. This selective treatment strongly suggests that Renton was interested not in controlling the "secondary effects" associated with adult businesses, but in discriminating against adult theaters based on the content of the films they exhibit. The Court ignores this discriminatory treatment, declaring that Renton is free "to address the potential problems created by one particular kind of adult business," ante at 475 U. S. 52-53, and to amend the ordinance in the Page 475 U. S. 58 future to include other adult enterprises. Ante at 475 U. S. 53 (citing Williamson v. Lee Optical Co., 348 U. S. 483, 348 U. S. 488-489 (1955)). [Footnote 2/2] However, because of the First Amendment interests at stake here, this one-step-at-a-time analysis is wholly inappropriate. "This Court frequently has upheld underinclusive classifications on the sound theory that a legislature may deal with one part of a problem without addressing all of it. See e.g., Williamson v. Lee Optical Co., 348 U. S. 483, 348 U. S. 488-489 (1955). This presumption of statutory validity, however, has less force when a classification turns on the subject matter of expression." "[A]bove all else, the First Amendment means that government has no power to restrict expression because of its message, its ideas, its subject matter, or its content." Police Dept. of Chicago v. Mosley, 408 U.S. at 408 U. S. 95. Erznoznik v. City of Jacksonville, 422 U. S. 205, 422 U. S. 215 (1975). In this case, the city has not justified treating adult movie theaters differently from other adult entertainment businesses. The ordinance's underinclusiveness is cogent evidence that it was aimed at the content of the films shown in adult movie theaters. B Shortly after this lawsuit commenced, the Renton City Council amended the ordinance, adding a provision explaining that its intention in adopting the ordinance had been "to promote the City of Renton's great interest in protecting and preserving the quality of its neighborhoods, commercial districts, and the quality of urban life through effective land Page 475 U. S. 59 use planning." App. to Juris. Statement 81a. The amended ordinance also lists certain conclusory "findings" concerning adult entertainment land uses that the Council purportedly relied upon in adopting the ordinance. Id. at 81a-86a. The city points to these provisions as evidence that the ordinance was designed to control the secondary effects associated with adult movie theaters, rather than to suppress the content of the films they exhibit. However, the "legislative history" of the ordinance strongly suggests otherwise. Prior to the amendment, there was no indication that the ordinance was designed to address any "secondary effects" a single adult theater might create. In addition to the suspiciously coincidental timing of the amendment, many of the City Council's "findings" do not relate to legitimate land use concerns. As the Court of Appeals observed, "[b]oth the magistrate and the district court recognized that many of the stated reasons for the ordinance were no more than expressions of dislike for the subject matter." 748 F.2d 527, 537 (CA9 1984). [Footnote 2/3] That some residents may be offended by the content of the films shown at adult movie theaters cannot form the basis for state regulation of speech. See Terminiello v. Chicago, 337 U. S. 1 (1949). Some of the "findings" added by the City Council do relate to supposed "secondary effects" associated with adult movie Page 475 U. S. 60 theaters. [Footnote 2/4] However, the Court cannot, as it does, merely accept these post hoc statements at face value. "[T]he presumption of validity that traditionally attends a local government's exercise of its zoning powers carries little, if any, weight where the zoning regulation trenches on rights of expression protected under the First Amendment." Schad v. Mount Ephraim, 452 U. S. 61, 452 U. S. 77 (1981) (BLACKMUN, J., concurring). As the Court of Appeals concluded, "[t]he record presented by Renton to support its asserted interest in enacting the zoning ordinance is very thin." 748 F.2d at 536. The amended ordinance states that its "findings" summarize testimony received by the City Council at certain public hearings. While none of this testimony was ever recorded or preserved, a city official reported that residents had objected to having adult movie theaters located in their community. However, the official was unable to recount any testimony as to how adult movie theaters would specifically affect the schools, churches, parks, or residences "protected" by the ordinance. See App.190-192. The City Council conducted no studies, and heard no expert testimony, on how the protected uses would be affected by the presence of an adult movie theater, and never considered whether residents' concerns could be met by "restrictions that are less intrusive on protected forms of expression." Schad, supra, at 452 U. S. 74. As a result, any "findings" regarding "secondary effects" caused by adult movie theaters, or the need to adopt specific locational requirements to combat such effects, were not "findings" at all, but purely speculative conclusions. Such "findings" were not such as are required to justify the burdens Page 475 U. S. 61 the ordinance imposed upon constitutionally protected expression. The Court holds that Renton was entitled to rely on the experiences of cities like Detroit and Seattle, which had enacted special zoning regulations for adult entertainment businesses after studying the adverse effects caused by such establishments. However, even assuming that Renton was concerned with the same problems as Seattle and Detroit, it never actually reviewed any of the studies conducted by those cities. Renton had no basis for determining if any of the "findings" made by these cities were relevant to Renton's problems or needs. [Footnote 2/5] Moreover, since Renton ultimately adopted zoning regulations different from either Detroit or Seattle, these "studies" provide no basis for assessing the effectiveness of the particular restrictions adopted under the ordinance. [Footnote 2/6] Renton cannot merely rely on the general experiences Page 475 U. S. 62 of Seattle or Detroit, for it must "justify its ordinance in the context of Renton's problems -- not Seattle's or Detroit's problems." 748 F.2d at 536 (emphasis in original). In sum, the circumstances here strongly suggest that the ordinance was designed to suppress expression, even that constitutionally protected, and thus was not to be analyzed as a content-neutral time, place, and manner restriction. The Court allows Renton to conceal its illicit motives, however, by reliance on the fact that other communities adopted similar restrictions. The Court's approach largely immunizes such measures from judicial scrutiny, since a municipality can readily find other municipal ordinances to rely upon, thus always retrospectively justifying special zoning regulations for adult theaters. [Footnote 2/7] Rather than speculate about Renton's motives for adopting such measures, our cases require the conclusion that the ordinance, like any other content-based restriction on speech, is constitutional "only if the [city] can show that [it] is a precisely drawn means of serving a compelling [governmental] interest." Consolidated Edison Co. v. Public Service Comm'n of N.Y., 447 U.S. at 447 U. S. 540; see also Carey v. Brown, 447 U. S. 455, 447 U. S. 461-462 (1980); Police Department of Chicago v. Mosley, 408 U. S. 92, 408 U. S. 99 (1972). Only this strict approach can insure that cities will not use their zoning powers as a pretext for suppressing constitutionally protected expression. Page 475 U. S. 63 Applying this standard to the facts of this case, the ordinance is patently unconstitutional. Renton has not shown that locating adult movie theaters in proximity to its churches, schools, parks, and residences will necessarily result in undesirable "secondary effects," or that these problems could not be effectively addressed by less intrusive restrictions. II Even assuming that the ordinance should be treated like a content-neutral time, place, and manner restriction, I would still find it unconstitutional. "[R]estrictions of this kind are valid, provided . . . that they are narrowly tailored to serve a significant governmental interest, and that they leave open ample alternative channels for communication of the information." Clark v. Community for Creative Non-Violence, 468 U. S. 288, 468 U. S. 293 (1984); Heffron v. International Society for Krishna Consciousness, Inc., 452 U. S. 640, 452 U. S. 648 (1981). In applying this standard, the Court "fails to subject the alleged interests of the [city] to the degree of scrutiny required to ensure that expressive activity protected by the First Amendment remains free of unnecessary limitations." Community for Creative Non-Violence, 468 U.S. at 468 U. S. 301 (MARSHALL, J., dissenting). The Court "evidently [and wrongly] assumes that the balance struck by [Renton] officials is deserving of deference so long as it does not appear to be tainted by content discrimination." Id. at 468 U. S. 315. Under a proper application of the relevant standards, the ordinance is clearly unconstitutional. A The Court finds that the ordinance was designed to further Renton's substantial interest in "preserv[ing] the quality of urban life." Ante at 475 U. S. 50. As explained above, the record here is simply insufficient to support this assertion. The city made no showing as to how uses "protected" by the ordinance would be affected by the presence of an adult movie theater. Thus, the Renton ordinance is clearly distinguishable from Page 475 U. S. 64 the Detroit zoning ordinance upheld in Young v. American Mini Theatres, Inc., 427 U. S. 50 (1976). The Detroit ordinance, which was designed to disperse adult theaters throughout the city, was supported by the testimony of urban planners and real estate experts regarding the adverse effects of locating several such businesses in the same neighborhood. Id. at 427 U. S. 55; see also Northend Cinema, Inc. v. Seattle, 90 Wash.2d 709, 711, 585 P.2d 1153, 1154-1155 (1978), cert. denied sub nom. Apple Theatre, Inc. v. Seattle, 441 U.S. 946 (1979) (Seattle zoning ordinance was the "culmination of a long period of study and discussion"). Here, the Renton Council was aware only that some residents had complained about adult movie theaters, and that other localities had adopted special zoning restrictions for such establishments. These are not "facts" sufficient to justify the burdens the ordinance imposed upon constitutionally protected expression. B Finally, the ordinance is invalid because it does not provide for reasonable alternative avenues of communication. The District Court found that the ordinance left 520 acres in Renton available for adult theater sites, an area comprising about five percent of the city. However, the Court of Appeals found that, because much of this land was already occupied, "[l]imiting adult theater uses to these areas is a substantial restriction on speech." 748 F.2d at 534. Many "available" sites are also largely unsuited for use by movie theaters. See App. 231, 241. Again, these facts serve to distinguish this case from American Mini Theatres, where there was no indication that the Detroit zoning ordinance seriously limited the locations available for adult businesses. See American Mini Theatres, supra, at 427 U. S. 71, n. 35 (plurality opinion) ("The situation would be quite different if the ordinance had the effect of . . . greatly restricting access to . . . lawful speech"); see also Basiardanes v. City of Galveston, 682 F.2d 1203, 1214 (CA5 1982) (ordinance effectively banned adult theaters Page 475 U. S. 65 by restricting them to "the most unattractive, inaccessible, and inconvenient areas of a city'"); Purple Onion, Inc. v. Jackson, 511 F.Supp. 1207, 1217 (ND Ga.1981) (proposed sites for adult entertainment uses were either "unavailable, unusable, or so inaccessible to the public that . . . they amount to no locations"). Despite the evidence in the record, the Court reasons that the fact "[t]hat respondents must fend for themselves in the real estate market, on an equal footing with other prospective purchasers and lessees, does not give rise to a First Amendment violation." Ante at 475 U. S. 54. However, respondents are not on equal footing with other prospective purchasers and lessees, but must conduct business under severe restrictions not imposed upon other establishments. The Court also argues that the First Amendment does not compel "the government to ensure that adult theaters, or any other kinds of speech-related businesses for that matter, will be able to obtain sites at bargain prices." Ibid. However, respondents do not ask Renton to guarantee low-price sites for their businesses, but seek only a reasonable opportunity to operate adult theaters in the city. By denying them this opportunity, Renton can effectively ban a form of protected speech from its borders. The ordinance "greatly restrict[s] access to . . . lawful speech," American Mini Theatres, supra, at 427 U. S. 71, n. 35 (plurality opinion), and is plainly unconstitutional. [Footnote 2/1] The Court apparently finds comfort in the fact that the ordinance does not "deny use to those wishing to express less favored or more controversial views." Ante at 475 U. S. 48-49. However, content-based discrimination is not rendered "any less odious" because it distinguishes "among entire classes of ideas, rather than among points of view within a particular class." Lehman v. City of Shaker Heights, 418 U. S. 298, 418 U. S. 316 (1974) (BRENNAN, J., dissenting); see also Consolidated Edison Co. v. Public Service Comm'n of N.Y., 447 U. S. 530, 447 U. S. 537 (1980) ("The First Amendment's hostility to content-based regulation extends not only to restrictions on particular viewpoints, but also to prohibition of public discussion of an entire topic."). Moreover, the Court's conclusion that the restrictions posed here were viewpoint-neutral is patently flawed. "As a practical matter, the speech suppressed by restrictions such as those involved [here] will almost invariably carry an implicit, if not explicit, message in favor of more relaxed sexual mores. Such restrictions, in other words, have a potent viewpoint- differential impact. . . . To treat such restrictions as viewpoint-neutral seems simply to ignore reality." Stone, Restrictions of Speech Because of its Content: The Peculiar Case of Subject- Matter Restrictions, 46 U.Chi.L.Rev. 81, 111-112 (1978). [Footnote 2/2] The Court also explains that "[t]here is no evidence that, at the time the Renton ordinance was enacted, any other adult business was located in, or was contemplating moving into, Renton." Ante at 475 U. S. 52. However, at the time the ordinance was enacted, there was no evidence that any adult movie theaters were located in, or considering moving to, Renton. Thus, there was no legitimate reason for the city to treat adult movie theaters differently from other adult businesses. [Footnote 2/3] For example, "finding" number 2 states that "[l]ocation of adult entertainment land uses on the main commercial thoroughfares of the City gives an impression of legitimacy to, and causes a loss of sensitivity to the adverse effect of pornography upon children, established family relations, respect for marital relationship and for the sanctity of marriage relations of others, and the concept of nonaggressive, consensual sexual relations." App. to Juris. Statement 86a. "Finding" number 6 states that "[l]ocation of adult land uses in close proximity to residential uses, churches, parks, and other public facilities, and schools, will cause a degradation of the community standard of morality. Pornographic material has a degrading effect upon the relationship between spouses." Ibid. [Footnote 2/4] For example, "finding" number 12 states that "[l]ocation of adult entertainment land uses in proximity to residential uses, churches, parks and other public facilities, and schools, may lead to increased levels of criminal activities, including prostitution, rape, incest and assaults in the vicinity of such adult entertainment land uses." Id. at 83a. [Footnote 2/5] As part of the amendment passed after this lawsuit commenced, the City Council added a statement that it had intended to rely on the Washington Supreme Court's opinion in Northend Cinema, Inc. v. Seattle, 90 Wash.2d 709, 585 P.2d 1153, (1978), cert. denied sub nom. Apple Theatre, Inc. v. Seattle, 441 U.S. 946 (1979), which upheld Seattle's zoning regulations against constitutional attack. Again, despite the suspicious coincidental timing of the amendment, the Court holds that "Renton was entitled to rely . . . on the detailed findings' summarized in the . . . Northend Cinema opinion." Ante at 475 U. S. 51. In Northend Cinema, the court noted that "[t]he record is replete with testimony regarding the effects of adult movie theater locations on residential neighborhoods." 90 Wash.2d at 719, 585 P.2d at 1159. The opinion however, does not explain the evidence it purports to summarize, and provides no basis for determining whether Seattle's experience is relevant to Renton's. [Footnote 2/6] As the Court of Appeals observed: "Although the Renton ordinance purports to copy Detroit's and Seattle's, it does not solve the same problem in the same manner. The Detroit ordinance was intended to disperse adult theaters throughout the city, so that no one district would deteriorate due to a concentration of such theaters. The Seattle ordinance, by contrast, was intended to concentrate the theaters in one place, so that the whole city would not bear the effects of them. The Renton Ordinance is allegedly aimed at protecting certain uses -- schools, parks, churches and residential areas -- from the perceived unfavorable effects of an adult theater." 748 F.2d at 536 (emphasis in original). [Footnote 2/7] As one commentator has noted: "[A]nyone with any knowledge of human nature should naturally assume that the decision to adopt almost any content-based restriction might have been affected by an antipathy on the part of at least some legislators to the ideas or information being suppressed. The logical assumption, in other words, is not that there is not improper motivation but, rather, because legislators are only human, that there is a substantial risk that an impermissible consideration has in fact colored the deliberative process." Stone, supra, n. 1, at 106. [PAGE LEFT BLANK INTENTIONALLY] Boston College Law Review Volume 46 Issue 3 Number 3 Article 3 5-1-2005 Sex , But Not the Cit y: Adult-Enter tainment Zoning , the First Amendment , and Residential and Rural Municipalities Matthew L. McGinnis Follow this and additional works at:http://lawdigitalcommons.bc.edu/bclr Part of the First Amendment Commons,Land Use Law Commons, and the Sexuality and the Law Commons This Notes is brought to you for free and open access by the Law Journals at Digital Commons @ Boston College Law School. It has been accepted for inclusion in Boston College Law Review by an authorized editor of Digital Commons @ Boston College Law School. For more information, please contact nick.szydlowski@bc.edu. Recommended Citation Matthew L. McGinnis,Sex, But Not the City: Adult-Entertainment Zoning , the First Amendment, and Residential and Rural Municipalities, 46 B.C.L. Rev.625 (2005),http://lawdigitalcommons.bc.edu/bclr/vol46/iss3/3 SEX, BUT NOT THE CITY: ADULT- ENTERTAINMENT ZONING, THE FIRST AMENDMENT, AND RESIDENTIAL AND RURAL MUNICIPALITIES Abstract: Adult entertainment's status as protected First Amendment speech has resulted in a confusing series of U.S. Supreme Court cases evaluating the zoning of adult businesses. Cases discussing the require- ment that municipalities provide alternative avenues of communication for adult businesses have raised many questions as to how rural and residential municipalities may satisfy this obligation. This Note identifies three solutions that would help frame this inquiry. First, state or county legislative bodies should adopt countywide or statewide location restric- dons on adult businesses. Second, courts should employ a regional analysis of the alternative avenues requirement when evaluating adult- entertainment zoning restrictions. Third, courts should undertake a supply-and-demand analysis when assessing what constitutes sufficient alternative avenues of communication, Adoption of these solutions would help to ensure that the First Amendment obligations of rural and residen- tial municipalities reflect the unique burdens of such municipalities while maintaining appropriate protection for free speech. INTRODUCTION The topic of adult-entertainment zoning remains a controversial subject in municipal politics.I Few zoning issues inspire as much legal and political hand-wringing as the locations of adult businesses in a municipality.2 Much of this controversy can be attributed to adult en- tertainment's status as protected First Amendment speech, which re- quires municipalities to be especially careful in their regulation and restriction of such businesses.5 1 See Ben Z, Hershberg, Courts Struggle to Balance Rights of Adult Stores, Cities, COURIER-J. (Louisville, Ky.), Oct. 19, 2004, at 1A. For purposes of this Note, "adult-entertainment business" and "adult business" are used interchangeably and include live nude and semi- nude dancing establishments, adult movie 'theaters, adult bookstores, and other sexually oriented businesses. 2 See id. 3 See Barnes v. Glen Theatre, Inc., 501 U.S. 560, 566 (1991) (holding that adult enter- tainment for commercial purposes "is expressive conduct within the outer parameters of the First Amendment, though ... only marginally so"); Hershberg, supra note 1, at 1A. 625 626 Boston College Law Review [Vol. 46:625 In recent years, many cities have engaged in well-publicized zon- ing action to regulate and even to eliminate the presence of adult- entertainment businesses within their borders.4 These efforts are largely a response to the adverse impacts adult businesses have on surrounding communities.5 A 1989 survey of studies done on the topic, for example, showed that the presence of adult-entertainment businesses in a neighborhood leads to decreases in property values, increases in property crimes and sex crimes, and general neighbor- hood deterioration.6 When several adult businesses are concentrated in a particular area, these effects are often worse.'' Rural and predominantly residential municipalities are especially susceptible to the negative effects of adult businesses.8 The same 1989 study found that the negative impacts of adult businesses on communi- ties are closely related to the businesses' proximity to residential areas.9 In rural and residential municipalities, where most land is residential, adult businesses may be necessarily closer to residential areas." Ac- cordingly, adult businesses arguably pose a greater risk to the quality of life in rural and residential municipalities than they do to the quality of life in large cities, where there exists a greater amount of commer- cially zoned acreage in which adult businesses may locate." Despite these greater risks, zoning restrictions on adult businesses in rural and residential municipalities are evaluated under a First Amendment analysis developed primarily in consideration of cities with large amounts of commercially zoned acreage." The U.S. Supreme Court's most complete discussion of this analysis took place in 1986 in City of Renton v. Playtime Theatres, Inc., in which the Court upheld the 4 See Dan Barry & David Rohde, Giuliani Begins to See Results in Battle Against Sex shops, N.Y. TIMES, Aug. 9, 1998, at A29; Scott S. Greenberger, Combat Zone's Demise Foreseen, Bos- TON GLOBE, July 5, 2003, at B1. 5 See MINN. ATTORNEY GEN., REPORT OF THE ATTORNEY GENERAL'S WORKING GROUP ON THE REGULATION OF SEXUALLY ORIENTED BUSINESSES (1989), reprinted in JULES B. GERARD, LOCAL REGULATION or ADULT BUSINESSES app. B, at 522-28 (2004 ed.). 6 Id. 7 Id. at 524. Some municipalities nevertheless have chosen to minimize the overall ad- verse effects of adult businesses by concentrating them in one area, thereby eliminating them from other neighborhoods entirely. See BOSTON, MASS., ZONING CODE § 3-1A(d) (2004); City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 50, 52 (1986) (holding con- stitutional a zoning scheme that concentrated adult businesses in 5% of a city's land area). 8 See MINN. ATTORNEY GEN., supra note 5, at 529-30; see also Karen DeMasters, Is a Buffer-Zone Law Fair if There Is No Room far a Buffer?, N.Y. TIMES, Jan. 3, 1999, § 14, at 6. 9 See MINN. ATTORNEY GEN., supra note 5, at 529-30. 10 See id.; DeMasters, supra note 8, at 6. 11 See MINN. ArroRNEY GEN., supra note 5, at 529-30; DeMasters, supra note 8, at 6. 12 See Renton, 475 U.S. at 50, 53. 2005] Adult-Entertainment Zoning 627 zoning ordinance' of Renton, Washington, which effectively concen- trated all adult-entertainment businesses in certain areas of the city.13 Under Renton, an adult-entertainment zoning restriction is upheld if it is (1) is intended to serve a substantial governmental interest and (2) permits reasonable alternative avenues of communication.14 To sat- isfy the second, "alternative avenues" requirement of this test, the city must show that a business owner has a reasonable opportunity to oper- ate an adult business elsewhere within municipal boundaries.15 The two-pronged Renton test was created for a city with large per- centages of commercially zoned land, and thus applying the second prong of the test to rural and residential municipalities, which have substantially less commercially zoned land, has been problematic.16 Courts have encountered great difficulty in determining how such communities may satisfy Renton's alternative avenues requirement." In these instances, the Supreme Court's case law as applied to rural and residential communities is ari uncertain guide.18 Consider the following hypothetical scenario.19 A city attorney for Blackacre Village, a small town surrounded by larger commercial cities, is tasked with drafting the city's first adult-entertainment zoning ordi- nance." Because it is a primarily , residential municipality, only 5% of Blackacre's total land area is zoned for commercial use.21 To ensure Blackacre meets its constitutional obligations under the First Amend- ment, the attorney reviews Renton to determine what constitutes sufficient alternative avenues of communication, the second require- ment of the Renton test.22 In doing so, the attorney encounters some significant, unanswerable questions." If Renton requires cities to allow adult businesses to locate on 5%, of the municipality's available land, does this mean Blackacre essentially must allow adult businesses throughout its small commercial' core?24 Should the fact that other 13 id, at 50. " Id. 16 See id. at 54. 16 See id. at 53; Keego Harbor Co. v. City of Keego Harbor, 657 F.2d 94, 96 (6th Cir. 1981); Township of Saddle Brook v. A.B. Family Ctr., Inc., 722 A.2d 530, 532 (NJ. 1999). " See Keego Harbor Co., 657 F.2d at 96; Stiddle Brook, 722 A.2d at 532. 18 See Saddle Brook, 722 A.2d at 534. 19 The facts from this scenario are loosely based on Keego Harbor Co., 657 F.2d at 96, and Saddle Brook, 722 A.2d at 532. " See Keego Harbor Co., 657 F.2d at 96; Saddle Brook, 722 A.2d at 532. 21 See Keego Harbor Co., 657 F.2d at 96; Saddle Brook, 722 A.2d at 532. 22 See Renton, 475 U.S. at 50, 53. 23 see id. at 53; Saddle Brook, 722 A.2d at 532, 535-36. 24 See Renton, 475 U.S. at 53. 628 Boston College Law Reuiew [Vol. 46:625 nearby cities provide a wealth of adult-entertainment businesses lessen Blackacre's obligation, at least for purposes of the First Amendment?25 What if a 1000-foot distancing requirement between adult businesses and churches, schools, and residential areas effectively bans these busi- nesses from Blackacre entirely?" The Supreme Court case law offers few answers to these questions, leaving the city attorney little direction in drafting the ordinance.27 In response to these difficult questions, this Note argues that the Supreme Court's adult-entertainment zoning jurisprudence leaves un- answered the following four problems facing rural and residential mu- nicipalities: the undetermined constitutionality of a total ban, vague standards for evaluating the alternative avenues requirement, an inabil- ity to enact sufficient distancing requirements, and a lack of regional zoning of adult businesses.28 To address these problems, this Note pro- poses three solutions: regional zoning of adult businesses, a regional analysis of Renton's alternative avenues requirement, and a supply-and- demand analysis of Renton's alternative avenues requirement.29 Part I.A of this Note reviews the Supreme Court's First Amend- ment jurisprudence on content-neutral laws as it applies to adult- entertainment zoning cases." Parts I.B, I.C, and I.D review in detail three Supreme Court cases that discuss the requirement of adequate alternative avenues of communication for adult-entertainment zoning laws." Part 1.E analyzes three subsequent lower court cases that strug- gled to apply Supreme Court case law to rural and residential com- munities." Part II identifies and discusses the four problems that adult-entertainment Supreme Court case law creates for rural and residential municipalities and their adult-entertainment zoning laws.33 Part III proposes three solutions to these problems, which legislators, judges, and lawyers may adopt to ensure a more equitable application of First Amendment case law to rural and residential municipalities.34 25 See Saddle Brook, 722 A.2d at 535-36. 26 See id. at 532. 27 See Renton, 475 U.S. at 50, 53; Schad v. Borough of Mount Ephraim, 452 U.S. 61,76 (1981); Young v. Am. Mini Theatres, Inc., 427 U.S. 50,71-73 (1976) (plurality opinion). 28 See infra notes 219-264 and accompanying text. 29 See infra notes 265-305 and accompanying text. so See infra notes 35-61 and accompanying text. 31 See infra notes 62-174 and accompanying text. 32 See infra notes 175-212 and accompanying text. 33 See infra notes 213-264 and accompanying text. 34 See infra notes 265-305 and accompanying text. 2005] Adult-Entertainment Zoning 629 I. THE SUPREME COURT'S FIRST AMENDMENT JURISPRUDENCE CONCERNING ADULT-ENTERTAINMENT ZONING AND ITS APPLICATION BY LOWER COURTS A. The Content-Neutrality Doctrine Central to the Supreme Court's adult-entertainment case law is the interpretation of adult-entertainment zoning ordinances as con- tent-neutral rather than content-based.35 A content-neutral law con- trols expression without regard to the speech itself or the speech's impact.36 In this sense, laws that regulate the time, place, and manner of speech, but not the actual speech itself, are content-neutral.37 Therefore, an adult-entertainment zoning law that regulates the loca- tion of a business is said to regulate only the secondary effects of such speech, rather than the speech itself." In contrast, a content-based law singles out certain messages, topics, or forms of expression for regulation and restriction .59 Although the theoretical distinction between content-neutral and content-based laws may be clear, scholars have noted that the practical 55 See City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 48 (1986). The prevailing scholarly consensus is that adult-entertainment zoning ordinances are, in most instances, not content-neutral, despite Supreme Court holdings to the contrary. See, e.g., Clay Calvert, Free Speech and Content-Neutrality: Inconsistent Applications of an Increasingly Malleable Doctrine, 29 MCGEORGE L. REV. 69, 103 (1997); Erwin Chemerinsky, Content Neutrality as a Central Problem of Freedom of Speech: Problems in the Supreme Court's Application, 74 S. CAL. L. REV. 49, 59 (2000); Geoffrey R. Stone, Content-Neutral Restrictions, 54 U. Cm. L. REv. 46, 115 (1987). Despite this problematic application, the Court continues to apply the content-neutrality doctrine. See City of Los Angeles v. Alameda Books, Inc. 535 U.S. 425, 434, 441 (2002) (plu- rality opinion). Contra Wilson R. Huhn, Assessing the Constitutionality of Laws That Are Both Content-Based and Content Neutral: The Emerging Constitutional Calculus, 79 bin. L.J. 801, 803, 810-12, 846 (2004) (discussing a new "constitutional calculus" test based on Justice John Paul Stevens's concurring opinion in City of Los Angeles v. Alameda Books, Inc.). There is grow- ing discontent with the doctrine among the Justices, however. See Los Angeles, 535 U.S. at 444-45 (Kennedy, J., concurring). In 2002, in Los Angeles the Court upheld Los Angeles's adult-entertainment zoning ordinance enacted in reliance on a twenty-year-old study. Id. at 430 (plurality opinion). Justice Anthony Kennedy, who was the fifth vote in a five-to-four decision, wrote a concurring opinion in which he disagreed with the majority's contention that the zoning ordinance was content-neutral. Id. at 445-46 (Kennedy, J., concurring). Noting that "the designation is imprecise," Justice Kennedy stated that the Court should acknowledge that the law was content-based, but still subject it to the intermediate scrutiny usually reserved for content-neutral laws. Id. at 444-45, 447 (Kennedy, J., concurring). Un- der this interpretation, content-based adult-entertainment zoning laws would be treated as an exception to the content-neutrality doctrine. See id. at 947 (Kennedy, J., concurring). 36 See Renton, 475 U.S. at 48. 37 See Calvert, supra note 35, at 74. 38 See Renton, 475 U.S. at 46. " See Calvert, supra note 35, at 76. 630 Boston College Law Review [Vol. 46:625 categorization of most laws is not.40 In theory, the controlling ques- tion for determining whether a law is content-neutral should be whether the application of the law turns on the message or content of the speech." The Supreme Court's analysis, however, is often incon- sistent with this approach.42 Instead of analyzing the law on its face to determine whether it singles out certain speech, the Court often con- siders the intent or purpose of the legislation.43 In these instances, a content-based law that is motivated by an apparent content-neutral purpose—such as .the regulation of only the time, place, and manner of speech—is considered content-neutral, even if the law is facially con ten t-based .44 For instance, a law that identifies particular areas of a city where adult businesses may locate is content-based because, on the face of the law, adult entertainment as a form of speech is singled out for dif- ferential treatment.° If that law, however, were motivated by a desire to limit the negative effects of adult entertainment on surrounding communities, but not to eliminate the speech altogether, a court may find the law content-neutral.° In finding as much, the court would be ignoring facial evidence to the contrary.47 As a result of this arguably inconsistent approach to content neu- trality, some scholars have advocated abandoning the doctrine.48 They argue that most laws have both content-based and content-neutral ele- ments, making categorization arbitrary.49 Many scholars nevertheless see merit in the distinction, noting that the problem with the content- neutrality doctrine is really one of application, not theory.5° Under this 40 See Huhn, supra note 35, at 803. 1 ' See Chemerinsky, supra note 35, at 51. 42 See Calvert, supra note 35, at 103; Chemerinsky, supra note 35, at 59-60. 43 See Chemerin sky, supra note 35, at 59-60. Scholars advocate an emphasis on the ef- fects of the given restriction, rather than its intent, in evaluating content neutrality. See Calvert, supra note 35, at 108-09; Chemerinsky, supra note 35, at 60-61; Huhn, supra note 35, at 803. Under this analysis, an ordinance restricting the locations and operations of adult-entertainment businesses clearly restricts speech, making it content-based. See Chem- erinsky, supra note 35, at 60-61. 44 SeChernerinsky, supra note 35, at 59-60. 15 See id. at 60. 48 See, e.g., Renton, 475 U.S. at 48. 47 See Chemerinsky, supra note 35, at 60. 46 See, e.g., Huhn, supra note 35, at 826; Martin H. Redish, The Content Distinction in First Amendment Analysis, 34 STAN. L. REV. 113,139-40 (1981). 49 See, e.g., Huhn, supra note 35, at 826. " See Calvert, supra note 35, at 110. 2005] Adult-Entertainment Zoning 631 rationale, the Court has complicated the issue by considering legislative intent when it should be looking at the law on its face.51 According to these commentators, a consistent application of the content-based/content-neutral distinction permits the Court to focus its strictest scrutiny on content-based laws, which suppress speech most severely, and to apply a more deferential level of scrutiny to less- threatening content-neutral laws.52 Whereas content-based laws pre- sumptively violate the First Amendment," content-neutral laws are upheld so long as they satisfy the two-pronged test outlined in City of Renton v. Playtime Theatres, Inc.54 First, the content-neutral law must serve a substantial governmental interest.55 This is commonly satisfied by the municipality showing it regulates only the negative secondary effects of speech, such as crime or diminished property values, by re- stricting the locations of adult-entertainment businesses rather than the content of adult entertainment itself." Second, the content-neutral law must leave open adequate alterna- tive avenues of communication.57 This alternative avenues requirement is included because the First Amendment guarantees citizens the right to share their message with those interested." As a result, in the adult entertainment context, a content-neutral law must ensure adult busi- nesses are afforded space to operate.59 Three Supreme Court cases discuss municipalities' obligations to provide sufficient alternative avenues of communication when enact- ing adult-entertainment zoning.6° Each has significantly influenced lower court decisions regarding adult-entertainment zoning in resi- dential and rural communities.61 51 See id. at 108-09. 55 See id. at 74-75; Stone, supra note 35, at 54. 55 Renton, 475 U.S. at 46-47; see also R.A.V. v, City of St. Paul, 505 U.S. 377, 382 (1992) (holding unconstitutional a restriction on hate speech based on race, color, religion, or gender). " See Renton, 475 U.S. at 46-47. 55 See id. at 47. 55 See id. at 50. 57 See id. 55 See Heffron v. Int'l Soc'y for Krishna Consciousness, Inc., 452 U.S. 640, 654 (1981) (holding constitutional a Minnesota state fair rule prohibiting the sale or distribution of printed or written material except from fixed locations). 59 See Renton, 475 U.S. at 54. *3 See id. at 53-54; Schad v. Borough of Mount Ephraim, 452 U.S. 61, 76 (1981); Young v. Am. Mini Theatres, Inc., 427 U.S, 50, 62-63 (1976) (plurality opinion). 51 See, e.g., Keego Harbor Co. v. City of Keego Harbor, 657 F.2d 94, 96-97 (6th Cir. 1981); Township of Saddle Brook v. A.B. Family Ctr., Inc., 722 A.2d 530, 533-34 (NJ. 1999). Two other frequently cited Supreme Court cases considering restrictions on adult 632 Boston College Law Review [Vol. 46:625 B. The U.S. Supreme Court Upholds a Zoning Ordinance Dispersing Adult Businesses: Young v. American Mini Theatres, Inc. In 1976, in Young v. American Mini Theatres, Inc., the U.S. Supreme Court upheld a Detroit, Michigan, zoning ordinance that required dispersal of adult-entertainment businesses .° As the first Supreme Court adult-entertainment zoning case, Young established the authority of cities to restrict the locations in which adult businesses may oper- ate.63 At issue were amendments to an "And-Skid Row Ordinance" aimed at preventing the concentration of adult-entertainment busi- nesses in Detroit." The ordinance placed two primary restrictions on adult businesses." First, it prohibited adult theaters from being located within 1000 feet of any two other "regulated uses."66 In addition to adult theaters, "regulated uses" included adult bookstores, cabarets, bars, dance halls, and hotels.° Second, the ordinance prohibited adult theaters from locating within 500 feet of a residential area." Com- bined, these restrictions had the effect of dispersing adult businesses.° In Young, operators of two adult theaters in Detroit filed suit against Detroit city officials, contending the ordinances were uncon- stitutional." The United States District Court found for the city and the U.S. Court of Appeals for the Sixth Circuit reversed." The adult theater operators made three primary arguments before the U.S. Su- preme Court.72 First, they contended that the definition of adult thea- ters was unconstitutionally vague.73 Second, they argued the restric- entertainment are not discussed here. See Los Angeles, 535 U.S. at 433 (plurality opinion); City of Erie v. Pap's A.M, 529 U.S. 277, 283-84 (2000). Los Angeles considers only the gov- ernmental interest requirement of the Reflects test in reviewing Los Angeles's adult- entertainment zoning law. See Los Angeles, 535 U.S. at 433 (plurality opinion). In City ofErie v. Pap's A.M., the Supreme Court upheld a city ordinance banning nudity in public places, but it did not consider a zoning ordinance, and thus did not apply the Renton test. See Pap's A.M., 529 U.S. at 283-84. 62 427 U.S. at 72-73 (plurality opinion). 63 See id. (plurality opinion). " Id. at 52-54 (plurality opinion). 62 Id. at 52 (plurality opinion). 88 See id. (plurality opinion). 67 Young, 427 U.S. at 52 n.3 (plurality opinion). 65 Id. at 52 (plurality opinion). 69 See hi. (plurality opinion). 7° Id. at 55 (plurality opinion). 71 See id. at 55-57 (plurality opinion); Am. Mini Theatres, Inc. v. Gribbs, 518 F.2d .1014, 1021 (6th Cu. 1975); Nortown Theatre Inc. v. Gribbs, 373 F. Supp. 363, 371 (E.D. Mich. 1974). 72 Young, 427 U.S. at 58 (plurality opinion). "See id. at 61 (plurality opinion). 2005] Adult-Entertainment Zoning 633 tions were unconstitutional as prior restraints on free speech.74 Fi- nally, they questioned the content neutrality of the law and its sup- pression of protected First Amendment speech." The plurality opinion by Justice John Paul Stevens quickly dis- pensed with the adult theater operators' first two arguments." Stevens stated that there was no question that adult theaters were within the scope of the. supposedly vague definition." A claim of vagueness was, in reality, a hypothetical issue, with no real bearing on the interested parties' situation." As a result, the first argument was rejected." In response to the second argument, Justice Stevens noted that the op- erators had not contended that the ordinance placed a limit on the total number of theaters, denied exhibitors access to the market, or prevented the demand of the "viewing public" from being met.80 Con- sequently, the market for adult entertainment was "essentially unre- strained,"81 and a restriction on the location where adult films could be shown did not violate the First Amendment.82 In response to the claim that the law was content-based, the Court first acknowledged the fundamental importance of content neutrality to the Court's jurisprudence, noting that content-based re- strictions on expression would undermine the importance of a na- tional forum and public debate es Nevertheless, Justice Stevens held adult-entertainment zoning was an instance where the value of free speech and public debate had to be balanced against at least two competing interests.84 First, some laws can protect the "government's paramount obli- gation of neutrality," and therefore remain constitutional, so long as they are viewpoint-neutral, even if they are content-based.° Laws fal- ling into this category include adult-entertainment zoning ordinances because they identify only the locations where such speech may occur but do not express an opinion of endorsement or disapproval about '74 See id. at 62 (plurality opinion). " See id. at 63-66 (plurality opinion). 76 See id. at 58-63 (plurality opinion). 77 See Young, 427 U.S. at 61 (plurality opinion). 78 See id. (plurality opinion) 79 See id. (plurality opinion) f" See id. at 62 (plurality opinion). 61 Id. (plurality opinion) 82 See Young, 427 U.S. at 62 (plurality opinion). 86 Id. at 65-66 (plurality opinion). 84 See id. at 70 (plurality opinion). 66 See id. (plurality opinion) 634 Boston College Law Review [Vol. 46:625 the speech itself.86 Detroit's ordinance, in other words, had the same effect on the location of adult businesses regardless of an adult film's particular message or viewpoint, and therefore the government re- mained neutral as to viewpoint.87 Second, society has a lesser interest in protecting commercial material, such as borderline pornography, than in protecting important political or philosophical debate." As Justice Stevens famously noted, "few of us would march our sons and daughters off to war to preserve the citizen's right to see 'Specified Sexual Activities' exhibited in the theaters of our choice."89 In short, these opposing concerns reflect a city's valid interest in preserving "the quality of urban life.”" Given Detroit's countervailing interests, the Court held the city was justified in restricting the location of adult businesses because it intended only to limit the secondary ef- fects of such businesses.91 The Young Court did not clarify, however, whether other communities, including rural and residential ones, pos- sess a similar interest in maintaining the quality of urban life, given that urban life is not a fundamental attribute of those communities.92 C. The U.S. Supreme Court Strikes Down a Ban on Live Entertainment: Schad v. Borough of Mount Ephraim In 1981, in Schad v. Borough of Mount Ephraim, the Supreme Court struck down Mount Ephraim, New Jersey's zoning ordinance prohibit- ing any live entertainment, adult or otherwise.93 Whereas Young had considered a large city's interest in maintaining the quality of urban life, Schad considered a small, primarily residential community's inter- est in maintaining the character of its community.94 Mount Ephraim's zoning ordinance identified various permitted uses in commercial zones and further noted that any uses not expressly permitted were prohibited.95 Live entertainment, nude or otherwise, was implicitly among the prohibited uses." The appellants in Schad operated an adult bookstore that, in 1976, violated the ordinance by adding a coin- 88 See id. (plurality opinion) 8r Young, 427 U.S. at 70 (plurality opinion). 26 See id. (plurality opinion) 89 Id. (plurality opinion) 9° See id. at 71 (plurality opinion). 91 Id. at 71-72 (plurality opinion). 92 See 427 U.S. at 71-72 (plurality opinion). 98 See 452 U.S. at 72 (plurality opinion). 94 See Schad, 452 U.S. at 72; Young, 427 U.S. at 71 (plurality opinion). 9 Schad, 452 U.S. at 63-64. 9° See id. 2005] Adult-Eniertainment Zoning 635 operated peep show where a customer could watch a live nude dancer performing.97 They were found criminally guilty of violating the ordi- nance, a decision which they appealed to the U.S. Supreme Court." The Schad Court delivered five opinions.99 The majority opinion written by Justice Byron White represented six Justices, including himself, William Brennan, Potter Stewart, Thurgood Marshall, Harry Blackmun, and Lewis Powell.'" Justices Blackmun, Powell and Stevens each wrote concurring opinions, with Justice Stewart joining in Justice Powell's opinion.'" Chief Justice Warren Burger and Justice William Rehnquist were the only dissenters.'" Justice White's majority opinion contained two primary hold- ings.'" First, the Court held the appellants could challenge the ordi- nance as being overly broad)" As Justice White noted, the ordinance in question implicitly prohibited not only nude dancing, but also all live entertainment in the city.'" Although he acknowledged that nude dancing does possess some form of First Amendment protection, Jus- tice White focused instead on the fact that the ordinance on its face also prohibited other activities protected by the First Amendment, such as commercial theater, musical concerts, and other perform- ances.'" Such a broad ordinance accordingly required equally expan- sive justification.197 Second, Mount Ephraim did not sufficiently justify the breadth of its ordinance, and thus failed to identify a substantial governmental 97 Id. at 62, °a Id. at 64-65, 99 Id. at 62-77; id. at 77-79 (Blackmun, J., concurring); id. at 79 (Powell, J., concur- ring); id. at 79-85 (Stevens, J., concurring); id. at 85-88 (Burger, CJ., dissenting). 19° See Schad, 452 U.S. at 62-79. Professor Jules B. Gerard concludes otherwise, claim- ing that White's opinion represented only three Justices ( Justices White, Brennan, and Marshall) because justices Blackmun, Powell, and Stevens wrote separate concurring opin- ions. JULES B. GERARD, LOCAL REGULATION OF ADULT BUSINESSES 209 (2004 ed.). This argument ignores the fact that both Justice Blackmun's and Justice Powell's opinions ex- plicitly note that they loin the Court's opinion." Schad, 452 U.S. at 77 (Blackmun, J., con- curring); id. at 79 (Powell, J., concurring). As a result, Justice Stevens is the only concur- ring Justice not to join justice White's opinion because he only concurs in the judgment, not the opinion. See id. at 79 (Stevens, J., concurring). 1 °1 See id. at 77-79 (Blackmun, J., concurring); id. at 79 (Powell, J., concurring); id, at 79-85 (Stevens, J., concurring). In Id. at 85 (Burger, J., dissenting). 1 °3 Id. at 65-67. 1 °4 Id. at 66. 1 °5 Schad, 452 U.S. at 65. 108 Id. 107 See id. at 67. 636 Boston College Law Review [Vol. 46:625 interest, which was required to uphold the content-neutral law as con- stitutional.'" This was evident from the fact that the ordinance on its face failed to offer anything in the way of a justification.'" Because the ordinance only implicitly prohibited live entertainment, it was impossi- ble to glean anything about the motives underlying the prohibition.'" The majority further reasoned that Young did not control the facts of Schad." In Young, Detroit had implemented only a zoning scheme to disperse adult entertainment, whereas Mount Ephraim in Schad attempted to ban it altogether.'" Moreover, Detroit had pro- vided clear justification for its dispersal ordinance and had identified clear negative secondary effects deriving from a concentration of adult businesses.'" In this sense, Mount Ephraim had learned none of the lessons of Young—the town offered no justifications and no evi- dence for the claim that live entertainment, much less live adult en- tertainment, created any negative secondary effects.'" As a result, Mount Ephraim could not claim its ordinance was a valid restriction on time, place, or manner of communication.'" Although this holding alone was sufficient to strike down the or- dinance and reverse appellants' conviction, Justice White's majority opinion further discussed the alternative avenues requirement of the content-neutrality doctrine."6 The Court held that Mount Ephraim's ordinance ensured no alternative avenues of communication could exist because the ordinance was an outright ban on live entertain- ment in the commercial zone of the Borough."7 Young permitted only the restrictive zoning of adult businesses in such a way that the market was left "essentially unrestrained."lt" In contrast, Mount Ephraim at- tempted to prohibit the operation of adult businesses altogether, en- 108 See id. 155 See id. no See Schad, 452 U.S. at 67. 111 Id. at 71-72; see Young, 427 U.S. at 72-73 (plurality opinion). 112 Schad, 452 U.S. at 71; Young, 427 U.S. at 72-73 (plurality opinion). 115 See Young, 427 U.S. at 71 (plurality opinion). 114 See Schad, 452 U.S. at 73. 115 See id. at 75. More recently, the Supreme Court has expanded on what evidence is sufficient to justify a time, place, and manner restriction on adult entertainment. See Los Angeles, 535 U.S. at 430 (plurality opinion). In Los Angeles, the Court held that Los Angeles could rely on a twenty-year-old study showing the negative secondary effects of adult busi- ness to justify its ordinance as a valid content-neutral adult-entertainment zoning ordi- nance. Id. 115 See Schad, 452 U.S. at 75-76. "7 See id. at 76. 118 427 U.S. at 62 (plurality opinion). 2005] Adult-Entertainment Zoning 637 tirely foreclosing the market for adult entertainment.'" This reason- ing alone was enough to strike down the law.I 2° Nevertheless, the Court offered some support for residential communities attempting to justify a total prohibition on adult enter- tainment."' In response to Mount Ephraim's claim that nearby mu- nicipalities offered live adult entertainment, and that this availability should satisfy the alternative avenues requirement, Justice White of- fered the following analysis: [Mount Ephraim's] position suggests the argument that if there were countywide zoning, it would be quite legal to al- low live entertainment in only selected areas of the county and to exclude it from primarily residential communities, such as the Borough of Mount Ephraim. This may very well be true, but the Borough cannot avail itself of that argument in this case. There is no countywide zoning in Camden County, and Mount Ephraim is free under state law to impose its own zoning restrictions, within constitutional limits.122 Justice White thus seems to suggest that there may be instances in which primarily residential communities may be able to rely on the existence of adult entertainment in other locales as evidence that al- ternative avenues for communication exist.125 The prerequisite of such an exception to the alternative avenues requirement, however, is countywide—or perhaps statewide—zoning.'24 Justices Blackmun, Powell, and Stevens each wrote concurring opinions in response to Justice White's discussion of the alternative avenues requirement.125 Justice Blackmun reasoned that municipalities should not be able to sidestep their First Amendment obligations by Ilg See Schad, 452 U.S. at 76. Justice White noted that "our decision today does not es- tablish that every unit of local government entrusted with zoning responsibilities must provide a commercial zone in which live entertainment is permitted." Id. at 75 n.18. 120 See id. at 76-77. 121 See id. at 76. '22 Id. (emphasis added). Those cases that have evaluated countywide zoning ordi- nances restricting adult entertainment involve ordinances that apply only to unincorpo- rated areas of a county. See, e.g., David Vincent, Inc. v. Broward County, 200 F.3d 1325, 1327,1329 (11th Cir. 2000); Intl Eateries of Am., Inc. v. Broward County, 941 F.2d 1157, 1165 (11th Cir. 1991). 122 See Schad, 452 U.S. at 76. 124 See id. '25 See id. at 77-79 {Blackmun, J., concurring); id. at 79 (Powell, J., concurring); id. at 79-85 (Stevens, J., concurring). 638 Boston College Law Review [Vol. 46:625 pointing to the actions of other cities, even in the same county.126 Jus- tice Powell, with Justice Stewart joining, reasoned instead that some communities—those primarily residential in character—should be able to ban live adult entertainment altogether.'" Justice Stevens agreed, noting that at the very least Mount Ephraim could show that adult en- tertainment is available nearby, outside the limits of the Borough.128 Likewise, Chief Justice Burger, joined by Justice Rehnquist, dis- sented primarily because of Justice White's analysis of the alternative avenues requirement, arriving at the same conclusion as the concurring Justices."29 Chief Justice Burger asserted that small communities like Mount Ephraim should be able to justify their adult-entertainment zon- ing law by pointing to the availability of adult entertainment nearby.'" Such a justification could hardly be thought to chill protected speech in any given region because, as Chief Justice Burger stated, "' [c] hilling' this kind of show business in this tiny residential enclave can hardly be thought to show that the appellants' 'message' will be prohibited in nearby—and more sophisticated—cities."'" Unlike Justice White, Chief Justice Burger stopped short of requiring countywide zoning to permit this arrangement.'" Rather, Chief Justice Burger argued that the natu- ral distinction between smaller residential communities and larger, "more sophisticated" cities permits a modified First Amendment analysis for smaller, less urban locales.'" Read together, eight of nine Justices in Schad suggest, either im- plicitly or explicitly, that residential and rural municipalities may pos- sess more flexibility as to the alternative avenues requirement than do other municipalities.'" Schad thus reveals that the Burger Court expe- rienced some anxiety regarding the burdens the First Amendment placed on adult-entertainment zoning in rural and residential corn- "6 See id. at 78 (Blackmun, J., concurring). 127 See id. at 79 (Powell, J., concurring). 128 See Schad, 452 U.S. at 84 n.11 (Stevens, J., concurring). 129 See id. at 85 (Burger, C.J., dissenting). is° See id. at 87 (Burger, Cj., dissenting). '3 ' Id. (Burger, CJ., dissenting). 132 See id. (Burger, CJ., dissenting). 133 See Schad, 452 U.S. at 87 (Burger, C.J., dissenting). 154 See id. at 76; id. at 79 (Powell, J., concurring); id. at 84 n.11 (Stevens, J., concur- ring); id. at 87 (Burger, C.J., dissenting). 2005] Adult-Entertainment Zoning 639 munities.135 What Schad did not do, however, was identify how later courts were to respond to these anxieties.'" D. The Supreme Court Upholds a Zoning Ordinance Concentrating Adult Businesses: Renton v. Playtime Theatres, Inc. In upholding a zoning ordinance that concentrated adult busi- nesses in certain areas of the city, Justice Rehnquist's majority opinion in Renton offers the Court's fullest discussion of the alternative ave- nues requirement to date.'" The Renton, Washington, ordinance in question was enacted in April 1981 and restricted the locations in which adult movie theaters could operate.138 Renton, a suburb south- east of Seattle with a population of approximately 32,000, had no adult-entertainment businesses at the time of the ordinance's enact- ment.139 The city's ordinance prohibited such theaters from locating less than 1000 feet from residential zones, single- or multiple-family dwellings, churches, or parks, and less than one mile from schools.1 " These restrictions effectively left 520 acres, or 5% of the land area of Renton, available to such businesses.141 A Renton property owner who had plans to open two adult movie theaters in the prohibited areas filed suit, challenging the law as viola- tive of the First and Fourteenth Amendments.'42 In 1986, the U.S. Su- preme Court upheld the ordinance.'" A key issue in the Court's analy- sis of the Renton zoning ordinance was determining whether the law was content-neutral or content-based.'** The Court acknowledged that the ordinance did "not appear to fit neatly into either the 'content- based' or the 'content-neutral' category."145 Nevertheless, as in Young, it held the law to be content-neutral because the City Council intended only to regulate the negative secondary effects of adult entertainment, 135 See id. at 76; id. at 79 (Powell, J., concurring); id. at 84 n.11 (Stevens, J., concur- ring); id. at 87 (Burger, Cj., dissenting). 155 See id. at 76; id, at 79 (Powell, J., concurring); id. at 84 n.11 (Stevens, J., concur- ring): id. at 87 (Burger, Cj., dissenting). 157 See 475 U.S. at 53-55. 138 Id. at 44, In Id. 140 Id. The ordinance was later amended to restrict such businesses to locations less than 1000 feet from schools instead of one mile. Id. at 45. 141 Id. at 53. 142 Renton, 475 U.S. at 45. 145 See id. at 54-55. 144 See id. at 47. 145 Id. 640 Boston College Law Review [Vol. 46:625 rather than the actual expression, by restricting the locations in which such businesses operated.'4° In other words, the legislative intent, rather than the statutory language, contributed to the law's content neutrality."7 Having established that the ordinance was content-neutral, the Court then turned to the two-part test for content-neutral laws— whether the law was designed to serve a substantial government inter- est, and whether it permitted adequate alternative avenues of corn- munication."° It was clear to the Court that the ordinance served a substantial government interest because the Court emphasized, as it had in Young, that "a city's 'interest in attempting to preserve the quality of urban life is one that must be accorded high respect.'""s The City of Renton claimed, and the Court accepted, that the experi- ences of nearby Seattle showed that widespread dispersion of adult- entertainment businesses led to negative secondary effects on com- munity and neighborhood improvement efforts and contributed to blight's° The fact that the experiences of Seattle, and its recommen- dation to concentrate adult business, conflicted directly with the ex- periences of Detroit, which dispersed them, was not problematic to the Court.151 Rather, the Court reasoned, cities must be accorded great flexibility in the regulation of such businesses and the "admit- tedly serious problems they engender," especially with regard to their goals of preserving the quality of urban life.152 As a result, the Court held the Renton ordinance served a substantial governmental inter- est, thus satisfying the first prong of the First Amendment test for con- tent-neutral ordinances.Iss The Court next considered whether the Renton ordinance en- sured reasonable alternative avenues of communication for adult- entertainment businesses.'" The situation the Court faced in Renton, however, differed from that in Young and Schad.155 In Young, the law satisfied the alternative avenues requirement because the market was 1146 See id. at 48. 147 See Renton, 475 U.S. at 48; see also Chemerinsky, supra note 35, at 59-60. I" See Renton, 475 U.S. at 50. 149 Id. (quoting Young, 427 U.S. at 71 (plurality opinion)). 1 " See id. at 51. 151 id. at 51-52; Young, 427 U.S. at 71 (plurality opinion). 52 Young, 427 U.S. at 71 (plurality opinion). 155 See Renton, 475 U.S. at 51. 154 See ed. at 53. 155 See Id. at 52-53; Schad, 452 U.S. at 76; Young, 427 U.S. at 62 (plurality opinion). 2005] Adult-Entertainment Zoning 641 unrestrained.1 " In Schad, the law failed the alternative avenues re- quirement because adult businesses were totally precluded from locat- ing in Mount Ephraim.'" In Renton, however, the market was some- what restrained by virtue of businesses' concentration, but it was not totally eliminated.1 " The Court first analyzed the land-use scenario in Renton for adult businesses.'59 Even with the ordinance in effect, the Court noted that there were 520 acres, greater than 5% of Renton's total land area, where adult-entertainment businesses could legally locate.'" Justice Rehnquist further rejected respondents' argument that most of this land either was not available or was commercially unviable.161 He rea- soned that the commercial viability of the available land is irrelevant for a First Amendment analysis because this fact goes only to the issue of marketability of the business, not the business's free expression.'" As a result, all 520 acres were considered available to adult-entertainment businesses wishing to locate in Renton.'" The Court did not offer a clear explanation of the connection between the amount of available acreage, or even the percentage of land available, and the determination of whether alternative avenues of communication were adequate.1 " It noted, however, that the city had made "some areas" open to adult-entertainment businesses wish- ing to engage in protected expression and that these areas provided a "reasonable opportunity" to operate such businesses.'" The Court therefore held that the City of Renton had satisfied the alternative avenues requirement of the test for content-neutral laws, and the or- dinance therefore passed First Amendment muster.'" Lower courts have struggled to apply Renton's alternative avenues analysis to other situations, but they have generally employed two dif- ferent tests.'" One test concludes that a city's available land for adult- 06 427 U.S. at 62 (plurality opinion). 167 See 452 U.S. at 76. 166 See 475 U.S. at 52-53. 162 See id. at 53. 160 See id. 161 Sec id. at 53-54, 162 See id.; see also A.F.M., Ltd. s City of Medford, 704 N.E.2d 184,186 n.4 (Mass. 1999) (holding that information about whether available property was for sale or lease is irrele- vant to the constitutionality of a zoning restriction). 162 See Renton, 475 U.S. at 53-54. 164 See id. 162 See id. at 54. 166 See id. at 54-55. 167 See infra notes 168-174 and accompanying text. 642 Boston College Law Review [Vol. 46:625 entertainment businesses may be considered adequate by a court if it is a reasonable percentage of the city's total land area.168 This ap- proach relies heavily on Renton's analysis of the percentage of land available, and attempts to determine whether the 5% found there is constitutionally mandated.169 As interpreted by courts, the reason- ableness of the percentage varies greatly depending on the size and urban qualities of the municipality.'" For example, courts have dif- fered over whether the appropriate denominator in such an equation should be the city's total land area—as used in Renton—or only com- mercially zoned areas."' Alternatively, the second test concludes that a municipality's avail- able land for adult businesses may be considered adequate if the total number of sites meets the demand as measured by population size, the number of existing adult businesses, or the number of existing and po- tential adult-entertainment businesses.172 This approach is, at its base, a supply-and-demand analysis, in which the analysis itself only varies de- pending on how supply (the amount of land available) and demand na Compare Specialty Malls of Tampa v. City of Tampa, 916 F. Supp. 1222, 1231 (M.D. Fla. 1996) (holding an ordinance leaving 7.5% of the city of Tampa's land available for adult entertainment was constitutional because it exceeded the 5% figure found constitu- tional in Renton), affd, 109 F.3d 770 (11th Cir. 1997), with D.H.L. Assocs. v. O'Gorman, 199 F.3d 50, 59-60 (1st Cir. 1999) (holding an ordinance leaving 0.09687% of land available for adult businesses in Tyngsborough, Massachusetts, (population 9500) was constitutional because the percentage of acreage available is "relevant but not dispositive"), cert. denied, 529 U.S. 1110 (2000). '69 See Specialty Malls of Tampa, 916 F. Supp. at 1231. 10 Compare Specialty Malls of Tampa, 916 F. Supp. at 1231 (holding that leaving 7.5% of the city of Tampa's land available for adult entertainment was constitutional because it exceeded the 5% figure found constitutional in Renton), with O'Gorman, 199 F.3d at 59-60 (holding that leaving 0.09687% land available for adult businesses in Tyngsborough, Mass., (population 9500) was constitutional because the percentage of acreage available is "rele- vant but not dispositive"). 171 Compare Renton, 475 U.S. at 54, with Ambassador Books & Video, Inc. v. City of Little Rock, 20 F.3d 858, 864-65 (8th Cir. 1994) (holding that 6.75% of zoned business acreage constituted sufficient alternative avenues). 172 See O'Gorman, 199 F.3d at 60-61. Courts have held adequate avenues of communica- tion existed where as few as two sites were available. See, e.g., Northlake Blvd. Corp. v. Vill. of N. Palm Beach, 753 So. 2d 754, 758 (Fla. Dist. Ct. App. 2000); see also Lakeland Lounge of Jackscln, Inc. v. City of Jackson, 973 F.2d 1255, 1260 (5th Cir. 1992) (holding that "[a]s a matter of arithmetic," a city has provided a sufficient number of sites if the current num- ber of adult-entertainment businesses is less than the available sites); Alexander v. City of Minneapolis, 698 F.2d 936, 938-39 (8th Cir. 1983) (holding an ordinance unconstitutional when it created only twelve sites for thirty existing businesses); Centerfold Club, Inc. v. City of St. Petersburg, 969 F. Supp. 1288, 1305-06 (M.D. Fla. 1997) (holding that nineteen sites for a population of 238,726—or one business per 12,565 persons—constituted insufficient alternative avenues of communication). 2005] Adult-Entertainment Zoning 643 (the number of persons wishing to open or visit adult businesses) are defined.'" Under either test, however, the constitutional sufficiency of a municipality's adult-entertainment zoning will depend largely on how the test is framed and how the requirements are determined.174 E. Lower Courts and Rural or Residential Communities Lower courts, both state and federal, have struggled with how to apply the Supreme Court's holdings in Young, Schad, and Renton to rural and residential communities.175 Some cases in particular have interpreted these opinions and reached their own holdings as to rural and residential communities' responsibilities in providing adequate alternative avenues of communication.'" For example, in 1981, in Keego Harbor Co. v. City of Keego Harbor, the U.S. Court of Appeals for the Sixth Circuit struck down Keego Harbor, Michigan's prohibition on adult movie theaters.177 As the Sixth Circuit noted in its decision, Keego Harbor was "an unusual community" and a "largely recreational town" of about 3000 people.'" The United States District Court for the Eastern District of Michigan had upheld, in an 175 See O'Gorman, 199 F.3d at 60-61. 174 See Renton, 475 U.S. at 54; see also Young v. City of Simi Valley, 216 F.3d 807, 822 (9th Cir. 2000) ("Data regarding the number of sites available for adult use is meaningless without a contextual basis for determining whether that number is sufficient for a particular locale."). The author of a 2002 student comment offered a differing interpretation of the alternative avenues requirement. See Ashley C. Phillips, Comment, A Matter of Arithmetic.. Using Supply and Demand to Determine the Constitutionality of Adult Entertainment Zoning Ordinances, 51 EMORY I.J. 319, 322 (2002). The author suggests there are actually three distinct tests employed by courts: a "population proportion" test, a "total acreage" test, and a "supply and demand" test. See id. The interpretation of the case law in this Note differs in that it collapses the author's second and third tests into one, but makes further distinctions based on to what the total acreage is being compared. See id.; supra notes 167-173 .and accompanying text. 175 See, e.g., Keego Harbor Co., 657 F.2d at 98; Saddle Brook, 722 A.2d at 534. 176 See Keego Harbor Co., 657 F.2d at 98; Diamond v. City of Taft, 29 F. Supp. 2d 633, 646 (F.D. Cal. 1998), aff'd, 215 F.3d 1052 (9th Cir. 2000), cert. denied, 531 U.S. 1072 (2001); Sad- dle Brook, 722 A.2d at 535-36. In contrast to this case law discussing residential and rural municipalities, in 2001, the U.S. District Court for the Southern District of Florida in Univer- sity Books Video, Inc. v. Miami-Dade County discussed a larger geographical unit's responsi- bilities as to adult-entertainment zoning in holding that 0.0092% of city acreage zoned for adult businesses was insufficient given Miami-Dade County's status as a "large metropolitan area with a population of well over one million." 132 F. Supp. 2d 1008, 1014 (SD. Fla. 2001). The court noted that cities in major urban areas must provide more than "a few dozen acres" to ensure adequate avenues of Communication for adult businesses. See id. 177 657 F.2d at 95. Keego Harbor Co. was decided more than two months after the deci- sion in Schad. Schad, 452 U.S. at 61; Keego Harbor Co., 657 F.2d at 94. The Keego Harbor Co. court discusses Schad in detail. See Keego Harbor Co., 657 F.2d at 97-98. 178 Keep Harbor Co., 657 F.2d at 96. 644 Boston College Law Review [Vol. 46:625 oral opinion, Keego Harbor's ordinance after evaluating it under the content-neutrality doctrine.179 After finding its purpose sufficiently justified by the city, the district court judge evaluated the alternative avenues requirement on a region-wide basis, finding that "the market [for adult entertainment] embraces most if not all of Oakland County. There is nothing in the law that should[,] nor should there be[,] that requires each and every hamlet, no matter how small, to provide a space for explicit sex films."18° On appeal, the Sixth Circuit reversed.181 Its holding, however, addressed only the first prong of the content-neutrality doctrine, con- cluding only that Keego Harbor had failed to justify the ordinance sufficiently.182 The holding left untouched the district court's findings as to the alternative avenues requirement.183 Moreover, the court ex- plicitly noted that it did not intend to reverse the district court as to these issues: "We do not hold that every unit of government, however small, must provide an area in which adult fare is allowed. "184 The Sixth Circuit thus explicitly declined to address, either positively or negatively, the district court's holding as to alternative avenues, while it simultaneously preserved the district court's analysis and emphasis on a regionalized approach to alternative avenues.185 In 2000, in Diamond v. City of Taft, the U.S. Court of Appeals for the Ninth Circuit affirmed a finding by the Eastern District of Califor- nia that the California city's zoning ordinance provided a sufficient 178 Id. 180 Id. lin See id. at 95. 182 See id. at 98-99. 183 See Keego Harbor Co., 657 F.2d at 99. 184 Id. lea See id. In 1998, in Wolfe v. Village of Brice, the U.S. District Court for the Southern District of Ohio interpreted Renton as overruling the Sixth Circuit's decision in Keego Har- bor Co. See 997 F. Supp. 939, 944-45 (S.D. Ohio 1998). The court noted that Keego Harbor Co.'s interpretation of Schad 'appears to have been closed by the Renton Court, when that Court held that the First Amendment requires that a city refrain from effectively denying citizens a reasonable opportunity to open and to operate an adult theater within the city." Id. at 945. Although Renton does require most communities to permit adult businesses, it stops shJat of requiring all communities to do so. See Renton, 475 U.S. at 48-50. It further permits all communities to protect their quality of life against the negative secondary ef- fects of such businesses. See id. at 50. As such, Renton 's holding leaves open the possibility that some small communities that are less sophisticated in nature may ban adult uses en- tirely under the First Amendment. See id. at 48-50. Chief Justice Burger endorsed this pre- cise notion in his dissenting opinion in Schad, which Justice Rehnquist, author of the ma- jority opinion in Renton, joined. See Renton, 475 U.S. at 43; Schad, 452 U.S. at 87 (Burger, CJ., dissenting). 20051 Adult-Entertainment Zoning 645 number of alternative sites for adult entertainment when there were seven available sites for a town of 6800 people.' What is significant about Diamond, however, is the means by which the district court judge determined what sites were available to adult businesses in the area.187 After noting that Taft was a "rural town" and that it "is possible to travel from one end of the developed area of the city to the other in a matter of minutes," the court analyzed in detail the sites the city identified as available to adult-entertainment businesses.188 Among those analyzed were five sites in a commercially zoned area located on state highways."9 As the court noted, the sites were outside Taft's city limits but within Taft's "Sphere. of Influence."190 Although unclear from the opinion, this comment presumably responds to an argument made by the City of Taft that sites outside city limits should qualify as part of the available market if they are perceived as part of the general city area.191 The court ultimately found these five sites unavailable by virtue of their location within a required 1000-foot buffer of establishments fre- quented by minors.192 In so holding, however, the court did not decide whether sites within a city's "Sphere of Influence," but outside city lim- its, could be considered alternative avenues for such businesses.'" Al- though it sidestepped this issue, the court noted that smaller towns and communities deserve different treatment when it comes to the alternative avenues requirement.194 Its rationale for this premise was twofold.tm First, smaller communities possess smaller economic mar- kets and correspondingly smaller demands for commercial First Amendment speech like adult entertainment.'" Second, rural com- munities typically have smaller commercial zones in comparison to residentially zoned land, and thus should be permitted to provide comparatively less space to adult businesses.'" Although the court's ultimate decision as to these five lots was on separate grounds, the 188 215 F.3d 1052, 1058 (9th Cir. 2000), cert. denied, 531 U.S. 1072 (2001). 187 See Diamond, 29 F. Supp. 2d at 638. 188 See id. at 636-39. 188 See id. at 638. I" Id. 181 See id. 192 See Diamond, 29 F. Supp. 2d at 642. 10 See id. at 643 n.12. I" See id. at 646. I" See id. at 642, 646. 188 See id. at 646. 187 See Diamond, 29 F. Supp. 2d at 642. 646 Boston College Law Review [Vol. 46:625 court's fundamental premise identifies a separate means of handling smaller communities when it comes to zoning for adult businesses.'" In 1999, in Township of Saddle Brook v. A.B. Family Center, the Su- preme Court of New Jersey relied on similar justifications to hold that a region wide analysis of the alternative avenues requirement is ap- propriate.'" The court reversed a trial court's finding of unconstitu- tionality of a state statute requiring dispersal of adult businesses.200 The state law imposed a ban on adult businesses within 1000 feet of any place of worship, school, school bus stop, playground, or residen- tial area."' The effect of this statute was a prohibition on the opera- tion of any adult bookstores in Saddle Brook, New Jersey.202 In up- holding the statute, the court reasoned that the alternative avenues requirement can be evaluated on a region-wide, rather than munici- pality-wide, basis.203 Central to the court's reasoning on this issue was the U.S. Supreme Court's decision in Schad.204 The New Jersey court quoted at length Schad's suggestion that a region-wide analysis of alternative avenues may be sufficient, and further justified this by pointing to later federal cases coming to a similar conclusion."5 This precedent thus led the court to decide that, when evaluating the alternative avenues available, the 1 " See id. at 646; see also City of Crystal v. Fantasy House, Inc., 569 N.W.2d 225, 230-31 (Minn. Ct. App. 1997) (holding that 0.9% of Crystal's overall land and 15% of its indus- trial and commercial zones satisfied the alternative avenues requirement because of the city's "overwhelmingly residential character and conservative planning practices"). 199 See 722 A.2d at 536. 21'91 Id. at 531-32. 2°' Id. at 532. 402 Id. at 531. The state statute in question provides in pertinent part as follows: Except as provided in a municipal zoning ordinance adopted pursuant to NJ.S.2C:34-2, no person shall operate a sexually oriented business within 1,000 feet of any existing sexually oriented business, or any church, syna- gogue, temple or other place of public worship, or any elementary or secon- dary school or any school bus stop, or any municipal or county playground or place of public resort and recreation, or any hospital or any child care center, or within 1,000 feet of any area zoned for residential use. N.J. STAT. ANN. § 2C:34-7(a) (West 2004). New Jersey's distancing statute is relatively unique for adult-entertainment zoning in the United States. See DeMasters, supra note 8, at 6. Nevertheless, as the court in Saddle Brook noted, the statute "is not a statewide zoning regulation for sexually oriented businesses, [but] it does constitute a statewide restriction on their location." 722 A.2d at 535. The statute also authorizes municipalities to override the restriction by enacting their own more permissive ordinance. Id. 203 See Saddle Brook, 722 A.2d at 535. 2°4 See Schad, 452 U.S. at 76; Saddle Brook, 722 A.2d at 533-34. 205 See Saddle Brook, 722 A.2d at 533-34. 20051 Adult-Entertain?nenl Zoning 647 lower court should consider "areas located in other municipalities `within reasonable proximity to the Saddle Brook location."298 The New Jersey Supreme Court's holding in this case, however, was limited to the evaluation of state statutes, not local zoning ordi- nances.297 In this sense, the court advocated only a scope of analysis consistent with the scope of the law in question.208 It did not, however, advocate an analysis of the alternative avenues requirement that con- sidered availability beyond the geographic coverage of the law itself, as would be the case when considering countywide availability to as- sess a municipal ordinance."9 Keego Harbor Co., Diamond, and Saddle Brook illustrate the ways in which lower courts have interpreted the alternative avenues require- ment for rural and residential communities.21 ° In each, there is a common question, first articulated by Chief Justice Burger in Schad: if the alternative avenues requirement truly considers only the availabil- ity of other opportunities for protected speech, why should nearby areas, beyond municipal boundaries, not qualify?211 Although this question is definitively answered , only in Saddle Brook, all three cases indicate a particular sensitivity to the needs of rural and residential communities in relation to adult businesses.212 H. PROBLEMS FACING RURAL AND RESIDENTIAL MUNICIPALITIES IN ZONING ADULT-ENTERTAINMENT BUSINESSES CONSISTENT WITH THE FIRST AMENDMENT Courts have struggled to apply the Supreme Court's adult- entertainment zoning jurisprudence to rural and residential munici- palities.2 " In 1981, in Keego Harbor Co. v. City of Keego Harbor, the U.S. 206 See id. at 535 (quoting Township of Saddle Brook v. A.B. Family Ctr., Inc., 704 A.2d 81, 89 (Nj. Super. Ct. App. Div. 1998)). Reasonable proximity is to be determined by "evi- dence of regional marketing patterns, availability of public transportation and access by automobiles, geographical distribution of customers at comparable sexually oriented busi- nesses, and other factors deemed relevant by the parties and the court." Id. at 536, 207 at 532-33. MS See id. 269 See id. 21° See Keep Harbor Co., 657 F.2d at 99; Diamond, 29 F. Supp, 2d at 646; Saddle Brook, 722 A.2d at 535. 211 See Schad, 452 U.S. at 87 (Burger, Cj., dissenting); Keep Harbor Co., 657 F.2d at 99; Diamond, 29 F. Supp. 2d at 646; Saddle Brook, 722 A.2d at 535. 212 See Keego Harbor Co., 657 F.2d at 99; Diamond, 29 F. Supp. 2d at 646; Saddle Brook, 722 A.2d at 535, 212 See Keego Harbor Co. v. City of Keego Harbor, 657 F.2d 94, 99 (6th Cir. 1981); Dia- mond v. City of Taft, 29 F. Supp. 2d 633, 646 (E.D. Cal. 1998), affd, 215 F.3d 1052, 1058 648 Boston College Law Review (Vol. 46:625 Court of Appeals for the Sixth Circuit struck down Keego Harbor's zon- ing ordinance while declining to hold that every municipality must provide alternative avenues of communication within their borders.214 Similarly, in 2000, in Diamond v. City of Tait the U.S. Court of Appeals for the Ninth Circuit affirmed a district court decision that declined to decide whether sites outside municipal boundaries but within a city's "Sphere of Influence" could be considered under the alternative ave- nues requirement.219 In contrast, in 1999, in Township of Saddle Brook v. A.B. Family Center, Inc., the Supreme Court of New Jersey held constitu- tional a state statute that effectively banned adult businesses from a residential municipality so long as there were nearby alternative ave- nues of communication.216 Read together, these cases suggest the difficulties courts confront in applying the U.S. Supreme Court's First Amendment case law on adult-entertainment zoning to rural and resi- dential municipalities.217 In response to this case law, this Note suggests four distinct problems rural and residential municipalities face in zon- ing adult-entertainment businesses consistent with the First Amend- men t.218 A. Undetermined Constitutionality of a Total Ban The principal problem relative to adult-entertainment zoning cases is that it is unclear whether rural and residential municipalities may enact a total ban on adult entertainment.219 In 1986, in City of Ren- ton v. Playtime Theatres, Inc., the U.S. Supreme Court held that the First Amendment required Renton, Washington—a city of 32,000 people— to refrain from denying adult businesses "a reasonable opportunity to (9th Cir. 2000), art, denied, 531 U.S. 1072 (2001); Township of Saddle Brook v. A.B. Family Cu'., Inc., 722 A.2d 530, 535 (Ni. 1999). These cases are, of course, by no means the only attempts at applying this case law. See, e.g., Young v. City of Simi Valley, 216 F.3d 807, 822- 23 (9th Cir. 2000) (holding that four available sites for adult businesses was adequate for a city of 100,000 when no such businesses currently existed and only one application was pending, but acknowledging the "chilling effect" some ordinances may have on prospec- tive adult businesses); City of Crystal v. Fantasy House, Inc., 569 N.W.2d 225, 230-31 (Minn. Ct. App. 1997) (holding that 0.9% of Crystal's land area constituted adequate al- ternative avenues of communication, given Crystal's "overwhelmingly residential character and conservative planning practices"). 214 See 657 F.2d at 99. 215 215 F.3d at 1058; Diamond, 29 F. Supp. 2d at 638, 646. 216 722 A.2d at 535-36. 217 See City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 54 (1986); Keego Harbor Co., 657 F.2d at 99; Diamond, 29 F. Supp. 2d at 646; Saddle Brook, 722 A.2d at 535-36. 218 See infra notes 219-264 and accompanying text. 212 See GERARD, supra note 100, at 214-46. 2005] Adult-Entertainment Zoning 649 open and operate."22° A broad reading of Renton's holding suggests that every municipality must provide space for adult businesses.221 Such a reading, moreover, is consistent with the Court's interpretation of the First Amendment as prohibiting the suppression of speech in one locale merely because such speech is allowed elsewhere.222 Nevertheless, there are two primary reasons that a total ban may still be permissible in rural and residential communities.223 In 1981, in Schad v. Borough of Mount Ephraim, the U.S. Supreme Court struck down a city's zoning ordinance prohibiting adult entertainment, but explicitly declined to hold that every municipality, no matter how small, must allow such entertainment.224 Furthermore, five of nine justices in Schad—including Justice Rehnquist, the author of the Ren- ton majority opinion—believed that some small communities should be able to exclude adult entertainment completely when such enter- tainment is available nearby.225 As a result, there remains an unre- solved conflict between Renton and Schad as to the particular obliga- tions of smaller rural and residential communities in permitting adult businesses when space for such businesses is nearby but outside a town's borders.228 Although larger cities clearly must provide alterna- tive avenues of communication within their borders, it is still unclear whether rural and residential municipalities must do the same.227 B. Unclear Standards forRenton 's Alternative Avenues Requirement The second problem is that, even assuming that rural and resi- dential municipalities must provide alternative avenues of communi- 5 " 475 U.S. at 54. 221 See id. 222 See id.; see also Schad v. Borough of Mount Ephraim, 452 U.S. 61,76-77 (1981). 223 See Schad, 452 U.S. at 75 n.18. 244 Id. ("[O]ur decision today does not establish that every unit of local government entrusted with zoning responsibilities must provide a commercial zone in which live enter- tainment is permitted."). 215 See id. at 79 (Powell, J., concurring); id. at 84 n.11 (Stevens, J., concurring); id. at 87 (Burger, C.j., dissenting). justices supporting such a ban were justices Powell, Stewart, and Stevens in their concurring opinions and Chief Justice Burger and Justice Rehnquist in Chief Justice Burger's dissenting opinion. Id. at 79 (Powell, J., concurring); id. at 79 (Stev- ens, J., concurring); id. at 85 (Burger, CJ., dissenting); see also GERARD, supra note 100, at 215. State court case law also supports this position. See e.g., Saddle Brook, 722 A.2d at 531. For instance, the immediate effect of the state statute upheld in Saddle Brook was a total ban on adult businesses within Saddle Brook. Id. The New Jersey Supreme Court impliedly upheld this statute on the understanding that space for adult-entertainment businesses was available in nearby municipalities. See id. at 535-36. 226 See Renton, 475 U.S. at 54; Schad, 452 U.S. at 75 n.18. 227 See Renton, 475 U.S. at 54; Schad 452 U.S. at 75 n.18. 650 Boston College Law Review [Vol. 46:625 cation within their borders, there are few standards guiding them as to what constitutes sufficient alternative avenues of communication.228 This situation arises primarily as a result of Renton.229 In Renton, the Supreme Court upheld an ordinance allowing adult businesses on 5% of Renton's total land area, but did not hold that such a percentage was constitutionally mandated.2" Subsequent lower court opinions have further complicated the issue by interpreting Renton differently."' Some appear to view the 5% figure from Renton as constitutionally mandated.232 For instance, in 1997, in Specialty Malls of Tampa, Inc. v. City of Tampa, a Florida district court upheld a Tampa law making 7.5% of the city's land available to adult business because this percentage exceeded the 5% found consti- tutional in Renton.233 Consistent with this, in 2001, in University Books & Videos, Inc. v. Miami -Dade County, another Florida district court held that 0.0092% of Miami-Dade County acreage zoned for adult busi- nesses was insufficient given the county's status as a large metropoli- tan area with a population of well over one million."234 Other courts, however, have upheld laws that make less than 5% of a municipality's land available to adult businesses on the theory that the size and character of a municipality should influence what constitutes an appropriate percentage.235 For instance, in 1999, in D.H.L. Associates v. O'Gorman, the U.S. Court of Appeals for the First Circuit upheld an ordinance that left only 0.09687% of the land in Tyngsborough, Massachusetts, (population 9500) available to adult businesses.235 In holding as much, the court noted that "an analysis of the alternative avenues requirement in Renton] should encompass a variety of factors," one of which was Tyngsborough's status as a rural town with very little commercially zoned land.237 Thus, disparate in- terpretations reveal the lack of guidance afforded to rural and resi- 229 See Phillips, supra note 174, at 321. 229 Sce id.; see also Renton, 475 U.S. at 54. 550 See 475 U.S. at 53-54. 23) Sec e.g., D.H.L. Assocs. v. O'Gorman, 199 F.3d 50, 60 (1st Cir. 1999); Univ. Books Videos, Inc. v. Miami-Dade County, 132 F. Supp. 2d 1008, 1014 (S.D. Fla. 2001); Specialty Malls of Tampa v. City of Tampa, 916 F. Supp. 1222, 1231 (M.D. Fla. 1996). 232 See, e.g., Specialty Malls of Tampa, 916 F. Supp. at 1231. 222 See id. 234 See 132 F. Supp. 2d at 1014. 222 See O'Gorman, 199 F.3d at 59-60. 299 See id. Five available sites were located within this available area. Id. at 60. 237 Id. 2005] Adult-Entertainment Zoning 651 dential municipalities as to what constitutes adequate alternative ave- nues of communication under Renton 2s$ C. Inability to Enact Sufficient Distancing Requirements The uncertainty with respect to what constitutes sufficient alter- native avenues of communication is complicated by an additional drafting problem—namely, an inability to enact sufficient distancing requirements.m In Young v. American. Mini Theatres, Inc., the U.S. Su- preme Court upheld a zoning ordinance requiring dispersal of adult- entertainment businesses.2 " Municipalities that choose to enact a dis- tancing requirement must determine what constitutes an appropriate buffer zone between adult businesses and other adult businesses, places of worship, schools, or residential areas.241 Rural and residen- tial municipalities that attempt to enact a buffer zone similar to that of larger cities, however, may often find that the buffer effectively pre- cludes any adult businesses from operating within their borders or leaves too little space to be considered adequate alternative avenues of communication.242 This scenario is aptly illustrated by a situation resulting from New Jersey's statewide adult business location restriction, as upheld in Sad- dle Brook.243 The law required a 1000-foot buffer between any adult business and places of worship, school and school bus stops, munici- pal or county playgrounds, and residential areas.244 A buffer of this size is consistent with those employed by cities whose ordinances the Supreme Court has reviewed and upheld.2" In a town the size of Sad- dle Brook, however, a buffer zone of 1000 feet effectively banned any adult businesses from legally operating within city limits, even though the ban was no more restrictive than adult-entertainment zoning laws 238 See Renton, 475 U.S. at 54; GERARD, supra note 100, at 214-16. 238 See Crysta4 569 N.W.2d at 227. 248 427 U.S. 50, 72-73 (1976) (plurality opinion). 241 See id. (plurality opinion) 242 See Crysta4 569 N.W.2d at 227. 243 See 722 A.2d at 531; DeMasters, supra note 8, at 6. 244 Saddle Brook, 722 A.2d at 532. 243 See City of Los Angeles v. Alameda Books, Inc., 535 U.S. 425, 430 (2002) (plurality opinion); Renton, 475 U.S. at 43. The law in Renton, for instance, placed a 1000-foot buffer between adult businesses and churches, parks, schools, or residential areas. See Renton, 475 U.S. at 43; see also Los Angeles, 535 U.S. at 430 (plurality opinion) (holding constitutional an ordinance that placed a 1000-foot buffer between adult businesses and a 500-foot buffer between such businesses and churches, schools, and parks). 652 Boston College Law Review [Vol. 46:625 upheld by the Supreme Court.245 Thus, a buffer zone or distancing requirement that is acceptable in larger cities may fail to provide any space for adult-entertainment businesses in rural and residential mu- nicipalities—a result problematic under Renton's alternative avenues requirement.247 For rural and residential municipalities that lack statewide zoning of adult businesses,248 this may mean that they are forced to enact adult-entertainment zoning laws with smaller distancing requirements to ensure available space for adult-entertainment businesses.249 Smaller buffer zones, however, are less restrictive of the location of adult busi- nesses, and consequently less protective of residential areas.25° This was the situation that faced Crystal, Minnesota, a largely resi- dential municipality, which was forced to enact a less restrictive distanc- ing requirement because of its small size.251 In 1997, in City of Crystal v. Fantasy House, Inc., the Court of Appeals of Minnesota upheld an ordi- nance requiring a 250-foot buffer zone between prohibited businesses and residential areas, daycares, libraries, parks, places of worship, and playgrounds.252 Crystal had enacted this requirement only after realiz- ing that a 1000-foot buffer zone effectively precluded all adult busi- nesses from operating in the municipality.255 Crystal's decision to re- duce its adult business buffer zone is indicative of the problem rural and residential municipalities face.254 Such municipalities must enact 2 " See Saddle Brook, 722 A.2d at 532; see also Los Angeles, 535 U.S. at 430 (plurality opin- ion); Renton, 475 U.S. at 43; Young v. Am. Mini Theatres, Inc., 427 U.S. 50, 52 (1976) (plu- rality opinion). 247 See Saddle Brook., 722 A.2d at 532. 2" All states but New Jersey lack a statewide restriction on the location of adult enter- tainment. NJ. STAT. ANN. § 2C:34-7(a) (West 2004); DeMasters, supra note 8, at 6. 249 See Crystal, 569 N.W.2d at 227. 25° See id.; MINN. ATTORNEY GENERAL, supra note 5, at 529-30. This approach is consis- tent with the prevailing view that the concentration of adult businesses produces harmful secondary effects to the surrounding areas, including prostitution, theft, and other violent and nonviolent crime. See, e.g., Los Angeles, 535 U.S. at 430 {plurality opinion); Renton, 475 U.S. at 51. Contra Bryant Paul et al., Government Regulation of Adult" Businesses Through Zoning and Anti-Nudity Ordinances: Debunking the Legal Myth of Negative Secondary Effects, 6 Comm. L. & PoL'Y 355, 391 (2001). "I See Crystal, 569 N.W.2d at 227. 231 Id. 253 See id. Crystal realized this through the enactment of an ordinance referred to in Crystal as the "interim ordinance? See id. It is unclear from the opinion if the ordinance was intended as interim when it was enacted, or only later when it was discovered to have created a total ban on adult businesses. See id. The interim ordinance was upheld by the Court of Appeals of Minnesota because it was considered a valid moratorium on zoning while studies were conducted and permanent zoning was adopted. Id. at 231. 454 See id. 2005] Adult-Entertainment Zoning 653 smaller buffer zones than larger cities to satisfy the alternative avenues requirement, even if they are more susceptible than larger cities to the negative secondary effects of adult-entertainment businesses.255 D. Lack of Regional Zoning of Adult Businesses The inequity and inconsistency created by buffer zones of varying sizes is evident in the fourth and final problem facing rural and resi- dential municipalities: a general, though not universal, lack of re- gional zoning of adult businesses.250 When no regional zoning restric- tion on adult businesses exists, courts limit themselves to examining the alternative avenues of communication available within the mu- nicipality.257 In doing so, they may ignore significant nearby opportu- nities for adult entertainment that would satisfy the alternative ave- nues requirement of Renton and lessen a rural or residential municipality's burden to provide space for adult businesses.258 The value of regional zoning is evident in the New Jersey Su- preme Court's decision in Saddle Brook.259 In Saddle Brook, the court evaluated a statewide, rather than municipal, restriction on the loca- tion of adult businesses.260 Because it was evaluating a statewide zon- ing statute rather a municipal ordinance, the court's analysis of po- tential alternative avenues of communication was not restricted to municipal boundaries, but rather included available alternative loca- tions in the surrounding region.26 i Although the court in Saddle Brook limited its holding to statewide statutes, the fundamental premise of the case arguably applies to countywide or region-wide zoning restric- tions as wel1.262 In contrast to Saddle Brook, residential and rural mu- nicipalities that lack countywide or statewide zoning are left to their own devices to identify alternative locations within their boundaries, even if such sites already exist in nearby locations.263 Given the already 263 See id.; MINN. ATTORNEY GENERAL, supra note 5, at 529-30. 236 See DeMasters, supra note 8, at 6; see also Saddle Brook, 722 A.2d at 532. New jersey, as discussed in Saddle Brook, is a notable exception. See Saddle Brook, 722 A.2d at 532. 07 See Schad, 452 U.S. at 76. Contra Diamond, 29 F. Supp. 2d at 638 (suggesting that ar- eas outside of Taft's city limits were within the city's "Sphere of Influence"). 258 See Renton, 475 U.S. at 53-54; Schad, 452 U.S. at 76; Diamond, 29 F. Supp. 2d at 638. 236 See 722 A.2d at 531. 266 See id. at 532-33. 261 See id. at 532. 262 See id. at 532-33; see also Schad, 452 U.S. at 76 (holding that Mount Ephraim cannot point to sites beyond city boundaries as alternative avenues of communication because "[t]here is no countywide zoning in Camden County"). 283 See Diamond, 29 F. Supp. 2d at 638,646. 654 Bolan College Law Review [Vol. 46:625 identified complications such municipalities face in zoning adult businesses, the lack of a broader regional approach is only an addi- tional hindrance.264 III. ZONING ADULT-ENTERTAINMENT BUSINESSES CONSISTENT WITH THE FIRST AMENDMENT: SOLUTIONS FOR RURAL AND RESIDENTIAL MUNICIPALITIES Short of a new U.S. Supreme Court opinion clarifying some of the issues within the alternative avenues requirement as applied to adult- entertainment businesses, regional and rural municipalities face difficult problems when zoning adult entertainment.265 This Note has identified four problems with the Supreme Court's First Amendment jurisprudence as applied to adult-entertainment zoning creates for such municipalities.266 First, the Court's adult-entertainment zoning case law leaves unclear whether some municipalities may enact a total ban on adult entertainment.267 Second, there is contradicting prece- dent as to what constitutes sufficient alternative avenues of conununica- tion.268 Third, rural and residential municipalities are often forced to enact less restrictive distancing requirements than larger cities, argua- bly increasing the risk to security and quality of life in the municipal- ity.269 Finally, rural and residential municipalities are disadvantaged by a general lack of countywide or statewide zoning of adult-entertainment businesses.270 This Note now proposes three solutions which, when combined or adopted independently, will address these problems."' A. Adopt Countywide or Statewide Location Restrictions on Adult Businesses State and county legislatures should consider regionalized ap- proaches to restrictions on the location of adult-entertainment busi- nesses.272 New Jersey's statewide statute requiring the distancing of 264 See id.; Crystal, 569 N.W.2d at 227. 265 See Renton v. Playtime Theatres, Inc., 475 U.S. 41, 53-54 (1986); Diamond v. City of Taft, 29 F. Supp. 2d 633, 646 (E.D. Cal. 1998), affd, 215 F.3d 1052 (9th Cir. 2000), cert. denied, 531 U.S. 1072 (2001); City of Crystal v. Fantasy House, Inc., 569 N.W.2d 225, 227 (Minn. Ct. App. 1997). 266 supra notes 219-264 and accompanying text. 267 See Schad v. Borough of Mount Ephraim, 452 U.S. 61, 75 n.18 (1981). 269 See Phillips, supra note 174, at 321; see also Renton, 475 U.S. at 54; D.H.L. Assocs. v. O'Gorman, 199 F.3d 50, 59-60 (1st Cir. 1999). 269 See Crystal, 569 N.W.2d at 227. 270 See Diamond, 29 F. Supp. 2d at 638. 271 See infra notes 272-305 and accompanying text. 272 See Township of Saddle Brook v. A.B. Family Ctr., Inc., 722 A.2d 530, 532 (NJ. 1999). 20051 Adult-Entertainment Zoning 655 adult businesses from each other and from places of public worship, schools, playgrounds, and residential areas is an example of this.278 As discussed earlier, this statute requires a 1000-foot buffer zone between such businesses unless the municipality in question chooses to "over- ride the statutory limitation by [enacting] a local zoning ordinance more permissive than the state statute."274 Assuming the municipality in question chooses not to enact a more permissive restriction, the benefits of a state statute restricting the location of adult-entertainment businesses are clear in light of the Su- preme Court's case law,275 In Schad v. Borough of Mount Ephraim, the Court struck down a city's ordinance prohibiting adult entertain- ment.278 In so holding, the Court rejected the argument that a region- alized approach to the alternative avenues requirement is justified when there is no countywide zoning in the area.277 The implication of Scharf s reasoning is that the presence of a countywide or statewide zon- ing restriction, instead of a municipal restriction, should permit a more regionalized analysis of the area's alternative avenues of communica- tion.278 A regionalized approach to adult-entertainment businesses en- sures that the community as a whole bears the burden of secondary effects equally, while still permitting some municipalities to increase their burden through a local ordinance if they foresee potential benefits from adult businesses.279 B. Employ a Regional Analysis of the Alternative Avenues Requirement Absent countywide or statewide zoning restrictions on adult busi- nesses, courts should apply a broader analysis of the alternative ave- nues requirement.28° In City of Renton v. Playtime Theatres, Inc., the U.S. Supreme Court held that an adult-entertainment zoning ordinance is constitutional if it (1) is intended to serve a substantial governmental interest and (2) permits reasonable alternative avenues of comnriuni- cation.281 As Renton made clear, the alternative avenues requirement is 272 N.J. STAT. ANN. § 2C:34-7(a) (West 2004); see also Saddle Brook, 722 A.2d at 532. 274 Saddle Brook, 722 A.2d at 535; see N.J. STAT. ANN. § 2C:34-.7(a). 275 See id. at 535-36; see also Schad, 452 U.S. at 76-77. 276 Sce Schad, 452 U.S. at 76-77. 277 See id. 275 See id.; see also Saddle Brook, 722 A.2d at 532-33. 27° See Saddle Brook, 722 A.2d at 535-36. 285 See Schad, 452 U.S. at 79 (Powell, J., concurring); id. at 85 n.11 (Stevens,J., concur- ring); id. at 87 (Burger, CJ., dissenting). 281 See 475 U.S. at 50. 656 Boston College Law Review [Vol. 46:625 crucial because the First Amendment guarantees a citizen's right to share his or her message with others—a right, moreover, that cannot be suppressed merely on the grounds that it can be exercised else- where.282 Accordingly, adult businesses must be guaranteed space to operate where patrons may visit if they choose.285 Arguably, whether or not that space is within the municipal city limits of a rural or resi- dential community or directly outside seems less significant so long as adult businesses continue to retain reasonable—and therefore nearby—opportunities to open and operate.284 This regionalized approach to the alternative avenues require- ment, moreover, is arguably permissible under Schad so long as the municipality can demonstrate the locations and proximity of these nearby alternative avenues :285 In Schad, the U.S. Supreme Court re- jected the city's argument for a region-wide analysis of the alternative avenues requirement largely because the record failed to show any evidence of availability in nearby areas.288 This rationale thus leaves open the possibility that a record providing evidence of nearby loca- tions for adult businesses could satisfy the alternative avenues re- quirement.287 Accordingly, Schad should be viewed not as foreclosing the opportunity for a regional analysis of the alternative avenues re- quirement, but rather, only as setting a high standard for its use.288 Furthermore, to address Schad's concern that cities not shirk their obligation to ensure alternative avenues of communication for adult businesses, courts should place the burden of proof for the al- ternative avenues requirement on the municipality.288 Municipalities 282 See id.; Heffron v. Intl Soc'y for Krishna Consciousness, 452 U.S. 640, 654-55 (1981); Schad, 452 U.S. at 76-77. 282 See Renton, 475 U.S. at 53-54. 284 See Renton, 475 U.S. at 53-54; Schad, 452 U.S. at 79 (Powell, J., concurring); id. at 85 n.11 (Stevens, J., concurring); id. at 87 (Burger, CJ., dissenting). But see Schad, 452 U.S. at 78 (Blackmun, J., concurring) ("Were I a resident of Mount Ephraim, I would not expect my right to attend the theater or to purchase a novel to be contingent upon the availability of such opportunities in 'nearby' Philadelphia, a community in whose decisions I would have no political voice."). 282 See 452 U.S. at 76, 79 (Powell, j., concurring); id. at 85 n.11 (Stevens, J., concur- ring); id. at 87 (Burger, Cj., dissenting). 286 gee id. at 76 ("[T]here is no evidence in [the] record to support the proposition that the kind of entertainment appellants wish to provide is available in reasonably nearby areas."). 28.7 id. 288 See id. at 76; id. at 79 (Powell, J., concurring); id. at 85 n.11 (Stevens, J., concur- ring); id. at 87 (Burger, CJ., dissenting). 21° See id. at 76-77; Saddle Brook, 722 A.2d at 536 ("[W]e believe it to be consistent with First Amendment decisional law that recognizes the fairness of imposing on the public 2005] Adult-Entertainment Zoning 657 will then retain responsibility for ensuring nearby, available, and sufficient alternative avenues of communication, regardless of whether those avenues are located within or outside the municipal- ity.290 With this safeguard in place, courts could employ a broader analysis of the alternative avenues requirement without forgoing any of the accountability provided by a citywide analysis.29 ' C. Adopt a Supply-and-Demand Analysis of the Alternative Avenues Requirement A third and final solution to the problems rural and residential municipalities face likewise involves the analysis a court may use when considering the alternative avenues requirement.292 Courts should ap- ply a supply-and-demand analysis when determining whether a munici- pality has provided adequate alternative avenues of communication.293 A supply-and-demand approach would stipulate that a restriction on adult-entertainment business provides alternative avenues of communi- cation if the available number of sites exceeds the demand for those sites coming from current and prospective adult-entertainment busi- nesses.294 This approach thus would ensure that municipal ordinances do not prevent adult-entertainment businesses from identifying legiti- mate locations in which to operate 29 This is in contrast to methods of analysis that look purely at the percentage of land available or the number of sites available without regard to demand.296 The simplicity of the supply-and-demand approach is appeal- ing.297 All that must be known to analyze the alternative avenues re- quirement is the number of existing sites and the demand by adult businesses for sites in the municipality.298 Moreover, this method en- body that elects to restrict protected speech the obligation of demonstrating that its re- strictions are reasonably tailored to achieve its objectives ... and provide adequate avail- able alternative avenues of communication."). 290 See Schad, 452 U.S. at 76-77; Saddle Brook, 722 A.2d at 536. 291 See Saddle Brook, 722 A.2d at 536. 292 See Phillips, supra note 174, at 322-23. 293 See id. 299 See Lakeland Lounge of Jackson, Inc. v. City of Jackson, 973 F.2d 1255, 1260 (5th Cir. 1992). 299 See Phillips, supra note 174, at 341. 2" See Renton, 475 U.S. at 53-54; O'Gorman, 199 F.3d at 60. 297 See Diamond, 29 F. Sup!). 2d at 646 ("Without considering both producer supply and consumer demand, there can be no meaningful determination of whether the First Amendment's purposes in guaranteeing reasonable alternative avenues of communication are satisfied."); Phillips, supra note 174, at 340-42. 298 See Lakeland Lounge, 973 F.2d at 1260. 658 Boston College Law Review [Vol. 46:625 sures that residential and rural communities are not forced to provide more space than the market requires.299 Problems with the supply-and-demand approach are minimal.509 Demand for available sites by current and prospective adult businesses arguably can be determined in a number of ways, and some of this uncertainty undoubtedly leads to some indeterminacy in the analy- sis.301 Additionally, the demand for sites coming from adult businesses likely changes in a community over time, making the supply-and- demand method a less than ideal long-term approach.992 As a result, adult-entertainment zoning restrictions would still need to be revis- ited over time.905 Nevertheless, the supply-and-demand approach en- sures that rural and residential communities are required to offer al- ternative avenues of communication only to actual and prospective adult businesses.904 Given the inherently changing role of adult busi- nesses in any community, this flexibility is desirable.905 CONCLUSION Every community faces the difficult problem of restricting, but nevertheless allowing, adult-entertainment businesses. Given the var- ied concerns about the secondary effects of such businesses, munici- palities both large and small have struggled over the years to deter- mine how best to allow them while minimizing their potential negative impacts to neighborhoods and community institutions. In these respects, rural and residential communities are no different than larger cities like Detroit, New York, and Boston, and suburban cities like Renton. Rural and residential communities, however, do face a unique burden in determining what will satisfy their constitu- tional obligations as to alternative avenues of communication. Courts 299 See Woodall v. City of El Paso, 49 F.3d 1120, 1127 (5th Cir. 1995). 3D° See Phillips, supra note 174, at 340-42. "I See Lim v. City of Long Beach, 12 F. Supp. 2d 1050, 1066 (C.D. Cal. 1998) (deter- mining that courts compare the number of available sites to (1) the municipality's popula- don, (2) the existing number of adult businesses, or (3) the number of businesses wishing to offer adult entertainment); see also N. Ave. Novelties, Inc. v. City of Chicago, 88 KM 441, 445 (7th Cir. 1996) (determining the number of businesses wishing to offer adult enter- tainment by the number of inquiries Chicago's zoning department received in a year re- garding potential adult businesses), 3°2 See Phillips, supra note 174, at 351 ("[O]ver time, a community's demand for adult entertainment may change."). " See id. SU See id. at 340. 505 See id. at 352-53. 20051 Adult-Entertainment Zoning 659 should be sensitive to these burdens, and should seek out new ap- proaches—within the scope of the U.S. Supreme Court's precedent— to evaluate rural and residential communities' First Amendment obli- gations. Short of such changes, some communities will continue to be burdened unfairly by a constitutional analysis primarily developed in consideration of larger and more commercial cities. MATTHEW L. McGINNts [PAGE LEFT BLANK INTENTIONALLY] ADULT ENTERTAINMENT ZONING & LICENSING COMMITTEE REPORT TO THE CITY OF MOUNT 2017 ADULT ENTERTAINMENT ADVISORY COMMITTEE Page 1 ADULT ENTERTAINMENT ADVISORY COMMITTEE REPORT TABLE OF CONTENTS INTRODUCTION Introduction ..................................................................................................................................... 3 BACKGROUND Background ...................................................................................................................................... 3 TASKS A. Secondary Negative Impacts ..................................................................................................... 5 B. Sensitive Land Uses ................................................................................................................... 7 C. Areas Where Adult Entertainment Uses Should be Located ................................................. 8 FINDINGS, CONCLUSIONS AND RECOMMENDATIONS Conclusions and Recommendations ...................................................................................... 12 TABLES: 1.1: Materials the Committee Read & Analyzed............................................................................. 5 1.2: Secondary Negative Impacts ................................................................................................... 7 1.3: List of Sensitive Used Identified ............................................................................................... 7 1.4: Initial Zoning Determinations of the Committee ..................................................................... 8 1.5: Sensitive Use Buffers from Adult Entertainment Uses from other Jurisdictions .................. 10 MAPS: Map 2.1: Initial Zoning Determination Map Map 2.2: Sensitive Land Uses with 1,000 foot Buffers Map 2.3: College Way Area Considered Map 2.4: South Mount Vernon Area Considered Map 2.5: Committee’s Recommended Area to Allow Adult Entertainment Uses APPENDIX A – ORDINANCES 3698, 3699 AND RESOLUTION 920 APPENDIX B – COMMITTEE’S AGENDAS AND MEETING MINUTES APPENDIX C – COMMITTEE’S LIST OF SECONDARY NEGATIVE IMPACTS ASSOCIATED WITH MATERIALS THE COMMITTEE ANALYZED ADULT ENTERTAINMENT ADVISORY COMMITTEE Page 2 REPORT AUTHORIZATION By signing below, we, the members of the City’s Adult Entertainment Advisory Committee, have approved this report with its Exhibits (as noted within the foregoing report) to be provided to the Mount Vernon Planning Commission and City Council. Kathleen Bisagna Brian Gentry Ryan Hagman, Committee Co-Chair Rudy Kerkvliet Kari Matson Lisa Zacherl, Committee Chair This page will be replaced with the page containing all of the Committee's signatures ADULT ENTERTAINMENT ADVISORY COMMITTEE Page 3 INTRODUCTION This purpose of this report is to: 1) summarize the work completed by the Mount Vernon Adult Entertainment Zoning and Licensing Committee; and 2) make recommendations to the City’s Planning Commission and City Council with regard to the regulation of adult entertainment uses in the City of Mount Vernon. BACKGROUND On October 26, 2016 the Mount Vernon City Council adopted Ordinances 3698 and 3699 that enacted interim licensing and zoning regulations related to adult business and adult entertainment. At the same time Council also adopted Resolution 920 creating an Adult Entertainment Zoning and Licensing Committee (herein after ‘Committee’). The purpose of this Committee is “to assist the City in developing permanent development and licensing regulations for adult entertainment”. Accompanying this report labeled as Exhibit A are copies of Ordinances 3698, 3699, and Resolution 920. The Committee met a total of eight (8) times between November 29, 2016 to April 11, 2017. Attached labeled as Exhibit B are copies of all the Committee’s Agendas and minutes. The Committee is comprised of the following individuals: •Kathleen Bisagna; •Brian Gentry; •Ryan Hagman; •Rudy Kerkvliet; •Kari Matson; and, •Lisa Zacherl. At the Committee’s first meeting held on November 29, 2016 they appointed Lisa Zacherl as the Committee Chair and Ryan Hagman as the Committee’s Co-Chair. Following is the definition of Adult Entertainment adopted by the City within Ordinance 3698. This same definition is proposed to be adopted as part of the final amendments to MVMC Chapters 5.06, 5.13, and 17.72. 5.06.020 Definitions. "Adult entertainment" means: 1.Any exhibition, performance or dance of any type conducted in a premises where such exhibition, performance or dance involves a person who is unclothed or in such costume, attire or clothing as to expose any portion of the female breast below the top of the areola or any portion of the pubic region, anus, buttocks, vulva or genitals, or wearing any device or covering exposed to view which simulates the appearance of any portion of the female breast, pubic region, anus, buttocks, vulva or genitals, or human male genitals in a discernibly turgid state, even if completely covered; or ADULT ENTERTAINMENT ADVISORY COMMITTEE Page 4 2.Any exhibition, performance or dance of any type conducted in a premises where such exhibition, performance or dance is distinguished or characterized by a predominant emphasis on the depiction, description, simulation or relation to the following specified sexual activities: a.Human genitals in a state of sexual stimulation or arousal; b.Acts of human masturbation, sexual intercourse or sodomy; or c.Fondling or other erotic touching of human genitals, pubic region, buttocks, or female breasts; or 3.Any exhibition, performance or dance intended to sexually stimulate any patron and conducted in a premises or part of a premises where such exhibition, performance or dance is performed for, arranged with or engaged in with fewer than all patrons on the premises at that time, with separate consideration paid, either directly or indirectly, for such performance, exhibition or dance. For purposes of example only and not limitation, such exhibitions, performances or dances are commonly referred to as table dancing, couch dancing, taxi dancing, lap dancing, private dancing or straddle dancing. These same chapters of the MVMC also contain the following list of activities that are not meant to be regulated under these chapters: 5.06.125 Activities not prohibited -- Liquor licenses. A. This chapter shall not be construed to prohibit: 1.Plays, operas, musicals or other dramatic works which are not obscene as defined in Section 5.06.125 B below; 2.Classes, seminars and lectures held for serious scientific or educational purposes; or 3.Exhibitions or dances which are not obscene as defined in section 5.06.125(B), below. These exemptions shall not apply to the sexual conduct defined in MVMC 5.06.020, or the sexual conduct described in RCW 7.48.010 (2)(b)(ii) and (iii). B. Whether or not an activity is obscene shall be judged by consideration of the following factors: 1.Whether the average person, applying contemporary community standards, would find that the activity taken as a whole appeals to a prurient interest in sex; and 2.Whether the activity depicts or describes in a patently offensive way, as measured against contemporary community standards, sexual conduct as described in RCW 7.48A.010(2)(b); and 3.Whether the activity taken as a whole, and in the context in which it is used, lacks serious literary, artistic, political or scientific value. ADULT ENTERTAINMENT ADVISORY COMMITTEE Page 5 TASKS The Committee was tasked with making recommendations to the City’s Planning Commission and City Council with regard to how adult entertainment uses should be regulated within the City. To complete this task the Committee studied, and within this report, will be making recommendations with regard to: A. Secondary Negative Impacts associated with adult entertainment uses; B. Sensitive Land Uses that need to be protected from adult entertainment uses; and, C. Areas of the City that adult entertainment uses should be located in the City. These three (3) topic areas are discussed in detail below. A. SECONDARY NEGATIVE IMPACTS: Defined as indirect negative impact that occur as a result of an adult entertainment uses locating in a geographic area. The Committee read and analyzed the following materials related to secondary negative impacts. TABLE 1.1: COMMITTEE’S LIST OF MATERIALS READ & ANALYZED DESCRIPTION OF REPORT/STUDY/ARTICLE/MATERIALS FROM A Report on Zoning and Other Methods of Regulating Adult Entertainment in Amarillo City of Amarillo Report on Adult Oriented Businesses in Austin City of Austin Location of Adult Entertainment Uses City of Bellevue Blaine Book Company Memorandum with Allegations of Rape and Solicitation of a Minor for Prostitution Blaine Police Department Adult Use Zoning Analysis, including their Legislative Record City of Des Moines Report on Crime at Existing Adult Retail Businesses City of Everett, Crime Analysis Unit The Relationship Between Crime and Adult Business Operation on Garden Grove Boulevard City of Garden Grove Legislative record City of Federal Way Adult Entertainment Businesses in Indianapolis City of Indianapolis Study and Recommendations for Adult Entertainment Businesses in the Town of Islip Town of Islip Memo Regarding Zoning for Sexually Oriented Businesses City of Kelso Adult Use Zoning Study City of Kent Study of the Effects of the Concentration of Adult Entertainment Establishments in the City of Los Angeles City of Los Angeles Adult Entertainment Study, and Report on the Secondary Effects of the Concentration of Adult Use Establishments in the Times Square Area New York ADULT ENTERTAINMENT ADVISORY COMMITTEE Page 6 Report of the Attorney General’s Working Group on the Regulation of Sexually Oriented Businesses Minnesota Legislative Report on Zoning Regulations of Adult Oriented Businesses City of Olympia Adult Entertainment – a 40 acre Study City of Saint Paul Declarations from Karen Rel, Dr. Joseph Asterino, Ron Hansen, and Joseph C. Books; also testimony from Karen Roberts to the City Planning Commission City of Spokane News reports linking adult entertainment and human trafficking Various Declaration of Marilyn Petersen (City Clerk for the City of Renton) submitting exhibits given to the Renton City Council from Phillip Beckley City of Renton Declaration of Londi Lindell, City Attorney of Federal Way, submitting photographs from a magazine found by Bob Evans, discarded in a parking lot of an Adult Retail Establishment. City of Federal Way Declaration of Patricia C. Walker, Special Deputy Prosecuting Attorney for Spokane County, submitting copies of items citizens have found near adult entertainment facilities and testifying to negative secondary impacts Spokane County Declarations from Herbert Hall (customer of adult book stores), Officer Ricardo Bermudez, Officer Todd Elgin, Officer Gary Faust, Officer Mark Hutchinson and Declarations from the following persons describes as neighbors of A-Z Bookstore: Sherilyn Duarte, Lam-Son Trinh, Mr. and Mrs. Ron Foster, Erin K. Davis, Gary Adamson, Joe and Vera Moralez, Joe Keohane, and Buddy Allred, J. Gaynor City of Garden Grove Declaration from Officer DeVore regarding incident with suspects that met at R & R Adult Toys store. City of Bellevue A copy of each of the items listed in the table above are included as part of this report labeled as Exhibits 1.1 to 1.28. At the Committee’s third meeting held on December 27, 2016 the Committee made a formal motion that the Committee finds that negative secondary impacts are associated with adult entertainment uses. The motion was unanimously passed by the committee After reading, analyzing and discussing all of the above listed items the Committee identified ten distinct negative secondary impacts associated with adult entertainment uses that are listed below. ADULT ENTERTAINMENT ADVISORY COMMITTEE Page 7 TABLE 1.2: SECONDARY NEGATIVE IMPACTS SECONDARY NEGATIVE IMPACTS 1.Increased Incidence of Crime 2.Creation of an Atmosphere for Crimes 3.Declining Property Values 4.Deterioration of Areas 5.Incompatibility with Other Uses 6.Negative Land Use Impacts 7.Negative Impacts on Quality of Life 8.Declining Tourism 9.Human Trafficking Associations 10.Harm to the Public’s Health, Safety and Welfare The accompanying Exhibit D contains a summary of each of the listed secondary negative secondary impacts and provides detailed information on the sources the committee relied upon in making this list of impacts. B. SENSITIVE USES: Defined as uses that should be buffered from adult entertainment uses due to their sensitive nature and the high potential for secondary negative impacts. The following list of sensitive uses were chosen primarily because they are uses and/or areas where minor children and families are likely to congregate and be present. TABLE 1.3: SENSITIVE USES IDENTIFIED BY THE COMMITTEE SENSITIVE USE: DEFINITION OF SENSITIVE USE: PARKS A tract of land owned or maintained by a public entity that is designated for and used by the public for active and passive recreational activities. TRAILS Linear shaped facilities designed and intended for the public to walk, run, or otherwise travel across that are owned or maintained by the City of Mount Vernon. CHURCHES Are buildings or structures, or groups of buildings or structures, which by design and construction are primarily intended for the conducting of organized religious services and accessory uses associated therewith. SCHOOLS Any building or part thereof designed, constructed, or used for formal educational uses that are recognized by the Washington state superintendent of public instruction. This definition includes both public and private schools. ADULT ENTERTAINMENT ADVISORY COMMITTEE Page 8 CHILD CARE CENTERS Are facilities that regularly provide child day care and early learning services for a group of children for periods of less than twenty-four hours licensed by the Washington state department of early learning under chapter 170-295 WAC. LIBRARIES Facilities that include organized collection of resources made accessible to the public for reference or borrowing supported with money derived from taxation. BUSINESSES OR AREAS WHERE YOUTH ARE LIKELY TO BE PRESENT Business or areas where children under the age of eighteen years are commonly present RESIDENTIAL ZONES OR USES Areas within the City limits and the City’s Urban Growth Areas (UGAs) that permit residential uses as either permitted, conditional or special uses. Also areas within the City limits and the City’s UGAs where uses that are primarily residential in nature exist C. WHERE SHOULD ADULT ENTERTAINMENT USES BE LOCATED? Following the committee’s determination that there were negative secondary impacts associated with adult entertainment uses and after identifying land uses that, due to their nature, should be buffered from adult entertainment uses, the committee worked through the steps outlined below that eventually determined the geographic area within the City where they felt adult entertainment uses should be located. 1.IDENTIFIED GEOGRAPHIC AREAS WHERE ADULT ENTERTAINMENT USES WOULD/SHOULD NOT BE ALLOWED. The City is comprised of nineteen distinct zoning districts. The table below identifies each of these districts and indicates where this district was removed from consideration – or not – as the first step in the committee’s process. TABLE 1.4: CITY ZONING AND COMMITTEE’S INITIAL DETERMINATIONS ZONE REMOVED OR NOT – REASONS WHY Single-Family Residential (R-1) Removed from consideration, commercial uses not allowed and proximity to neighborhoods with families and minor children. Infrastructure serving existing developed residential areas not sufficient to provide adequate level of service for commercial uses. Two-Family Residential (R-2) Removed from consideration, commercial uses not allowed and proximity to neighborhoods with families and minor children. Infrastructure serving existing developed residential areas not sufficient to provide adequate level of service for commercial uses. ADULT ENTERTAINMENT ADVISORY COMMITTEE Page 9 Multi-family Residential (R-3 and R-4) Removed from consideration proximity to neighborhoods with families and minor children. Infrastructure serving existing developed residential areas not sufficient to provide adequate level of service for commercial uses. Residential Agricultural (R-A) Removed from consideration, commercial uses not allowed and proximity to neighborhoods with families and minor children. Infrastructure serving existing developed residential areas not sufficient to provide adequate level of service for commercial uses. Public (P) Removed from consideration due uses allowed within Public zones; such as, schools, churches and parks where families congregate with minor children. Residential Office (R-O) Removed from consideration due uses allowed within Public zones; such as, schools, churches and parks where families congregate with minor children. Health Care Development (H-D) Removed from consideration due uses allowed within the Health Care Development District, mainly the public hospital and medical clinics where families and minor children regularly are present. Professional Office (P-O) Not removed from initial consideration. Mobile Home Park (MHP) Removed from consideration, commercial uses not allowed and proximity to neighborhoods with families and minor children. Infrastructure serving existing developed residential areas not sufficient to provide adequate level of service for commercial uses. Central Business (C-1) Removed from consideration because residential uses are allowed within this zone and with residential uses there is proximity to neighborhoods with families and minor children. General Commercial (C- 2) Not removed from initial consideration. Community Commercial (C-3) Removed from consideration because residential uses are allowed within this zone and with residential uses there is proximity to neighborhoods with families and minor children. Neighborhood Commercial (C-4) Removed from consideration because residential uses are allowed within this zone and with residential uses there is proximity to neighborhoods with families and minor children. Limited Commercial (LC) Not removed from initial consideration. Commercial/Limited Industrial (C-L) Not removed from initial consideration. Light Manufacturing and Commercial (M-1) Not removed from initial consideration. ADULT ENTERTAINMENT ADVISORY COMMITTEE Page 10 Industrial District (M-2) Not removed from initial consideration. Floodplain District (F-1) Removed from consideration because structures are not allowed within this district. Map 2.1 (on the following page) identifies the areas listed within TABLE 1.4 (above) that were either removed or not removed from further consideration by the committee. 2.BUFFERED EXISTING SENSITIVE LAND USES. Due to the negative secondary impacts from adult entertainment uses the second step the committee took was to apply buffers around the sensitive uses that were previously identified by the Committee. Table 1.3 lists the sensitive uses the committee identified that includes: parks, trails, churches, schools, child care centers, libraries, businesses or areas where youth are likely to be present and residential zones or uses. To determine the size of the buffer between the identified sensitive uses and potential adult entertainment uses the committee analyzed buffers that other jurisdictions had adopted into their development regulations. TABLE 1.5 (below) lists the buffers from other jurisdictions. TABLE 1.5: ADULT ENTERTAINMENT USE BUFFERS FROM OTHER JURISDICTIONS SENSITIVE USES OTHER ADULT USES EVERETT 250’ 1000’ FEDERAL WAY 1000’ 1000’ KELSO 600’ NA KENNEWICK 500’ 1500’ KING COUNTY 300’ 3000’ MUKILTEO 800’ 500’ OAK HARBOR 750’ NA VANCOUVER 1000’ 500’ residential districts NA SNOHOMISH COUNTY 330’ and 660’ (depending on adult use) 660’ THURSTON COUNTY 330’ NA ADULT ENTERTAINMENT ADVISORY COMMITTEE Page 11 After evaluating the buffers from other jurisdictions the committee evaluated two different buffer sizes. The first buffer was 650 feet; this was chosen because the average block length in Mount Vernon is 325 linear feet, which means that 650 feet would be equivalent to two (2) Mount Vernon city blocks. The second buffer was 1,000 feet; this was chosen because is equates to approximately three (3) city blocks and it also equates to an approximate five (5) minute walking distance for the average adult1 City staff created maps that identified both 650 and 1,000 foot buffers around the sensitive uses listed within Table 1.3 that the Committee examined and discussed at their February 21, 2017 meeting. After much discussion the committee decided that a 1,000-foot buffer, in most cases, would be most effective with keeping negative secondary impacts away from the identified sensitive uses. 3. SELECTED C-L ZONING SOUTH OF ANDERSON ROAD AND WEST OF I-5. After the 1,000 foot buffer was selected the committee was able to take a closer look at Map 2.3 to determine where adult entertainment uses should be located. The committee found there were two (2) distinct pockets of commercial and industrial zoned property outside of the sensitive use buffers within the zoning districts the committee identified as remaining for consideration (these zoning determinations are summarized in Table 1.4). The first area that was evaluated is shown on Map 2.3 and is generally located on both sides of East College Way from the Interstate-5 south bound off-ramp extending east to almost Continental Place. The committee decided not to consider this geographic area as a place to potentially locate adult entertainment uses for two (2) primary reasons: 1) this area is in close proximity to commercial and retail uses frequented by minor children and their families (for example, Coastal Farms, Round Table Pizza, Denny’s, Starbucks, Big Scoop Restaurant, Rite Aid, JoAnn Fabric, 24 Hour Fitness, Whidbey Island and Opus Banks, Taco Time, and many more); and 2) the City adopted into its 2016 Comprehensive Plan Goals, Objectives and Policies that direct the City to adopt development regulations to encourage mixed use zoning; and this area of the City would be an ideal area to potentially allow new residential uses to locate in the future. The second area that was evaluated is shown on Map 2.4 and represents that area that the committee decided that adult entertainment uses would be allowed within because it is zoned such that new residential uses are not allowed, it is (but for limited instances 2) located outside of the 1,000-foot buffer areas the committee placed around sensitive uses, and last the uses allowed within this area are much less likely to have minor children and their families frequenting them as compared to other commercial uses within the City. 1 At 3 miles per hour a person is able to walk 1,320 linear feet in five (5) minutes. 2 There are two 1,000 buffers that encroach into the final area selected by the committee to allow adult entertainment uses that the Committee found could be reduced from 1,000 feet to 700 feet. These buffers originate from uses located on the opposite side of Interstate-5 and Henson Road. The Committee found that being separated by two major road systems (I-5 and Henson) allows the 1,000 buffers from the two identified sensitive uses to be reduced to 700 feet. ADULT ENTERTAINMENT ADVISORY COMMITTEE Page 12 FINDINGS, CONCLUSIONS, & RECOMMENDATIONS 1.The committee finds that the following list of Secondary Negative Impacts occur when adult entertainment uses are located within a community. As such, the Committee concludes there is a need to mitigate these secondary negative impacts. SECONDARY NEGATIVE IMPACTS 1.Increased Incidence of Crime 2.Creation of an Atmosphere for Crimes 3.Declining Property Values 4.Deterioration of Areas 5.Incompatibility with Other Uses 6.Negative Land Use Impacts 7.Negative Impacts on Quality of Life 8.Declining Tourism 9.Human Trafficking Associations 10.Harm to the Public’s Health, Safety and Welfare 2.The Committee finds that the following list of sensitive uses need to be protected from the negative secondary impacts associated with adult entertainment uses. As such, the committee concludes that these Sensitive Uses should be separated from adult entertainment uses by a minimum distance of 1,000 feet with the exception of the two buffers originating from sensitive uses on the east side of Interstate-5 and Henson Road that will be reduced to 700 feet because they are separated by the Interstate and an additional public road. SENSITIVE USES 1.Parks 2.Trails 3.Churches 4.Schools 5.Child Care Centers 6.Libraries 7.Businesses/Areas where Youth are Likely to be Present 8.Residential Zones and Uses 3.The Committee finds that the geographic area shown on Map 2.5 has the least potential impacts to the sensitive uses identified by the Committee. As such, the Committee recommends that be the area of the City that adult entertainment uses are limited to. 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ROADSOUTHWALNUTSTREETM O U NTVERNON BIGLAKE R O A DGOLDENROD ROADSKYRIDGE R O A D GEORGE HOPPER INTERCHANGE ROAD TRUMPETER LANEBURLINGAME ROADEAST GILKEY ROAD E A S T WH I T M A R SH ROAD MCLE AN ROA D PEASE ROAD BOUSLOGROADLINDEGREN ROAD CEDARDALERDM E M O R I A L H I G H W A Y HICKOX ROAD DUN B A R R O A DRIVERBENDROAD EAST HICKOX ROAD THILLBERG ROADSOUTH BURLINGTON BOULEVARDL I T TL E M O U N TA I N R O A DFREEWAYDRBLODGETTRDLINDSAYLPS 25THSTPHILIP'S LP WCASCADE PLACE APACHE DR TWIN BROOKS DRN 30TH STALPINEVIEWPLSLAVENTURERDN 14TH STA LISSALAN EA R B O R STS24THSTMONAR CHB L V D SWAUGHRDMADDOXCREEKRDN 1ST STLORDR MARYCIR S 18TH STF RASERA VES 20TH STS26THSTLE A N N ST BE A V E R PO NDDRSNOOKSACK L P S30THSTBRITTRDN MARTIN RDM O N T E VISTADRPHILIP'SLPEEMEADOWBLVDHIDDEN LAKE LP S 3RD STWOODLAND PLDIGBY RDRIVERVISTAL P OLD HIGHWAY 99 SC H E S T N U T LPRUBYPEAKAVEMT B A K E R L P S 2ND STDIG BY PLMOUNTAIN VIEW DRS 15TH STSWIFT CRE EKDRSHOSHONE DR SU MMERS UNSTS 38TH PLTIMBERLAND LP MANITO DRN35TH STSKAGITHIGHLANDSPKW YS 1ST STRILEY RDURBAN AVEW FIR ST LI LACDRSTANFORDDRCONTINENTALPLCOMMANCHE DR STATEROUTE9PARKWAYDR LITTLE M O U N T A I N R DHENSONRDMAPLE LNWOODLAND DRS 17TH STMONIC A D R CLUB CT MOBILE DR WILLIAM WY FOREST DRRIT ADRMARKET STTUNDRA LPSTONEBRID GEWYFRANCIS RDN E W WOODS PLN BEL-AIR DRB ONNEYLANE ERIC ST R E ETN18THPLLIBERTYPLANDIS ROAD COLONYPLN25THSTCEDARDALE ROADCLAREMONTPLN27TH ST HILLCREST LPSANDALWOODCT PINE CRK DRJACKS LN N 43RD PLSOUNDVIEWROADNWOODSLP RD TIMBERRIDG E D RFI DALGO DRIVESOUT HSKYRID GEDRIVEMONTEVISTA PLA UT OBOUL EVARDBARRY LP SHER MANL A N E V E RA CT PORT DRIVEMARKETPLACED RIVE PEREGRIN E LANESOUTHGOLDENRODROADBABCOCKROADSUNSETLANESOUTHANACORTESSTREETOLYM PIC P LACEWHITMARSH ROADCASCADE MALL DRIVEERVINELA N E BLODGETTROADLITTLE M O U NTAINPARKRDMOUNTAIN VIEW ROADPULVER ROADB R IT T R O A DDIKE ROADEARL CT PARK AVENUEELEANOR LN TIFFANY WAYBENNETT ROAD GILKEY ROAD ¬¬9 ¬¬20 ¬¬536 ¬¬536 ¬¬538 ¬¬536 ¬¬538 §¨¦5 §¨¦5 "Adult Uses" Planning Study Map General Land Use Types Zones that allow Residential Uses Public and F-1 Commercial Zoning Assessor Parcel Lines City Boundary Water Body Map updated 2/17/2016 by MV GIS, Parcel data courtesy of Skagit County GIS The City of Mount Vernon does not warrant, guarantee or accept any liability for the accuracy, precision or completeness of any information shown or described hereon or for any inferences made therefrom. Any use made of this information is solely at the risk of the 0 1,000 2,000Feet EMAP 2.1 W KINCAID ST RIVERSIDE DRE SECTION ST E FIR STFREEWAY DRE DIVISION ST B L O D G E TT R DN 4TH STHICKOX RD E BLACKBURN RDS18THST N 30TH STMCLEAN RD MARTIN RD BRI TTRDN MARTIN RDW BLACKBURN RD S 1ST STDIGBY RDOLD HIGHWAY 99 SS 2ND STS 15TH STROOSEVELT AVE N 18TH STN WALL STW HAZEL ST BROAD ST FULTON ST W SECTION ST ANDERSON RD HOAG RD DIKE RD NWAUGHRDE B ROA DWAY S TN 15TH STS30THSTCLEVELAND AVESKAGITHIGHLANDSPKWYS 13TH STS 3RD STURBAN AVEN LAVENTURE RDW FIR ST N 6TH STSWAUGHRDSLAVENTURERDCONTINENTALPLL I T T LEMOUN T A I N R D E STEWART RD LEIGH WYS3OTHSTMARKET STPACIFIC PL CAMERONWYF R A N C IS R D E HICKOX RDCEDARDALERD¬¬536 ¬¬538 ¬¬536 ¬¬536 ¬¬20 ¬¬9 ¬¬538 §¨¦5 §¨¦5 "Adult Uses" Planning Study MapSensitive Areas & Buffers ÆJ Park ?Residential Use î Church ¹»School ­±°¯Daycare Æc Library "T Game Arcade !!Trail 1000' Sensitive Area Buffer Assessor Parcel Lines Commercial Zoning City Boundary Water Body Map updated 10/31/2016 by MV GIS, Parcel data courtesy of Skagit County GIS The City of Mount Vernon does not warrant, guarantee or accept any liability for the accuracy, precision or completeness of any information shown or described hereon or for any inferences made therefrom. Any use made of this information is solely at the risk of the 0 1,250 2,500Feet EMAP 2.2 MAP 2.3 ADULT ENTERTAINMENT ADVISORY COMMITTEE REPORT COLLEGE WAY AREA CONSIDERED MAP 2.4 ADULT ENTERTAINMENT ADVISORY COMMITTEE REPORT SOUTH MOUNT VERNON AREA CONSIDERED CITY Uses/Businesses Can Be Permitted Location for Adult Entertainment Site ±MAP 2.5 ORDINANCE 3698 ORDINANCE 3699 RESOLUTION 920 ORDINANCE NO. 3698 AN ORDINANCE OF THE CITY OF MOUNT VERNON, WASHINGTON, ENAC TING INTERIM LICENSING AND ZONING REGULATIONS REPEALING AND RE-ENACTING CHAPTER 5.13 OF THE MOUNT VERNON MUNICIPAL CODE, ADDING A NEW CHAPTER 5.06 OF THE MOUNT VERNON MUNIC IPAL CODE RELATING TO ADULT BUSINE SS LICENSES, EMPLOYEE S, AND ADOPTING REGULATIONS AMEND ING MOUNT VERNON MUNICIPAL CODE TITLE 17; AND DECLARING AN EMERGEN CY NECESSITATING IMMEDIATE ADOPTION OF INTERIM CONTROL REGULATIONS FOR THE ZONING, LICENSING AND REGULATION OF ADULT ENTERTAINMENT WHEREAS, cities have the right and duty to enact laws for the protection of the public health, safety, general welfare, economic vitality and economic growth, and morals; and WHEREAS, the City of Mount Vernon was incorporated in 1890, is a non-charter code city organized under Title 35A of the revised code of Washington with a population of thirty three thousand three hundred and fifty persons over twenty seven percent of which are under the age of 18. The City is largely defined by the Skagit River to north and east, a number of streams, some salmon bearing, and lower Skagit Valley agricultural lands which surround parts of the City. As stated in the City's comprehensive plan, one of the City's primary goals is to maintain, enhance, or establish those elements that create the quality of life for its residents by providing a rural , natural setting with small town character and community atmosphere ; and WHEREAS, the City's Comprehensive Plan was last updated on September 14, 20 16 and provides in part for the following as goals and policies of the City to help protect the public health, safety, welfare, morals and economic vitality and growth of the City: 1.GOAL LU-5 Enhance and improve the quality of single-family living environments throughout the city. 2.POLICY LU-1.2.1 Provide development regulations that create a compatible pattern of development within established neighborhoods. the development standards shall addre ss densities, building setback s, parking and landscaping 3.POLICY LU-8.2.6 Development should be designed to mitigate potential adverse impacts on adj acent properties with different zoning designations (i .e., residential or public zoning). careful consideration of impacts from lighting, landscaping, and setbacks should all be evaluated during site design 4.GOAL LU-9: To minimize potential noise impacts to the surrounding residential neighborho od all non-residential uses should be closed for business at reasonable time s. 5.GOAL LU-10: Development regulations shall be adopted to reduce the negative visual, noise, odor, and exhaust impacts from garbage and recycling receptacles, loading docks, and drive through lanes 6.HOUSING ELEMENT GOAL 1. Promote the preservation, maintenance and enhancement of existing housing and residential neighborhoods throughout the city. Ordinance No 3698 page 1 7.HEALTH AND WELLNESS ELEMENT GOAL HW-2. Improve the safety of neighborhoods and public spaces. WHEREAS, extensive evidence has been presented to the City Council showing that the establi shment and locations of adult entertainment businesses and related adult entertainment activities is associated with increased crime and/or depreciated property values, and is antithetical to the public health, welfare, safety, morals and economic vitality and growth of the community. For example, locally, Olympia, Seattle, Federal Way, Des Moines, Kelso, Everett, Snohomish County, Bellevue, among other Western Washington cities, towns and communities, have all concluded that this is the case. Nati onally, studies and/or stati stics from New Orleans, Denver, New York, Cleveland, Los Ange les, Louisville, Jefferson Parish Louisiana, and jurisdictions within Texas among other communities acro ss the nation, have been cited as showing that adult entertainment businesses and activities are associated with increased crime and create nuisances that are contrary to the public health, safety, welfare, morals and economic vitality and growth of the community; and WHEREAS, the evidence presented demonstrated that increases in crimes and types of crime involving prostituti on, narcotics, sex-related crimes, and other disruptive behavior are either directly related to or associated with adult entertainment businesses and activities; and WHEREAS, extensive evidence presented establishes that the establishment of adult entertainment businesses and their related activities is directly related to or associated with a decline in property values of nearby properties . For example, locally, Kent, Seattle, Des Moines, Bellevue, Olympia and Everett have all concluded that thi s is the case. Nati onally, studies and/or stati stics from, for example, Denver, Indianapolis, and New York have been cited as showing that adult entertainment businesses are directly related to or associated with decline in property values; and WHEREAS, the evidence presented demonstrates that negative land use impacts including noise, trash, and traffic problems are directly related to or associated with adult entertainment businesses and their related activities; and WHEREAS, extensive evidence presented establishes that the establishment of adult entertainment businesses and related activiti es is associated with a degradation of the quality of life within nearby neighborhoods and the community in general ; and WHEREAS, Over 27% of Mount Vernon's population is under the age of 18 and there is a compelling need to protect minors from criminal and unlawful activities, and their adverse secondary effects, associated with adult entertainment businesses, uses and activities; and WHEREAS, at this time Mount Vernon ha� no licensing regulations regarding the operation of any sexually oriented adult entertainment business, and the City's current zoning regulations are old and out of date, do not conform to current legal standards or Ordinance No 3698 page 2 judicial allowances for such regulations, have limited effectiveness and ap plication, and only proscribe distance requirements from other sensitive uses; and WHEREAS, the Mayor of Mount Vernon has established an "Adult Entertainment Zoning and Licensing Committee" made up of citizens and city staff who will conduct a comprehensive review of the City's current and outdated and limited adult entertainment regulations, zoning and licensing requirements, and report to the Planning Commission in January 20 17 with recommendati ons regarding licensing and zoning regulations for adult entertainment busine sses; and WHEREAS, there is reason to believe that there is increased interest in locating sexually oriented adult entertainment businesses in the City of Mount Vernon as evidenced by recent inquiries regarding the establishment of adult retail stores and establishments who have a history of serving the public in dre ss that violates the City's current Lewd Conduct regulations; and WHEREAS, RCW 35A.63 .220 and RCW 36.70A.390, as well as interpretative judicial decisions, authorize adoption of interim zoning controls and regulations with certain limitations, including the requirement to hold a public hearing on the adopted interim zoning controls/re gulations within 60 days of its adoption, and the adoption of findings of facts and, if appropriate, a work plan; and WHEREAS, in accordance with RCW 35A.63 .220, interim zoning controls may be effective for no longer than six months, but may be effective for up to a year if a work plan is developed for related studies providing for such a longer period, and WHEREAS, there is an urgent need, pending completion of the Adult Entertainment Zoning and Licensing Committee 's work and the adoption of permanent zoning and regulatory ordinances and licensing requirements, to adopt interim regulatory ordinances regarding adult entertainment businesses and sexually oriented adult entertainment uses to address the well-recognized and documented adverse secondary impacts of such businesses, uses and activities wh ile allowing reasonable opportunities for sexually oriented adult entertainment businesses to locate and conduct their businesses within the City; and WHEREAS, staff has prepared a draft interim licensing ordinance which is supported by the legislative records provided herein. WHEREAS, the City Council shall after appropriate public notice, hold a public hearing on December 7th, 20 16 at a regularly held meeting of the City Council on this Ordinance to consider public testimony regarding adoption of this Ordinance and adopt findings of fact justifying its action in the event such findings are not adopted prior to the hearing ; and WHEREAS, the Council has adopted a work plan pursuant to RCW 35A.63 .220 and RCW 36. 70A.390 which includes multiple public hearings following public notices to Ordinance No 3698 page 3 complete the adoption of permanent zoning and regulatory ordinances regarding adult entertainment busine sses and sexually oriented adult entertainment uses; and WHEREAS, the City on October 17, 20 16 conducted a planning report with app endices providing a land use analysis and buildable lands analysis to study where there may be reasonable opportunities for sexually oriented adult busine sses to locate while minimizing secondary impact to such uses identified as item 16 in the City's Legislative Record and adopts the study as further support of this Interim Control Ordinance; and WHEREAS, the City Council finds that the regulations, modifications and amendments contained in this Interim Control Ordinance are ap propriate and necessary for the preservation of the public health, safety, welfare, economic vitality and continued economic growth of the City, and to protect Mount Vernon citizens from the adverse secondary impacts of sexually oriented adult entertainment businesses, uses and activities, while allowing reasonable opportunities for sexually oriented adult entertainment businesses to locate and conduct their businesses within the City; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOUNT VERNON, WASHINGTON, DO ORDAIN AS FOLLOWS: SECTION 1. Findings That the City Council adopts the recitals set forth above as findings of fact justifying adoption of this Interim Control Ordinance and incorporates those recitals as if set forth fully herein. The Council may adopt additional findings in the event that additional public hearings are held or evidence presented to the City Council. The City Council makes the following additional fmdings in support of the adoption of this Interim Control Ordinance based on the testimony and evidence presented: 1. The City Council takes legislative notice of the evidence of conduct, activities and crimes occurring in and around adult entertainment businesses located in other jurisdictions, which the Council hereby deems to be relevant to the experience in Mount Vernon, as reported in judicial opinions including for example, but not limited to, Kev, Inc. v. Kitsap County, 793 F.2d 1053 (9th Cir. 1986), Ino Ino, Inc. v.City of Bellevue, 132 Wn.2d 103 (1997), DCR, Inc. v. Pierce County, 92 Wn.App . 660 (1998) and Colacurcio v. City of Kent, 163 F.3d 545 (9th Cir. 1998); 2.The City Council takes legislative notice of the evidence of conduct, activities and crimes occurring in and around adult entertainment businesses located in other jurisdictions, which the Council hereby deems to be relevant to the experience in Mount Vernon,, as reported in the studies and findings of other city and county legislative bodies that have also adopted ordinances regulating adult entertainment businesses, including by way of example, but not limited to, the cities of Olympia, New Orleans, Seattle, Federal Way, Des Moines, Kelso, Everett, Snohomish County, Bellevue, and jurisdictions within Texas. 3. The operation of adult entertainment businesses has historically and regularly been accompanied by secondary effects that are detrimental to the public health, safety, Ordinance No 3698 page 4 moral s, economic vitality and growth, and general welfare of the citizens of Mount Vernon. Such secondary effects include, by way of example but not limited to the following: a.Significant criminal activity and activities injurious to the public health, safety, moral s, economic growth and vitality, and general welfare of the community; b.Detrimental effects on nearby busine sses and residential areas; and c.A decline in property values in the area of the adult entertainment businesses. d.The history of criminal and injurious activity includes without limitation prostitution, narcotics and liquor law violations, breaches of the peace, assaults, employment or involvement of minors, sexual conduct between customers or between customers and entertainers, the opportunity for the spread of sexually transmitted diseases and the presence within the industry of individuals with hidden ownership interests and outstanding arrest warrants. Accordingly, there is a compelling need and interest to regulate adult entertainment businesses as provided in this ordinance to protect and promote the public health, safety, morals and general welfare of the citizens of Mount Vernon. 4.The resources available for responding to problems associated with adult entertainment businesses are limited and are most efficiently and effectively utilized through appropriate zoning and a licensing and regulatory program. 5.The license fe es required in this ordinance are necessary as reasonable fe es imposed to help defray the costs of processing the license app lications and the substantial expenses incurred by Mount Vernon in regulating the adult entertainment industry. License requirements set forth in this ordinance are necessary to detect and discourage the involvement of organized crime in the adult entertainment industry, to prevent the exploitation of minors, to assure the correct identification of persons working in adult entertainment businesses, to effectively deploy its limited law enforcement resources and in order to effectively protect the public health, safety, morals and general welfare of its citizenry, the City must be fully appri sed of the identity, age and criminal background of managers in adult entertainment busine sses. 6.It is necessary to have a licensed manager on the premi ses of an adult entertainment business during all hours of operation so there will be a person responsible for the overall operation of the business, including the actions of customers, entertainers and other employees. To monitor the actions of these individuals, a manager must be able to observe these individuals at all times. 7.To prevent the exploitation of minors, to assure the correct identification of persons working in adult entertainment businesses, to effectively deploy its limited law enforcement resources and to effectively protect the public health, safety, moral s, economic vitality and growth and general welfare of its citizenry, the City must be fully appri sed of the identity, age and criminal background of entertainers in adult clubs. Ordinance No 3698 page 5 19. At this time Mount Vernon has no licensing regulations regarding the operation of most sexually oriented adult busine sses, and the City currently has limited or outdated or ineffective zoning regulations which give rise to an urgent need pending completion of the Adult Entertainment Zoning and Licensing Committee's work and the adoption of permanent zoning and regulatory ordinances to adopt interim regulatory ordinances regarding adult entertainment businesses and sexually oriented adult entertainment uses to address the adverse secondary impacts of such businesses and uses while still allowing reasonable opportunities for sexually oriented adult entertainment businesses to locate and conduct their businesses within the City. 20. City recently awarded a bid to complete the City's downtown flood protection project in 20 17 which, once completed, shall remove large areas of the City from the 100 year FEMA regulated floodplain, and this will likely trigger an increase in interest and redevelopment of the City's historical downtown. Absent further interim regulation, such development could include sexually oriented adult entertainment businesses to locate and conduct their businesses within this historic area of the City which is characterized as mixed commercial and residential uses where people of all ages congregate including but not limited to the City's new riverfront public plaza and river trail system. 21 . The City has made significant changes to its comprehensive plan including completion of its comprehensive plan review mandated under Washington State 's Growth Management Act, RCW 36.70A.130. 22.Since the City's adoption of limited zoning regulations permitting adult entertainment businesses to locate in certain areas of the City in 1995, over twenty years ago, large annexations of property have occurred as well as changes to the City's comprehensive plan and development regulations have occurred which include allowing further mixed use commercial and single or multifamily residential uses in areas of the City (including but not limited to its historic downtown) where adult entertainment is currently allowed making it possible for an adult entertainment business to be sited near, adj acent, or within the same structure as single and multiple fam ily dwellings. 23 . Proximity between entertainers and customers in adult clubs and businesses facilitates sexual conduct, prostitution, transactions involving controlled substances and other crime s. 24.To prevent sexual conduct from occurring between entertainers and customers, customers must be prohibited from any stage where adult entertainment occurs and be prohibited from passing tip s, gratuities or other payments directly to entertainers performing on stage. 25.To discourage customers of bars and other alcohol-serving businesses from moving to adult entertainment businesses at two a.m. for "after hours " activities, and the increased likelihood of breaches of the peace and other criminal conduct that arise from those customers, and to reduce the adverse secondary effects of adult entertainment businesses on minors and the community, it is necessary and reasonable to restrict the closing time of adult entertainment businesses. Ordinance No 3698 page 7 SECTION 2. New Section. A new Chapter 5.06, Adult Entertainment Dance Studios, Adult Entertainers and Adult Entertainment Dance Studio Managers is added to the Mount Vernon Municipal Code as follows: ADULT ENTERTAINMENT DANCE STUDIOS, ADULT ENTERTAINERS AND ADULT ENTERTAINMENT DANCE STUDIO MANAGERS Sections: 5.06.010 General provisions. 5.06.020 Definitions. 5.06.030 Adult entertainment dance studio license required. 5.06.040 Prima fa cie evidence of adult entertainment dance studio. 5.06.050 Adult entertainment dance studio license --Application, issuance. 5.06.060 Other licenses/permits not waived. 5.06.070 Adult entertainment dance studio license --Renewal. 5.06.080 License for managers and adult entertainers required. 5.06.090 Manager's and adult entertainer's license --Application, issuance. 5.06.100 Manager's or adult entertainer's license --Renewal. 5.06.110 Adult entertainment dance studio regulations. 5.06.112 Manager on premises. 5.06.115 Additional requirements fo r adult entertainment dance studios. 5.07.117 Standards of conduct. 5.06.120 Inspections. 5.06.125 Activities not prohibited --Liquor licenses. 5.06.130 Enforcement. 5.06.135 Suspension and revocation. 5.06.140 Disclaimer. 5.06.150 Civil penalties. 5.06.160 Criminal penalties. 5.06.170 Public nuisance. 5.06.180 Nonexclusive remedies. 5.06.190 Severability. 5.06.010 General provisions. Unless specified otherwi se in this chapter, the general provisions contained in chapter 5.01 MVMC shall not ap ply to the licenses required under this chapter. 5.06.020 Definitions. For the purpose of this chapter the words and phrases used in thi s section shall have the following meanings un less the context otherwi se requires: A. "Adult entertainment" means: I. Any exhibition, performance or dance of any type conducted in a premises where such exhibition, performance or dance involves a person who is unclothed or in such costume, attire or clothing as to expose any portion of the female breast below the top of the areola or any portion of the pubic Ordinance No 3698 page 8 region, anus, buttocks, vulva or genital s, or wearing any device or covering exposed to view which simulates the appearance of any portion of the female breast, pubic region, anu s, butto cks, vulva or genital s, or human male genitals in a discernibly turgid state, even if completely covered; or 2.Any exhibition, performance or dance of any type conducted in a premises where such exhibition, performance or dance is distinguished or characterized by a predominant emphasis on the depiction, description, simulation or relation to the following specified sexual activities : a.Human genitals in a state of sexual stimulation or arousal; b.Acts of human masturbation, sexual intercourse or sodomy; or c.Fondling or other erotic touching of human genital s, pubic region, buttocks, or female breasts; or 3. Any exhibition, performance or dance intended to sexually stimulate any patron and conducted in a premi ses or part of a premises where such exhibition, performance or dance is performed for, arranged with or engaged in with fewer than all patrons on the premises at that time, with separate consideration paid, either directly or indirectly, for such performance, exhibition or dance. For purposes of example only and not limitation, such exhibitions, performances or dances are commonly referred to as table dancing, couch dancing, taxi dancing, lap dancing, private dancing or straddle dancing. B. "Adult entertainer" means any person who provides live adult entertainment within an adult entertainment dance studio as defined in this section whether or not a fee is charged or accepted for such entertainment. C. "Adult entertainment dance studio" means any business, premises or location to wh ich any member of the public is invited or admitted and where adult entertainment is provided on a regular basis as a substantial part of the premises activity. D. "Applicant control person" means: (1) if a sole proprietorship, the sole proprietor; (2) if a non-publicly held partnership, whether general or limited, each partner and their respective ownership intere st; or (3) if a non-publicly held corporation, every officer, director, shareholder owning 51 % or more interest and any shareholder owning 50% or less who hold a significant interest in the business based on responsibility for management. E. "Employee" means any and all persons, including manager and adult entertainers, who work in or at or render any services directly related to the operation of an adult entertainment dance studio, regardless of whether that person is deemed statutory employee, common law employee or independent contractor. F. "Manager" means any person who manages, directs, administers, controls or is in charge of, the affairs and/or the conduct of any portion of any activity involving adult entertainment occurring at any premi ses offering adult entertainment. G. "Member of the public" means any customer, patron, club member, or person, other than an employee as defined in this section, who is invited or admitted to an adult entertainment dance studio. Ordinance No 3698 page 9 H. "Operato r" means any person operating, conducting or maintaining an adult entertainment dance studio. I. "Person" means any individual, partnership, firm, joint stock company, corporation, association, trust, estate, limited liability company, limited liability partnership or other legal entity, however organi zed. J. "Sexual conduct" means acts of: (a) sexual intercourse within its ordinary meaning ; or (b) any contact between persons involving the sex organs of one person and the mouth or anus of another; or ( c) masturbation, manual or instrumental , of oneself or of one person by another; or ( d) touching of the sex organs or anus, of oneself or of one person by another. K. "Licensing authority " means the Finance Director of the City of Mount Vernon or any duly autho rized representative. 5.06.030 Adult entertainment dance studio license required. No person shall operate an adult entertainment dance studio without a valid adult entertainment dance studio license issued by the licensing authority . 5.06.040 Prima fa cie evidence of adult entertainment dance studio. It shall be prima facie evidence that a business is an adult entertainment dance studio when one or more adult entertainers displays or exposes any portion of the breast below the top of the areola or any portion the pubic region, anus, buttocks, vulva and/or genital s. 5.06.050 Adult entertainment dance studio license --Application, issuance. A. App lication for an adult entertainment dance studio license shall be made to the licensing auth ority on a form prepared and made available by the licensing authority, which forms may be revised from time to time. B. An app lication for an adult entertainment dance studio license shall be signed by the applicant and shall contain or set forth the following information: 1. The name, any aliases or previous names, addre ss, telephone number, driver's license number, if any, social security number, if any and principal occupation, and age of the applicant and each ap plicant control person; 2.The name, addre ss, and principal occupation of the managing agent or agents of the business; 3. For the app licant and each ap plicant control person, list any other licenses currently held for similar adult entertainment or sexually oriented busine sses, including motion picture theaters and panorams, as defined in MVMC 17.72.130, whether from the county or another city, county or state, and the names and addre sses of each licensed business; 4.For the ap plicant and each app licant control person, list prior licenses held for similar adult entertainment or sexually oriented busine sses, whether from the county or from another city, county or state, providing the names, Ordinance No 3698 page 10 addre sses and dates of operation for such businesses, and whether any business license or adult entertainment license has been revoked or suspended, and the reason there for; 5.For the ap plicant and all app licant control persons, list any and all criminal convictions or forfeitures within five years immediately preceding the date of app lication, other than parking offenses or minor traffic infractions including the dates of conviction, nature of the crime, name and location of court and disposition; 6.For the app licant and all app licant control persons, a description of business, occupation or employment history for the three years immediately preceding the date of app lication; 7.The business name, business addre ss, and the business telephone number of the establishment or proposed establishment together with a description of the nature of the business and a scale drawing or diagram showing the configuration of the premises for the proposed adult entertainment dance studio, including a statement of the total floor space occupied by the business, and marked dimensions of the interior of the premises. Performance areas, seating areas, manager's office and stati ons, restrooms and service areas shall be clearly marked on the drawing. An ap plication for a license for an adult entertainment dance studio shall include building plans which demonstrate conformance with this chapter; 8.Any ap plicant or app licant control person who se business is registered with the Washington Secretary of State shall submit a current certificate of good standing or certificate of existence that shows the business is active and up to date with state reporting requirements; 9.The names, addresses, telephone numbers and principal occupation of every person, partnership, or corporation having any interest in the real or personal property utilized or to be utilized by the business or proposed business; 10. Autho rization for the City, its agents and employees to obtain information to confirm any statements set forth in the app lication; 11. Each app licant shall verify, under penalty of perjury, that all of the information contained in the ap plication is true, accurate and complete. C. The licensing authority may request other information or clarification when necessary to determine compliance with this chapter. D. Each app lication shall be accompanied by a non-refundable fe e as follows: 1. Adult entertainment dance studio: $350.00 per year 2.Adult entertainer: $55.00 per year 3.Adult entertainment dance studio manager: $55.00 per year 4.The fee shall not be prorated. E. As soon as practicable following receipt of a completed app lication for an adult entertainment dance studio license, the licensing authority shall transmit copies of the app lication to the police chief, fire marshal , and department of community and development services for their investigation and review to determine compliance of the proposed adult entertainment dance studio with the laws and regulations which each department administers. Each department shall, within 25 Ordinance No 3698 page 11 days of the date of such app lication, inform the licensing auth ority in writing of the results of its investigation and review. No license may be issued unl ess each department reports that the ap plication and premises comply with the relevant laws. F. Within 30 days of receipt of a fully completed app lication for an adult entertainment dance studio license and payment of the fee, the licensing authority shall issue the license, except that the licensing authority shall deny the app lication if issuance of a license will violate any provision of Chapter 5.06 MVMC, the zoning ordinance for the city, MVMC Title 17, or any other law or ordinance, or if the licensing authority determines that the applicant has made a fal se, misleading or fraudulent statement of material fact on the app lication for a license. A person aggrieved by denial of a license under this subsection may app eal the denial to the City hearing examiner. The ap peal shall be filed and processed as set forth in MVMC 19.15.030 and MVMC 19.15.040 G. An adult entertainment dance studio license shall expire on December 31 of the year in which it is issued. H. An adult entertainment dance studio license shall not be issued to any person under the age of 18 years. I. An adult entertainment dance studio license, if granted, shall state on its face the name of the person or persons to whom it is issued, the expiration date, the doing-business-as name and the address of the licensed establishment. J. A license issued to an adult entertainment dance studio is not transferable to any person, entity or to any other business or property. K. It is the responsibility of the licensee issued a license under this section to keep the information on the license current at all time s. L. The licensee shall notify the licensing authority of any change in address, business name, or in the officers, directors or partners of such business, within 14 days of any such change and shall supply the same information as required for an initial adult entertainment dance studio license app lication. 5.06.060 Other licenses/permits not waived. (1) The issuance of an adult entertainment dance studio license shall not be construed or act as absolving the licensee of complying with the requirements of any governmental agencies, including, but not limited to, fe deral, state, city and county laws or ordinances relating to buildings, fire, health, sanitation, zoning, taxation, public safety, and all other requirements and conditions provided by law. (2) The filing of an ap plication for a license under this chapter shall not give the app licant the right to engage in the activity covered prior to the issuance of a license. 5.06.070 Adult entertainment dance studio license --Renewal. An adult entertainment dance studio license may be renewed by following the application procedure set out in MVMC 5.06.050. It shall be the duty of the licensee to make app lication for renewal prior to the expiration of an outstanding license. An expired license shall not be automatically renewed and will only be renewed upon a renewal Ordinance No 3698 page 12 ap plication by the app licant following the procedure in MVMC 5.06.050. A decision of the licensing authority to deny an app lication for renewal shall be stayed and the prior license shall remain in effect during administrative and judicial review of that decision. 5.06.080 License fo r managers and adult entertainers required. No person shall work as a manager or adult entertainer without a valid manager's or adult entertainer's license issued by the licensing authority . 5.06.090 Manager's and adult entertainer's license --Application, issuance. A. Application for a manager 's or adult entertainer 's license shall be made to the licensing auth ority on a form prescribed by the licensing autho rity . B. An app lication for a manager 's or adult entertainer's license shall contain or set forth the following information: 1. The app licant's name, home addre sses (current and former), home telephone number, date of birth, social security number, alias (past or present), and stage name; 2.The business name and addre ss where the app licant intends to dance or work; 3.Authorization for the City, its agents and employees to investigate and confirm any statement set forth in thi s application. C. With the app lication the ap plicant shall present documentation that he or she has att ained the age of 18 years. Any of the following shall be accepted as documentation of age: 1. A motor vehicle operator 's license issued by any state bearing the ap plicant's date of birth and photograph; 2.An identification card issued by any governmental agency bearing the app licant's date of birth and photograph; 3.An official passport issued by the United States of America; 4.An immigration card issued by the United States of America. D. Each app licant shall be photographed. E. Each application shall be accompanied by a non-refundable fee as provided in MVMC 5.06.050 D. The fee shall not be prorated. F. Upon receipt of a completed ap plication for a manager's or adult entertainer's license and proof of compliance with MVMC 5.06.090 D required by this chapter, the licensing authority shall issue the license. As soon as possible, following the issuance of a manager's or adult entertainer's license, the licensing authority shall transmit copies of the ap plication and license to the Mount Vernon Police Department. G. A manager's or adult entertainer 's license shall expire on December 31 of the year in which it is issued. H. A manager's or adult entertainer's license shall entitle a manager or adult entertainer to perform or work only at the location indicated on the manager's or adult entertainer 's license. If a manager or adult entertainer changes his or her location where employed or performing during the license term, the license certificate must be returned to the licensing authority for reissuance, upon Ordinance No 3698 page 13 payment of the fee set out in MVMC 5.06.050 D, indicating the new location of employment. I. A manager 's or adult entertainer's license shall not be issued to any person under the age of 18. J. It is the responsibility of all managers and adult entertainers issued a license under this section to keep the information on their license current and accurate at all time s. K. Each ap plicant shall verify, under penalty of perjury, that all of the information contained in the ap plication is true, accurate and complete. 5.06.100 Manager's or adult entertainer's license --Renewal. A manager's or adult entertainer 's license may be renewed by following the ap plication procedure set out in MVMC 5.06.090. It shall be the duty of the licensee to make app lication for renewal prior to the expiration of an outstanding license. 5.06.110 Adult entertainment dance studio regulations. A. No person shall advertise, or cause to be advertised, an adult entertainment dance studio without a valid adult entertainment dance studio license issued pursuant to this chapter. B. No later than March 1 of each year an adult entertainment dance studio licensee shall file a verified report with the licensing authority showing the licensee 's gross receipts for the preceding calendar year. C. An adult entertainment dance studio licensee shall maintain and retain for a period of two years the names, addresses, and ages of all adult entertainers and managers . D. No adult entertainment dance studio licensee shall employ as a manager or adult entertainer a person under the age of 18 years or a person not licensed pursuant to this chapter. E. No person under the age of 18 years shall be admitted to an adult entertainment dance studio. F. An adult entertainment dance studio shall be closed between 2:00 a.m. and 8:00 a.m. G. No adult entertainment dance studio licensee shall serve, sell, distribute, or suffer the consumption or possession of any intoxicating liquor or contro lled substance upon the premi ses of the licensee. H. An adult entertainment dance studio license issued pursuant to this chapter shall be conspicuously displayed at the place of businesses during normal business hours. I. Manager and adult entertainer licenses issued pursuant to this chapter shall be maintained on the premises of the business during normal business hours. J. No adult entertainment shall be visible outside of the adult entertainment dance studio, nor any photograph, drawing, sketch or other pictorial or graphic representation which includes lewd matter as defined in RCW 7.48A or display of sexually explicit material in violation of RCW 9.68.130 . Ordinance No 3698 page 14 K. No member of the public shall be permitted during normal business hours to enter into any of the non-public portions of the adult entertainment dance studio, which shall include but are not limited to : the dressing rooms of the adult entertainers or other rooms provided for the benefit of employees, and the kitchen and storage areas. Provided, that persons delivering goods and materi als, food or beverages, or performing maintenance or repairs to the premi ses or equipment on the premi ses may be permitted into non-public areas to the extent required to perform their job dutie s. 5.06.112 Manager on premises. A. A licensed manager shall be on duty at an adult entertainment dance studio premi ses at all times that adult entertainment is being provided. The name of the manager on duty shall be prominently displayed during business hours. B. The licensed manager on duty shall not be an adult entertainer. It shall be the responsibility of the manager to verify that any employee or adult entertainer working or performing within the establishment possesses a current and valid employee 's or adult entertainer 's license as required by this chapter. C. The license manager shall not permit any violations of this chapter to occur. 5.06.115 Additional requirements for adult entertainment dance studios Every adult entertainment dance studio shall be physically arranged in such a manner that : A. Performance Area. The performance area of the adult entertainment dance studio where adult entertainment is performed shall be a stage or platform at least 18 inches in elevation above the level of the patron seating areas, and shall be separated by a distance of at least 6 fe et from all areas of the premises to which members of the public have access. A continuous railing three to five fe et in height above the floor and located at least six fe et from all points of the performance area shall separate the performance area and the patron seating areas. The stage and the entire portion of cubicles, rooms or stalls wherein adult entertainment is provided must be visible from the common areas of the premises and at least one manager's station. Visibility shall not be blocked or obstructed in any way by doors, curtains, drapes or any other obstruction whatsoever. B. Illumination. Sufficient lighting shall be provided in and about the parts of the premises which are open to and used by the public so that all objects are plainly visible at all times and all parts of such premises shall be illuminated so that patrons or others on any part of the premises shall be able to read the Washington State Liquor Control Board card or other written instrument, printed in eight­ point type. C. Signs. A sign at least two fe et by two feet, with letters at least one inch high shall be conspicuously displayed in the public area(s) of the adult entertainment dance studio, stating each of the following: 1. A list of any and all adult entertainment provided on the premises with the specific fee or charge in dollar amounts for each adult entertainment listed; and Ordinance No 3698 page 15 2."THIS ADULT ENTERTAINMENT DANCE STUDIO IS REGULATED BY SNOHOMISH COUNTY. DANCERS ARE : A. NOT PERMITTED TO ENGAGE IN ANY TYPE OF SEXUAL CONDUCT B. NOT PERMITTED TO APPEAR SEMI-NUDE OR NUDE, EXCEPT ON STAGE C. NOT PERMITTED TO ACCEPT TIPS OR ORA TUITIES IN ADVANCE OF THEIR PERF ORMAN CE D. NOT PERMITTED TO ACCEPT TIPS OR GRATUITIES DIRECTLY FROM PATRON S WHILE PERFORMING UPON ANY STAGE AREA ." 5.06.117 Standards of conduct. The following standards of conduct must be adhered to by employees of any adult entertainment dance studio while in any area in which members of the public are allowed to be present : A. No employee or adult entertainer shall be unclothed or in such less than opaque and complete attire, costume or clothing so as to expose to view any portion of the fe male breast below the top of the areola, or any portion of the pubic region, anus, butto cks, vulva or genitals except upon a stage at least 18 inches above the immediate floor level and removed at least 6 feet from the nearest member of the public. B. No employee or adult entertainer mingling with members of the public shall be unclothed or in less than opaque and complete attire, costume or clothing as described in subdivision (1) of this section, nor shall any male employee or adult entertainer app ear at any time with his genitals in a discernibly turgid state, even if completely and opaquely covered. C. No employee or adult entertainer mingling with members of the public shall wear or use any device or covering exposed to view which simulates the breast of a fe male below the top of the areola, vulva, genitals, anus, butto cks, or any portion of the pubic region or human male genitals in a discernibly turgid state, even if completely and opaquely covered. D. No employee or adult entertainer shall caress, fondle or erotically touch any member of the public. E. No employee or adult entertainer shall encourage or permit any member of the public to caress, fondle or erotically touch any employee or adult entertainer. F. No employee or adult entertainer shall sit on the lap of a member of the public or separate the legs of a member of the public. G. No employee or adult entertainer shall perform simulated non-obscene acts of sexual conduct except upon a stage at least 18 inches above the immediate floor level and removed at least 6 fe et from the nearest member of the public. H. No empl oyee or adult entertainer mingling with members of the public shall conduct any dance, performance or exhibition in or about the non-stage areas of the adult entertainment dance studio unless that dance, performance or exhibition is performed at a torso-to-torso distance of no less than 4 feet from the member or members of the public for whom the dance, performance or exhibition is performed. Ordinance No 3698 page 16 I. No tip or gratuity offered to or accepted by an adult entertainer may be offered or accepted prior to any performance, dance or exhibition provided by the adult entertai ner. No adult entertainer performing upon any stage area shall be permitted to accept any form of gratuity offered directly to the adult entertainer by any member of the public. Any gratuity offered to any adult entertai ner performing upon the stage area must be placed into a receptacle provided for receipt of gratui ties by the adult entertainment dance studio or provided through a manager on duty on the premi ses. Any gratuity or tip offered to any adult entertainer or employee conducting any performance, dance or exhibition in or about the non-stage area of the adult entertainment dance studio shall be placed into the hand of the adult entertainer or employee or into a receptacle provided by the adult entertainer or employee, and not upon the person or into the clothing of the adult entertainer or employee. J. No employee or adult entertainer shall perform actual acts of sexual conduct as defined in this chapter, or any act which constitutes a violation of RCW 7.48A, the Washington Moral Nuisances Statute . 5.06.120 Inspections. All books and records required to be kept pursuant to this chapter or Washington State law shall be open to inspection by the licensing authority, city police, or their agents during the hours when the adult entertainment dance studio is open for business. The purpose of such inspection shall be to determine if the books and records meet the requirements of this chapter. 5.06.125 Activities not prohibited --Liquor licenses. A. This chapter shall not be construed to prohibit: 1. Plays, operas, musicals or other dramatic works which are not obscene as defined in Section 5.06.125 B below; 2.Classes, seminars and lectures held for serious scientific or educational purposes; or 3. Exhibitions or dances which are not obscene as defined in section 5.06.125 B below. These exemptions shall not ap ply to the sexual conduct defined in MVMC 5.06.020, or the sexual conduct described in RCW 7.48.010 (2)(b)(ii) and (iii). B. Whether or not an activity is obscene shall be judged by consideration of the following factors : 1. Whether the average person, app lying contemporary community standards, would find that the activity taken as a whole app eals to a prurient interest in sex; and 2.Whether the activity depicts or describes in a patently offensive way, as measured against contemporary community standards, sexual conduct as described in RCW 7.48A.0 10(2)(b); and Ordinance No 3698 page 17 3. Whether the activity taken as a who le, and in the context in which it is used, lacks serious literary, arti stic, political or scientific value . 5.06.130 Enforcement. The licensing authority, community and economic development director and/or police chief or designated repre sentatives are autho rized and directed to enforce the terms and provisions of this chapter. 5.06.135 Suspension and revocation. A. The licensing authority may, at any time upon the recommendation of the Police Chief or as provided below suspend, revoke or impose conditions on any license issued under this chapter: 1. Where such license was procured by fraud or fa lse representation of fact; or 2.For the violation of, or failure to comply with the provisions of this chapter or any other similar local or state law by the licensee or by any of its servants, agents or employees when the licensee knew or should have known of the violations committed by its servants, agents, or employees; or 3. For the conviction of the licensee of any crime or offense involving prostitution, promoting prostitution, or transactions involving controlled substances as defined in RCW Arti cle 69 .50 committed on the premi ses, or the conviction of any of the licensee 's servants, agents or employees of any crime or offense involving prostitution, promoting prostitution, or transactions involving controlled substances as defined in RCW Article 69 .50 committed in the licensed premi ses when the licensee knew or should have known of the violations committed by its servants, agents or employees. B. A license procured by fraud or misrepresentation shall be revoked. Where other violations of this chapter or other app licable ordinances, statutes or regulations are found, the licensing auth ority shall suspend a license issued under this chapter for 30 days for the first violation, 90 days for the second violation and 120 days for the third and subsequent violations within a 24 month period, not including periods of suspension. C. No license suspended or revoked under the provisions of this chapter may be renewed during any period of suspension. D. The licensing authority may revoke a license upon the grounds for a suspension when a license has been suspended three times within a 24 month period, not including periods of suspension. E. The procedure for suspension, revocation or conditioning is initiated by the service of a notice and order issued by the licensing autho rity, pursuant to Chapter 19.15 MVMC. 5.06.140 Disclaimer No license/permit issued by the City of Mount Vernon shall be construed as an endorsement by the City of Mount Vernon, including any endorsement of any licensee or Ordinance No 3698 page 18 activity incidental to any licensed acti vity. The City of Mount Vernon assumes no liability or responsibility of any sort as a result of the issuance of any license/ permit. 5.06.150 Civil penalty. In addition to or as an alternative to any other penalty provided herein or by law, any person who engages in any activity for which a license or permit is required pursuant to the provisions of this Chapter while his or her license is suspended or revoked, or in violation of any condition of a license, or who fa ils to obtain a license or permit prior to engaging in the activity for which a license or permit is required, or who otherwi se violates any license or permit law shall pay as set forth in Chapter 19.35.0 10 MVMC. The civil penalty may be assessed and collected by use of all appropriate legal remedies, including the procedures set out in Title 19 of the MVMC. 5.06.160 Criminal pen alty. Except as otherwi se specifically provided in this Chapter, any person violating or fa iling to comply with any of the provisions of this Chapter shall be deemed guilty of a misdemeanor and upon conviction thereof shall be punished by a fine in any sum not exceeding $1,000 or by imprisonment in the county jail for a period not exceeding 90 days, or both. Each day that any person conducts any business, calling, profession, trade, occupation or activity in violation of any provision of this chapter shall constitute a separate offense and be punished as such. 5.06.170 Public nuisance. Any activity, act, or conduct undertaken without a license or permit required by this Chapter constitutes a public nuisance and such activity, act, or conduct may be abated by the licensing authority or police chief by securing an appropriate order from the court. 5.06.180 Nonexclusive remedies. The remedies for violation of thi s Chapter set out in this Chapter are not exclusive. 5.06.190 Severability. If any portion of this chapter, or its application to any person or circumstance, is held invalid, the remainder or app lication to other persons or circumstanc es shall not be affected. SECTION 3. Chapter 5.13, CABARETS, of the Mount Vernon Municipal Code is hereby repealed and reenacted, which Chapter shall read as follows: Chapter 5.13 ADULT BUSINESSES AND EMPLOYEES Ordinance No 3698 page 19 Sections : 5.13.005 General provisions. 5.13.010 Definitions. 5.1 3.015 Adult businesses-License required. 5.13.020 License fees and term . 5 .13. 025 Investigation require d. 5 .13 .030 Fingerprinting required. 5.13.035 Photo graph required. 5.13.040 Underage employees. 5.13.045 Unlawful to employ unlicensed person. 5.13.050 Manager license required. 5.13.055 Employee license required. 5.13.060 Exclusions. 5 .13 .070 Standards of conduct. 5.13.075 Notice to public. 5 .13 .080 Prima facie evidence of adult sales practice. 5.13.085 Signs. 5 .13 .090 Enforcement. 5 .13 .095 Nuisance declared. 5 .13 .100 Additional enforcement. 5.13.105 Relation to other laws 5.12.1 10 Severability 5.13.005 General provisions. Unless specified otherwise in this chapter, the general provisions contained in chapter 5.04 MVMC shall ap ply to licenses required by this chapter. 5.13.010 Definitions. The words and phrases in this chapter, unless the context otherwise indicates, shall have the following meanings: A. "Adult entertainment" means: 1. Any exhibition, performance or medium which is distinguished or characterized by displays of less than completely and opaquely covered human genitals, pubic hair, pubic area, perineum, anus, buttocks, or female breast below the top of the areola; or 2.Any exhibition, performance or dance conducted in a premises where such exhibition, performance or dance is performed within the view of one or more members of the public and is intended or is likely to sexually stimulate any member of the public. B. "Adult entertainment book store " means any business from which minors are excluded and in which the purchase, rental, viewing or use of books, magazine s, newspapers, movie films, devices, slides, or other photographic or written Ordinance No 3698 page 20 reproductions distinguished or characterized by their emphas is on matter depicting, describing, or relating to adult entertainment or adult entertainment material make up 25% or more of the stock in trade. C. "Adult entertainment busine ss" means any establi shment or premises other than a business subj ect to chapter 5.06 MVMC or 5.56 MVMC, which: 1. Engages in adult sales practi ce; or 2.Has at least 25% of its trade in the display, barter, rental, or sale of a medium which meets the criteria of adult entertainment as defined by this chapter including but not limited to: adult entertainment bookstores, adult entertainment movie theaters, adult tanning salons, escort businesses and nude house cleaning businesses; or D. "Adult hotel" means a hotel, motel, or similar commercial establishment which offers a sleeping room for rent for a period of time less than 10 hours or allows a tenant or occupant of a sleeping room to sub-rent the room for a period of time that is less than 10 hours . E. "Adult entertainment movie theater" means any establishment, from which minors are excluded and where the principal use of the premi ses consists of the showing of motion pictures, slides, or photographic or other visual repro ductions, where the subj ect matter meets the criteria of adult entertainment as defined in thi s chapter and where fees of any kind are charged. This definition shall include establishments wherein the above mentioned medium is the major attraction on a regular basis and establishments wherein the above mentioned medium is shown at least 25% of the showing time of the theater. F. "Adult sales practice" means any activity which is distinguished or characterized by a person being in a state of partial nudity while conducting or otherwi se engaged in retail sales of goods or services under circumstances where such conduct is likely to be viewed by a member of the public. G. "Adult tanning salon" means any establishment which offers tanning services to a member of the public and in which adult entertainment takes place. H. "Customer" means a person patronizing a business for which an adult business license is required by this chapter. I. "Employee" means any and all persons who work in or at or render any services directly related to the operation of an adult entertainment business regardless of whether that person meets the criteria of a statutory employee, common law employee or independent contractor. J. "Escort" means a person who, for consideration, agrees or offers to act as a companion, guide, or date for another person, or who agrees or offers to privately model lingerie or to privately perform a stripte ase for another person. K. "Escort business" means a person or business association who furnishes, offers to furnish, or advertises to furnish escorts. L. "Manager" means any person who manage s, directs, administers or is in charge of, the affairs and/or conduct of any portion of any activity involving adult entertainment occurring at any place offering adult entertainment . M. "Member of the public" means any person other than a manager or employee as defined in this section. Ordinance No 3698 page 21 N. "Nude or state of nudity " means a state of dress or undre ss such that any of the body parts described in the City's lewd conduct ordinance, MVMC 9.1 9.040, is exposed to view or covered with anything other than a full and opaque covering within the meaning of that ordinance. 0."Nude house cleaning business" means a person or business which offers house cleaning services in which the house cleaner is in a state of nudity. P. "State of partial nudity " means a state of dress or undre ss not constituting a state of nudity in which any of the following body parts or portions thereof is exposed to view or covered with anythi ng other than a full and opaque covering: 1. Any part of the buttocks or anal cleft; or 2. Any part of the female breast located below the top of the areola. 3. Items commonly known as pasties, G-strings, T-backs, dental floss, and thongs; body paint, body dye, tattoos, latex, tape, or any similar substance ap plied to the skin surfac e; any substance that can be washed off the skin; or any substance designed to simulate or which by its nature simulates the ap pearance of the anato mical area beneath it, is not full and opaque covering within the meaning of this subsection. Q. "Stock in trade " means the greater of: (a) the retail dollar value of all prerecorded video tapes, discs, books, magazines or similar material readily available for purchase, rental , viewing or use by patrons of the establishment, including paper or electronic form, excluding material located in any storeroom or other portion of the premi ses not regularly open to patrons ; or (b) the total number of titles of all prerecorded video tapes, discs, books, magazine s, or similar material readily avai lable for purchase, rental, viewing or use by patrons of the establishment, including paper or electronic form, excluding material located in any storeroom or other portion of the premi ses not regularly open to patrons . 5.13.015 Adult businesses-License required. No person shall operate within the City of Mount Vernon an adult entertainment business, an adult hotel, an adult tanning salon, an escort business, or a nude house cleaning business without a valid adult business license issued by the licensing authority. No escort business or nude house cleaning business shall provide services within the City of Mount Vernon without a valid license issued by the licensing authority. 5.13.020 License fe es and term. The fe es for the licenses required by this chapter are as follows : A. Adult business location: $265 .00; B. Adult business employees : $1 1 5.00; C. Adult business manager: $1 1 5.00. The terms for the se licenses is one year from date of issuance. 5.13.025 Investigation required. Ordinance No 3698 page 22 App licants seeking a license under thi s chapter shall have ap plicant's app lication forwarded to the Mount Vernon Police Department with any supporting documents to be investigated as follows: A. Whether any outstanding criminal violations/charges exist. B. Whether any le gitimate complaints exist regarding the app licant's past business practi ces that would have any bearing or effect on the issuance of the license/permit under consideration. C. Whether the person is prohibited by law from engaging in this type of activity. D. Whether the ap plication should otherwi se be disapproved based upon public safety considerations. E. Within 30 days following the receipt of the ap plication from the licensing authority, the police chief or his or her designee make a written recommendation on the issuance of the license setting forth the results in his investigation and his recommendation as to the disposition of the ap plication. The police chief or his or her designee may request an extension to complete his investigation of no more than 3 0 days, which request shall be granted upon a showing of reasonable cause. 5.13.035 Photograph required. Ap plicants seeking an employee or manager license as required by this chapter shall submit photographs when app lications are submitted. Each app licant, or party signing the app lication, shall submit four 2" x 2" photographs taken within the last six months of the date of application showing three full face and one full length front-facing shot. These photographs shall be provided at the expense of the app licant. The app licant shall certify under penalty of perjury that the photograph is a true, accurate and unaltered depiction of the ap plicant. The license, when issued, shall have affixed to it a photograph of the app licant, or the party signing the app lication, shall be posted at all times in a conspicuous place in the establishment where such license is enjoyed, and shall not be tampered with in any manner. On renewal of a license app licants must resubmit photographs as described in this section. 5.13.040 Underage employees. It shall be unlawful for any owner, proprietor, manager, or person in charge of any facility regulated by thi s chapter, to have an employee in such establishment, under the age of 18 years. 5.13.045 Unlawful to employ unlicensed person. It shall be unlawful for any owner, proprietor, manager, or person in charge of any escort business, nude house cleaning business, adult tanning salon, or business using an adult sales practi ce, as regulated by this chapter, to employ in such establi shment, any person who does not have a valid employee license as required by MVMC 5.13.055. Ordinance No 3698 page 23 5.13.050 Manager license required. No person shall work as a manager in nude house cleaning business, escort business, adult tanning salon, or business using an adult sales practi ce, as regulated by this chapter, without a valid license issued by the licensing authority. 5.13.055 Employee license required. A. It shall be unlawful for any person to work in the following adult entertainment businesses, in the capacities outlined below, without a license as provided for in thi s chapter: I. "nude house cleaning "--any person actually performing or assisting in the performance of nude house cleaning, as defined in thi s chapter; 2."escort business "--any person acting as an escort as defined by this chapter; 3. "adult tanning salons "--any person performing any services in a closed room while the patron is present; or 4.business using an "adult sales practice"-any person who is in a state of partial nudity while conducting or otherwi se engaged in retail sales of goods or services. B. All licenses required shall be invalid as to any adult entertainment business during any period in which the employer is not engaged in business whether by reason of choice or fa ilure of the employer to operate a busine ss or by reason of lapse, suspension or revocation of employer 's license. C. An employee license shall entitle the employee to work only at the adult entertainment business indicated on the employee's license. If an employee changes his or her employment during the license term, the license certificate must be returned to the licensing authority or reissuance, upon payment of the fee set out in MVMC 5.13.020, indicating the new place of employment. 5.13.060 Exclusions. A. This chapter shall not be construed to prohibit: I. Plays, operas, musicals, dramatic works, or other exhibitions or performances that constitute protected speech under the federal or state constitution and which are not obscene; 2.Classes, seminars and lectures held for serious scientific or educational purposes; 3. Conduct of licensed adult entertainers within adult entertainment dance studios operating pursuant to chapter 5.06 MVMC; or 4.The act of breastfeeding or expressing breast milk. B. For this chapter, any exhibition, performance, dance or other medium is obscene : I. Which the average person, ap plying contemporary community standards, would find, when considered as a who le, app eals to the prurient intere st; and 2.Which explicitly depicts or describes patently offensive representations or descriptions of a.Ultimate sexual acts, normal or perverted, actual or simulated; or Ordinance No 3698 page 24 b.Masturbation, fellatio, cunnilingus, bestiality, excretory functions or lewd exhibition of the genitals or genital area; or c.Violent or destructive sexual acts including but not limited to human or animal mutilation, dismemberment, rape or torture ; and 3. Which, when considered as a whole, and in the context in which it is used, lacks serious literary, arti stic, political, or scientific value. 5.1 3.070 Standards of conduct. The following standards of conduct shall be adhered to by any adult business for which a license is required by this chapter: A. No person under the age of 18 years shall enter or remain in any establishment or premi ses in which an employee is in a state of nudity or partial nudity. B. No employee shall be in a state of partial nudity under circumstances where such conduct is likely to be observed by a member of the public other than a customer. C. No employee shall be in a state of nudity under circumstanc es where such conduct is likely to be observed by a member of the public, except that an employee who is employed as an escort or nude house cleaner may be in a state of nudity when observed by a customer. D. No employee who is employed as an escort or nude house cleaner shall be in a state of nudity when observed by a customer unless the employee is removed at least 6 fe et from the nearest customer. E. No male employee shall be visible to a member of the public with his genitals in a discernibly turgid state, even if completely and opaquely covered. F. No employee shall caress, fondle or erotically touch any employee or member of the public. G. No employee shall encourage or permit any member of the public to caress, fondle or erotically touch any employee or member of the public. 5.13.075 Notice to public. Any business for which an adult business license is required by this chapter shall by signage and other reasonable means put potential customers on notice that the business is an adult business from which persons under the age of 18 years are excluded. Such notice for a business establishment or premises shall include at least one sign conspicuously displayed at each entrance which shall have horizontal and vertical dimensions of least two feet by two fe et and state "ADULTS ONLY" in bold letters at least six inches in height. 5.1 3.080 Prima fa cie evidence of adult sales practice. It shall be prima facie evidence of an adult sales practice when a person other than an adult entertainer as defined in MVMC 5.06.020 engages in the retail sale of goods or services while in a state of partial nudity under circumstances where such conduct is likely to be viewed by a member of the public. Ordinance No 3698 page 25 B. This chapter shall not be construed to limit ap plication of other federal, state, and local laws that may app ly to adult businesses or employees subject to this chapter, including but not limited to laws relating to public health and workplace safety. 5.13.110 Severability. If any section, sentence, clause or phrase of this chapter should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of any other section, sentenc e, clause or phrase of this chapter. SECTION 4. That a new section 17. 72.130 of the Mount Vernon Municipal Code is hereby created which section shall read as follows: 17.72.130 Adult entertainment uses. Adult entertainment uses must meet the following requirements : A. Adult entertainment businesses or uses are prohibited within the area circumscribed by a circle which has the radius shown below from any public or private school, preschool, educational institution, church or other religious facility, public or private park, libraries, child care centers, game arcades, youth oriented facilities, and shall be permitted in only the following: Those areas of the C-L Commercial/Limited Industrial District as further set forth in Exhibit A attached hereto : 1. Adult entertainment book stores--650'. 2. Adult entertainment dance studios--650'. 3. Adult entertainment movie theaters--650'. 4. Adult hotels--650'. 5. Adult tanning salons--650'. 6. Escort businesses--O'. 7. Nude house cleaning businesses--O'. 8. Panoram premises--650' 9. All other adult entertainment uses--650'; B. The distances specified in this section shall be measured horizontally by following a straight line without regard to intervening buildings, from the nearest point of the property parcel upon which the propo sed use is to be located to the nearest point of the parcel of property of the land use from which the proposed use is to be separated; C. Violation of the use provisions of this section is: 1. Declared to be a public nuisance per se, which may be abated by the county by way of civil abatement procedures only, and not by criminal prosecution; or 2. Subj ect to enforcement in accordance with the provisions of Title 19 MVMC; Ordinance No 3698 page 27 D. Nothing in this section is intended to autho rize, legalize, or permit the establi shment, operation, or maintenance of any business, building, or use which violates any other City of Mount Vernon or Skagit County ordinance or statute of the State of Washington or any Federal law regarding public nuisances, sexual conduct, lewdness, or obscene or harmful matter or the exhibition or public display there of; and E. The following definitions apply to adult entertainment uses: 1. "Adult entertainment" means any exhibition, performance or medium which is distinguished or characterized by: a.acts of masturbation, sexual intercourse, or sodomy; b.fondling or other touching of the human genital s, pubic region, buttocks or female breast; c.human genital s in a state of sexual stimulation or arousal; d.displays of less than completely and opaquely covered human genital s, pubic region, anus, butto cks, or fe male breast below the top of the areola; e.human male genitals in a discernibly turgid state even if completely covered; f. any exhibition, performance, or dance conducted in a premises where such exhibition, performance, or dance is performed within the view of one or more members of the public and is intended or is likely to sexually stimulate any member of the public; or g.adult entertainment shall not include the following: i.plays, operas, musicals, or other dramatic works which are not obscene; ii.classes, seminars, and lectures which are held for serious scientific or educational purpo ses; 111. exhibitions or dances which are not obscene; h. For this chapter, any exhibition, performance, dance, or other medium is obscene : i.which the average person, ap plying contemporary community standards, would find, when considered as a whole, ap peals to the prurient intere st; and ii.which explicitly depicts or describes patently offensive representations or descriptions, app lying contemporary community standards of sexual conduct as described in RCW 7.48A.01 0(2)(b); and iii.which, when considered as a whole, and in the context in which it is used, lacks serious literary, artistic, political, or scientific value . 2."Adult entertainer" means any person who provides live adult entertainment within an adult entertainment dance studio as defined in this section whether or not a fe e is charged or accepted for entertainment. 3. "Adult entertainment book store " means any business from which minors are excluded and in which the purchas e, rental, viewing or use of books, magazines, newspapers, movie films, devices, slides, or other photographic or written reproductions distinguished or characterized by their emphasis on matter depicting, describing, or relating to adult entertainment or adult entertainment materials make up 25 percent or more of the stock in trade. � "Adult entertainment business/use" means any establishment or premises engaged in the adult sales practices as defined in MVMC 5.13.010 F, or_which has a Ordinance No 3698 page 28 substantial or significant portion of its trade, the display, barter, rental or sale of any adult entertainment medium, or which meets the definitions contained in thi s chapter of adult entertainment book stores, adult hotels, adult entertainment movie theaters, adult tanning salons, escort busine sses, nude house cleaning businesses, adult entertainment dance studi os, panoram premi ses. 5. Adult entertainment dance studi o" means any place where an exhibition or dance of any type is conducted where such exhibition invo lves adult entertainment as defined by this section. 6.Adult entertainment movie theater" means any establishment, from which minors are excluded and where the principal use of the premises consists of the showing of motion pictures, slides, or photographic or other visual reproductions, where the subject matter meets the criteria of adult entertainment as defined in this chapter and where fe es of any kind are charged. This definition shall include establi shments where the above mentioned medium is the major attraction on a regular basis and establishments wherein the above mentioned medium is shown at least 25 percent of the showing time of the theater 7."Adult hotel" means a hotel, motel, or similar commercial establishment which offers a sleeping room for rent for a period of time less than 10 hours or allows a tenant or occupant of a sleeping room to sub-rent the room for a period of time that is less than 10 hours. 8."Adult tanning salon" means any establishment which offers tanning services to a member of the public and in which adult entertainment takes place. 9."Child Care Centers" means facilities that regularly provide child day care and early learning services for a group of children for periods of less than twenty-four hours licensed by the Washington state department of early learning under chapter 170-295 WAC. 10. "Church" means buildings or structures, or groups of buildings or structure s, which by design, construction or use are primarily intended for the conducting of organized religious services and accessory uses associated therewith. 11. "Escort" means a person who , for consideration, agrees or offers to act as a companion, guide, or date for another person, or who agrees or offers to privately model lingerie or to privately perform a stripte ase for another person. 12. "Escort business" means a person or business association who furnishes, offers to furnish, or advertises to furnish escorts as one of its primary business purposes for fe e, tip, or other consideration. 13. "Game Arcades" means entertainment venues fe aturing primari ly video game s, simulators, and/or other amusement devices where persons under twenty-one years of age are not restricted 14. "Member of the public" means any customer, patron or person, other than an employee, who is invited or admitted to an adult entertainment premi ses. 15. "Nude or state of nudity" means displays of less than completely and opaquely covered human genitals, pubic area, anus, buttocks, or fe male breast below the top of the areola. 16. "Nude house cleaning business" means a business which offers house cleaning services in which the house cleaner is in a state of nudity. Ordinance No 3698 page 29 17. "Panoram premi ses " or "adult arcade" means any premises on which any panoram device is located and to which members of the public are admitted. The term "panoram premi se s" as used in this chapter does not include movie or motion picture theater auditoriums capable of seating more than five people. 18. "Panoram," "preview," "picture arcade," or "peep show" means any device whi ch, for payment of a fee, membership fee or other charge, is used to exhibit or display a picture, view, or other graphic display of adult entertainment. The terms "panoram" and "panoram device" as used in this chapter do not include games which employ picture s, views, or video displays or gambling devices regulated by the state or by chapter 5.14 MVMC. 19. "Parks" means land owned or maintained by a public or private entity opened to the public designated for and used by the public for active and passive recreational activities . 20."Schools" means any building or part thereof designed, constructed, or used for formal educational uses recognized by the Washington state superintendent of public instruction. This definition includes both public and private schools 21 . Stock in trade" means the greater of: a.the retail dollar value of all prerecorded video tapes, discs, books, magazine s, or similar material readily avai lable for purchase, rental, viewing, or use by patrons of the establishment, excluding material located in any storeroom or other portion of the premi ses not regularly open to patrons; or b.the total number of titles of all prerecorded video tapes, discs, books, magazines, or similar material readily available for purchase, rental, viewing, or use by patrons of the establishment excluding material located in any storeroom or other portion of the premi ses not regularly open to patrons. 22."Trails" means linear shaped facilities designed and intended for the public to walk, run, or otherwise travel across. 23 . "Youth oriented facility" means facilities owned or operated by non-profit organizations for the purpose of providing recreational or educational opportunities for youth including, but not limited to, Boys and Girls Clubs, YMCAs, YWCAs, Little League, and other youth sports associations. F. If any sentence, clause or phrase of this section should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of any other section, sentence, clause or phrase of this chapter. SECTION 5. Repealer. The following definitions set forth in MVMC 17.06.010 A are hereby repealed: "Adult bookstore" "Adult cabaret" "Adult drive-in theater" "Adult entertainment" Adult Entertainment Establishment. "Adult motion picture theater" Ordinance No 3698 page 30 "Adult retail store" "Adult video store" SECTION 6. Repe aler. The following are hereby repealed. A. Ordinance 3429 as codified in Section MVMC 17.45.030 A 10. B. Ordinance 3429 as codified in Section MVMC 17.48 .020 A 11. C. Ordinance 3429 as codified in Section MVMC 17.5 1 .040 B Repeal is limited to only those sections described above. All portions of Ordinance 3429 not identi fied above shall remain in force and effect. SECTION 6. Hearing To Be Held. Pursuant to RCW 36. 70A.390 and/or RCW 35A.63 .220, the City Council shall hold a public hearing on thi s interim regulation within 60 days of adoption of this interim regulations ordinance. SECTION 7. City to Consider Permanent Regulations Adopti on of City Work Plan. The City Council hereby directs that the City Community and Economic Development Department to study the issue of adult entertainment uses within the City and begin the process of drafting proposed permanent regulations to be considered through the City's public participation process including allowing for public input and providing for public hearings at both the Planning Commission and City Council. City Council Adopt the following work plan set forth in Exhibit B attached hereto . SECTION 8. Severability. If any section, sentence, clause or phrase of this ordinance should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of any other section, sentence, clause or phrase of this ordinance. SECTION 9. Savings Clause. All previous ordinances including Ordinance No. 3536 which may be repealed in part or their entirety by this ordinanc e, shall remain in full force and effect until the effective date of thi s ordinance. SECTION 10. Effective Date and Declaration of Emergen cy. The City Council hereby declares that an emergency exists neces sitating that this Ordinance take effect immediately upon passage by a majority plus one of the whole membership of the Council, and that the same is not subj ect to a referendum. Without an immediate interim regulation on the City's acceptance of business licenses, building applications, permits or other ty pes of land use/development permits/approvals, such app lications could become vested under regulations subject to change by the City in this comprehensive review and regulation amendment/adoption process. This Ordinance will not affect any existing rights, or any vested app lications previously submitted to the City. SECTION 11. Ordinance to be Transmitted to Department. Pursuant to RCW 36.70A.106, this Interim Ordinance shall be transmitted to the Washington State Department of Commerce as required by law. Ordinance No 3698 page 31 PASSED AND ADOPTED by the City Council of the City of Mount Vernon at a regular meeting thereof this O-C th day of October, 20 16. SIGNED AND APPROVED thi s 1)6 th day of October, 20 16. City Jil�udreau, Mayor Approved as to Form : Kevin Rogerson, City Attorney Date of Publication: �J JO \ OO\ � Effective Date: --- Ordinance No 3698 page 32 Exhibit B ADULT ENTERTAINMENT INTERIM REGULATION WORK PLAN This Adult Entertainment Interim Regulation Work Plan supports the City's Ordinance No. 3698 establishing interim control measures and regulations and licensing and zoning regulations repealing and re-enacting chapter 5.13 of the Mount Vernon Municipal Code, adding a new chapter 5.06 of the Mount Vernon Municipal Code relating to adult business licenses, employees, and adopting regulations amending Mount Vernon Municipal Code Title 17, and declaring an emergency necessitating immediate adoption of interim control regulations to ensure the City Council 's intent for appropriate licensing and zoning and other regulations for adult entertainment. This Work Plan is established pursuant to RCW 35A.63 .220 and RCW 36.70A.390, as well as interpretative judicial decisions, which authorize adoption of interim zoning controls and regulations with certain limitations, including, if appropriate , a work plan. Work Plan General Rules and Procedures : 1. All meetings of the Adult Entertainment Zoning and Licensing Committee shall comply with Washington State 's Open Public Meetings Act 2.All meetings of the Adult Entertainment Zoning and Licensing Committee shall include a time during the meeting to allow public testimony 3. All meetings of the Adult Entertainment Zoning and Licensing Committee shall substantially comply with Robert Rules of Order 4.Any permanent development regulations and or comprehensive proposed amendments shall comply with the City's public participation program adopted through Resolution 49 1. In the event of a conflict between Resolution 49 1 and Ordinance 3698, Ordinance 3698 shall contro l. 5.For the purposes of Resolution 49 1, the Council hereby accepts Ordinance 3698 as a proposed amendment for review as a docketed amendment. 6.The Mount Vernon Community and Economic Development Department shall: i) retain all documents reviewed or prepared by the Committee; ii) �ssign a staff person(s) to provide administrative support; and iii) shall keep minutes. 7.All documents shall be made available to the public at the Community and Economic Development Department during normal business hours. 8.The Adult Entertainment Zoning and Licensing Committee, Planning Commission, or City Council may extend the time schedule set forth below in order if necessary to adequately study materi als submitted, obtain new or supplementary information, or provide additional public comment or testimony. Work Plan Schedule: November 2016 A minimum of two meetings of the Adult Entertainment Zoning and Licensing Committee. Tasks shall include: • Appointing Chairperson and Second (alternati ve) Chairperson; • Establish and publish a schedule of meeting days, times, and locations for meetings. • Review of City's Interim Regulations adopted by Ordinance 3698; • Review of City's Legislative Record including all Secondary Effects evidence and testimony; • Acceptance of public testimony; and • Acceptance and review of additional testimony by City Staff and the public. December 2016 A minimum of two meetings of the Adult Entertainment Zoning and Licensing Committee Tasks shall include: • Review of proposed drafts of the plans or ordinances; • One joint meeting with the City's Planning Commission; • Presentation of additional information in response to the Committee's requests, public testimony, or suggestions by the City's Planning Commission; and • Make a recommendation together with findings to the City's Planning Commission. January 2017 -February 2017 Public Review, Comment and Hearing of the Planning Commission. • The Mount Vernon Planning Commission shall review all proposed amendments or adopt new plans and/or implementing regulations, and make recommendation to the City Council together with any SEP A analysis. • The Planning Commission shall hold at least one public hearing and additional hearings if needed. • The Planning Commission will make a recommendation, together with findings, to the City Council unless it is unable to reach a decision on a recommendation. March 201 7 • City Council review and consideration of Planning Commission recommendation after public notice and public comment required pursuant to Resolution 49 1. The Mount Vern on City Council adopted Ordinance 3698 on Octo ber 26, 20 16. An Ordinance of the City of Mount Vernon, Wa shington, enacting interi m lice nsing and zo ning reg ulati ons re pea ling and re-e nact ing Chapter 5.13 of the Mount Ve rn on Municipal Code, adding a new Chapter 5.06 of the Mount Ve rnon Municipal Code re lating to adult business licenses , em ployees , and adopting reg ulations amending Mount Ve rnon Municipal Code Title 17; and declaring an emergency necessitati ng im mediate adoption of interi m contro l reg ulations for the zo ning, lice nsing and reg ulation of adult enterta inment. Anyone wishing to view or receive the ordinance in its entirety should contact the Mount Ve rn on Finance Offi ce , 91 0 Cleveland, Mount Ve rn on WA 98273. Published : October 30, 201 6 ORDINANCE NO. 3699 AN ORDINANCE OF THE CITY OF MOUNT VERNON, WASHINGTON, RELATING TO OFFENSES AGAINST PUBLIC MORALS, PROHIBITING CERTAIN CONDUCT; REPEALING AND REENACTING SECTIONS 9.19.030- 9.19.040 OF THE MOUNT VERNON MUNICIPAL CODE, ADDING NEW CODE SECTIONS, AND PRESCRIBING PENALITIES. WHEREAS, cities have the right and duty to enact laws for the protection of the public health, safety, general welfare, economic vitality and economic growth, and morals; and WHEREAS, the City of Mount Vernon was incorporated in 1890, is a non-charter code city organized under Title 35A of the revised code of Washington with a population of thirty three thousand three hundred and fifty persons over twenty seven percent of which are under the age of 18. The City is largely defined by the Skagit River to north and east, a number of streams, some salmon bearing, and lower Skagit Valley agricultural lands which surround parts of the City. As stated in the City's comprehensive plan, one of the City's primary goals is to maintain, enhance, or establish those elements that create the quality of life for its residents by providing a rural, natural setting with small town character and community atmosphere; and WHEREAS, the City's Comprehensive Plan was last updated on September 14, 2016 and provides in part for the following as goals and policies of the City to help protect the public health, safety, welfare, morals and economic vitality and growth of the City: 1.GOAL LU-5 Enhance and improve the quality of single-family living environments throughout the City. 2.Policy LU-1.2.1 Provide development regulations that create a compatible pattern of development within established neighborhoods. The development standards shall address densities, building setbacks, parking and landscaping 3.Policy LU-8.2.6 Development should be designed to mitigate potential adverse impacts on adjacent properties with different zoning designations (i.e., residential or public zoning). Careful consideration of impacts from lighting, landscaping, and setbacks should all be evaluated during site design 4. Goal LU-9: To minimize potential noise impacts to the surrounding residential neighborhood all non-residential uses should be closed for business at reasonable times. 5. Goal LU-10: Development Regulations shall be adopted to reduce the negative visual, noise, odor, and exhaust impacts from garbage and recycling receptacles, loading docks, and drive through lanes 6. Housing element goal 1. promote the preservation, maintenance and enhancement of existing housing and residential neighborhoods throughout the City. 7.Health and Wellness element goal hw-2. Improve the safety of neighborhoods and public spaces. Ordinance No.3699 page 1 ORDINANCE NO. 3699 AN ORDINANCE OF THE CITY OF MOUNT VERNON, WASHINGTON, RELATING TO OFFENSES AGAINST PUBLIC MORALS, PROHIBITING CERTAIN CONDUCT; REPEALING AND REENACTING SECTIONS 9.19.030- 9.10.040 OF THE MOUNT VERNON MUNICIPAL CODE, ADDING NEW CODE SECTIONS, AND PRESCRIBING PENALITIES. WHEREAS, cities have the right and duty to enact laws for the protection of the public health, safety, general welfare, economic vitality and economic growth, and morals; and WHEREAS, the City of Mount Vernon was incorporated in 1890, is a non-charter code city organized under Title 3 5A of the revised code of Washington with a population of thirty three thousand three hundred and fifty persons over twenty seven percent of which are under the age of 18. The City is largely defined by the Skagit River to north and east, a number of streams, some salmon bearing, and lower Skagit Valley agricultural lands which surround parts of the City. As stated in the City's comprehensive plan, one of the City's primary goals is to maintain, enhance, or establish those elements that create the quality of life for its residents by providing a rural, natural setting with small town character and community atmosphere; and WHEREAS, the City's Comprehensive Plan was last updated on September 14, 2016 and provides in part for the following as goals and policies of the City to help protect the public health, safety, welfare, morals and economic vitality and growth of the City: 1.GOAL LU-5 Enhance and improve the quality of single-family living environments throughout the City. 2.Policy LU-1.2.1 Provide development regulations that create a compatible pattern of development within established neighborhoods. The development standards shall address densities, building setbacks, parking and landscaping 3.Policy LU-8.2.6 Development should be designed to mitigate potential adverse impacts on adjacent properties with different zoning designations (i.e., residential or public zoning). Careful consideration of impacts from lighting, landscaping, and setbacks should all be evaluated during site design 4.Goal L U-9: To minimize potential noise impacts to the surrounding residential neighborhood all non-residential uses should be closed for business at reasonable times. 5.Goal LU-10: Development Regulations shall be adopted to reduce the negative visual, noise, odor, and exhaust impacts from garbage and recycling receptacles, loading docks, and drive through lanes 6.Housing element goal 1. promote the preservation, maintenance and enhancement of existing housing and residential neighborhoods throughout the City. 7.Health and Wellness element goal hw-2. Improve the safety of neighborhoods and public spaces. Ordinance No.3699 page 1 WHEREAS, the Supreme Court has recognized the right of local governments to regulate offensive conduct in public places, including public nudity; and WHEREAS, local laws that regulate conduct in public places should clearly describe the conduct that is proscribed and include appropriate safeguards against infringement on protected expression; and WHEREAS, such conduct has had and is likely to have negative impacts on the community, including but not limited to criminal activities, exploitation of female employees, and exposure of minors to conduct that is appropriate only for adults; and WHEERAS, the City council intends by this ordinance to protect the public health, safety, welfare, economic vitality and economic growth, and morals by revising existing code provisions and adopting new provisions relating to lewd conduct. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOUNT VERNON, WASHINGTON, DO ORDAIN AS FOLLOWS: SECTION 1. Findings. That the City Council adopts the recitals set forth above as findings of fact supporting adoption of this Ordinance. SECTION 2. That section 9.19.030 of the Mount Vernon Municipal Code is hereby repealed and reenacted, which reenacted section shall read as follows: 9.19.030 Definitions. As used in this chapter, the following definitions shall apply: A. "Expose" means to reveal, exhibit, or otherwise render open to public view. B. "Expressive conduct" means any dance, opera, musical, dramatic work, or other exhibition or performance, whether or not part of an organized or formal event that constitutes protected speech under federal or state constitution. C. "Obscene" matter means any matter: 1.Which the average person, applying contemporary community standards, would find, when considered as a whole, appeals to the prurient interest; and 2. Which explicitly depicts or describes in a patently offensive way, as measured against contemporary community standards, sexual conduct as described in RCW 7.48A.010(2)(b); and 3.Which, when considered as a whole, and in the context in which it is used, lacks serious literary, artistic, political or scientific value. D. "Public place" means an area generally visible to public view, and includes without limitation streets, sidewalks, bridges, alleys, plazas, parks, driveways, parking lots, automobiles (whether moving or not), and any place in which the general public has a right to be present or view, whether or not conditioned upon Ordinance No.3699 page 2 payment of a fee, and included, but is not limited to, buildings open to the general public (including those which serve food or drink or provide entertainment), doorways and entrances to buildings or dwellings and the grounds enclosing them and structures from which customers can be served through a drive-up or walk-up window, or other means, whether or not access is restricted according to age. E. "Public place provided or set apart for nudity" means an enclosed public restroom, an enclosed functional shower or locker room facility, an enclosed sauna, a motel room or hotel room designed and intended for sleeping accommodations, the location of a bona fide private club whose membership as a whole engages in social nudism or naturalism (a nudist resort or camp), and any similar public places in which nudity is necessarily and customarily expected outside of the home. F. "Sexual contact" means any touching of the sexual or other intimate parts of a person done for the purpose of gratifying sexual desire of any person. G. "Sexual intercourse:" 1.Has its ordinary meaning and occurs upon any penetration, however slight; and 2.Also means any penetration of the vagina or anus however slight, by an object, when committed on one person by another, whether such persons are of the same or opposite sex, except when such penetration is accomplished for medically recognized treatment or diagnostic purposes; and 3. Also means any act of sexual contact between persons involving the sex organs of one person and the mouth or anus of another whether such persons are of the same or opposite sex. H. "Sexually explicit material" means any pictorial or three-dimensional material depicting sexual intercourse, masturbation, sodomy, bestiality, direct physical stimulation of unclothed genitals, flagellation or torture in the context of sexual relationship, or emphasizing the depiction of adult human genitals; PROVIDED, HOWEVER, That works of art or of anthropological significance shall not be deemed to be within the foregoing definition. In determining whether material is prohibited for public display by this section such material shall be judged without regard to any. covering which may be affixed or printed over the material in order to obscure genital areas in a depiction otherwise falling within the definition of this subsection. SECTION 3. That section 9.19.040 of the Mount Vernon Municipal Code is hereby repealed and reenacted, which section shall read as follows: 9.19.040 Lewd Conduct. A. A person is guilty of lewd conduct if in a public place and under circumstances where such conduct is likely to be observed by a member of the public the person intentionally: Ordinance No.3699 page 3 1. Exposes any of the following body parts of the person without a full and opaque covering in other than a public place provided or set apart for nudity: a.Any part of the male or female genitals, pubic hair, pubic area, perineum, anus, or bottom one-half of the anal cleft; b.Any part of the areola or nipple of the female breast; or c.More than one-half of the part of the female breast located below the top of the areola, provided that the covered area shall be reasonably compact and contiguous to the areola. 2.Exposes the male genitals in a discernibly turgid state, even if fully and opaquely covered. 3.Touches, caresses, or fondles the genitals or female breast, whether clothed or unclothed; 4.Masturbates; or 5.Engages in sexual contact. B. Body paint, body dye, tattoos, latex, tape, or any similar substance applied to the skin surface, any substance that can be washed off the skin, or any substance designed to simulate or by which by its nature simulates the appearance of the anatomical area beneath it, is not full and opaque covering within the meaning of this section. C. This section shall not be construed to prohibit: 1.The act of breastfeeding or expressing breast milk; 2.Classes, seminars, and lectures held for serious scientific or educational purposes; 3.Expressive conduct that is not obscene, subject to the time, place, and manner restrictions contained in chapters 5.06 MVMC; 5.13 MVMC or 17. 73 MVMC or other State or Federal law; 4.Conduct of licensed adult entertainers within adult entertainment dance studios operating pursuant to chapter 5.06 MVMC ; 5.Conduct of licensed employees working as escorts or nude house cleaners in adult businesses operating pursuant to chapter 5.13 MVMC , provided that the conduct is not exposed to a person under 18 years of age; or 6.Conduct of a child under 10 years of age. D. Lewd conduct is a misdemeanor; however, if a person exposes himself or herself or performs any lewd act or facilitates lewd conduct as set forth in MVMC 9.19.050 to a person under the age of 14 years, then the lewd conduct is a gross misdemeanor. SECTION 4. That a new section 9.19.060 of the Mount Vernon Municipal Code is hereby created which section shall read as follows: 9.19.060 Facilitating lewd conduct. The owner, lessee, manager, operator, or other person in charge of a public place is guilty of facilitating lewd conduct if the person knowingly permits, encourages, or causes to be committed lewd conduct as defined in MVMC 9.19.040. Ordinance No.3699 page 4 SECTION 5. That a new section 9.19.070 of the Mount Vernon Municipal Code is hereby created which section shall read as follows: 9.19.070 Severability. If any section, sentence, clause or phrase of this chapter should be held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of any other section, sentence, clause or phrase of this chapter. SECTION 6. Savings Clause. All previous ordinances including Ordinance No. 3536 which may be repealed in part or their entirety by this ordinance, shall remain in force and effect until the effective date of this ordinance. SECTION 7. publication. Effective Date. This Ordinance shall take effect five days after its 1� Adopted this "6' day of October, 2016 ATTEST: Q\fu, A� Alicia u�c'ilta, City Finance Director Approved as to Form: � Kevin Rogerson, City Attorney Ordinance No.3699 page 5 The Mount Vernon City Council adopted Ordinance 3699 on October 26, 2016. An Ordinance of the City of Mount Vernon, Washington, relating to offenses against public morals, prohibiting certain conduct; repealing and re-enacting Sections 9.19.030-9.19.040 of the Mount Vernon Municipal Code, adding new code sections, and prescribing penalties. Anyone wishing to view or receive the ordinance in its entirety should contact the Mount Vernon Finance Office, 910 Cleveland, Mount Vernon WA 98273. Published: October 30, 2016 COMMITTEE’S AGENDAS AND MINUTES ADULT ENTERTAINMENT ADVISTORY COMMITTEE AGENDA Kick Off Meeting November 29, 2016 5:15 PM –6:15 PM City Hall - 910 Cleveland Ave Downstairs Conference Room 5:15 – 5:35 INTRODUCTION Committee/Staff Introductions Why are we here? General Rules/Procedures: • Committee subject to Open Public Meetings Act • Roberts Rules of Order • Appoint Chairperson and Second (alternative) Chairperson • Scheduling Future Meetings 5:35 – 5:50 REGULATION OF ADULT ENTERTAINMENT/USES Overview by Kevin Rogerson, City Attorney Review of Ordinance 3698 5:50 – 6:05 PLANNING STUDY Overview by Rebecca Lowell 6:05 – 6:15 PUBLIC COMMENTS Public comment or testimony to be taken should anyone wish to attend and provide such comment or testimony 6:15 ADJOURN ATTACHED: • Portions of: The Open Public Meetings Act, MRSC, June 2016 • Introduction to Roberts Rules of Order • Ordinance 3698 • Planning Study Narrative APPENDIX B - COMMITTEE REPORT 1 of 167 City of Mount Vernon Adult Entertainment Zoning and Licensing Committee APPROVED - Minutes from November 29, 2016 The meeting was called to order and began with introductions of those present. City staff members included City Attorney Kevin Rogerson, Senior Planner Rebecca Lowell and Administrative Assistant Linda Beacham. Committee members Kathleen Bisagna, Kari Mattson, Lisa Zacherl, and Ryan Hagman were present. Committee member Brian Gentry was available by speaker phone. Committee member Rudy Kerkvliet was absent. Skagit Valley Herald reporter Brandon Stone and local resident and non-committee member Patrick Lescot were also in attendance. Mr. Rogerson provided an overview of the work-plan outlined in Ordinance No. 3698 adopted by City Council October 26, 2016. Ordinance 3698 is an ordinance that adopts interim control regulations while the committee and staff develop final regulations. Although adult entertainment is protected under the First Amendment, restrictions such as time, place, manner and secondary impacts can be applied. Committee members and City staff will work together in reviewing current city code and making recommendations for adult entertainment businesses to the Planning Commission. The committee members were also briefed on the Open Public Meetings Act, public records and Roberts Rules of Order. Committee member Lisa Zacherl was selected to serve as chairperson, and Ryan Hagman to serve as second chairperson. Mrs. Bisagna moved, second by Kari Mattson, to approve the selection of officers. Motion carried. Following a discussion on future meeting dates the meeting adjourned. APPENDIX B - COMMITTEE REPORT 2 of 167 The Open Public Meetings Act How it Applies to Washington Cities, Counties, and Special Purpose Districts APPENDIX B - COMMITTEE REPORT 3 of 167 The Open Public Meetings Act Copyright © 2016 by MRSC. All rights reserved. Except as permitted under the Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means or stored in a database or retrieval system without the prior written permission of the publisher; however, governmental entities in the state of Washington are granted permission to reproduce and distribute this publication for official use. MRSC 2601 4th Avenue, Suite 800 Seattle, WA 98121-1280 (206) 625-1300 (800) 933-6772 www.MRSC.org June 2016 $30 APPENDIX B - COMMITTEE REPORT 4 of 167 Contents 1Introduction 3 Who Is Subject to the Act? 6 What Is a “Meeting”? 9 What Procedural Requirements Apply to Meetings? 16 When May a Governing Body Hold an Executive Session? 26 What Meetings Are Exempt from the Act? 28 What Are the Penalties for Violating the Act? 30 What Training is Required by the Act? 31 Selected Cases and Attorney General Opinions APPENDIX B - COMMITTEE REPORT 5 of 167 Foreword This is the second revision of our original September 1997 publication on the Open Public Meetings Act. Issues involving public meetings of governing bodies of cities, towns, counties, and special purpose districts continue to figure prominently in inquiries to MRSC legal consultants. This publication is intended for use by city, town, county, and special purpose district officials and is intended to provide general guidance in understanding the policies and principles underlying this important law. Special acknowledgment is given to Bob Meinig, Legal Consultant, who prepared this publication. Thanks are also due to Pam James, Legal Consultant, for her editing, and to Holly Stewart, Desktop Publishing Specialist, for designing the publication. APPENDIX B - COMMITTEE REPORT 6 of 167 1RCW 42.30.010. 2Throughout this publication, indented quotations in italics are statutory language. 3For convenience, the term “city council" will in this publication also refer to town councils and to citycommissions under the commission form of government. There is currently only one city in the state, Shelton, that isgoverned by the commission form of government. Open Public Meetings Act 1 Introduction In 1971, the state legislature enacted the Open Public Meetings Act (the “Act”) to make the conduct of government more accessible and open to the public. The Act begins with a strongly worded statement of purpose:1 The legislature finds and declares that all public commissions, boards, councils, committees, subcommittees, departments, divisions, offices, and all other public agencies of this state and subdivisions thereof exist to aid in the conduct of the people's business. It is the intent of this chapter that their actions be taken openly and that their deliberations be conducted openly. The people of this state do not yield their sovereignty to the agencies which serve them. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created.2 Codified in chapter 42.30 RCW, the Act applies to all city and town councils,3 to all county councils and boards of county commissioners, and to the governing bodies of special purpose districts, as well as to many subordinate city, county, and special purpose district commissions, boards, and committees. It requires, basically, that all “meetings” of such bodies be open to the public and that all “action” taken by such bodies be done at meetings that are open to the public. The terms “meetings” and “action” are defined broadly in the Act and, consequently, the Act can have daily significance for cities, counties, and special purpose districts even when no formal meetings are being conducted. APPENDIX B - COMMITTEE REPORT 7 of 167 4There is no single uniform definition of a special purpose district in state law. In general, a special purposedistrict is any unit of local government other than a city, town, or county that is authorized by law to perform a singlefunction or a limited number of functions, such as water-sewer districts, irrigation districts, fire districts, school districts,port districts, hospital districts, park and recreation districts, transportation districts, diking and drainage districts, floodcontrol districts, weed districts, mosquito control districts, metropolitan municipal corporations, etc. 2 Open Public Meetings Act This publication comprehensively reviews the Act as it applies to Washington cities, towns, counties, and special purpose districts.4 It also provides answers to selected questions that have been asked of MRSC staff concerning application of the Act. However, we find that new questions constantly arise concerning the Act. So, if you have questions that are not addressed by this publication, do not hesitate to contact your legal counsel or MRSC legal staff. APPENDIX B - COMMITTEE REPORT 8 of 167 5RCW 42.30.030. 6RCW 42.30.020(1)(b). 7The legislative bodies of cities are the city councils or city commissions, and the legislative bodies of countiesare the boards of county commissioners or county councils. 8Most special purpose district governing bodies do not have the authority to create such subagencies. 9RCW 42.30.020(1)(c). Open Public Meetings Act 3 Who Is Subject to the Act? The basic mandate of the Open Public Meetings Act is as follows: All meetings of the governing body of a public agency shall be open and public and all persons shall be permitted to attend any meeting of the governing body of a public agency, except as otherwise provided in this chapter.5 The Act applies to “meetings” of a “governing body” of a “public agency.” A “public agency” includes a city, county, and special purpose district.6 A “governing body” is defined in the Act as follows: “Governing body” means the multimember board, commission, committee, council, or other policy or rule-making body of a public agency, or any committee thereof when the committee acts on behalf of the governing body, conducts hearings, or takes testimony or public comment. The legislative bodies of cities and counties7 clearly are governing bodies under this definition, as are the boards or commissions that govern special purpose districts. However, they are not the only governing bodies to which the Act applies. The Act also applies to any “subagency” of a city, county, or special purpose district,8 because the definition of “public agency” includes: Any subagency of a public agency which is created by or pursuant to statute, ordinance, or other legislative act, including but not limited to planning commissions, library or park boards, commissions, and agencies.9 Under this definition, the subagency must be created by some legislative act of the governing body, such as an ordinance or resolution. A group established by a mayor to advise him or her APPENDIX B - COMMITTEE REPORT 9 of 167 10AGO 1971 No. 33, at 9. The attorney general's office bases its conclusion on this issue on the language "orother policy or rulemaking body of a public agency" in the definition of "governing body" in RCW 42.30.020(2), quotedabove. See also AGLO 1972 No. 48. 11RCW 27.12.210. 4 Open Public Meetings Act could not, for example, be a subagency, because a mayor does not act legislatively. However, a legislative act alone does not create a subagency. According to the attorney general's office, a board or a commission or other body is not a subagency governed by the Act unless it possesses some aspect of policy or rulemaking authority. In other words, its “advice,” while not binding upon the agency with which it relates . . . , must nevertheless be legally a necessary antecedent to that agency's action.10 If a board or commission (or whatever it may be termed) established by legislative action is merely advisory and its advice is not necessary for the city, county, or district to act, the Act generally does not apply to it. Given the above definitions, the following are governing bodies within city and county government that are subject to the Act: P City council or commission P County council or board of commissioners P Planning commission P Civil service commission P Board of adjustment Other boards or commissions will need to be evaluated individually to determine whether the Act applies to them. For example, the definition of a subagency identifies library boards, but, in some cities (particularly those without their own libraries), library boards function as purely advisory bodies, without any policymaking or rulemaking authority. That type of a library board would not be subject to the Act. In cities where library boards function under statutory authority11 and possess policymaking and rulemaking authority, those boards must follow the requirements of the Act. Most special purpose districts have only one “governing body” under the meaning of that term in the Act. In some circumstances, the Act applies to a committee of a governing body. As a practical matter, city or county legislative bodies are usually the only governing bodies with committees to which the Act may apply. A committee of a city or county legislative body will be subject to the Act in the following circumstances: APPENDIX B - COMMITTEE REPORT 10 of 167 12In a 2015 decision, the state supreme court adopted the reasoning of AGO 1986 No. 16 in concluding that acommittee acts on behalf of the governing body "when it exercises actual or de facto decision making authority." CitizensAlliance v. San Juan County, ___ Wn.2d ___ (2015). A committee when it is exercising actual or de facto decision makingauthority should be distinguished from the situation where a committee simply provides advice or information to thegoverning body and is not subject to the OPMA. Id. 13While the definition of “governing body” speaks of “when” a committee acts so as to come within thatdefinition, the courts have not been clear about whether a committee is subject to the Act for all of its meetings when itis only at some that it is acting in that manner. See Clark v. City of Lakewood, 259 F.3d 996 (9th Cir. 2001). 14RCW 42.30.010. 15Wood v. Battle Ground School Dist., 107 Wn. App. 550, 561 (2001). 16Citizens Alliance v. San Juan County, ___ Wn.2d ___ (2015). Open Public Meetings Act 5 P when it acts on behalf of the legislative body12 P when it conducts hearings, or P when it takes testimony or public comment. When a committee is not doing any of the above, it is not subject to the Act.13 Keep in mind that it is usually good public policy to open the meetings of city, county, and special district governing bodies to the public, even if it is uncertain or doubtful that the Act applies to them. Secrecy is rarely warranted, and the Act's procedural requirements are not onerous. This approach would be consistent with the Act's basic intent that the actions of governmental bodies “be taken openly and that their deliberations be conducted openly.”14 Further Questions May four councilmembers-elect of a seven-member council meet before taking their oaths of office without procedurally complying with the Act? Yes. Councilmembers-elect are not yet members of the governing body and cannot take “action” within the meaning of the Act, and so they are not subject to the Act.15 Must a committee of the governing body be composed solely of members of the governing body for it to be subject to the Act under the circumstances identified in RCW 42.30.020(2)? This statute defines a “governing body” to include a “committee thereof when the committee acts on behalf of the governing body, conducts hearings, or takes testimony or public comment.” (Emphasis added.) Does a “committee thereof” include only members of the governing body? The state supreme court has held that a “committee thereof,” an entity created or specifically authorized by the governing body, may include or consist of individuals who are not members of the governing body.16 APPENDIX B - COMMITTEE REPORT 11 of 167 17RCW 42.30.020(4). 18RCW 42.30.020(3). 19See, e.g., RCW 35A.12.120; 35.23.270; 35.27.280; 36.32.010. 20Citizens Alliance v. San Juan County, ___ Wn.2d ___ (2015). 21Id.; Wood v. Battle Ground School Dist., 107 Wn. App. 550, 562 (2001). 22RCW 42.30.020(3) defines “final action” as “a collective positive or negative decision, or an actual vote by amajority of the members of a governing body when sitting as a body or entity, upon a motion, proposal, resolution,order, or ordinance.” 6 Open Public Meetings Act What Is a “Meeting”? There must be a “meeting” of a governing body for the Act to apply. Sometimes it is very clear that a “meeting” must be open to the public, but other times it isn't. To determine whether a governing body is having a “meeting” that must be open, it is necessary to look at the Act's definitions. The Act defines “meeting” as follows: “’Meeting’ means meetings at which action is taken.”17 “Action,” as referred to in that definition of “meeting,” is defined as follows: “Action” means the transaction of the official business of a public agency by a governing body including but not limited to receipt of public testimony, deliberations, discussions, considerations, reviews, evaluations, and final actions. “Final action” means a collective positive or negative decision, or an actual vote by a majority of the members of a governing body when sitting as a body or entity, upon a motion, proposal, resolution, order, or ordinance.18 Since a governing body can transact business when a quorum (majority) of its members are present,19 it is conducting a meeting subject to the requirements of the Open Public Meetings Act whenever a majority of its members gathers with the collective intent of transacting the governing body’s business.20 This includes simply discussing some matter having to do with agency business. Because members of a governing body may discuss the business of that body by telephone or e-mail, it is not necessary that the members be in the physical presence of each other for there to be a meeting subject to the Act.21 See the “Further Questions” at the end of this section. Also, it is not necessary that a governing body take “final action”22 for a meeting subject to the Act to occur. Note that it does not matter if the meeting is called a “workshop,” a “study session,” or a “retreat”; it is still a meeting subject to the Open Public Meetings Act if a quorum is addressing the business of the city, county, or special purpose district. If a governing body just meets APPENDIX B - COMMITTEE REPORT 12 of 167 23RCW 42.30.070; In re Recall of Roberts, 115 Wn.2d 551, 554 (1990). 24Citizens Alliance v. San Juan County, ___ Wn.2d ___ (2015);Wood v. Battle Ground School Dist., 107 Wn.App. 550, 562-63 (2001). 25Though, at least one local government in this state has held an online meeting of its governing body,providing notice under the Act and giving the public the opportunity to “attend.” 26Id. Open Public Meetings Act 7 socially or travels together, it is not having a meeting subject to the Act as long as the members do not discuss agency business or otherwise take “action.”23 Further Questions If a majority or more of the members of a governing body discuss city, county, or district business by telephone or e-mail, are they having a meeting subject to the Act? Since the members of a governing body can discuss city, county, or district business together by telephone or by e-mail so as to be taking “action” within the above definition, the governing body can conduct a meeting subject to the Act even when the members are not in the physical presence of one another24 This type of meeting could take many forms, such as a conference call among a majority or more of the governing body, a telephone “tree” involving a series of telephone calls, or an exchange of e-mails. Since the public could not, as a practical matter, attend this type of “meeting,” it would be held in violation of the Act.25 Given the increasingly prevalent use of e-mail and the nature of that technology, members of city councils, boards of county commissioners, and special district governing bodies must be careful when communicating with each other by e-mail so as not to violate the Act. However, such bodies will not be considered to be holding a meeting if one member e- mails the other members merely for the purpose of providing relevant information to them. As long as the other members only “passively receive” the information and a discussion regarding that information is not then commenced by e-mail amongst a quorum, there is no Open Public Meetings Act issue.26 May one or more members of a governing body “attend” a meeting by telephone? Although no courts in this state have addressed this question, it probably would be permissible for a member of a governing body to “attend” a meeting by telephone, with the permission of the body, if that member's voice could be heard by all present, including the public, and if that member could hear all that is stated at the meeting. Some sort of speaker phone equipment would be necessary for this to occur. If a governing body decides APPENDIX B - COMMITTEE REPORT 13 of 167 27See AGO 2006 No. 6. 8 Open Public Meetings Act to allow participation by telephone, it is advisable to authorize such in its rules, including under what circumstances it will be allowed. May a quorum of a city or county legislative body attend, as members of the audience, a citizens' group meeting? Yes, provided that the members attending the meeting do not discuss, as a group, city or county or district business, as the case may be, or otherwise take “action” within the meaning of the Act.27 That possibility could in most circumstances be avoided by not sitting as a group. May an entire county council attend a private dinner in honor of the out-going county official without complying with the Open Public Meetings Act? Again, the issue comes down to whether the council will be dealing with county business. It can be argued that honoring the county official is itself county business. On the other hand, it could be argued that honoring an individual who is leaving county employment does not involve the functioning of the county. This is a gray area where caution should be exercised. Must the public be allowed to attend the annual city council retreat? Yes. A retreat attended by a quorum of the council where issues of city business are addressed constitutes a meeting. APPENDIX B - COMMITTEE REPORT 14 of 167 28See RCW 42.30.060, .070, .080. Also, state law, though not the Open Public Meetings Act, may require thegoverning body of a city, county, or special district to meet with a certain regularity, such as monthly. For example,second class and code city councils, town councils, and the board of directors of any school district must meet at leastonce a month. RCW 35.23.181; RCW 35.27.270; RCW 35A.12.110; RCW 28A.343.380. 29For example, second class city councils may not pass an ordinance or approve a contract or a bill for thepayment of money at a special meeting. RCW 35.23.181. Town councils may not pass a resolution or order for thepayment of money at a special meeting. RCW 35.27.270. Many special purpose districts are subject to requirementsthat certain actions can be taken only at a regular meeting, i.e., not at a special meeting. See, e.g., RCW 54.16.100(appointment and removal of public utility district manager); RCW 85.05.410 (setting compensation of board of dikingdistrict commissioners). The councils of first class and code cities and county legislative bodies have no specific limitationson actions that may be taken at a special meeting, other than those imposed by the Open Public Meetings Act. Open Public Meetings Act 9 What Procedural Requirements Apply to Meetings? The Act establishes some basic procedural requirements that apply to all meetings of a governing body, whether they are regular or special meetings. All meetings of a governing body are, under the Open Public Meetings Act, either regular or special meetings. It does not matter if it is called a “study session” or a “workshop” or a “retreat,” it is either a regular or special meeting. What is a regular meeting? A regular meeting is one that is held according to a schedule adopted by ordinance, resolution, order, or rule, as may be appropriate for the governing body.28 What is a special meeting? A special meeting is any meeting that is not a regular meeting. In other words, special meetings are not held according to a fixed schedule. Under the Act, special meetings have specific notice requirements, as discussed below. Also, governing bodies may be subject to specific limitations about what may be done at a special meeting.29 What procedural requirements apply to all meetings of a governing body? The following requirements and prohibitions apply to both regular and special meetings of a governing body: APPENDIX B - COMMITTEE REPORT 15 of 167 30RCW 42.30.030. 31RCW 42.30.040. 32That statute provides in relevant part as follows In such a session, final disposition may be taken only on matters appearing on the agenda. Representatives of the press or other news media, except those participating in the disturbance, shallbe allowed to attend any session held pursuant to this section. Nothing in this section shall prohibitthe governing body from establishing a procedure for readmitting an individual or individuals notresponsible for disturbing the orderly conduct of the meeting. 33RCW 42.30.060(2). Any vote taken by secret ballot is null and void. 34RCW 35.23.181; 35.27.270; 35A.12.110. Although meetings need not necessarily be held within a city,when a governing body decides to hold one outside the city, it should not site the meeting at a place so far from the cityas to effectively prevent the public from attending. 35RCW 36.32.080. 10 Open Public Meetings Act P All meetings must be open to the public.30 P A member of the public may not be required as a condition of attendance to register his or her name or other information, or complete a questionnaire, or be required to fulfill any other condition to be allowed to attend.31 P The governing body may require the removal of members of the public who disrupt the orderly conduct of a meeting. If order cannot be restored by removal of individuals, the governing body may order the meeting room cleared and may continue in session or it may adjourn and reconvene the meeting at another location, subject to the limitations in RCW 42.30.050.32 P Votes may not be taken by secret ballot.33 P Meetings may be adjourned or continued subject to the procedures in RCW 42.30.090, as discussed below. P The governing body may meet in executive (closed) session, but only for one of the reasons specified in and in accordance with the procedures identified in RCW 42.30.110. See discussion on executive sessions. Although the Act gives the public the right to attend meetings, the public has no statutory right to speak at meetings. However, as a practical and policy matter, city, county, and special district governing bodies generally provide the public some opportunity to speak at meetings. The Open Public Meetings Act does not require that a city or county legislative body or special district governing body hold its meetings within the city or in a particular place in the county or district. However, other statutes provide that the councils of code cities, second class cities, and towns may take final actions on ordinances and resolutions only at a meeting within the city or town.34 Also, county legislative bodies must hold their regular meetings at the county seat,35 but APPENDIX B - COMMITTEE REPORT 16 of 167 36RCW 36.32.090. 37RCW 28A.330.070. 38RCW 87.03.115. 39The Act does not directly address designating (in the ordinance, resolution, order, or rule designating the dateand time of regular meetings) the place at which regular meetings will be held. RCW 42.30.070. However, the statutesgoverning the particular classes of cities, except those governing first class cities, require designation of the site of regularcouncil meetings. RCW 35A.12.110; 35.23.181; 35.27.270. The county statutes and those relating to special purposedistricts do not address designating the site of regular meetings. However, counties, first class cities, and special purposedistricts should, of course, also designate the site of regular meetings along with the designation of the date and time ofthose meetings. 40RCW 42.30.070. 41Laws of 2014, ch. 61, § 2. This requirement does not mean that the agenda cannot be modified after it isposted online. Also, a failure to comply with this requirement with respect to a meeting will not invalidate an otherwiselegal action taken at the meeting. Open Public Meetings Act 11 may hold special meetings in the county outside of the county seat if there are agenda items that “are of unique interest or concern” to the residents of the area of the county in which the meetings are held.36 Some special purpose district governing bodies, such as first class school district boards of directors,37 are specifically required to hold their regular meetings within the district, while others, such as irrigation districts,38 are specifically required to hold meetings in the county where the district is located. Where the statutes are silent as to where meetings must be held for a particular type of district, they should be held, if possible, within the district or, at the very least, within the county in which the district is located. What procedural requirements apply specifically to regular meetings? P The date and time of regular meetings must be established by ordinance, resolution, order, or rule, as may be required for the particular governing body.39 P If the regular meeting date falls on a holiday, the meeting must be held on the next business day.40 P The meeting agenda must be made available online at least 24 hours in advance of the regular meeting.41 This requirement does not apply if the city, county, or district does not have a website or if it employs fewer than 10 full-time equivalent employees. What procedural requirements apply specifically to special meetings? The procedural requirements that apply to special meetings deal primarily with the notice that must be provided. These requirements, contained in RCW 42.30.080, are as follows: APPENDIX B - COMMITTEE REPORT 17 of 167 42There is a conflict between the provision in RCW 42.30.080 authorizing a majority of the members of agoverning body to call a special meeting and the provision for code cities in RCW 35A.12.110 authorizing three membersof the city council to call a special meeting. This conflict occurs only with respect to a code city with a seven-membercouncil, because three members is less than a majority. Since RCW 42.30.140 provides that the provisions of the Act willcontrol in case of a conflict between it and another statute, four members of a seven-member code city council, notthree, are needed to call a special meeting. 43Note also that statutes relating to each class of city require that cities establish a procedure for notifying the public of upcoming hearings and thepreliminary agenda for the forthcoming council meeting. Such procedure mayinclude, but not be limited to, written notification to the city's official newspaper,publication of a notice in the official newspaper, posting of upcoming councilmeeting agendas, or such other processes as the city determines will satisfy theintent of this requirement. RCW 35A.12.160; 35.22.288; 35.23.221; 35.27.300. There are no similar statutes that apply to counties or specialpurpose districts. Nevertheless, we recommend that counties and special districts establish like procedures for notifyingthe public. 12 Open Public Meetings Act P A special meeting may be called by the presiding officer or by a majority of the members of the governing body.42 P Written notice must be delivered personally, by mail, by fax, or by e-mail at least 24 hours before the time of the special meeting to: • each member of the governing body, and to • each local newspaper of general circulation and each local radio or television station that has on file with the governing body a written request to be notified of that special meeting or of all special meetings.43 P Notice of the special meeting must be provided to the public as follows: • “prominently displayed” at the main entrance of the agency’s principal location, and at the meeting site if the meeting will not held at the agency’s principal location; and • posted on the agency’s web site. Web site posting is not required if the agency: N does not have a web site; N has fewer than 10 full-time equivalent employees; or N does not employ personnel whose job it is to maintain or update the web site. P The notice must specify: • the time and place of the special meeting, and • the business to be transacted at the special meeting. APPENDIX B - COMMITTEE REPORT 18 of 167 44This does not prevent a governing body from discussing or otherwise taking less than final action with respectto a matter not identified in the notice. 45The type of emergency contemplated here is a severe one that “involves or threatens physical damage” andrequires urgent or immediate action. Mead Sch. Dist. No. 354 v. Mead Educ. Ass’n, 85 Wn.2d 140, 144-45 (1975). 46Teaford v. Howard, 104 Wn.2d 580, 593 (1985) Open Public Meetings Act 13 P The governing body may take final action only concerning matters identified in the notice of the meeting.44 P Written notice to a member or members of the governing body is not required when: • a member files at or prior to the meeting a written waiver of notice or provides a waiver by telegram, fax, or e-mail; or • the member is present at the meeting at the time it convenes. P Special meeting notice requirements may be dispensed with when a special meeting is called to deal with an emergency involving injury or damage to persons or property or the likelihood of such injury or damage, when the time requirements of the notice would make notice impractical and increase the likelihood of such injury or damage.45 An emergency meeting must, nevertheless, be open to the public.46 What procedural requirements apply to adjournments of regular or special meetings? A regular or special meeting may be adjourned to a specified time and place, where it will be continued. There are a number of circumstances under which a meeting might be adjourned. A meeting may be adjourned and continued to a later date because the governing body did not complete its business. The Act, in RCW 42.30.090, addresses two other circumstances under which a meeting may be adjourned and continued at a later date: P When the governing body does not achieve a quorum. In that circumstance, less than a quorum may adjourn a meeting to a specified time and place; or P When all members are absent from a regular meeting or an adjourned regular meeting. In that instance, the clerk of the governing body may adjourn the meeting to a stated time and place, with notice provided as required for a special meeting, unless notice is waived as provided for special meetings. However, the resulting meeting is still considered a regular meeting. Notice of an adjourned meeting is to be provided as follows: P An order or notice of adjournment, specifying the time and place of the meeting to be continued, must be “conspicuously posted” immediately following adjournment on or APPENDIX B - COMMITTEE REPORT 19 of 167 47RCW 42.30.100. 48See AGO 1998 No. 15. 14 Open Public Meetings Act near the door of the place where the meeting was held. P Notice of a regular meeting adjourned by the clerk when all members of the governing body are absent must be provided in the same manner as for special meetings. P If the notice or order of an adjourned meeting fails to state the hour at which the adjourned meeting is to be held, it must be held at the hour specified for regular meetings by ordinance, resolution, or other rule. If the governing body is holding a hearing, the hearing may be continued at a later date by following the same procedures for adjournment of meetings.47 Further Questions Must a city, county, or special purpose district provide published notice of a special meeting? No, not under the Open Public Meetings Act. While notice must be provided to media that have on file a request to be notified of special meetings, this is not equivalent to a publishing requirement. Of course, if the governing body has adopted a requirement of published notice for special meetings, that requirement must be followed. May notice to the media of a special meeting be provided by fax or e-mail? Yes. Legislation passed in 2005 amended RCW 42.30.080 to allow notice by fax or e-mail. May a governing body prohibit a member of the public from tape recording or videotaping a meeting? No, there is no legal basis for prohibiting the audio or videotaping of a meeting, unless the taping disrupts the meeting. If the governing body enacted such a rule, it essentially would be conditioning attendance at a meeting on not recording the meeting. This would be contrary to RCW 42.30.040, which prohibits a governing body from imposing any condition on attending a public meeting.48 APPENDIX B - COMMITTEE REPORT 20 of 167 Page 1 of 4 ROBERT'S RULES OF ORDER - SUMMARY VERSION INTRODUCTION TO ROBERT’S RULES OF ORDER (Taken from: http://www.robertsrules.org/) What Is Parliamentary Procedure? It is a set of rules for conduct at meetings that allows everyone to be heard and to make decisions without confusion. Why is Parliamentary Procedure Important? Because it's a time tested method of conducting business at meetings and public gatherings. It can be adapted to fit the needs of any organization. Today, Robert's Rules of Order newly revised is the basic handbook of operation for most clubs, organizations and other groups. So it's important that everyone know these basic rules! Organizations using parliamentary procedure usually follow a fixed order of business. Below is a typical example: 1. Call to order. 2. Roll call of members present. 3. Reading of minutes of last meeting. 4. Officer’s reports. 5. Committee reports. 6. Special orders --- Important business previously designated for consideration at this meeting. 7. Unfinished business. 8. New business. 9. Announcements. 10. Adjournment. The method used by members to express themselves is in the form of moving motions. A motion is a proposal that the entire membership take action or a stand on an issue. Individual members can: 1. Call to order. 2. Second motions. 3. Debate motions. 4. Vote on motions. How are Motions Presented? 1. Obtaining the floor a. Wait until the last speaker has finished. b. Rise and address the Chairman by saying, "Mr. Chairman, or Mr. President." c. Wait until the Chairman recognizes you. 2. Make Your Motion d. Speak in a clear and concise manner. e. Always state a motion affirmatively. Say, "I move that we ..." rather than, "I move that we do not ..." f. Avoid personalities and stay on your subject. 3. Wait for Someone to Second Your Motion 4. Another member will second your motion or the Chairman will call for a second. 5. If there is no second to your motion it is lost. APPENDIX B - COMMITTEE REPORT 21 of 167 Page 2 of 4 6. The Chairman States Your Motion a. The Chairman will say, "it has been moved and seconded that we ..." Thus placing your motion before the membership for consideration and action. b. The membership then either debates your motion, or may move directly to a vote. c. Once your motion is presented to the membership by the chairman it becomes "assembly property", and cannot be changed by you without the consent of the members. 7. Expanding on Your Motion a. The time for you to speak in favor of your motion is at this point in time, rather than at the time you present it. b. The mover is always allowed to speak first. c. All comments and debate must be directed to the chairman. d. Keep to the time limit for speaking that has been established. e. The mover may speak again only after other speakers are finished, unless called upon by the Chairman. 8. Putting the Question to the Membership a. The Chairman asks, "Are you ready to vote on the question?" b. If there is no more discussion, a vote is taken. c. On a motion to move the previous question may be adapted. Voting on a Motion: The method of vote on any motion depends on the situation and the by-laws of policy of your organization. There are five methods used to vote by most organizations, they are: 1. By Voice -- The Chairman asks those in favor to say, "aye", those opposed to say "no". Any member may move for a exact count. 2. By Roll Call -- Each member answers "yes" or "no" as his name is called. This method is used when a record of each person's vote is required. 3. By General Consent -- When a motion is not likely to be opposed, the Chairman says, "if there is no objection ..." The membership shows agreement by their silence, however if one member says, "I object," the item must be put to a vote. 4. By Division -- This is a slight verification of a voice vote. It does not require a count unless the chairman so desires. Members raise their hands or stand. 5. By Ballot -- Members write their vote on a slip of paper, this method is used when secrecy is desired. There are two other motions that are commonly used that relate to voting. 1. Motion to Table -- This motion is often used in the attempt to "kill" a motion. The option is always present, however, to "take from the table", for reconsideration by the membership. 2. Motion to Postpone Indefinitely -- This is often used as a means of parliamentary strategy and allows opponents of motion to test their strength without an actual vote being taken. Also, debate is once again open on the main motion. Parliamentary Procedure is the best way to get things done at your meetings. But, it will only work if you use it properly. 1. Allow motions that are in order. 2. Have members obtain the floor properly. 3. Speak clearly and concisely. 4. Obey the rules of debate. Most importantly, BE COURTEOUS. APPENDIX B - COMMITTEE REPORT 22 of 167 Page 3 of 4 For Fair and Orderly Meetings & Conventions Provides common rules and procedures for deliberation and debate in order to place the whole membership on the same footing and speaking the same language. The conduct of ALL business is controlled by the general will of the whole membership - the right of the deliberate majority to decide. Complementary is the right of at least a strong minority to require the majority to be deliberate - to act according to its considered judgment AFTER a full and fair "working through" of the issues involved. Robert's Rules provides for constructive and democratic meetings, to help, not hinder, the business of the assembly. Under no circumstances should "undue strictness" be allowed to intimidate members or limit full participation. The fundamental right of deliberative assemblies requires all questions to be thoroughly discussed before taking action! The assembly rules - they have the final say on everything! Silence means consent! • Obtain the floor (the right to speak) by being the first to stand when the person speaking has finished; state Mr/Madam Chairman. Raising your hand means nothing, and standing while another has the floor is out of order! Must be recognized by the Chair before speaking! • Debate cannot begin until the Chair has stated the motion or resolution and asked "are you ready for the question?" If no one rises, the chair calls for the vote! • Before the motion is stated by the Chair (the question) members may suggest modification of the motion; the mover can modify as he pleases, or even withdraw the motion without consent of the seconder; if mover modifies, the seconder can withdraw the second. • The "immediately pending question" is the last question stated by the Chair! Motion/Resolution - Amendment - Motion to Postpone • The member moving the "immediately pending question" is entitled to preference to the floor! • No member can speak twice to the same issue until everyone else wishing to speak has spoken to it once! • All remarks must be directed to the Chair. Remarks must be courteous in language and deportment - avoid all personalities, never allude to others by name or to motives! • The agenda and all committee reports are merely recommendations! When presented to the assembly and the question is stated, debate begins and changes occur! THE RULES • Point of Privilege: Pertains to noise, personal comfort, etc. - may interrupt only if necessary! • Parliamentary Inquiry: Inquire as to the correct motion - to accomplish a desired result, or raise a point of order • Point of Information: Generally applies to information desired from the speaker: "I should like to ask the (speaker) a question." • Orders of the Day (Agenda): A call to adhere to the agenda (a deviation from the agenda requires Suspending the Rules) • Point of Order: Infraction of the rules, or improper decorum in speaking. Must be raised immediately after the error is made • Main Motion: Brings new business (the next item on the agenda) before the assembly • Divide the Question: Divides a motion into two or more separate motions (must be able to stand on their own) • Consider by Paragraph: Adoption of paper is held until all paragraphs are debated and amended and entire paper is satisfactory; after all paragraphs are considered, the entire paper is then open to amendment, and paragraphs may be further amended. Any Preamble cannot be considered until debate on the body of the paper has ceased. APPENDIX B - COMMITTEE REPORT 23 of 167 Page 4 of 4 • Amend: Inserting or striking out words or paragraphs, or substituting whole paragraphs or resolutions • Withdraw/Modify Motion: Applies only after question is stated; mover can accept an amendment without obtaining the floor • Commit /Refer/Recommit to Committee: State the committee to receive the question or resolution; if no committee exists includes size of committee desired and method of selecting the members (election or appointment). • Extend Debate: Applies only to the immediately pending question; extends until a certain time or for a certain period of time • Limit Debate: Closing debate at a certain time, or limiting to a certain period of time • Postpone to a Certain Time: State the time the motion or agenda item will be resumed • Object to Consideration: Objection must be stated before discussion or another motion is stated • Lay on the Table: Temporarily suspends further consideration/action on pending question; may be made after motion to close debate has carried or is pending • Take from the Table: Resumes consideration of item previously "laid on the table" - state the motion to take from the table • Reconsider: Can be made only by one on the prevailing side who has changed position or view • Postpone Indefinitely: Kills the question/resolution for this session - exception: the motion to reconsider can be made this session • Previous Question: Closes debate if successful - may be moved to "Close Debate" if preferred • Informal Consideration: Move that the assembly go into "Committee of the Whole" - informal debate as if in committee; this committee may limit number or length of speeches or close debate by other means by a 2/3 vote. All votes, however, are formal. • Appeal Decision of the Chair: Appeal for the assembly to decide - must be made before other business is resumed; NOT debatable if relates to decorum, violation of rules or order of business • Suspend the Rules: Allows a violation of the assembly's own rules (except Constitution); the object of the suspension must be specified APPENDIX B - COMMITTEE REPORT 24 of 167 APPENDIX B - COMMITTEE REPORT25 of 167 APPENDIX B - COMMITTEE REPORT26 of 167 APPENDIX B - COMMITTEE REPORT27 of 167 APPENDIX B - COMMITTEE REPORT28 of 167 APPENDIX B - COMMITTEE REPORT29 of 167 APPENDIX B - COMMITTEE REPORT30 of 167 APPENDIX B - COMMITTEE REPORT31 of 167 APPENDIX B - COMMITTEE REPORT32 of 167 APPENDIX B - COMMITTEE REPORT33 of 167 APPENDIX B - COMMITTEE REPORT34 of 167 APPENDIX B - COMMITTEE REPORT35 of 167 APPENDIX B - COMMITTEE REPORT36 of 167 APPENDIX B - COMMITTEE REPORT37 of 167 APPENDIX B - COMMITTEE REPORT38 of 167 APPENDIX B - COMMITTEE REPORT39 of 167 APPENDIX B - COMMITTEE REPORT40 of 167 APPENDIX B - COMMITTEE REPORT41 of 167 APPENDIX B - COMMITTEE REPORT42 of 167 APPENDIX B - COMMITTEE REPORT43 of 167 APPENDIX B - COMMITTEE REPORT44 of 167 APPENDIX B - COMMITTEE REPORT45 of 167 APPENDIX B - COMMITTEE REPORT46 of 167 APPENDIX B - COMMITTEE REPORT47 of 167 APPENDIX B - COMMITTEE REPORT48 of 167 APPENDIX B - COMMITTEE REPORT49 of 167 APPENDIX B - COMMITTEE REPORT50 of 167 APPENDIX B - COMMITTEE REPORT51 of 167 APPENDIX B - COMMITTEE REPORT52 of 167 APPENDIX B - COMMITTEE REPORT53 of 167 APPENDIX B - COMMITTEE REPORT54 of 167 APPENDIX B - COMMITTEE REPORT55 of 167 APPENDIX B - COMMITTEE REPORT56 of 167 APPENDIX B - COMMITTEE REPORT57 of 167 APPENDIX B - COMMITTEE REPORT58 of 167 APPENDIX B - COMMITTEE REPORT59 of 167 APPENDIX B - COMMITTEE REPORT60 of 167 Adult Uses Planning Study Page 1 of 34 DATE: October 26, 2016 TO: City Council, Mayor Boudreau, and Planning Commission FROM: Rebecca Lowell, Senior Planner SUBJECT: PLANNING STUDY ON ‘ADULT USES’ INTRODUCTION: The City of Mount Vernon is subject to the State Growth Management Act (GMA) (36.70A RCW). Part of the GMA [RCW 36.70A.130(1)(a)] requires that the City’s comprehensive plan “be subject to continuing review and evaluation by the county or city that adopted them. Except as otherwise provided, a county or city shall take legislative action to review and, if needed, revise its comprehensive land use plan and development regulations to ensure the plan and regulations comply with the requirements of this chapter according to the deadlines in subsections (4) and (5) of this section”. Further, subsection (5)(b) of this same RCW requires that the City “take action to review and, if needed, revise their comprehensive plans and development regulations to ensure the plan and regulations comply with the requirements of this chapter…on or before June 30, 2016, and every eight years thereafter, for… Skagit…county…”. On September 14, 2016 the City adopted Ordinance 3690 approving the above-described required update to the City’s Comprehensive Plan. Part of the City’s Comprehensive Plan update process included an evaluation of the City’s development regulations to ensure that they are, and will remain, consistent with the adopted Comprehensive Plan. This evaluation lead planning staff to create a list of development regulations that should be evaluated and possibly amended in the future due, primarily, to the time that had lapsed since these original regulations were adopted. The City’s zoning code regulations pertaining to adult uses were first adopted in 1985 and substantively amended just once in 1995. The potential for undesirable impacts, in conjunction with regulations that have not been analyzed in over two decades, as well as changes in the law related to adult entertainment uses, lead to the initiation of the foregoing Planning Study. Within the context of this study adult uses includes, but are not limited to, bookstores, cabarets, drive-in theaters, entertainment, motion picture theaters, retail stores and drive through businesses, video stores, massage parlors, panorams, previews, picture arcades, and peep shows all of which are characterized by a predominate emphasis on matters related to sexual activities and/or anatomical areas that are further described within the Mount Vernon Municipal Code (MVMC). APPENDIX B - COMMITTEE REPORT 61 of 167 Adult Uses Planning Study Page 2 of 34 This planning study on adult uses is organized into the following sections: INTRODUCTION Introduction ......................................................................................................................... 1 SECTION A – BACKGROUND ....................................................................................................... 3 - 6 SECTION B – EXISTING CONDITIONS B.1: Mount Vernon’s Landscape Setting ........................................................................ 7-8 B.2: Mount Vernon’s Demographics ............................................................................ 9-11 B.3: Mount Vernon’s Land Use Patterns .................................................................... 12-16 SECTION C – IMPACTS ANALYSIS ........................................................................................... 17 - 20 SECTION D – LOCATION ANALYSIS .........................................................................................21 - 32 TABLES: 1.0: Jurisdiction Sizes 2015 ....................................................................................... 9 2.0: Population Growth 1990 - 2015 ........................................................................ 9 3.0: Population Density 2015 ................................................................................. 11 4.0: Mount Vernon Land Use Types ....................................................................... 13 6.0: Summary of Land U se Types........................................................................... 10 7.0: Sensitive Areas Defined by Other Jurisdictions ............................................... 18 8.0: Sensitive Uses Identified by Mount Vernon ............................................. 19 - 20 9.0: Examples of Adult Use Buffers From Others ................................................... 21 10.0: Summary of sites that could be developed with adult uses ........................... 31 11.0: Potential Adult Use Areas and Relationship to Population/Acreage ............. 32 12.0: Comparison of Adult Entertainment Use Areas to Others ............................. 32 GRAPHS: 2.1: Population Growth 1990 - 2015 ...................................................................... 10 2.2 2015 Total Population ...................................................................................... 10 6.1 Mount Vernon Land Use Types ......................................................................... 15 MAPS: LU-1.0: Regional Setting ........................................................................................... 7 LU-2.0: Local Setting ................................................................................................. 8 LU-3.0: Land Use Types .......................................................................................... 13 LU-4.0: Sensitive Uses and Buffer Zones ................................................................ 26 LU-5.0: Property Available for Adult Uses in C-L Zone ........................................... 27 LU-6.0A: Floodplain in Mount Vernon ..................................................................... 33 LU-6.0B: FEMA Flood Zones ..................................................................................... 34 APPENDIX A – PLANNING STUDIES APPENDIX B – DEVELOPMENT POTENTIAL DATA FOR SITES ON MAP 5.0 APPENDIX C – PLANNING COMMISSION 7.2.85 MINUTES AND 10.24.16 CEDD LETTER APPENDIX B - COMMITTEE REPORT 62 of 167 Adult Uses Planning Study Page 3 of 34 A. BACKGROUND 1. EXISTING ZONING CODE REGULATIONS FOR ADULT ENTERTAINMENT The City’s zoning code (Title 17) currently regulates adult entertainment and uses as follows: CHAPTER OF ZONING CODE: REGULATION: 17.06.010,A Definitions Adult bookstore” means a retail establishment in which: A. Twenty-five percent or more of the “stock-in-trade” consists of books, magazines, posters, pictures, periodicals or other printed material distinguished or characterized by a predominant emphasis on matters depicting, describing, or relating to “specified sexual activities” or “specified anatomical areas,” as defined in the Mount Vernon Municipal Code; B. “Stock-in-trade” for the purpose of this section shall mean the greater of: 1. The retail dollar value of all books, magazines, posters, pictures, periodicals, or other printed material readily available for purchase, rental, viewing or use by patrons of the establishment excluding material located in any storeroom or other portion of the premises not regularly open to patrons; or 2. The total volume of shelf space and display area; C. Any person is excluded by virtue of age from all or part of the premises generally held open to the public where books, magazines, posters, pictures, periodicals, or other predominant emphasis on matters depicting, describing or relating to “specified sexual activities” or “specified anatomical areas,” as defined in the Mount Vernon Municipal Code, are displayed or sold. “Adult cabaret” means a commercial establishment which presents go-go dancers, strippers, or similar entertainers and which excludes any person by virtue of age from all or any portion of the premises; and which includes the display of “specified anatomical areas” or “specified sexual activities” as currently defined within this chapter, or as these definitions may be amended in the future. “Adult drive-in theater” means a drive-in theater where at least 25 percent of the use is used for presenting motion picture films, video cassettes, cable television, or any other like visual media, distinguished or characterized by a predominant emphasis on matters depicting, describing, or relating to “specified sexual activities” or “specified anatomical areas” as defined in the Mount Vernon Municipal Code. “Adult entertainment” means any enterprise from which minors are excluded and which sells, rents or displays sexually explicit matter, including, but not limited to, adult bookstores, adult magazine stores, stores selling sexually oriented adult games or devices, adult motion picture theaters, adult mini-motion picture theaters, adult peep shows, establishments where nude or topless dancing or other displays regularly occur or other similar business. APPENDIX B - COMMITTEE REPORT 63 of 167 Adult Uses Planning Study Page 4 of 34 CHAPTER OF ZONING CODE: REGULATION: 17.06.010,A Definitions Adult Entertainment Establishment. The following businesses or facilities are defined or referred to as “adult entertainment establishments”: A. Adult book stores; B. Adult cabarets; C. Adult drive-in theaters; D. Adult entertainment and adult entertainment premises; E. Adult motion picture theater; F. Adult retail stores; G. Adult video stores; H. Massage parlors and public bath houses; I. Panorams, previews, picture arcades, and peep shows, as defined in Chapter 5.56 MVMC. “Adult motion picture theater” means an enclosed building where at least 25 percent of the use is used for presenting, for commercial purposes, motion picture films, video cassettes, cable television, or any other like visual media, distinguished or characterized by a predominant emphasis on matters depicting, describing, or relating to “specified sexual activities” or “specified anatomical areas” as defined in the Mount Vernon Municipal Code for observation by patrons therein. “Adult retail store” means a retail establishment in which: A. Twenty-five percent or more of the “stock-in-trade” consists of items, products, or equipment distinguished or characterized by a predominant emphasis or simulation of “specified sexual activities” or “specified anatomical areas” as defined in the Mount Vernon Municipal Code; or B. Any person is excluded by virtue of age from all or part of the premises generally held open to the public where products or equipment distinguished or characterized by a predominant emphasis or simulation of “specified sexual activities” or “specified anatomical areas” as defined in the Mount Vernon Municipal Code are displayed or sold. “Adult video store” means a retail establishment in which: A. Twenty-five percent or more of the “stock-in-trade” consists of prerecorded video tapes, discs, or similar material distinguished or characterized by a predominant emphasis on matters depicting, describing, or relating to “specified sexual activities” or “specified anatomical areas” as defined in the Mount Vernon Municipal Code; or B. Any person is excluded by virtue of age from all or part of the premises generally held open to the public where prerecorded video tapes, discs, or similar material distinguished or characterized by a predominant emphasis on matters depicting, describing, or relating to “specified sexual activities” or “specified anatomical areas” as defined in the Mount Vernon Municipal Code are displayed or sold. “Specified anatomical areas” means both of the following: A. Less than completely and opaquely covered: 1. Human genitals, pubic region; 2. Buttock; 3. Breast below a point immediately above the top of the areola; B. Human male genitals in a discernibly turgid state, even if completely and opaquely covered. APPENDIX B - COMMITTEE REPORT 64 of 167 Adult Uses Planning Study Page 5 of 34 CHAPTER OF ZONING CODE: REGULATION: 17.06.190,S Definitions “Specified sexual activities” means all of the following: A. Human genitals in a state of sexual stimulation or arousal; B. Acts of masturbation, sexual intercourse, or sodomy; C. Fondling or other erotic touching of human genitals, pubic region, buttock, or breast. 17.35.050, Prohibited uses (in HD zone) B. Adult entertainment. 17.45.030, Permitted uses (in C-1 zone) Ground-level uses where visible from the street: (in C-1a and C-1b) 10. Adult entertainment establishments, as herein defined; provided, that no adult entertainment establishment shall be located nearer than 1,000 feet from any other adult entertainment establishment; and provided further, that no adult entertainment establishment shall be located nearer than 1,000 feet from any public or private school, church, or public park. Distances as provided in this subsection shall be measured by following a straight line, without regard to intervening buildings, from the nearest point of the property parcel upon which the proposed use is to be located to the nearest point of the parcel of property of the land use from which the proposed use is to be separated, 17.48.020, Permitted uses (in C-2 zone) 11. Adult entertainment establishments, as herein defined; provided, that no adult entertainment establishment shall be located nearer than 1,000 feet from any other adult entertainment establishment; and provided further, that no adult entertainment establishment shall be located nearer than 1,000 feet from any public or private school, church, or public park. Distances as provided in this subsection shall be measured by following a straight line, without regard to intervening buildings, from the nearest point of the property parcel upon which the proposed use is to be located to the nearest point of the parcel of property of the land use from which the proposed use is to be separated; and 17.51.040, Conditional Uses (in C-3 zone) B. Adult entertainment; provided, that no adult entertainment establishment shall be located nearer than 1,000 feet from any other adult entertainment enterprise; 17.54..050, Prohibited uses (C-4 zone) A. Adult entertainment. APPENDIX B - COMMITTEE REPORT 65 of 167 Adult Uses Planning Study Page 6 of 34 Adult uses were first defined and regulated in the City’s zoning code in 1985 with the adoption of Ordinance 2188 with subsequent amendments to these regulations in 1994 and 1995 with Ordinances 2631 and 2688, respectively. ORDINANCE NUMBER: DATE ADOPTED: 2188 July 24, 1985 2631 December 14, 1994 2688 July 25, 1995 Staff conducted interviews with City staff that have lived in Mount Vernon since the early 1970’s, including a retired Mount Vernon Police officer, to determine the extent of and details surrounding historic adult uses in the City. Staff is not aware of any businesses operating in the City today that include adult uses as currently defined in the Mount Vernon Municipal Code 1. Following is a brief summary of the two businesses that historically offered adult uses in the City along with the one recent request to operate an adult use in the City. Staff is not aware of any other requests submitted to the City for adult uses since 2004. • Near the 400 block of Myrtle Street there existed a business named the ‘Green Door’ owned by Arnold Libby that was in operation in the mid-1980s. Staff is told that the Green Door offered coin operated peep shows featuring topless dancers and pornographic movies. Staff was able to find meeting minutes from the City’s Planning Commission from July 2, 1985 that reference both the Green Door and Peking Gardens; these minutes can be found in the accompanying Appendix C. • Near the 600 block of 1st Street there existed a business named ‘Peking Gardens’ owned by Roy Kraus that was in operation in the late 1970s. Staff is told that this business had topless women dancing on an elevated stage. • The City received a request in October 2016 from David Davidson who is asking to operate an adult retail store at 920 Lincoln Street #B. A copy of the City’s response to Mr. Davidson can be found within Appendix C of this study. 1 Should City Council adopt development regulations recommended by staff it is possible that the one bikini espresso stand located in Mount Vernon (named ‘Foxy Lady Lattte’, located at 2626 Henson Road) will need to make sure that their employees are not engaging in adult sales practices which includes activities distinguished or characterized by a person being in a state of partial nudity while conducting or otherwise engaged in retail sales of goods or services where their conduct is likely to be viewed by the public. APPENDIX B - COMMITTEE REPORT 66 of 167 Adult Uses Planning Study Page 7 of 34 B. EXISTING CONDITIONS: This section contains information on the following: 1. Mount Vernon’s Landscape setting; 2. Mount Vernon’s demographics; and, 3. Mount Vernon’s land use patterns. 1. MOUNT VERNON’S LANDSCAPE SETTING The City is situated with the Seattle metropolitan area approximately 60 miles to the south, Vancouver B.C. approximately 80 miles to the north, and the Puget Sound approximately six miles to the east. Following are two maps illustrating the City’s regional and local setting. MAP 1.0: REGIONAL SETTING APPENDIX B - COMMITTEE REPORT 67 of 167 Adult Uses Planning Study Page 8 of 34 MAP 2.0: LOCAL SETTING APPENDIX B - COMMITTEE REPORT 68 of 167 Adult Uses Planning Study Page 9 of 34 2. MOUNT VERNON’S DEMOGRAPHICS Skagit County is comprised of four cities: Anacortes, Burlington, Mount Vernon, and Sedro-Woolley, along with four towns: Concrete, Hamilton, LaConner, and Lyman. In 2015 each of Skagit Counties’ four towns had populations of less than 1,000 people and were comprised of 1.4 square miles or less. As such, the towns are not included in the comparisons below because their demographics are significantly different than unincorporated Skagit County and the cities analyzed below. Table 1.0 provides the size in square miles of Mount Vernon, the listed cities, and unincorporated Skagit County. TABLE 1.0: JURISDICTION SIZES 2015 JURISDICTION 2015 SIZE IN SQUARE MILES1 Mount Vernon 12.63 Anacortes 13.16 Burlington 4.09 Sedro-Woolley 4.15 Unincorporated Skagit County 1,693.52 1 State of WA: Office of Financial Management. (2015, December). 2015 Data Book. Table 2.0 and graphs 2.1 and 2.2 list and show how Mount Vernon’s population has grown over time; and compares this growth to other Skagit County cities and unincorporated Skagit County. TABLE 2.0: POPULATION GROWTH 1990 - 2015 POPULATION YEAR Mount Vernon Burlington Sedro- Woolley Anacortes Unincorporated Skagit County 19901 17,647 4,349 6,333 11,451 37,841 20001 26,332 6,757 8,658 14,557 44,506 20101 31,743 8,388 10,540 15,778 48,110 20152 33,350 8,485 10,700 16,310 49,220 1 1990 – 2010 population: U .S. Census Bureau; Census 1970, 1980, 1990, 2000, 2010 Profile of General Population and Housing Characteristics: Mount Vernon City, WA. Retrieved October 20, 2016 from www.factfinder.census.gov 2 2015 population: Office of Financial Management (2016, April 1). Population of Cities, Towns and Counties Used for Allocations of Selected State Revenues State of WA. APPENDIX B - COMMITTEE REPORT 69 of 167 Adult Uses Planning Study Page 10 of 34 GRAPH 2.1: POPULATION GROWTH 1990 - 2015 GRAPH 2.2: 2015 TOTAL POPULATION 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 1990 2000 2010 2015 Mount Vernon Burlington Sedro-Woolley Anacortes Unincorporated Skagit County 8,485 10,700 16,310 33,350 49,220 0 10,000 20,000 30,000 40,000 50,000 60,000 Burlington Sedro-Woolley Anacortes Mount Vernon Unincorporated Skagit County 2015 Total Population APPENDIX B - COMMITTEE REPORT 70 of 167 Adult Uses Planning Study Page 11 of 34 TABLE 3.0: POPULATION DENSITY 2015 JURISDICTION 2015 SIZE IN SQUARE MILES1 POPULATION2 DENSITY POPULATION/SQUARE MILES Mount Vernon 12.63 33,350 2,640.5 Anacortes 13.16 16,310 1,239.4 Burlington 4.09 8,485 2,074.5 Sedro-Woolley 4.15 10,700 2,578.3 Unincorporated Skagit County 1,693.52 49,220 29.1 1 State of WA: Office of Financial Management. (2015, December). 2015 Data Book. 2 Office of Financial Management (2016, April 1). Population of Cities, Towns and Counties Used for Allocations of Selected State Revenues State of WA. Table 4.0 contains the number of Mount Vernon residents that are under the age of 18 and compares this age demographic to Skagit Counties’ other cities. TABLE 4.0: RESIDENTS UNDER 18 YEARS OF AGE IN 2014 JURISDICTION POPULATION1 RESIDENTS UNDER 182 % OF POPULATION UNDER 18 Mount Vernon 33,350 9,119 27% Anacortes 16,310 2,890 18% Burlington 8,485 2,160 25% Sedro-Woolley 10,700 2,835 26% 1 Office of Financial Management (2016, April 1). Population of Cities, Towns and Counties Used for Allocations of Selected State Revenues State of WA. 2 U.S. Census Bureau. (2014). American FactFinder fact sheet: Population Under 18 Years by Age: Anacortes, Burlington, Mount Vernon, Sedro-Woolley. Retrieved October 20, 2016, from http://factfinder.census.gov. APPENDIX B - COMMITTEE REPORT 71 of 167 Adult Uses Planning Study Page 12 of 34 3. MOUNT VERNON’S LAND USE PATTERNS The City’s land use patterns have, over time, been heavily influenced by the location of the Skagit River, the Burlington Northern Railroad, Interstate-5, State Routes 536 and 538, and the topographic changes that occur as one heads east and southeast through the City. The City’s first business district was formed on the east side of the river where the City’s historic downtown district still exists today (generally between Division and Kincaid Streets). Additional business/commercial/industrial areas have development around major transportation corridors such as Interstate-5, Riverside Drive, College Way (SR 536) and more recently in the South Mount Vernon area where both Old Highway 99 and Interstate-5 run north/south. Historically natural disasters such as floods and fires spurred residential growth at higher elevations on the east side of the City moving away from the Skagit River and Interstate-5. In large part these land use patterns still exist today. Following is Map 3.0 that illustrates the City’s overall land use types; e.g., commercial/industrial, residential, and other (public, open spaces, etc). In addition to this map, Tables 5.0, 6.0 and Graph 6.1 summarize the acreage of the City’s land use types. Evident is that the City is composed predominately of areas used for residential purposes. It is important to understand that Map 3.0, Tables 5.0, 6.0 and Graph 6.1 have been created using the City’s existing zoning information. This distinction is important because the zoning designation of property does not always directly correlate to the actual use of a site. For example, the City has a number of properties that are zoned for commercial or industrial uses that contain existing residential structures being used for residential purposes. While existing residential uses in commercial or industrial zones are observed throughout the City it is far more unusual to see commercial or industrial uses in residential zones. Additionally, the City has four zoning designations that allow for mixed use development that either do, or potentially could, have both residential and commercial primary permitted or conditional uses in close proximity to each other. These mixed use zones include: Residential Office (MVMC Chapter 17.33), Central Business District (MVMC Chapter 17.45), Community Commercial District (MVMC Chapter 17.51), and Neighborhood Commercial District (MVMC Chapter 17.54). APPENDIX B - COMMITTEE REPORT 72 of 167 §¨¦5 §¨¦5 ¬¬538 ¬¬536 ¬¬9RIVERSIDEDR E SECTION ST E FIR ST B LOD G E T T RDN 4TH STE BLACKBURN RDS18THSTMCLEAN RD MARTIN RD W BLACKBURN RDS 1ST STS 15TH STROOSEVELT AVE N 18TH STW HAZEL ST BROAD ST ANDERSON RD HOAG RD N WAUGH RDE BRO A D W A Y STN 15TH STN LAVENTURE RDCONTINENTALPLF RANCIS R D CEDARDALE RDFREEWAYDRN 30TH STN MARTIN RDDIGBY RDOLD HIGHWAY 99 SS 2ND STS30THSTSKAGITHIGHLAND S PKW YURBAN AVES LAVENTURE RDL I T T LE M O UNTAINRD "Adult Uses" Planning StudyMap 3.0General Land Use Types Residential Zoning Commercial Zoning Other Non-Commercial Zoning City Boundary Water Body Map updated 10/24/2016 by MV GIS, Parcel data courtesy of Skagit County GIS The City of Mount Vernon does not warrant, guarantee or accept any liability for the accuracy, precision or completeness of any information shown or described hereon or for any inferences made therefrom. Any use made of this information is solely at the risk of the 0 2,500 5,000Feet E APPENDIX B - COMMITTEE REPORT 73 of 167 Adult Uses Planning Study Page 14 of 34 TABLE 5.0: MOUNT VERNON LAND USE TYPES ZONING DESIGNATIONS ACRES RESIDENTIAL LAND USES Single-Family Residential (R-1, 3.0, 4.0, 5.0, 7.0, Eaglemont PUD, and R-A) 3,999 Multi-family Residential (R-2, R-3, R-4) 363 Mobile Home Park (MHP) 126 COMMERCIAL AND INDUSTRIAL LAND USES Commercial (C-2) 510 Commercial Allowing Residential Uses (C-1, C-3, C-4, R-O) 78 Commercial Light Industrial (C-L) 416 Industrial (M-1, M-2) 112 Healthcare Development District 29 Professional Office, Limited Commercial (P-O, LC) 33.5 OTHER LAND USES Public 1,376 Skagit River, Dike, Flood, Right-of-Way, and Railroad 991.5 TOTAL ACREAGE: 8,034 TABLE 6.0: SUMMARY OF LAND USE TYPES LAND USE INFORMATION ACRES % OF THE CITY Total Land Area within Mount Vernon 8,034 100% Residential Uses Land Area 4,178 52% Commercial & Industrial Land Area 1,149 14% Public, River, Floodplain & Right-of-Way 2,668 33% APPENDIX B - COMMITTEE REPORT 74 of 167 Adult Uses Planning Study Page 15 of 34 GRAPH 6.1: MOUNT VERNON LAND USE TYPES 52% 14% 33% Residential Commercial and Industrial Public, River, floodplain and row APPENDIX B - COMMITTEE REPORT 75 of 167 Adult Uses Planning Study Page 16 of 34 This existing conditions section can be summarized as follows: • Mount Vernon is more than three times larger (in land area) than Burlington or Sedro- Woolley. • Unincorporated Skagit County is 134 times larger (in land area) than Mount Vernon and Anacortes is .53 square miles larger than Mount Vernon. • Mount Vernon has two times as many residents as Anacortes, three times as many residents as Sedro-Woolley, and nearly four times as many residents as Burlington. • Unincorporated Skagit County has close to 16,000 more residents than Mount Vernon; however, unincorporated Skagit County is 134 times larger (in land area) than Mount Vernon making Mount Vernon’s population density per square mile of land area 89 times more dense than unincorporated Skagit County. • As a percentage of total population, Mount Vernon has more residents under the age of 18 than any of the other Skagit County cities do. In addition, as a total number Mount Vernon has three times as many residents under the age of 18 than any other Skagit County city. APPENDIX B - COMMITTEE REPORT 76 of 167 Adult Uses Planning Study Page 17 of 34 C. IMPACTS ANALYSIS: The City is vested with the authority to regulate land uses to ensure the public’s health, safety, welfare, and economy is protected. When evaluating new regulations, or updating existing ones, the first item planning staff considers are foreseeable impacts generated from a given use that could produce land use and other secondary adverse impacts. Research compiled to-date shows that numerous communities both in Washington State and across the Country have experienced negative secondary impacts from adult uses. Evaluating experiences from other jurisdictions that have experience with regulating adult uses is important because Mount Vernon is able to learn from these experiences and adopt regulations to mitigate the negative impacts others have endured. A summary of some of the more significant negative impacts from existing adult entertainment uses in other jurisdictions are briefly summarized below with the full text of these reports accompanying this study in Appendix A. • The City of Bellevue, WA lists secondary effects of increased incidence of crime, property values declining, and incompatibilities between land uses. • The City of Des Moines, WA identified negative impacts from adult uses including: decreases in property values, deterioration of areas including deferred maintenance, economic impacts from increased turnover in tenants adjacent and near these uses, parking and traffic problems, attraction of transients, interference with parental responsibilities for children, incompatibility with residences, schools, churches, and park areas, and increased crime. • The City of Kent, WA documented Incidence of increased crime, property values decreasing and neighborhoods deteriorating within areas located near adult uses. • The City of Olympia, WA notes that adult oriented businesses generally create an atmosphere for increases in crimes such as assault, theft, robbery, prostitution, drug use, and others, that surrounding property values tend to decline as a result of the appearance of these businesses and the activities they attract. Table 7.0, below, summarizes sensitive uses identified by other jurisdictions when they completed evaluations of adult uses in their respective jurisdictions. APPENDIX B - COMMITTEE REPORT 77 of 167 Adult Uses Planning Study Page 18 of 34 TABLE 7.0: SENSITIVE USES IDENTIFIED BY OTHER JURISDICTIONS JURISDICTION SENSITIVE USES DEFINED EVERETT Public Library Public playground or park Public or private school and its grounds, from kindergarten to twelfth grade Nursery school or day care center Church, temple, mosque, synagogue, or other place of religious worship Lot located in Residential zones FEDERAL WAY Public Park Library Day care center for children, nursery, or pre-school Church or other facility or institution used primarily for religious purposes Public or private elementary or secondary school KELSO Existing youth-oriented business or activity defined as: “Youth-oriented business or activity” means a business utilizing a permanent building or facility where children under the age of eighteen years are invited onto the business premises in conjunction with such business activity and at least fifty percent of the business revenue is generated from their patronage. KENNEWICK Residential zone Public or private school, or any trade or vocational school that on a regular basis has at least one student under the age of eighteen years Church or other religious facility or institution Park or any public facility or open space zone KING COUNTY Certain residential zones Schools Licensed daycare centers Public Parks or trails Community centers Public Libraries Churches MUKILTEO Residential zones Public Park Public library Public or private nursery school or preschool Public or private primary or secondary school Daycare Community Youth Center Place of Worship OAK HARBOR Schools Religious institutions Parks Certain Residential Zones APPENDIX B - COMMITTEE REPORT 78 of 167 Adult Uses Planning Study Page 19 of 34 JURISDICTION SENSITIVE USES DEFINED THURSTON COUNTY Property used for public and private schools; Property used for public parks; Property used for public libraries; Property used for state-certified day care; Property used for public community centers; Property used for churches, cemeteries or other religious facilities or institutions; Certain residential zones VANCOUVER Public park Child care facility licensed by the State of Washington Preschool Permanent religious institution Public or private elementary, middle, junior high or high school Certain residential districts SNOHOMISH COUNTY Private School Preschool Educational Institution Church or other Religious Facility Public or Private Park Youth Oriented Facility Establishment Serving Alcohol by the Drink After much research, planning staff identified the following list of uses that should be buffered from adult uses due to the sensitive nature of these uses and the high potential for secondary adverse impacts. The following list of sensitive uses were chosen primarily because they are uses are areas where minor children and families are likely to congregate and be present. TABLE 8.0: SENSITIVE USES IDENTIFIED BY MOUNT VERNON SENSITIVE USE: DEFINITION OF SENSITIVE USE: PARKS A tract of land owned or maintained by a public entity that is designated for and used by the public for active and passive recreational activities. TRAILS Linear shaped facilities designed and intended for the public to walk, run, or otherwise travel across that are owned or maintained by the City of Mount Vernon. CHURCHES Are buildings or structures, or groups of buildings or structures, which by design and construction are primarily intended for the conducting of organized religious services and accessory uses associated therewith. SCHOOLS Any building or part thereof designed, constructed, or used for formal educational uses that are recognized by the Washington state superintendent of public instruction. This definition includes both public and private schools. APPENDIX B - COMMITTEE REPORT 79 of 167 Adult Uses Planning Study Page 20 of 34 SENSITIVE USE: DEFINITION OF SENSITIVE USE: CHILD CARE CENTERS Are facilities that regularly provide child day care and early learning services for a group of children for periods of less than twenty-four hours licensed by the Washington state department of early learning under chapter 170-295 WAC. LIBRARIES Facilities that include organized collection of resources made accessible to the public for reference or borrowing supported with money derived from taxation. GAME ARCADES Are entertainment venues featuring primarily video games, simulators, and/or other amusement devices where persons under twenty-one years of age are not restricted. APPENDIX B - COMMITTEE REPORT 80 of 167 Adult Uses Planning Study Page 21 of 34 D. LOCATION ANALYSIS: Now that staff has outlined the existing conditions of the City in terms of its landscape setting, demographics, and land use patterns and evaluated the land use and secondary impacts likely to occur from adult uses, staff is able to make informed recommendations with regard to where these uses will result in the fewest negative impacts. The list below contains the steps of the assessment that staff completed to answer the question of where should adult uses should be allowed in the City. 1. REMOVED RESIDENTIALLY ZONED AREAS FROM CONSIDERATION. The City is comprised of nineteen distinct zoning classifications. The intent of, and primary permitted uses, in six of these zones are residential uses (R-A, R-1, R-2, R-3, R-4 and MHP). These zones largely prohibit commercial, industrial and other similar uses as a way to protect the living environment within these zones. Additionally, these residential areas have historically, and will continue to be subject to development regulations in terms of road width, utility sizing and the like, aimed at residential areas and uses. This is important because roads would need to be widened, paved parking areas would need to be created, and utilities like potable water and sanitary sewer would likely need to be upsized to serve a commercial or industrial use in an existing residentially zoned area. For these reasons all of the City’s residential zones listed above were not considered as areas where adult uses could be located. Please see the accompanying Map 3 that delineates the described residential areas from other zones within the City. 2. BUFFERED EXISTING SENSITIVE LAND USES. Due to the well documented negative secondary impacts from adult uses, staff determined that these uses are not compatible with certain sensitive land uses where minor children and families are likely to congregate and be present including: residences, parks, trails, churches, schools, child care facilities, libraries, and game arcades. To buffer these sensitive uses from adult entertainment uses staff needed to determine the distance these incompatible uses need to be separated from adult uses. To make a recommendation on the appropriate separation staff evaluated different separations (or buffers) that a number of different jurisdictions have adopted as part of their development regulations for adult uses. Table 9.0 summarizes these separations. APPENDIX B - COMMITTEE REPORT 81 of 167 Adult Uses Planning Study Page 22 of 34 TABLE 9.0: EXAMPLES OF ADULT USE BUFFERS FROM OTHERS SENSITIVE USES OTHER ADULT USES EVERETT 250’ 1000’ FEDERAL WAY 1000’ 1000’ KELSO 600’ NA KENNEWICK 500’ 1500’ KING COUNTY 300’ 3000’ MUKILTEO 800’ 500’ OAK HARBOR 750’ NA VANCOUVER 1000’ 500’ residential districts NA SNOHOMISH COUNTY 330’ and 660’ (depending on adult use) 660’ THURSTON COUNTY 330’ NA Analyzing the buffers that other jurisdictions have chosen in conjunction with an evaluation of the City’s street network and block length has led staff to recommend a minimum distance of 650 feet between adult uses and sensitive uses. Map 4.0, found on the following page, identifies 650-foot buffers around the sensitive areas the City has identified in Table 8.0. 3. SELECTED C-L ZONING SOUTH OF BLACKBURN ROAD. Analyzing the commercial and industrial zoned property outside of the 650-foot buffer zones placed around sensitive land uses listed in Table 8.0 lead staff to select the C-L zoned property south of Blackburn Road and east of the Burlington Northern Santa Fe (BNSF) rail line (illustrated on Map 5.0 that follows) as the least impactful area to locate adult uses. Staff found that although there were small pockets of commercial and industrial zoned property outside of the sensitive use buffers not within the C-L zoned area south of Blackburn Road and east of the BNSF rail line, many of these areas are in close proximity to commercial and retail uses frequented by minor children and their families. For example, in the northwest part of the City there exists many retailers and restaurants such as Wal-Mart, Lowes Home Improvement, Rite Aid, Burger King, IHOP, among many others. The City’s adopted Comprehensive Plan contains the following Goals, Objectives and Policies related to buffering incompatible uses, protecting residential neighborhoods, enhancing tourism, and prioritizing the beautification of the City. APPENDIX B - COMMITTEE REPORT 82 of 167 Adult Uses Planning Study Page 23 of 34 LAND USE ELEMENT: OBJECTIVE LU-1.2 Maintain and enhance the character of existing single-family neighborhoods but not preclude redevelopment and/or new development within established neighborhoods. Policy LU-1.2.1 Provide development regulations that create a compatible pattern of development within established neighborhoods. The development standards shall address densities, building setbacks, parking and landscaping. GOAL LU-5 ENHANCE AND IMPROVE THE QUALITY OF SINGLE-FAMILY LIVING ENVIRONMENTS THROUGHOUT THE CITY. OBJECTIVE LU-5.1 Ensure that new development in the single-family residential designations are designed to provide quality homes and neighborhoods for residents and take care to mitigate impacts of new development on existing neighborhoods. GOAL LU-6 ENHANCE AND IMPROVE THE QUALITY OF MULTI-FAMILY LIVING ENVIRONMENTS THROUGHOUT THE CITY THAT PROVIDE AREAS THAT OFFER A LARGER RANGE OF HOUSING OPTIONS IN THE FORM OF MULTI-FAMILY UNITS. Policy LU-6.1.3 Due to increased impacts to privacy and personal living space inherent in higher density living environments, new development shall be designed to create a high quality living environment with ample public open spaces within a walkable urban context. Policy LU-6.1.4 Evaluate project proposals in residential multi-family designations to consider the transition to lower density uses where multi-family sites abut lower density zones. Setbacks may be increased, heights reduced, and additional landscape buffering required through site plan review. Policy LU-6.1.5 New multi-family residential projects should demonstrate provisions for an environment that contributes to a high quality of life for future residents, regardless of income level. Policy LU-8.2.6 Development should be designed to mitigate potential adverse impacts on adjacent properties with different zoning designations (i.e., residential or public zoning). Careful consideration of impacts from lighting, landscaping, and setbacks should all be evaluated during site design. GOAL LU-9: TO MINIMIZE POTENTIAL NOISE IMPACTS TO THE SURROUNDING RESIDENTIAL NEIGHBORHOOD ALL NON-RESIDENTIAL USES SHOULD BE CLOSED FOR BUSINESS AT REASONABLE TIMES. GOAL LU-10: DEVELOPMENT REGULATIONS SHALL BE ADOPTED TO REDUCE THE NEGATIVE VISUAL, NOISE, ODOR, AND EXHAUST IMPACTS FROM GARBAGE AND RECYCLING RECEPTACLES, LOADING DOCKS, AND DRIVE THROUGH LANES. APPENDIX B - COMMITTEE REPORT 83 of 167 Adult Uses Planning Study Page 24 of 34 GOAL LU-12: DEVELOPMENT REGULATIONS SHALL BE ADOPTED TO REDUCE THE APPARENT MASS OF LARGER COMMERCIAL BUILDINGS, TO PROVIDE VISUAL INTEREST, AND TO HELP BLEND INTO THE RESIDENTIAL NEIGHBORHOODS IN WHICH THEY ARE LOCATED. GOAL LU-13: ENSURE THAT COMMERCIAL BUILDINGS ARE IN SCALE WITH THE SURROUNDING RESIDENTIAL NEIGHBORHOODS. GOAL LU-14: DEVELOPMENT REGULATIONS SHALL BE ADOPTED THAT ENSURE THAT MECHANICAL EQUIPMENT, VAULTS, AND OUTDOOR STORAGE ARE SCREENED TO ENHANCE THE APPEARANCE OF THE COMMERCIAL BUILDINGS WITHIN THE NEIGHBORHOOD COMMERCIAL ZONE. GOAL LU-15: DEVELOPMENT REGULATIONS SHALL BE ADOPTED THAT BALANCE SAFETY AND SECURITY AND THE RESIDENTIAL NATURE IN WHICH COMMERCIAL USES IN THE C-4 ZONE ARE LOCATED. HOUSING ELEMENT: GOAL 1: Promote the preservation, maintenance and enhancement of existing housing and residential neighborhoods throughout the City. Objective HO-1.1 Promote infill housing that is compatible with abutting housing styles and with the character of the existing neighborhood. Policy HO-1.1.1 Encourage infill housing on vacant or underutilized parcels having adequate services, and ensure that the infill development is compatible with surrounding neighborhoods. Policy HO-1.1.2 Adopt development regulations that enhance existing single family neighborhoods by requiring significant changes in density be transitioned near these existing neighborhoods. Ways to transition from higher-density to existing single-family neighborhoods include (but are not limited to) the following: reducing densities and building heights closest to existing neighborhoods; and require landscaping treatments and fencing surrounding higher density developments. Objective HO-1.2 Enhance the value, character and health of the City’s existing housing stock by improving and extending the life of such housing. Policy HO-1.2.1 In cooperation with Skagit County, the City should encourage the preservation of existing housing. Private investment should be encouraged in older residential neighborhoods, manufactured home parks, and multifamily complexes to ensure the health, safety and affordability of existing housing. Programs supporting weatherization, home repair and rehabilitation, and infrastructure maintenance should be supported. APPENDIX B - COMMITTEE REPORT 84 of 167 Adult Uses Planning Study Page 25 of 34 HEALTH AND WELLNESS ELEMENT: GOAL HW-2 IMPROVE THE SAFETY OF NEIGHBORHOODS AND PUBLIC SPACES. Policy HW-2.1 Study ways to improve neighborhood involvement in crime prevention, neighborhood beautification, and the reduction of blight throughout the City. GOAL HW-4 PRIORITIZE THE BEAUTIFICATION OF THE CITY. Policy HW-4.2 Make streets, trails and other public spaces more visually appealing and comfortable for the public by ensuring that street trees are planted, landscaping is maintained and regularly inspecting and cleaning these areas. ECONOMIC DEVELOPMENT ELEMENT: GOAL 1 HAVE A STRONG PROACTIVE POSITON TOWARDS ECONOMIC PROSPERITY THAT PROMOTES A POSITIVE CIVIC IMAGE AND ESTABLISHES MOUNT VERNON AS A PREFERRED PLACE FOR INVESTMENT. OBJECTIVE ED-1.5 Have a strong proactive positon towards revitalization of the downtown as a preferred place to live, work, and play. OBJECTIVE ED-1.5 Enhance and support tourism in Mount Vernon Policy 1.5.1 Grow the city’s tourism through special events that are consistent with the community’s values. Policy 1.5.2 Promote tourism using multiple media outlets and highlight the community assets. Policy 1.5.3 Continue to emphasize the City’s connection to its rich history to strengthen our community identity. The permitted uses in the Commercial-Limited Industrial zone, codified as Chapter 17.56 of the MVMC, includes commercial uses such as retail stores, eating and drinking establishments, theaters, bowling alleys, skating rinks, and other entertainment uses. These types of commercial uses mirror the commercial uses allowed in the City’s Central Business District (C-1) and General Commercial District (C- 2). APPENDIX B - COMMITTEE REPORT 85 of 167 §¨¦5 §¨¦5 ¬¬538 ¬¬536 ¬¬9 "Adult Uses" Planning StudyMap 4.0Sensitive Areas & Buffers 650' Sensitive Area Buffer Residential Zone City Boundary Water Body Sensitive Areas ÆJ Park ?Residential Use î Church ¹»School ­±°¯Daycare Æc Library "T Game Arcade !!Trail Map updated 10/24/2016 by MV GIS, Parcel data courtesy of Skagit County GIS The City of Mount Vernon does not warrant, guarantee or accept any liability for the accuracy, precision or completeness of any information shown or described hereon or for any inferences made therefrom. Any use made of this information is solely at the risk of the 0 2,500 5,000Feet E APPENDIX B - COMMITTEE REPORT 86 of 167 Adult Uses Planning Study Page 27 of 34 4. INVENTORY OF C-L ZONED PROPERTY SOUTH OF BLACKBURN ROAD. To ensure there exists ample opportunities for those wishing to own and operate businesses with adult uses staff completed an in- depth inventory and analysis of the geographic area staff selected as the least impactful area to allow these uses to operate in the City. To begin this inventory and analysis the following bulleted list of data was collected. All of this data was and analyzed using Geographic Information System (GIS) software. • Skagit County Assessor’s tax parcels; • Aerial photography produced in the Spring of 2015; • Zoning designations; • Physical improvements on the site (building(s), parking lot(s), storage yards, etc); • Parcel size; • Approximate square footage of critical areas including wetlands, streams, and their associated buffers; • Existing public utilities (sanitary sewer, storm sewer, potable water, power, and lighting); • Existing public and private roads and associated pedestrian facilities; and, • Location of the sensitive uses and their associated 650-foot buffers. Once the above bulleted list of data was imported into the GIS software staff removed several areas from consideration: • The sensitive uses and their associated 650-foot buffers that included a daycare center and two churches. If the 650-foot buffer touched part of a nearby parcel that entire parcel was removed from consideration. • Location of the two existing mobile home parks, and the residential neighborhood accessed by Hollydale Acres Road; and, • The property where the Skagit County jail is currently under construction. With the sensitive land uses and their assigned buffers, existing parcels used for residential purposes, and the jail property removed staff was left with 95 sites needing to be evaluated further. The term “site” is used here to describe one or more Skagit County Assessor parcels; in many locations multiple contiguous assessor parcels with overlapping uses under common ownership were logically combined into single sites, e.g. the two parcels comprising the Barnhardt Crane property were combined into a single site. These 95 remaining sites were then separated into three categories described below and shown on Map 5.0 that follows. 1. Sites that had existing structures and parking lots such that no new buildings could be constructed – these were labeled as “fully-developed” sites; 2. Sites that have at least 10,000 square feet of un-encumbered property where new buildings and parking areas could be constructed – these were labeled as “partially- developed” sites; and 3. Sites that have not been developed with buildings, parking, etc – these were labeled as “vacant” sites. APPENDIX B - COMMITTEE REPORT 87 of 167 HICKOX RD OLD HIGHWAY 99 SHICKOX ROAD PEDERSON LN NATHANLANE MCFARLAND LN DALE LNSUZANNE LN BLODGETTROADE HICKOX RDCEDARDALE RDSICKLESTEEL LNJACKS LN ELEANOR LN §¨¦5 §¨¦5 75 80 11 66 67 68 25 86 93 79 12 21 19 24 3 10 6 77 71 74 14 70 4 78 76 69 13 72 7381 5 90 1617 26 23 22 20 1 88 2 8 89 917 15 1892 8587 "Adult Uses" Planning StudyMap 5.0C-L Property South of Blackburn Sensitive Areas ÆJ Park c1 Alcohol Sales ?Residential Use î Church ¹»School ­±°¯Daycare Æc Library "T Game Arcade !!Trail South MV Vacant C-L Parcel South MV Partially-Developed C-L Parcel South MV Fully-Developed C-L Parcel 650' Sensitive Area Buffer Residential Zone City Boundary Water Body BL O D G E T T R D E BLACKBURN RD ANDERSON RD STAUDT RD S LAVENTURE RD MCFARLAND LN ELLISO N R O ADGUNN RDCHENOWETH ST BL ODGETTROADS 15TH STOLD HIGHWAY 99 SHENSONRDHOLLYDALEACRESLNCEDARDALERD§¨¦5 62 60 49 9 4453 46 61 5864 43 84 544748 45 42 41 82 52 83 55 63 56 59 50 51 57 95 27 28 35 33 36 29 30 39 38 32 3140 37 34 65 94 Match Line Match Line Map updated 10/25/2016 by MV GIS, Parcel data courtesy of Skagit County GIS The City of Mount Vernon does not warrant, guarantee or accept any liability for the accuracy, precision or completeness of any information shown or described hereon or for any inferences made therefrom. Any use made of this information is solely at the 0 500 1,000Feet E APPENDIX B - COMMITTEE REPORT 88 of 167 Adult Uses Planning Study Page 29 of 34 A 10,000 square foot lot size was chosen as the ideal lot size for a standalone development after evaluating dozens of commercial/industrial lots that are already developed and finding that a building with a 3,000 square foot footprint, with code compliant parking and landscaping could be developed on a 10,000 square foot lot. Please note that a 3,000 square foot building footprint means that a second or third story could be constructed that would double or triple the square footage of the hypothetical commercial/industrial building. Following is an illustration of how a building footprint, parking and landscaping could all be developed on a 10,000 square foot lot. All three categories of sites (fully-developed, partially-developed, vacant) were also evaluated to ensure that infrastructure to serve these sites was reasonably available; which staff defined as being within 100± feet of a site. The infrastructure that was inventoried included public and private roads, pedestrian access, lighting, potable water, sanitary and storm sewers and power. This reasonably available infrastructure analysis resulted in five Hickox Road sites totaling over 23 acres in size being removed from consideration prior to evaluation of aforementioned existing uses and critical area buffers. The flowchart on the next page summarizes the steps staff took in making a determination about whether or not a particular parcel was available for future development or re-development. 100’ by 100’ site shown 3,000 s.f. building footprint 9 parking stalls = 10’ by 20’ 10’ landscape along front yard APPENDIX B - COMMITTEE REPORT 89 of 167 Adult Uses Planning Study Page 30 of 34 PROPERTY DATA ON THE COMMERCIAL-LIMITED ZONE PARCELS SOUTH OF BLACKBURN ROAD COMPILED Quantified site area and square footage of physical improvements (buildings, parking lots, storage yards, stormwater ponds, etc) Identified location of streams and wetlands and their associated buffers and removed these areas from consideration for future development. Vacant sites, and sites with 10,000 s.f. or more of area not encumbered with buildings, parking lots, critical areas, and other similar improvements , were identified as available for development. Sites with existing buildings that could be repurposed for uses other than those they are currently used for were also identified as available for re- development. All locations were evaluated for city-standard access road(s) and public utilities within 100 ± feet of the site. Parcels not meeting this test were removed from further study. 1. 2. 3. 4. 5. 6. APPENDIX B - COMMITTEE REPORT 90 of 167 Adult Uses Planning Study Page 31 of 34 When evaluating the subject parcels staff made efforts to determine whether or not a developed parcel was encumbered with a long-term lease. This was done by pulling available title reports and reading through deed histories available by the Skagit County Assessor’s office for parcels identified on Map 5.0. Nearly all of the parcels within the area being evaluated are within the 100-year floodplain as shown on Map 6.0. FEMA identifies the flood zone these areas are located in as Zone AO (Depth 1) at the far north of the area closest to Blackburn Road and Zone AO (Depth 2) across the remaining areas. Just because property is located in a flood zone it is not precluded from development. Rather, the City’s development regulations (Chapter 15.36 of the MVMC, that are subject to continued review and approval by FEMA and the WA State Department of Ecology) require property developed in these flood zones to either elevate their buildings or flood proof them. In the AO (Depth 1) zone the finished floor of a building (not parking areas – just buildings) is required to be elevated two foot above the average adjacent grade or have the first two feet above grade flood proofed and in the AO (Depth 2) zone the finished floor of a building is required to be elevated three feet above the average adjacent grade or have the first three feet above grade flood proofed. Accompanying this study in Appendix B is a spreadsheet of the parcels that staff has identified as being reasonably available to be developed for adult uses. In addition to the spreadsheet there are copies of as-built maps proving the availability of infrastructure, site specific wetland reports, and documentation of the location of type of streams that flow through this area. Table 10.0 summarizes the total number and acreage of sites available on property zoned C-L south of Blackburn Road and east of the BNSF rail line shown on Map 5.0. TABLE 10.0: SUMMARY OF SITE THAT COULD BE DEVELOPED WITH ADULT USES # OF SITES AVAILABLE FOR DEVELOPMENT OR RE- DEVELOPMENT # OF SITES AVAILABLE FOR DEVELOPMENT OR RE- DEVELOPMENT FULLY DEVELOPED SITES THAT COULD HAVE A NEW TENANT 68 123.7 acres PARTIALLY DEVELOPED SITES THAT COULD ACCOMMODATE AT LEAST A 10,000 S.F. NEW DEVELOPMENT (BUILDING + PARKING + LANDSCAPING) 14 33.5 acres VACANT SITES THAT COULD ACCOMMODATE AT LEAST A 10,000 S.F. NEW DEVELOPMENT(BUILDING + PARKING + LANDSCAPING) 13 21.7 acres TOTAL OF ALL CATEGORIES 95 178.8 acres APPENDIX B - COMMITTEE REPORT 91 of 167 Adult Uses Planning Study Page 32 of 34 With the information found in Appendix B, shown on Map 5.0, and summarized in Table 10.0 staff is able to calculate the percentage of the City’s overall commercial/industrial acreage potentially available for adult uses as well as the number of sites potentially available in relation to the City’s population as follows. TABLE 11.0: POTENTIAL ADULT USE AREAS & RELATIONSHIP TO POPULATION & ACREAGE 2015 POPULATION 1 # SITES AVAILABLE FOR ADULT USES 2 RATIO 33,350 95 1 available site per every 351 people CITY WIDE COMMERCIAL AND INDUSTRIAL ACREAGE 3 TOTAL ACREAGE AVAILABLE FOR ADULT USES 2 PERCENT 1,038 178.8 17.2% 1 2015 population: Office of Financial Management (2016, April 1). Population of Cities, Towns and Counties Used for Allocations of Selected State Revenues State of WA. 2 See page 28, Map 5 and Appendix B of this report for this data 3 See page 14, Table 5.0, aggregate of C-2, C-L, M-1, and M-2 zones TABLE 12.0: COMPARISON OF MOUNT VERNON ADULT ENTERTAINMENT USE AREAS TO OTHER JURISDICTIONS JURISDICTION RATIO OF SITES AVAILABLE FOR ADULT USES TO POPULATION PERCENT OF JURISDICTION WIDE COMMERCIAL/INDUSTRIAL ACREAGE AVAILABLE FOR ADULT USES Mount Vernon 1 available site per every 351 people 17.2% Snohomish County 1 1 available site for every 3,805 people 7% San Diego County 1 1 available site per every 6,911 persons 4.46% City of Everett 1 available site per every 3,522 persons 2, 3 NA 1 McKibben v. Snohomish County, 72 F. Supp. 3d 1190 (2014) – court case cites the ratio and percentages listed within this table 2 Wallock v. City of Everett, Central Puget Sound Growth Management Hearing Board, WA State, Case No. 96-3-0025, Final Decision and Order. This case references the fact that Superior Court Judge Anita Farris made findings in the related Superior Court case including that she found there were 24 parcels of lots to choose from. 3 In 1996 when the above referenced Wallock v. City of Everett case (No. 96-3-0025) was heard by the Central Puget Sound Growth Management Hearings Board the population of the City of Everett was listed at 84,534 by the Office of Financial Management in their Intercensal Estimates of April 1 Population and Housing, 1990-2000. APPENDIX B - COMMITTEE REPORT 92 of 167 §¨¦5 §¨¦5 ¬¬538 ¬¬536 ¬¬9RIVERSIDEDR E SECTION ST E FIR ST B LOD G E T T RDN 4TH STE BLACKBURN RDS18THSTMCLEAN RD MARTIN RD W BLACKBURN RDS 1ST STS 15TH STROOSEVELT AVE N 18TH STW HAZEL ST BROAD ST ANDERSON RD HOAG RD N WAUGH RDE BRO A D W A Y STN 15TH STN LAVENTURE RDCONTINENTALPLF RANCIS R D CEDARDALE RDFREEWAYDRN 30TH STN MARTIN RDDIGBY RDOLD HIGHWAY 99 SS 2ND STS30THSTSKAGITHIGHLAND S PKW YURBAN AVES LAVENTURE RDL I T T LE M O UNTAINRD "Adult Uses" Planning StudyMap 6.0FEMA 100-year Floodplain FEMA 100-yr Floodplain City Boundary Water Body Map updated 10/25/2016 by MV GIS, Parcel data courtesy of Skagit County GIS The City of Mount Vernon does not warrant, guarantee or accept any liability for the accuracy, precision or completeness of any information shown or described hereon or for any inferences made therefrom. Any use made of this information is solely at the risk of the 0 2,500 5,000Feet E APPENDIX B - COMMITTEE REPORT 93 of 167 "Adult Uses" Planning Study MAP 6.0B APPENDIX B - COMMITTEE REPORT 94 of 167 APPENDIX B - COMMITTEE REPORT95 of 167 ADULT ENTERTAINMENT ADVISTORY COMMITTEE AGENDA 2nd Meeting December 22, 2016 2 PM –3 PM City Hall - 910 Cleveland Ave Downstairs Conference Room 2 – 2:10 REVIEW AND APPROVAL OF 11.29.16 MEETING MINUTES 2:10 – 2:35 CREATE COMMITTEE GOALS 2:35 – 2:50 ORGANIZE WORK/MEETINGS CONSISTENT WITH GOALS 2:50 – 3 PUBLIC COMMENTS Public comment or testimony to be taken should anyone wish to attend and provide such comment or testimony 3 ADJOURN ATTACHED: • Suggestions for creating a framework of Committee Goals APPENDIX B - COMMITTEE REPORT 96 of 167 City of Mount Vernon Adult Entertainment Zoning and Licensing Committee APPROVED - Minutes from December 20, 2016 THOSE PRESENT: Rebecca Lowell (City Staff), Krista Jewett (City Staff), Rudy Kerkvliet, Ryan Hagman, Kari Matson, Lisa Zacherl, and Brian Gentry DISCUSSION: The meeting began at 2 pm. A motion by Ryan Hagman and a second by Lisa Zacherl, motion passed and the 11.29.16 minutes were approved. R. Lowell discussed what secondary negative impacts were and how the committee needed to determine whether or not adult uses created secondary negative impacts. Goal is to create a list of these impacts at the December 27, 2016 meeting. Discussion ensued within the group about impacts. R. Lowell explained the process of determining the suggested area for the Adult Entertainment area. R. Lowell outlined a proposed schedule for the committee that would culminate in a recommendation to the Planning Commission on February 7th. ADJOURN: 3 PM APPENDIX B - COMMITTEE REPORT 97 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE GOAL FRAMEWORK DETERMINE WHETHER OR NOT ADULT ENTERTAINMENT USES PRODUCE NEGATIVE SECONDARY IMPACTS. 1. YES NO What are the negative secondary impacts? 2. How should these uses be regulated? 1. Separations from Sensitive Uses? 2. Which Zoning District to be Located Within? Increased Crime Declining Property Values Deterioration of Areas Increased Crime Creation of an Atmosphere for Crimes Incompatibility with other uses 3. Demonstrate there exists ample opportunities for adult entertainment uses to operate within the parameters selected to regulate this use. 4. APPENDIX B - COMMITTEE REPORT 98 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE GOAL FRAMEWORK GOALS SCHEDULE 1. Determine whether or not adult entertainment uses produce negative secondary impacts. December 27th initial yes/no 2. What are the negative secondary impacts? December 27th preliminary list of impacts 3. How should these uses be regulated? Both January meetings 4. Demonstrate there exists ample opportunities for adult entertainment uses to operate within the parameters selected to regulate this use. CEDD staff to assist with this 5. Other? February 7th Open Record Public Hearing with Planning Commission APPENDIX B - COMMITTEE REPORT 99 of 167 APPENDIX B - COMMITTEE REPORT100 of 167 ADULT ENTERTAINMENT ADVISTORY COMMITTEE AGENDA 3rd Meeting December 27, 2016 2 PM –3 PM City Hall - 910 Cleveland Ave Downstairs Conference Room 2 – 2:10 REVIEW AND APPROVAL OF 12.20.16 MEETING MINUTES 2:10 – 2:35 REVIEW OF SECONDARY NEGATIVE IMPACTS AND PRELIMINARY LIST OF THESE IMPACTS IN MOUNT VERNON 2:35 – 2:50 ZONING 101, LAND USES 2:50 – 3 PUBLIC COMMENTS Public comment or testimony to be taken should anyone wish to attend and provide such comment or testimony 3 ADJOURN ATTACHED: • MS PowerPoint Slides from 12.20.16 Meeting APPENDIX B - COMMITTEE REPORT 101 of 167 City of Mount Vernon Adult Entertainment Zoning and Licensing Committee APPROVED - Minutes from December 27, 2016 THOSE PRESENT: Rebecca Lowell (City Staff), Krista Jewett (City Staff), Rudy Kerkvliet, Kari Matson, Lisa Zacherl, Kathleen Bisagna and Brian Gentry. DISCUSSION: The meeting began at 2 pm. A motion by Rudy Kerkvliet and a second by Lisa Zacherl, motion passed and the 12.20.16 minutes were approved. R. Lowell explained that the group would need to establish if secondary negative impacts would be created. Discussion ensued. Lisa Zacherl made a motion that the committee does agree that secondary impacts would be created. Brian Gentry made the second and the motion passed. Discussion on the topic of signage and window dressing regulations, regulating hours of operation. Along with Primary and Secondary uses. Discussion continued within the group about impacts. ADJOURN: 3 PM APPENDIX B - COMMITTEE REPORT 102 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE DECEMBER 20, 2016 WWW.MOUNTVERNONWA.GOV APPENDIX B - COMMITTEE REPORT 103 of 167 COMMITTEE GOALS Goals set out in Ordinance 3698: 1. Determine whether or not adult entertainment uses produce negative secondary impacts. 2. If yes, what are negative secondary impacts? 3. How should these uses be regulated? 4. Demonstrate there exists ample opportunities for these uses to operate within the regulatory scheme proposed. APPENDIX B - COMMITTEE REPORT 104 of 167 COMMITTEE GOALS 1.Determine whether or not adult entertainment uses produce negative secondary impacts. To answer this we first need to define what are negative secondary impacts. APPENDIX B - COMMITTEE REPORT 105 of 167 COMMITTEE GOALS Definition of negative secondary impacts: Secondary Impacts = Indirect Impacts that occur as a result of an adult entertainment use locating in a neighborhood. Commonly cited impacts include: increased crime, declining property values, deterioration of areas, creation of an atmosphere for crimes, incompatibility with other uses. APPENDIX B - COMMITTEE REPORT 106 of 167 COMMITTEE GOALS Permanent Ordinance must be evidence based – BUT: •Can rely on any evidence that is “reasonably believed to be relevant” •We are not required to come forward with empirical data in support of the rational •We need not perform our own studies into secondary effects; rather, “reliance on the experiences of other jurisdictions is sufficient to satisfy the City’s minimal burden at the legislative stage” APPENDIX B - COMMITTEE REPORT 107 of 167 COMMITTEE GOALS Starting Point: The binders with studies from Bellevue, DesMoines, Federal Way, Kelso, Kent, and Olympia have been provided as the starting point for documenting negative secondary impacts. APPENDIX B - COMMITTEE REPORT 108 of 167 GOALS SCHEDULE 1. Determine whether or not adult entertainment uses produce negative secondary impacts. December 27th initial yes/no 2. What are the negative secondary impacts? December 27th preliminary list of impacts 3. How should these uses be regulated? Both January meetings 4. Demonstrate there exists ample opportunities for adult entertainment uses to operate within the parameters selected to regulate this use. CEDD staff to assist with this 5. Other? February 7th Hearing with the Planning Commission APPENDIX B - COMMITTEE REPORT 109 of 167 APPENDIX B - COMMITTEE REPORT110 of 167 ADULT ENTERTAINMENT ADVISTORY COMMITTEE AGENDA 4th Meeting January 10, 2017 5:15 PM –6:15 PM City Hall - 910 Cleveland Ave Downstairs Conference Room 5:15 – 5:25 REVIEW AND APPROVAL OF 12.27.16 MEETING MINUTES 5:25 – 5:45 REVIEW OF SECONDARY NEGATIVE IMPACTS, CONTINUATION OF THE LIST OF THESE IMPACTS, AND NEW STUDIES/DATA 5:45 – 6:05 SENSITIVE LAND USES 6:05 – 6:15 PUBLIC COMMENTS Public comment or testimony to be taken should anyone wish to attend and provide such comment or testimony 6:15 ADJOURN ATTACHED: • Secondary Negative Impact Data from the City of Everett’s Legislative Record • Secondary Negative Impact Data related to Human Trafficking • List of Sensitive Land Uses Staff has Previously Identified APPENDIX B - COMMITTEE REPORT 111 of 167 City of Mount Vernon Adult Entertain Advisory Committee Meeting Minutes from January 10, 2017 The meeting opened at 5:15 pm. Present were Committee members Rudy Kerkvliet, Ryan Hagman, Kathleen Bisagna, Kari Mattson and Liza Zacherl. City staff members included Senior Planner Rebecca Lowell and Administrative Assistant Linda Beacham. Minutes: Mr. Hagman moved, second by Mr. Kerkvliet, to approve the minutes from the December 27, 2016 meeting. Review of Secondary Negative Impacts: Mrs. Lowell provided additional studies from other cities and agencies. Some studies included human trafficking and prostitution as a secondary negative impact. A brief discussion regarding human trafficking ensued. The Committee reviewed a list of secondary negative impacts which included declining property values, deterioration of nearby areas, incompatible with other uses, and a decline in tourism. Discussion regarding the definitions of commercial and industrial zones, buffer zones and establishing restrictions followed. Sensitive Land Uses: A list of sensitive land uses identified by other jurisdictions was provided. Other sensitive uses may include schools, residential zones and uses, and establishments serving alcohol. Committee members requested to review other codes from local municipalities such as Oak Harbor and Burlington. There being no further business the committee adjourned. APPENDIX B - COMMITTEE REPORT 112 of 167 Share Advertisement 3 Baltimore strip clubs raided in human trafficking case FBI, Baltimore police execute raid Updated: 5:54 PM EDT Jun 26, 2015 Watch on DemandNOWCAST 0 42° APPENDIX B - COMMITTEE REPORT 113 of 167 Saliqa Khan WBALTV.com writer BALTIMORE — Three strip clubs in Baltimore were raided in connection with a human trafficking case, local and federal authorities said. Advertisement APPENDIX B - COMMITTEE REPORT 114 of 167 RELATED CONTENT Baltimore police raid clubs on The Block Mobile users tap here to watch video The FBI said the raids are part of a joint investigation involving federal agents, Baltimore police and the Baltimore City State's Attorney's Office. Officials raided clubs on The Block, also known as Baltimore Street, at 9:30 p.m. Thursday, and it lasted well into Friday morning, an FBI representative said. Police brought search warrants as they entered Club Chez, Joey, Diamond Lounge and Lust. Officials would not say what exactly led them to conduct the raids, what evidence they found or if any arrests were made. They would only say the investigation is ongoing. Harry Collins was walking on Baltimore Street when he noticed officers come in and shut down the area. "I didn't know what to think. I mean, I saw two police cars and there wasn't any traffic. All the buses had to divert onto South Street, so I didn't really know what was going on until I saw a whole bunch of police, so I guessed a raid went on," Collins said. Kya Mack, a dancer and bartender at one of the strip clubs, said she is not surprised about the raids since police headquarters is just a block away. "They are right there, and they're always up here checking to see if things like that are happening," Mack said. Mack said she does not know why police targeted the clubs, but she is aware that sex trafficking is happening in the area. APPENDIX B - COMMITTEE REPORT 115 of 167 "I can't say they are doing it at the clubs, but they are doing it on the street," Mack said. This wasn't the first time this year police raided The Block. In March, Chez Joey, Lust, two other clubs and some homes were searched. At that time, Baltimore police told the 11 News I-Team that they had found possible links between the clubs and criminal acts in other parts of the city. Detectives confiscated drugs, money and ammunition in those raids. Police have not said if there is a link between that raid and this one. WBAL-TV 11 News I-Team reporter Barry Simms contributed to this report Advertisement Trump fever for many Kurds Updated: 2:33 PM EST Jan 2, 2017 APPENDIX B - COMMITTEE REPORT 116 of 167 RELATED APPENDIX B - COMMITTEE REPORT 117 of 167 APPENDIX B - COMMITTEE REPORT 118 of 167 06/25/2015 07:44 am ET | Updated Jun 26, 2015 Andy Campbell Crime And Weird News Editor, The Huffington Post ANDY CAMPBELL / THE HUFFINGTON POST PORTLAND, Ore. — In late August last year, a 15-year-old girl was forced to strip off her clothes and dance naked at Stars Cabaret in nearby Beaverton. She had been missing since early July, after running away from a drug abuse treatment center. It took less than two months for her pimp, Anthony Curry, to find her, allegedly rape her repeatedly, advertise her body on escort sites like Backpage and force her to dance on stage in several area strip clubs. Each night, Curry would take the money and repay her in shopping trips and a false sense of security, according to court documents. Curry was arrested in September and convicted earlier this month in neighboring Washington County on seven counts of using a child to display sexually explicit conduct. He faces additional charges of rape and compelling prostitution in Multnomah county, where Portland is located. Vesna Vulovic, Survivor Of Mid-Air Plane Explosion And 33,000- Foot Fall, Dies At Age 66 Stars Slam ‘Hidden Figures’ Singer’s Homophobic Sermon The 12 Types Of Trips You Should Take In Your Lifetime Mariah Carey’s Disastrous New Year’s Eve Performance Was Producers’ Fault, Reps Say APPENDIX B - COMMITTEE REPORT 119 of 167 The Huffington Post doesn’t name the victims of sex trafficking, especially minors. But in many ways, this teen had her childhood taken away from her. She struggled through addiction and was bought and sold on the sex market — all before she could legally drive a car. Her innocence is gone. She shares her story with hundreds of other children who are trafficked in and around Portland each year. Between 2009 and 2013, 469 children were identified as victims of commercial sexual exploitation in the Portland metro area, according to a study by Portland State University Associate Professor Chris Carey. And those are the victims that were referred to the state Department of Human Services and local nonprofits — the number of cases that go unreported is much, much higher. “This is just the tip of the iceberg. The problem is real,” said Sarah Ohlsen, who works on a county Commercial Sexual Exploitation of Children (CSEC) steering committee dedicated to tackling the area’s sex trafficking issues. Victim advocates say Portland is a hub for such exploitation, due to its abundance of strip clubs and online services — as well as a high demand for sex online. But it’s hard to know for certain because nationwide statistics are elusive. Sex trafficking is a transient crime, local police say — pimps and gangs will sell victims from California to Portland and when business is slow, they’ll move to Seattle or Vegas. For that reason, it’s difficult to compile sex trafficking stats in any given community, or to argue definitively that Portland’s issues are worse than, say, Seattle’s. But local agencies were surprised at just how prevalent Portland’s problem is. Recent high-profile trafficking cases like Curry’s have put child sex trafficking back in the media spotlight. “I was surprised when I saw the numbers,” Carey said. “Is Portland a ‘hub’ or is it media hype that’s bringing these cases to light? It’s hard to say. What we do know is that these 469 cases are only the ones that made contact with the state system,” he said. “The next step is trying to find a predictive model for this crime.” The Tip Of The Iceberg In addition to Carey’s findings, the sheriff’s office identified 421 suspected sex traffickers between 2009 and late 2014 in a Multnomah County annual report. Each one of those suspects, Ohlsen said, is likely trafficking more than one victim. It’s hard to catch and convict those suspects because their cases require a victim willing to testify — and pimps and gangs can intimidate witnesses. Many Americans Don’t Believe Trump Can Handle Presidential Duties Never miss a thing. Sign up for up-to-the- minute breaking news alerts delivered straight to your inbox. Learn more address@email.com Subscribe NowSubscribe NowSubscribe NowSubscribe Now 970 K970 K970 K970 K 61.7 K61.7 K61.7 K61.7 K 462 K462 K462 K462 K PodcastPodcastPodcastPodcast Add us on SnapchatAdd us on SnapchatAdd us on SnapchatAdd us on Snapchat APPENDIX B - COMMITTEE REPORT 120 of 167 Police say it’s easier to trade humans than drugs. “You can’t intimidate an ounce of crack into not testifying against you — you can intimidate a person,” said Sgt. Chris Lindsey with the Portland Police Sex Trafficking Unit. “You can threaten them; you can threaten their family. I’d put the number at higher than 50 pimps trafficking at any given time.” The fact that police are finding more traffickers is a sign of progress — it means that more resources are being funneled toward identification and prosecution. Carey and Ohlsen’s studies were unprecedented before local police began to characterize child prostitutes as sex trafficking victims in 2009. It’s a step in the right direction: the classification places more of the burden on trafficking suspects than victims. Here are some more of Carey’s findings: • 469 child sex trafficking victims were identified between 2009 and 2013. • The average age of victims was 15. The youngest was 8. • 96 percent of the victims were female. • 40 percent of the victims were white, 27 percent were black and 5 percent were Hispanic. • Nearly 17 percent of victims had a child of their own when they were identified. • 62 percent of victims were dealing with addiction issues. Police say most of the adults working on the streets in Portland started as minors. Most victims are young and vulnerable when they’re lured in by pimps and gangs and many become addicts if they weren’t already. The Strip Club Problem Portland has more clubs per capita than any U.S. city, according to Willamette Week. Each has its own protections in the form of a free-speech clause in the state APPENDIX B - COMMITTEE REPORT 121 of 167 constitution that makes strip clubs difficult to regulate. Article 1, Section 8 forbids laws “restraining the free expression of opinion, or restricting the right to speak, write or print freely on any subject whatever.” The constitution allows clubs to pop up almost anywhere, unlike in other states where they can be heavily restricted by zoning regulations. Moreover, dancers are considered “contractors” and not required to have permits that would make it easier for police to identify underage victims, The Oregonian reported. Curry’s case is an example of how strip clubs can be used for the trafficking of minors. The pimp used Stars Cabaret in Beaverton and other clubs to pimp out his 15-year-old victim, Washington County Prosecutor Kevin Barton said. All Curry had to do was get her a fake ID and she could dance nude for patrons. Just before Curry’s arrest, Stars Cabaret manager Steven Toth was convicted in an unrelated but similar case. Toth turned a blind eye when a 13-year-old girl was being pimped out in Toth’s club by Victor Moreno-Hernandez. Toth and Moreno- Hernandez were both convicted and Toth was sentenced to 15 years in prison. Their cases prompted a Stars manager to identify Curry’s victim as a minor to police. From left to right: Anthony Curry, Victor Moreno-Hernandez and Steven Toth. All three were convicted for their role in child trafficking crimes at Stars Cabaret in Beaverton. Current Stars Cabaret owners — who are currently fighting the state Liquor Control Commission’s proposal to cancel their liquor license because of the club’s connection to criminal activities — declined to comment. “Strip clubs serve as fertile ground for the problem to fester,” said Sgt. Charles Lovell of the Portland Police Bureau. “Generally speaking, you have guys there, with money, already looking for sex. If you are a pimp or a sex trafficker, it’s a good place to peddle your services.” Because the demand to pay for sex is high at strip clubs, it’s still easy to sell sex in public, he said. APPENDIX B - COMMITTEE REPORT 122 of 167 “If you’re in a gang and you’re selling drugs to make money, if you get caught with those, you’re in trouble right off the bat — just possessing them is illegal,” Lovell said. “For sex trafficking, if you have a girl working and they’re loyal and not willing to cooperate with the police or tell on you, it’s very difficult to get them in any trouble. The risk is much lower.” But even more underage sex trafficking occurs online, police say. Hundreds of ads are placed on Backpage.com and other known trafficking sites each week, Ohlsen said. What’s Being Done The CSEC steering committee Ohlsen sits on was created in 2009 to allow educators, sexual assault aid and advocacy groups and law enforcement agencies to coordinate in fighting child sex trafficking. Awareness of the issue has allowed for more state and federal funding to be funneled to victim advocacy and criminal education. “People think sex trafficking is an international situation. I don’t think people are fully aware that seemingly legal industries can be hotbeds for this type of crime,” Ohlsen said. “We have made a lot of progress in education and awareness and better understanding that we do have a problem.” Indeed, her annual report shows more victims and perpetrators are being identified each year. Since the Sex Trafficking Unit’s inception in 2009, more buyers are being arrested while the arrest numbers for women working in the sex trade are falling. The report states: It is important to note that the reduction we see in the arrest of women does not indicate that demand is being reduced. It is instead a conscious choice by the officers of the Sex Trafficking Unit to handle these cases differently – meaning women are treated as victims, not criminals. As a collaboration, we understand that victimization does not stop because someone has become a legal adult. The Sex Trafficking Unit officers’ primary goal for the women they APPENDIX B - COMMITTEE REPORT 123 of 167 encounter is to offer them support services and treatment options. The goal is to support them in recovery. Because of that, officers spend a lot more resources working with victims. Prosecutors have taken a victim-centered approach to focus on convicting traffickers and helping victims, Ohlsen said. The state’s Department of Human Services also has a dedicated CSEC unit, started in May 2011, to identify victims and help them. That unit helps about 65 youth at any given time. Police, meanwhile, are trying to get ahead of the problem by going into schools and educating both potential victims and criminals. Educators are teaching children as young as 13 — the average age that prostitutes start as sex trafficking victims — to look out for signs of trafficking, Lovell said. “Part of what we have to do as a community is change people’s mind about purchasing sex,” Ohlsen said. “We have to disrupt transactions, identify sex trafficking when it happens and build an environment where it’s not ok to buy.” More:More:More:More: Suggest a correctionSuggest a correctionSuggest a correctionSuggest a correction Portland Victor Moreno-hernandez Anthony Curry Steven Toth Portland Strip Clubs Just Type in Your Name, Wait 10 Seconds, Then Brace Yourself Truthfinder People Search Subscription Mount Vernon: This Meal Service is Cheaper Than Your Local Store Home Chef This Credit Card is Charging 0% interest Until June 2018 Credit Cards by Offers.com The Most Addictive Game Of The Year! Forge Of Empires - Free Online Game 2 Credit Cards With 0% Interest for 21 Months NextAdvisor Jessica Alba and Angelina Jolie Love This $285 Leather Tote APPENDIX B - COMMITTEE REPORT 124 of 167 Human trafficking, drug activity at Treasures strip club, alleged by prosecutors MICHAEL REED, Regional News Bureau Published 11:18am , Wednesday, May 16, 2012 The city of Houston and Harris County joined forces Wednesday to file a lawsuit asking that the strip club, Treasures, be ordered closed for alleged ties to human trafficking and drug activity. APPENDIX B - COMMITTEE REPORT 125 of 167 The club, 5647 Westheimer Road, according to the suit, has a history of ignoring drug use on the property and allowing prostitution. “The evidence of human trafficking makes this place especially abhorrent,” said City Attorney David Feldman. “Law enforcement efforts alone have not stopped the habitual criminal activity occurring there.” “Trafficking,” under Texas law, means to “transport, entice, recruit, harbor, provide or otherwise obtain another person by any means.” Law enforcement officials reported within the past year, at least five gang-related activities, including prostitution and delivery of controlled substances, have taken place at Treasurers with more than 30 crimes having occurred on the premises during the last four years. “Gang activity,” under Texas law means organized crime that includes prostitution and the delivery of controlled substances. APPENDIX B - COMMITTEE REPORT 126 of 167 Reached Wednesday afternoon, an employee of Treasures said, “Our official comment is ‘no comment.’” The suit, filed in the 164th District Court, alleges the pattern of repeated behavior is evidence that Treasurers knowingly permits these acts. “Treasures allows pimps to traffic their women inside Treasures,” the suit alleges. “And through force, fraud or coercion, pimps cause these women to engage in prostitution. Treasures knowingly receives a benefit from participating in the prostitution trafficking venture.” The plaintiffs list 40 prostitution and drug-trafficking incidents handled by police at the club since January 2008. The most recent were for one act of prostitution on May 3 and six acts of prostitution and one act of promoting prostitution on April 26. The most recent cited drug offense was for delivery of a controlled substance on April 21. When a place allows criminal acts to continue, criminals keep coming back,” County Attorney Vince Ryan said. “You must take away the habitat to fix the problem.” APPENDIX B - COMMITTEE REPORT 127 of 167 APPENDIX B - COMMITTEE REPORT 128 of 167 APPENDIX B - COMMITTEE REPORT 129 of 167 SENSITIVE USES IDENTIFIED BY MOUNT VERNON TO-DATE SENSITIVE USE: DEFINITION OF SENSITIVE USE: PARKS A tract of land owned or maintained by a public entity that is designated for and used by the public for active and passive recreational activities. TRAILS Linear shaped facilities designed and intended for the public to walk, run, or otherwise travel across that are owned or maintained by the City of Mount Vernon. CHURCHES Are buildings or structures, or groups of buildings or structures, which by design and construction are primarily intended for the conducting of organized religious services and accessory uses associated therewith. SCHOOLS Any building or part thereof designed, constructed, or used for formal educational uses that are recognized by the Washington state superintendent of public instruction. This definition includes both public and private schools. CHILD CARE CENTERS Are facilities that regularly provide child day care and early learning services for a group of children for periods of less than twenty-four hours licensed by the Washington state department of early learning under chapter 170-295 WAC. LIBRARIES Facilities that include organized collection of resources made accessible to the public for reference or borrowing supported with money derived from taxation. GAME ARCADES Are entertainment venues featuring primarily video games, simulators, and/or other amusement devices where persons under twenty-one years of age are not restricted. APPENDIX B - COMMITTEE REPORT 130 of 167 SENSITIVE USES IDENTIFIED BY OTHER JURISDICTIONS JURISDICTION SENSITIVE USES DEFINED EVERETT Public Library Public playground or park Public or private school and its grounds, from kindergarten to twelfth grade Nursery school or day care center Church, temple, mosque, synagogue, or other place of religious worship Lot located in Residential zones FEDERAL WAY Public Park Library Day care center for children, nursery, or pre-school Church or other facility or institution used primarily for religious purposes Public or private elementary or secondary school KELSO Existing youth-oriented business or activity defined as: “Youth-oriented business or activity” means a business utilizing a permanent building or facility where children under the age of eighteen years are invited onto the business premises in conjunction with such business activity and at least fifty percent of the business revenue is generated from their patronage. KENNEWICK Residential zone Public or private school, or any trade or vocational school that on a regular basis has at least one student under the age of eighteen years Church or other religious facility or institution Park or any public facility or open space zone KING COUNTY Certain residential zones Schools Licensed daycare centers Public Parks or trails Community centers Public Libraries Churches MUKILTEO Residential zones Public Park Public library Public or private nursery school or preschool Public or private primary or secondary school Daycare Community Youth Center Place of Worship OAK HARBOR Schools Religious institutions Parks Certain Residential Zones APPENDIX B - COMMITTEE REPORT 131 of 167 SENSITIVE USES IDENTIFIED BY OTHER JURISDICTIONS, CONTINUED JURISDICTION SENSITIVE USES DEFINED THURSTON COUNTY Property used for public and private schools; Property used for public parks; Property used for public libraries; Property used for state-certified day care; Property used for public community centers; Property used for churches, cemeteries or other religious facilities or institutions; Certain residential zones VANCOUVER Public park Child care facility licensed by the State of Washington Preschool Permanent religious institution Public or private elementary, middle, junior high or high school Certain residential districts SNOHOMISH COUNTY Private School Preschool Educational Institution Church or other Religious Facility Public or Private Park Youth Oriented Facility Establishment Serving Alcohol by the Drink APPENDIX B - COMMITTEE REPORT 132 of 167 APPENDIX B - COMMITTEE REPORT133 of 167 ADULT ENTERTAINMENT ADVISTORY COMMITTEE AGENDA 5th Meeting January 31, 2017 5:15 PM –6:15 PM City Hall - 910 Cleveland Ave Downstairs Conference Room 5:15 – 5:25 REVIEW AND APPROVAL OF 1.10.16 MEETING MINUTES 5:25 – 5:45 REVIEW OF SECONDARY NEGATIVE IMPACTS, CONTINUATION OF THE LIST OF THESE IMPACTS, AND NEW STUDIES/DATA 5:45 – 6:05 DISCUSSION ON FEBRUARY 7, 2017 PLANNING COMMISSION MEETING 6:05 – 6:15 PUBLIC COMMENTS Public comment or testimony to be taken should anyone wish to attend and provide such comment or testimony 6:15 ADJOURN ATTACHED: • Meeting Minutes from 1.10.16 • Secondary Negative Impact Data – additional studies and graphic materials • Other Skagit County jurisdiction’s zoning codes APPENDIX B - COMMITTEE REPORT 134 of 167 City of Mount Vernon  Adult Entertainment Zoning and Licensing Committee  Minutes from January 31, 2017    The meeting opened at 5:15. Present were Committee members Kathleen Bisagna, Lisa Zacherl, Rudy  Kerkvliet, and Ryan Hagman. Senior Planner Rebecca Lowell and Administrative Assistant Linda Beacham  from the City were also present.  Mount Vernon resident Scott Correa was in attendance. Committee  members Kari Matson and Brian Gentry were absent    Minutes:  Mr. Hagman moved, second by Ms. Bisagna, to approve the minutes from January 10, 2017. Motion  carried.    Continuation of Review of Secondary Negative Impacts and New Studies:   The Committee discussed additional secondary negative impacts. Declining property values, loss of  tourism and customers to other businesses; risks to public health from patron behavior were among the  negative impacts discussed.      There was discussion on the areas that would be suitable for adult entertainment businesses.   Mrs. Lowell will provide maps for viewing by the Committee. The goal is to present the committee’s final  draft to the Planning Commission in March.    Public Comment:  Scott Correa, Mount Vernon resident, stated the City Council uses south Mount Vernon to dump  unattractive uses such as marijuana, bikini barista and County jail. Mrs. Lowell stated the jail site was  chosen by the County. Several committee members responded they have a vested interest as they have  a business and family that lives or attends school in south Mount Vernon.  Mr. Correa offered to assist  the committee if they need additional help.    There being no further business the meeting adjourned.  APPENDIX B - COMMITTEE REPORT 135 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE NEGATIVE SECONDARY IMPACTS ANALYSIS DRAFT WORK PRODUCT – PROVIDED AT 1.31.17 MEETING Page 1 of 10 INTRODUCTION: Negative secondary impacts are defined as indirect negative impacts that occur as a result of an adult entertainment use locating in a geographic area. Research compiled to-date shows that numerous communities both in Washington State and across the Country have experienced negative secondary impacts from adult uses. Evaluating experiences from other jurisdictions that have experience with regulating adult uses is important because Mount Vernon is able to learn from these experiences and adopt regulations to mitigate the negative impacts others have endured. A summary of some of the more significant negative impacts from existing adult entertainment uses in other jurisdictions are briefly summarized below. APPENDIX B - COMMITTEE REPORT 136 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE NEGATIVE SECONDARY IMPACTS ANALYSIS DRAFT WORK PRODUCT – PROVIDED AT 1.31.17 MEETING Page 2 of 10 NEGATIVE SECONDARY IMPACTS DOCUMENTATION/EVIDENCE: 1A. INCREASED INCIDENCE OF CRIME 1B. CREATION OF AN ATMOSPHERE FOR CRIMES “…between 1969 and 1972, the number of adult theaters in the City of Detroit increased from 2 to 18 and the number of adult bookstores rose from 2 to 21. During the same period, the incidence of crime in and around these establishments increased dramatically” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “Similar to Detroit, the City of Cleveland experienced a rapid increase of adult uses during the early 1970’s…In 1976, 26 adult businesses (8 theaters and 18 bookstores) were located in Cleveland’s 204 census tracts. The same year, the two census tracts having the highest rates of crime had a total of 8 pornography outlets. Cleveland Police statistics showed that during 1976 there was an average of 20.5 robberies per census tract. In the 15 census tracts which contained adult businesses, the average was nearly double at 40.5 robberies. A single census tract which contained 5 pornography outlets and a population of only 730 persons had a total of 136 robberies. The statistics for rape echoed the same pattern as for robbery. The citywide average of rape in Cleveland in 1976 was 2.4 per census tract. In the 15 census tracts containing pornography outlets, the rate was double that” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “The City of Kent, Washington had similar experiences with the Roadside Inn Tavern. Prior to its forced closing, the Roadside Inn offered topless dancing and table dancing in conjunction with its selling of alcoholic beverages. Kent police investigations conducted in the summer of 1981 revealed a very high incidence of criminal activity at the Roadside, related primarily to six crimes (prostitution) and drug related offenses” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “Bothell’s experiences with Mama Hoopah’s in 1982 demonstrated similar association between the use (an adult dance hall) and the occurrence of crime. Research by the Bothell Police Department also demonstrated the regional attraction that such an establishment can have. In one investigation of the 321 vehicles checked, 8 were registered in Bothell with most of the remainder from the Puget sound region, though others had out of state registration. This is potentially significant in that nonresidents of an area may be less inhibited in their personal behavior when away from their community” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “…testimony by individuals involved in the North End Cinema (located in North Seattle) indicated that the property owners sited…increased crime, and other factors in their concern about the nuisance element of this theater” [Thorpe, R.W. (1984). Des Moines Adult Use Study. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/d44adult.pdf] “Discussions with the City Planner reviewed the history of their attempts to remove an adult theater use from downtown Aberdeen. The City Planner cited increased instance of crime” [Thorpe, R.W. (1984). Des Moines Adult Use Study. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/d44adult.pdf] APPENDIX B - COMMITTEE REPORT 137 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE NEGATIVE SECONDARY IMPACTS ANALYSIS DRAFT WORK PRODUCT – PROVIDED AT 1.31.17 MEETING Page 3 of 10 “Discussions with members of the City Planning Staff (City of Redmond) indicate that problems similar to the North End Cinema were cited related to crime, late night disturbances…[Thorpe, R.W. (1984). Des Moines Adult Use Study. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/d44adult.pdf] “An analysis of crime rates was conducted by comparing areas with adult businesses (study areas) to areas without adult businesses (control areas). Both control and study areas are circular in shape with a 1,000 foot radius, contain similar land uses, and are in close proximity to one another. Four study areas were defined: two with single businesses and two with more than one business. Within the study areas, six-related crimes were found to be from two to nearly five times the city-wide average. Also, sex-related crime rates were found to be 66% higher in study areas with two adult businesses compared to study areas with only one business” [City of Austin (1986). Report on Adult Oriented Businesses in Austin. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/o46adult.pdf] “The City of Federal Way has experienced criminal activity in connection with the operation of Déjà Vu, an adult entertainment facility located at 31656 Pacific Highway South, Federal Way, Washington 98003. Criminal activity has also occurred in connection with the operation of X-Otic Tan, an adult entertainment facility located at 29500 Pacific Highway S., Federal Way, Washington” [Lindell, L.K. (1995). Adult Entertainment Code Amendments. Federal Way, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/f4adult.pdf] “Déjà Vu, Tukwila…provides stage dancing, table and couch dances. Tukwila police investigations conducted in the summer of 1994 resulted in over 500 criminal convictions relating primarily to six crimes such as prostitution. The 500 convictions includes 70 convictions for prostitution” [Lindell, L.K. (1995). Adult Entertainment Code Amendments. Federal Way, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/f4adult.pdf] “In April, 1978, the Department of Regional Planning of the County of Los Angeles published a study entitled Adult Entertainment Study and Proposed Zoning Ordinance Amendment. In the study, law enforcement officers were surveyed. Responses from the surveys indicated that areas with a concentration of adult businesses have a higher incidence of public intoxication, theft, assault, disturbing the peace, and sex-related vice. Respondents indicated that nude bars, modeling studios, and massage parlors cause the most individual problems” ” [City of Austin (1986). Report on Adult Oriented Businesses in Austin. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/o46adult.pdf] “In February, 1984, the Division of Planning in Indianapolis published a report entitled Adult Entertainment Businesses in Indianapolis: An Analysis. This report contained the results of an evaluation of the impact of adult business upon the surrounding area in terms of crime rates and real estates values…The Indianapolis study assessed the impact of adult entertainment businesses on crime rates by researching six areas containing adult businesses and six similar areas containing no adult businesses...The evaluation found that for both the Study and Control APPENDIX B - COMMITTEE REPORT 138 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE NEGATIVE SECONDARY IMPACTS ANALYSIS DRAFT WORK PRODUCT – PROVIDED AT 1.31.17 MEETING Page 4 of 10 Areas, the rate of major crimes was higher than the corresponding rate for the Indianapolis Police District as a whole. The average annual rate for major crimes in the Study Areas was 23 percent higher than the corresponding rate in the Control Areas. Comparison of the rates for sex-related crimes indicated a considerably larger difference between the Study and Control Areas. The average annual rate for sex-related crimes in the Study Area was 77 percent higher than the corresponding rate in the Control Areas. The study also found a strong correlation between the crime frequency and the residential character of the Study areas. Crime rates were 56 percent higher in predominantly residential areas than in predominantly commercial areas. The study found a more acute difference regarding sex-related crimes. Sex-related crimes occurred four times more frequently in predominantly residential areas than in areas that were substantially commercial in nature” [City of Austin (1986). Report on Adult Oriented Businesses in Austin. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/o46adult.pdf] “The Minneapolis study found a much stronger relationship between sexually oriented businesses and crime rates. A crime index was constructed including robbery, burglary, rape and assault. The rate of crime in areas near sexually oriented businesses was hen compared to crime rates in other areas. The study drew the following conclusions: (1) The effects of sexually oriented businesses on the crime rate index is positive and significant regardless of which control variable is used. (2) Sexually oriented businesses continue to be associated with higher crime rates, even when the control variables’ impacts are considered simultaneously. According to the statistical analysis conducted in the Minneapolis study, the addition of one sexually oriented business to a census tract area will cause an increase in the overall crime rate index in that area by 9.15 crimes per thousand people per year even if all other social factors remain unchanged”. [Minnesota Attorney General (1989). Report of the Attorney General’s Working Group on the Regulation of Sexually Oriented Businesses, pg. 383-384] The Planning Department of Phoenix, Arizona published a study in 1979 entitled “Relation of Criminal Activity and Adult Businesses”. This study showed that arrests for sexual crime and the location of sexually oriented businesses were directly related. The study compared three areas with sexually oriented businesses with three control areas which had similar and demographic and land use characteristics but no sexually oriented establishments. The study found that, (1) Property crimes were 43 percent higher in those areas which contained a sexually oriented businesses. APPENDIX B - COMMITTEE REPORT 139 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE NEGATIVE SECONDARY IMPACTS ANALYSIS DRAFT WORK PRODUCT – PROVIDED AT 1.31.17 MEETING Page 5 of 10 (2) The sex crime rate was 500 percent higher in those areas with sexually oriented businesses. (3) The study area with the greatest concentration of sexually oriented businesses has a sex crime rate over 11 times as large as a similar area having no sexually oriented businesses”. [Minnesota Attorney General (1989). Report of the Attorney General’s Working Group on the Regulation of Sexually Oriented Businesses, pg. 383-384] APPENDIX B - COMMITTEE REPORT 140 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE NEGATIVE SECONDARY IMPACTS ANALYSIS DRAFT WORK PRODUCT – PROVIDED AT 1.31.17 MEETING Page 6 of 10 NEGATIVE SECONDARY IMPACTS DOCUMENTATION/EVIDENCE: 2. DECLINING PROPERTY VALUES “…the majority of appraisers agreed that the impact of adult uses on residential property values is probably negative although no general rule can be applied. One appraiser estimated that the adverse effect could be as much as one to three percent of the property’s total value” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “As a general rule, most appraisers felt that in cases where an adult use located in a commercial environment, little or no adverse impact would be expected either to surrounding businesses or property values” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “The appraisers perception of various communities of which they are located, (Renton, Bremerton, Seattle, Redmond) indicates that they feel that this type of use (referring to adult uses) when included next door to other healthy businesses may result in a reduction of property values and/or rental income stream. Most appraisers felt that there is a negative impact on residential property values as well as an impact on business property values” [Thorpe, R.W. (1984). Des Moines Adult Use Study. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/d44adult.pdf] In surveys of professional real estate appraisers (described in the Austin study) “78%...felt that residential property values would decrease if located within one block of an adult business…80% of those surveyed felt residential property values would decrease if located within a block of an adult business” ” [City of Austin (1986). Report on Adult Oriented Businesses in Austin. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/o46adult.pdf] “…studies performed in Kent, Washington; Bellevue, Washington; Austin, Texas; Minnesota; and Indianapolis, Indiana, of the secondary impacts of adult entertainment uses. Many of these studies conclude that adult uses result in a reduction in property values of surrounding properties” [Lindell, L.K. (1995). Adult Entertainment Code Amendments. Federal Way, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/f4adult.pdf] “The data and analyses reported in this document make a clear, compelling statement abou the secondary consequences of the adult entertainment businesses along Garden Grove Boulevard. In terms of property values alone, the survey of real estate professionals leads to the unambiguous conclusion that the mere presence of these businesses depresses residential and commercial property values. While the effect on commercial property values is problematic, the effect on residential property values argues for strict regulations governing the distance of adult businesses from residential neighborhoods. In commercial zones, moreover, the consistent opinions of real estate professionals suggest that high density [referring to adult entertainment businesses] also depresses commercial property values. This argues for strict regulations governing the distances between adult businesses”. [McCleary, Richard and Meeker, James (1991) Final Report to the City of Garden Grove: The Relationship Between Crime and Adult Business Operations on Garden Grove Boulevard. Pg. 47] APPENDIX B - COMMITTEE REPORT 141 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE NEGATIVE SECONDARY IMPACTS ANALYSIS DRAFT WORK PRODUCT – PROVIDED AT 1.31.17 MEETING Page 7 of 10 NEGATIVE SECONDARY IMPACTS DOCUMENTATION/EVIDENCE: 3. DETERIORATION OF AREAS “Seattle: First Avenue and 3rd Avenue & Union Sites = Adult Cinemas…The general observation of these buildings is that these buildings and their uses create deferred maintenance, functional obsolescence and some general decline in upkeep and visual appearance of the existing buildings and adjacent uses” [Thorpe, R.W. (1984). Des Moines Adult Use Study. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/d44adult.pdf] APPENDIX B - COMMITTEE REPORT 142 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE NEGATIVE SECONDARY IMPACTS ANALYSIS DRAFT WORK PRODUCT – PROVIDED AT 1.31.17 MEETING Page 8 of 10 NEGATIVE SECONDARY IMPACTS DOCUMENTATION/EVIDENCE: 4A. INCOMPATIBILITY WITH OTHER USES 4B. NEGATIVE LAND USE IMPACTS 4C. NEGATIVE IMPACTS ON QUALITY OF LIFE 4D. DECLINING TOURISM “Based on the experience of certain Puget Sound communities, it has been demonstrated in the past that adult uses are incompatible with residential, educational, and religious uses. This fact was best demonstrated in the Greenwood area of Seattle in the mid-1970’s when a local theater began showing X-rated films. Residents of Greenwood complained loudly about increased traffic, undesirable patrons, lowered property values and other adverse impacts. Residents argued that theirs was an area of residences, churches, schools, and social gathering places, a closely-knit neighborhood unaccustomed to adult theaters and the disruptive impacts associated with such uses” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “..,.a “topless” tavern disrupted the quality of life for some Kent residents. The incident involved the Roadside Inn Tavern – a tavern offering topless table dancing – and the residents of an adjacent mobile home court. In July 1981, the residents of Bonel Mobile Home Court submitted a petition requesting the Kent City Council to revoke the business license of the Roadside. At the public hearing on the license revocation, residents complained about the Roadside’s excessive noise and litter impacts which spilled over onto adjacent residential properties” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] Land use impacts attributed to adult uses, “There appears to be a definite impact on adjacent land uses, the turnover of tenants, deferred maintenance, functional obsolesce, maintenance of access areas such as streets and parking lot surrounding these (adult) uses. [Thorpe, R.W. (1984). Des Moines Adult Use Study. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/d44adult.pdf] “…studies performed in Kent, Washington; Bellevue, Washington; Austin, Texas; Minnesota; and Indianapolis, Indiana, of the secondary impacts of adult entertainment uses…These studies also conclude that adult uses are incompatible with residential, educational and religious uses” [Lindell, L.K. (1995). Adult Entertainment Code Amendments. Federal Way, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/f4adult.pdf] The Minnesota Attorney General’s “Working Group heard testimony that a concentration of sexually oriented businesses has serious impacts upon the surrounding neighborhood. The Working Group heard that pornographic materials are left in adjacent lots. One person reported to the police that he had found 50 pieces of pornographic material in a church parking lot near a sexually oriented businesses. Neighbors report dining used condoms on their lawn and sidewalks and that sex acts with prostitutes occur on streets and alleys in plain view of families and children…Prostitution also results in harassment of neighborhood residents. Young girls on their way to school or young women on their way to work are often propositioned by johns. The Flick theater caters to homosexual trade, and male prostitution has been noted in the area”. [Minnesota Attorney General (1989). Report of the Attorney General’s Working Group on the Regulation of Sexually Oriented Businesses, pg. 389] “Concentrations of [these] adult-only activities have detrimental effects upon surrounding residential and commercial activities. These effects are caused by (a) the noise, lighting and traffic generated by the pedestrian and vehicular traffic frequenting these businesses whose APPENDIX B - COMMITTEE REPORT 143 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE NEGATIVE SECONDARY IMPACTS ANALYSIS DRAFT WORK PRODUCT – PROVIDED AT 1.31.17 MEETING Page 9 of 10 primary hours of operation are from late evening to late night, (b) the increased opportunity for “street crimes” in areas with high pedestrian traffic, and (c) the tendency to avoid areas where adult businesses (especially pornographic) are established. This avoidance and other factors can lead to the deterioration of surrounding commercial and residential activities”. [City of Amarillo, TX Planning Department (1977) A Report on Zoning and Other Methods of Regulating Adult Entertainment in Amarillo. pg. 15]. “Many residents of the communities in which adult entertainment establishments are located have complained about the impacts from these establishments. These impacts include: exposure of children and teenagers to graphic sexual images, increased crime, diminishing property values, adverse effects upon the climate for other types of commercial activities and overall negative influences upon community character. Sexually explicit business signs or displays visible from the public street are particularly offensive” (New York Department of City Planning (1994) Adult Entertainment Study, pg 61] APPENDIX B - COMMITTEE REPORT 144 of 167 ADULT ENTERTAINMENT ADVISORY COMMITTEE NEGATIVE SECONDARY IMPACTS ANALYSIS DRAFT WORK PRODUCT – PROVIDED AT 1.31.17 MEETING Page 10 of 10 NEGATIVE SECONDARY IMPACTS DOCUMENTATION/EVIDENCE: 5. HUMAN TRAFFICKING ASSOCIATIONS In 2012 the Canadian government moved to ban foreign strippers, escorts and massage-parlor workers “saying that cutting back on human trafficking and exploitation is at the heart of the decision”. Jason Kenney (the Conservative Party Government’s then Immigration Minister) “says the decision is part of a larger government effort to crack down on human trafficking, as the Royal Canadian Mounted Police has expressed repeated concerns over the link between escort agencies, brothels and massage parlors and human-trafficking and sexual-exploitation cases” [Newcomb, T. (2012, July 8). Canada Stripping Visas for Foreign Strippers. Time.com. Retrieved January 1, 2017, from http://newsfeed.time.com/2012/07/08/canada-stripping-visas-for-foreign- strippers/] May 2012, the City of Houston, TX and Harris County file a lawsuit asking that a strip club named Treasures, be ordered to be closed for alleged ties to human trafficking and drug activity. [Reed, M. (2012, May 16). Human trafficking, drug activity at Treasures strip club, alleged by prosecutors. Chron.com. Retrieved January 1, 2017, from http://www.chron.com/news/article/Human-trafficking-drug-activity-at- Treasures-9397283.php] May 2015, Greenville County, South Carolina, Sheriff states that his office began an investigation of the Platinum Plus strip club because women are lured into human trafficking. “Traffickers lure these girls with the idea of travel money and an easy life,” said the Greenville County Sheriff. [WSPA New Staff. (2015, May 8). Prostitution and strip clubs often linked to human trafficking, deputies say. WBTW.com. Retrieved January 1, 2017, from http://wbtw.com/2015/05/08/prostitution-and-strip-clubs- often-linked-to-human-trafficking-deputies-say/] June 2015, three strip clubs in Baltimore were raided in connection with a human trafficking case, Baltimore Police and FBI state [Khan, S. (2015, June 26). 3 Baltimore strip clubs raided in human trafficking case. WBALTV.com. Retrieved January 1 2017, from http://www.wbaltv.com/article/3-baltimore-strip-clubs-raided-in-human- trafficking-case/7094376] June 2015, Portland, Oregon. “Victim advocates say Portland is a hub for such exploitation (referring to sex trafficking), due to its abundance of strip clubs and online services…Sex trafficking is a transient crime, local police say – pumps and gangs will sell victims from California to Portland and when business is slow, they’ll move to Seattle or Vegas…”Strip clubs serve as fertile ground for the problem to fester”, said Sgt. Charles Lovell of the Portland Police Bureau. “Generally speaking, you have guys there, with money, already looking for sex. If you are a pimp or a sex trafficker, it’s a good place to peddle your services.” [Campbell, A. (2015, June 26). Where Strip Clubs Thrive In Portland, So Does Child Sex Trafficking. Huffingtonpost.com. Retrieved January 1, 2017, from http://www.huffingtonpost.com/2015/06/25/child-sex-trafficking-strip-clubs- portland_n_7650778.html] APPENDIX B - COMMITTEE REPORT 145 of 167 Page 1 CITY OF ANACORTES MUNICIPAL CODE 17.10.200 - Adult concessions (entertainment and retail). A. Adult entertainment and retail taken together as "concession," and defined in Section 5.35.030, are recognized as being uses that may prove detrimental in certain circumstances to its surrounding neighborhoods and thereby requiring the following regulations. B. No adult concession shall be located: 1. Within one hundred feet of any public or private school, or any trade or vocational school that on a regular basis has at least one student under the age of eighteen years; 2. Within one hundred feet of any church or other religious facility or institution; 3. Within one hundred feet of any park or any public facility or open space zone; 4. Within three hundred feet of another adult concession; 5. Within one hundred feet of any residential zone, for adult entertainment; and 6. Within thirty feet of any residential zone, for adult retail. C. The distance provided herein shall be measured by following a straight line, without regard to intervening buildings, from the nearest point on the property line or the zoning district boundary to the specified concession. D. No person owning, operating or managing an adult concession or their employee or agent shall invite, allow, or permit any person under the age of eighteen years to enter or remain on the premises of any concession. E. On the exterior of any concession there shall be no window, marquee, or other display of any manner describing, identifying, depicting or portraying "specified anatomical areas", or "specified sexual activities" (See AMC 5.35.030). F. Violation of the use provisions of this section is declared to be a public nuisance per se, which shall be abated by a civil action only and not by criminal prosecution. G. Concession establishments may be identified with signs on the exterior of the establishment in accordance with Chapter 17.40. All signs shall comply with subsection (E) hereof. No advertising, text, pictures or depictions shall be permitted anywhere in the windows, on the site, sidewalk or street (tent "A" board signs), store-front, marquee, or anywhere else other than on the approved signage. Terms such as "sale," etc., and other such advertising, as associated with mainstream advertising, will be accepted, subject to the interpretation of the planning director or her/his designee. H. There shall be no more than one concession business operating in the same building, structure or portion thereof. I. Nothing in this section is intended to authorize, legalize, or permit the establishment, operation, or maintenance of any business, building or use which violates any ordinance or statute of the city of Anacortes, Skagit County, state of Washington, or the United States. (Ord. No. 2902, § 4, 5-6-2013) APPENDIX B - COMMITTEE REPORT 146 of 167 APPENDIX B - COMMITTEE REPORT 147 of 167 APPENDIX B - COMMITTEE REPORT 148 of 167 APPENDIX B - COMMITTEE REPORT 149 of 167 APPENDIX B - COMMITTEE REPORT 150 of 167 APPENDIX B - COMMITTEE REPORT 151 of 167 APPENDIX B - COMMITTEE REPORT 152 of 167 APPENDIX B - COMMITTEE REPORT 153 of 167 APPENDIX B - COMMITTEE REPORT 154 of 167 APPENDIX B - COMMITTEE REPORT 155 of 167 APPENDIX B - COMMITTEE REPORT 156 of 167 APPENDIX B - COMMITTEE REPORT 157 of 167 APPENDIX B - COMMITTEE REPORT158 of 167 ADULT ENTERTAINMENT ADVISTORY COMMITTEE AGENDA 6th Meeting February 21, 2017 2 PM –3 PM City Hall - 910 Cleveland Ave Downstairs Conference Room 2 – 2:10 REVIEW AND APPROVAL OF 1.31.17 MEETING MINUTES 2:10 – 2:50 REVIEW OF ZONING MAP IN RELATION TO ZONES THAT ALLOW COMMERCIAL USES AND THE SENSITIVE USES IDENTIFIED BY THE COMMITTEE 2:50 – 3:00 PUBLIC COMMENTS Public comment or testimony to be taken should anyone wish to attend and provide such comment or testimony 3:00 ADJOURN ATTACHED: • Meeting Minutes from 1.31.17 • Draft Memo from the Committee to the Planning Commission and City Council APPENDIX B - COMMITTEE REPORT 159 of 167 City of Mount Vernon  Adult Entertainment Zoning and Licensing Committee  Minutes from February 21, 2017    The meeting opened at 2:00 p.m. Present were Committee members Ryan Hagman, Rudy Kerkvliet, Kari  Matson, Lisa Zacherl, Brian Gentry and Kathleen Bisagna. Also present were Development Services  Director Chris Phillips, Senior Planner Rebecca Lowell and Administrative Assistant Linda Beacham.  Mount Vernon resident Scott Correa was also in attendance.    Minutes:   Mr. Hagman moved, second by Mr. Kerkvliet, to approve the minutes from January 31, 2017. Motion  carried.    Review of Zoning Map:  Mrs. Lowell provided several maps that highlighted areas within the city where adult entertainment  businesses could possibly locate. The maps also illustrated areas within the C‐L zone (Commerical‐ Limited Industrial) where residential and other sensitive uses identified by the Committee were applied.  Committee members will determine whether to apply buffers of 650 feet or 1,000 feet from residential  and sensitive uses. Discussion ensued regarding which areas of the city that adult entertainment  businesses would best fit this criteria. Committee members were given maps and recommended to drive  through these areas to get a sense of the kind of neighborhoods that exist there.      A brief dialog followed regarding definition of adult entertainment, and the separation of art forms. The  Committee agreed the code is progressing well.    Public Comment:  Mount Vernon resident Scott Correa commented on accessory uses within a buffer area, and if Skagit  County could re‐zone its property within the City. Mrs. Lowell explained just as the City cannot re‐zone  properties outside its’ jurisdictional boundaries the County cannot re‐zone its’ property within the City  limits.    There being no further business the meeting adjourned.      APPENDIX B - COMMITTEE REPORT 160 of 167 APPENDIX B - COMMITTEE REPORT161 of 167 ADULT ENTERTAINMENT ADVISTORY COMMITTEE AGENDA 7th Meeting February 28, 2017 5:15 PM –6:15 PM City Hall - 910 Cleveland Ave Downstairs Conference Room 5:15 – 5:25 REVIEW AND APPROVAL OF 2.21.17 MEETING MINUTES 5:25 – 6:05 REVIEW AREAS WHERE ADULT ENTERTAINMENT USES COULD BE LIMITED TO DISCUSS POTENTIAL SECONDARY NEGATIVE IMPACTS DISCUSS REASONABLY AVAILABLE PARCELS IN THE SOUTH MOUNT VERNON AREA WEST OF I-5 6:05 – 6:15 PUBLIC COMMENTS Public comment or testimony to be taken should anyone wish to attend and provide such comment or testimony 6:15 ADJOURN ATTACHED: • Meeting Minutes from 2.21.17 APPENDIX B - COMMITTEE REPORT 162 of 167 City of Mount Vernon Adult Entertainment Advisory Committee Draft Minutes from February 28, 2017 The meeting opened at 5:15 p.m. Present were Committee members Kathleen Bisagna, Rudy Kerkvliet, Lisa Zacherl, and Kari Matson. City Senior Planner Rebecca Lowell and Administrative Assistant Linda Beacham. Committee members Ryan Hagman and Brian Gentry were absent. Mount Vernon resident Scott Correa was also in attendance. Minutes: Ms. Zacherl moved, second by Ms. Bisagna, to approve the minutes from February 21, 2017, with the correction of the start time of the meeting from 3:00 p.m. to 2:00 p.m. Motion carried. Review Areas Where Adult Entertainment Uses Could Be Limited To: A draft of a comparison table based on the committee’s research and analysis was provided for all attendees. The table outlined the number of sites available for adult entertainment uses per jurisdiction capita; percent of overall commercial/industrial land and other detailed data. While several areas within the City’s jurisdiction have been studied by the Committee to ensure there is ample opportunity for those choosing to operate adult entertainment businesses, the area meeting the criteria established and posing the least secondary negative impacts is within the south Mount Vernon C- L zone. Staff provided the Committee a summary of parcels in south Mount Vernon that could potentially be developed for adult entertainment uses. A brief discussion on the link between sex trafficking and adult businesses followed. Ms. Zacherl is waiting for additional information before addressing the Committee on this topic. Signage was also discussed. Mrs. Lowell will provide more detail on signage for adult entertainment uses at the next meeting. Public Comments: Mount Vernon resident Scott Correa offered several recommendations on drafting an ordinance regulating adult entertainment uses. Among these were prohibiting private membership clubs, and requiring surveillance such as cameras and lighting. There being no further business the meeting adjourned. APPENDIX B - COMMITTEE REPORT 163 of 167 APPENDIX B - COMMITTEE REPORT164 of 167 ADULT ENTERTAINMENT ADVISTORY COMMITTEE AGENDA 8th Meeting April 11, 2017 5:15 PM –6:15 PM City Hall - 910 Cleveland Ave Downstairs Conference Room 5:15 – 5:25 REVIEW AND APPROVAL OF 2.28.17 MEETING MINUTES 5:25 – 6:05 REVIEW AND DISCUSSION OF COMMITTEE REPORT 6:05 – 6:15 PUBLIC COMMENTS Public comment or testimony to be taken should anyone wish to attend and provide such comment or testimony 6:15 ADJOURN ATTACHED: • Meeting Minutes from 2.28.17 APPENDIX B - COMMITTEE REPORT 165 of 167 City of Mount Vernon Adult Entertainment Advisory Committee Draft Minutes from April 11, 2017 The meeting opened at 5:20. Present were Committee members Rudy Kerkvliet, Ryan Hagman, Kari Matson, and City Senior Planner Rebecca Lowell and Administrative Assistant Linda Beacham. Mount Vernon resident Scott Correa was also present. Lisa Zacherl, Kathleen Bisagna, and Brian Gentry were absent. Minutes: Mr. Hagman moved, second by Mr. Kerkvliet, to approve the minutes from February 28, 2017. Motion carried. Review and Discussion of Committee Report: Mrs. Lowell provided the committee members copies of the draft ordinance, maps and the committee report. The report includes numerous studies and reports reviewed and analyzed by the Committee members. It will also include the Committee’s recommended area for adult entertainment uses. This report will become an appendix of the ordinance. The Committee members reviewed and discussed the maps outlining areas to be considered, or not considered, for adult entertainment uses. This area is generally located west of I-5 to the City boundary, south of Suzanne Lane, north of Hickox Road. The Committee also reviewed definitions and illustrations of areas of the human body that must be covered. Following a brief discussion by Mr. Correa regarding parliamentary rules, the Committee members agreed to forward the draft ordinance with appendixes to the Planning Commission, who will hold a public hearing on April 18th. If approved by Planning Commission it will be recommended to City Council for adoption. City Council will hold a public hearing on April 26th. There being no further business the meeting adjourned. APPENDIX B - COMMITTEE REPORT 166 of 167 APPENDIX B - COMMITTEE REPORT167 of 167 REPORTS, STUDIES & ITEMS STUDIED BY THE COMMITTEE: These items are identified as Exhibits 1.1 to 1.28 of the Council's Legislative Record COMMITTEE ANALYSIS OF SECONDARYNEGATIVE IMPACTS ADULT ENTERTAINMENT ADVISORY COMMITTEE NEGATIVE SECONDARY IMPACTS ANALYSIS INTRODUCTION: Negative secondary impacts are defined as indirect negative impacts that occur as a result of an adult entertainment use locating in a geographic area. Research compiled to-date shows that numerous communities both in Washington State and across the Country have experienced negative secondary impacts from adult uses. Evaluating experiences from other jurisdictions that have experience with regulating adult uses is important because Mount Vernon is able to learn from these experiences and adopt regulations to mitigate the negative impacts others have endured. A summary of some of the more significant negative impacts from existing adult entertainment uses in other jurisdictions are briefly summarized below. NEGATIVE SECONDARY IMPACTS DOCUMENTATION/EVIDENCE: INCREASED INCIDENCE OF CRIME CREATION OF AN ATMOSPHERE FOR CRIMES “…between 1969 and 1972, the number of adult theaters in the City of Detroit increased from 2 to 18 and the number of adult bookstores rose from 2 to 21. During the same period, the incidence of crime in and around these establishments increased dramatically” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “Similar to Detroit, the City of Cleveland experienced a rapid increase of adult uses during the early 1970’s…In 1976, 26 adult businesses (8 theaters and 18 bookstores) were located in Cleveland’s 204 census tracts. The same year, the two census tracts having the highest rates of crime had a total of 8 pornography outlets. Cleveland Police statistics showed that during 1976 there was an average of 20.5 robberies per census tract. In the 15 census tracts which contained adult businesses, the average was nearly double at 40.5 robberies. A single census tract which contained 5 pornography outlets and a population of only 730 persons had a total of 136 robberies. The statistics for rape echoed the same pattern as for robbery. The citywide average of rape in Cleveland in 1976 was 2.4 per census tract. In the 15 census tracts containing pornography outlets, the rate was double that” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “The City of Kent, Washington had similar experiences with the Roadside Inn Tavern. Prior to its forced closing, the Roadside Inn offered topless dancing and table dancing in conjunction with its selling of alcoholic beverages. Kent police investigations conducted in the summer of 1981 revealed a very high incidence of criminal activity at the Roadside, related primarily to six crimes (prostitution) and drug related offenses” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “Bothell’s experiences with Mama Hoopah’s in 1982 demonstrated similar association between the use (an adult dance hall) and the occurrence of crime. Research by the Bothell Police Department also demonstrated the regional attraction that such an establishment can have. In one investigation of the 321 vehicles checked, 8 were registered in Bothell with most of the remainder from the Puget sound region, though others had out of state registration. This is potentially significant in that nonresidents of an area may be less inhibited in their personal behavior when away from their community” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “…testimony by individuals involved in the North End Cinema (located in North Seattle) indicated that the property owners sited…increased crime, and other factors in their concern about the nuisance element of this theater” [Thorpe, R.W. (1984). Des Moines Adult Use Study. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/d44adult.pdf] “Discussions with the City Planner reviewed the history of their attempts to remove an adult theater use from downtown Aberdeen. The City Planner cited increased instance of crime” [Thorpe, R.W. (1984). Des Moines Adult Use Study. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/d44adult.pdf] “Discussions with members of the City Planning Staff (City of Redmond) indicate that problems similar to the North End Cinema were cited related to crime, late night disturbances…[Thorpe, R.W. (1984). Des Moines Adult Use Study. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/d44adult.pdf] “An analysis of crime rates was conducted by comparing areas with adult businesses (study areas) to areas without adult businesses (control areas). Both control and study areas are circular in shape with a 1,000 foot radius, contain similar land uses, and are in close proximity to one another. Four study areas were defined: two with single businesses and two with more than one business. Within the study areas, six-related crimes were found to be from two to nearly five times the city-wide average. Also, sex-related crime rates were found to be 66% higher in study areas with two adult businesses compared to study areas with only one business” [City of Austin (1986). Report on Adult Oriented Businesses in Austin. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/o46adult.pdf] “The City of Federal Way has experienced criminal activity in connection with the operation of Déjà Vu, an adult entertainment facility located at 31656 Pacific Highway South, Federal Way, Washington 98003. Criminal activity has also occurred in connection with the operation of X-Otic Tan, an adult entertainment facility located at 29500 Pacific Highway S., Federal Way, Washington” [Lindell, L.K. (1995). Adult Entertainment Code Amendments. Federal Way, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/f4adult.pdf] “Déjà Vu, Tukwila…provides stage dancing, table and couch dances. Tukwila police investigations conducted in the summer of 1994 resulted in over 500 criminal convictions relating primarily to six crimes such as prostitution. The 500 convictions includes 70 convictions for prostitution” [Lindell, L.K. (1995). Adult Entertainment Code Amendments. Federal Way, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/f4adult.pdf] “In April, 1978, the Department of Regional Planning of the County of Los Angeles published a study entitled Adult Entertainment Study and Proposed Zoning Ordinance Amendment. In the study, law enforcement officers were surveyed. Responses from the surveys indicated that areas with a concentration of adult businesses have a higher incidence of public intoxication, theft, assault, disturbing the peace, and sex-related vice. Respondents indicated that nude bars, modeling studios, and massage parlors cause the most individual problems” ” [City of Austin (1986). Report on Adult Oriented Businesses in Austin. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/o46adult.pdf] “In February, 1984, the Division of Planning in Indianapolis published a report entitled Adult Entertainment Businesses in Indianapolis: An Analysis. This report contained the results of an evaluation of the impact of adult business upon the surrounding area in terms of crime rates and real estates values…The Indianapolis study assessed the impact of adult entertainment businesses on crime rates by researching six areas containing adult businesses and six similar areas containing no adult businesses...The evaluation found that for both the Study and Control Areas, the rate of major crimes was higher than the corresponding rate for the Indianapolis Police District as a whole. The average annual rate for major crimes in the Study Areas was 23 percent higher than the corresponding rate in the Control Areas. Comparison of the rates for sex-related crimes indicated a considerably larger difference between the Study and Control Areas. The average annual rate for sex- related crimes in the Study Area was 77 percent higher than the corresponding rate in the Control Areas. The study also found a strong correlation between the crime frequency and the residential character of the Study areas. Crime rates were 56 percent higher in predominantly residential areas than in predominantly commercial areas. The study found a more acute difference regarding sex-related crimes. Sex-related crimes occurred four times more frequently in predominantly residential areas than in areas that were substantially commercial in nature” [City of Austin (1986). Report on Adult Oriented Businesses in Austin. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/o46adult.pdf] “The Minneapolis study found a much stronger relationship between sexually oriented businesses and crime rates. A crime index was constructed including robbery, burglary, rape and assault. The rate of crime in areas near sexually oriented businesses was hen compared to crime rates in other areas. The study drew the following conclusions: (1) The effects of sexually oriented businesses on the crime rate index is positive and significant regardless of which control variable is used. (2) Sexually oriented businesses continue to be associated with higher crime rates, even when the control variables’ impacts are considered simultaneously. According to the statistical analysis conducted in the Minneapolis study, the addition of one sexually oriented business to a census tract area will cause an increase in the overall crime rate index in that area by 9.15 crimes per thousand people per year even if all other social factors remain unchanged”. [Minnesota Attorney General (1989). Report of the Attorney General’s Working Group on the Regulation of Sexually Oriented Businesses, pg. 383-384] The Planning Department of Phoenix, Arizona published a study in 1979 entitled “Relation of Criminal Activity and Adult Businesses”. This study showed that arrests for sexual crime and the location of sexually oriented businesses were directly related. The study compared three areas with sexually oriented businesses with three control areas which had similar and demographic and land use characteristics but no sexually oriented establishments. The study found that, (1) Property crimes were 43 percent higher in those areas which contained a sexually oriented businesses. (2) The sex crime rate was 500 percent higher in those areas with sexually oriented businesses. (3) The study area with the greatest concentration of sexually oriented businesses has a sex crime rate over 11 times as large as a similar area having no sexually oriented businesses”. [Minnesota Attorney General (1989). Report of the Attorney General’s Working Group on the Regulation of Sexually Oriented Businesses, pg. 383-384] NEGATIVE SECONDARY IMPACTS DOCUMENTATION/EVIDENCE: DECLINING PROPERTY VALUES “…the majority of appraisers agreed that the impact of adult uses on residential property values is probably negative although no general rule can be applied. One appraiser estimated that the adverse effect could be as much as one to three percent of the property’s total value” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “As a general rule, most appraisers felt that in cases where an adult use located in a commercial environment, little or no adverse impact would be expected either to surrounding businesses or property values” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “The appraisers perception of various communities of which they are located, (Renton, Bremerton, Seattle, Redmond) indicates that they feel that this type of use (referring to adult uses) when included next door to other healthy businesses may result in a reduction of property values and/or rental income stream. Most appraisers felt that there is a negative impact on residential property values as well as an impact on business property values” [Thorpe, R.W. (1984). Des Moines Adult Use Study. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/d44adult.pdf] In surveys of professional real estate appraisers (described in the Austin study) “78%...felt that residential property values would decrease if located within one block of an adult business…80% of those surveyed felt residential property values would decrease if located within a block of an adult business” ” [City of Austin (1986). Report on Adult Oriented Businesses in Austin. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/o46adult.pdf] “…studies performed in Kent, Washington; Bellevue, Washington; Austin, Texas; Minnesota; and Indianapolis, Indiana, of the secondary impacts of adult entertainment uses. Many of these studies conclude that adult uses result in a reduction in property values of surrounding properties” [Lindell, L.K. (1995). Adult Entertainment Code Amendments. Federal Way, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/f4adult.pdf] “The data and analyses reported in this document make a clear, compelling statement abou the secondary consequences of the adult entertainment businesses along Garden Grove Boulevard. In terms of property values alone, the survey of real estate professionals leads to the unambiguous conclusion that the mere presence of these businesses depresses residential and commercial property values. While the effect on commercial property values is problematic, the effect on residential property values argues for strict regulations governing the distance of adult businesses from residential neighborhoods. In commercial zones, moreover, the consistent opinions of real estate professionals suggest that high density [referring to adult entertainment businesses] also depresses commercial property values. This argues for strict regulations governing the distances between adult businesses”. [McCleary, Richard and Meeker, James (1991) Final Report to the City of Garden Grove: The Relationship Between Crime and Adult Business Operations on Garden Grove Boulevard. Pg. 47] NEGATIVE SECONDARY IMPACTS DOCUMENTATION/EVIDENCE: DETERIORATION OF AREAS “Seattle: First Avenue and 3rd Avenue & Union Sites = Adult Cinemas…The general observation of these buildings is that these buildings and their uses create deferred maintenance, functional obsolescence and some general decline in upkeep and visual appearance of the existing buildings and adjacent uses” [Thorpe, R.W. (1984). Des Moines Adult Use Study. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/d44adult.pdf] NEGATIVE SECONDARY IMPACTS DOCUMENTATION/EVIDENCE: INCOMPATIBILITY WITH OTHER USES NEGATIVE LAND USE IMPACTS NEGATIVE IMPACTS ON QUALITY OF LIFE DECLINING TOURISM “Based on the experience of certain Puget Sound communities, it has been demonstrated in the past that adult uses are incompatible with residential, educational, and religious uses. This fact was best demonstrated in the Greenwood area of Seattle in the mid-1970’s when a local theater began showing X-rated films. Residents of Greenwood complained loudly about increased traffic, undesirable patrons, lowered property values and other adverse impacts. Residents argued that theirs was an area of residences, churches, schools, and social gathering places, a closely-knit neighborhood unaccustomed to adult theaters and the disruptive impacts associated with such uses” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] “..,.a “topless” tavern disrupted the quality of life for some Kent residents. The incident involved the Roadside Inn Tavern – a tavern offering topless table dancing – and the residents of an adjacent mobile home court. In July 1981, the residents of Bonel Mobile Home Court submitted a petition requesting the Kent City Council to revoke the business license of the Roadside. At the public hearing on the license revocation, residents complained about the Roadside’s excessive noise and litter impacts which spilled over onto adjacent residential properties” [City of Bellevue. (1987). A Study on the Need to Regulate the Location of Adult Entertainment Uses, Part 1. Bellevue, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/b44adult.pdf] Land use impacts attributed to adult uses, “There appears to be a definite impact on adjacent land uses, the turnover of tenants, deferred maintenance, functional obsolesce, maintenance of access areas such as streets and parking lot surrounding these (adult) uses. [Thorpe, R.W. (1984). Des Moines Adult Use Study. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/d44adult.pdf] “…studies performed in Kent, Washington; Bellevue, Washington; Austin, Texas; Minnesota; and Indianapolis, Indiana, of the secondary impacts of adult entertainment uses…These studies also conclude that adult uses are incompatible with residential, educational and religious uses” [Lindell, L.K. (1995). Adult Entertainment Code Amendments. Federal Way, WA. Retrieved from http://mrsc.org/Corporate/media/MediaLibrary/SampleDocuments/GovDocs/f4adult.pdf] The Minnesota Attorney General’s “Working Group heard testimony that a concentration of sexually oriented businesses has serious impacts upon the surrounding neighborhood. The Working Group heard that pornographic materials are left in adjacent lots. One person reported to the police that he had found 50 pieces of pornographic material in a church parking lot near a sexually oriented businesses. Neighbors report dining used condoms on their lawn and sidewalks and that sex acts with prostitutes occur on streets and alleys in plain view of families and children…Prostitution also results in harassment of neighborhood residents. Young girls on their way to school or young women on their way to work are often propositioned by johns. The Flick theater caters to homosexual trade, and male prostitution has been noted in the area”. [Minnesota Attorney General (1989). Report of the Attorney General’s Working Group on the Regulation of Sexually Oriented Businesses, pg. 389] “Concentrations of [these] adult-only activities have detrimental effects upon surrounding residential and commercial activities. These effects are caused by (a) the noise, lighting and traffic generated by the pedestrian and vehicular traffic frequenting these businesses whose primary hours of operation are from late evening to late night, (b) the increased opportunity for “street crimes” in areas with high pedestrian traffic, and (c) the tendency to avoid areas where adult businesses (especially pornographic) are established. This avoidance and other factors can lead to the deterioration of surrounding commercial and residential activities”. [City of Amarillo, TX Planning Department (1977) A Report on Zoning and Other Methods of Regulating Adult Entertainment in Amarillo. pg. 15]. “Many residents of the communities in which adult entertainment establishments are located have complained about the impacts from these establishments. These impacts include: exposure of children and teenagers to graphic sexual images, increased crime, diminishing property values, adverse effects upon the climate for other types of commercial activities and overall negative influences upon community character. Sexually explicit business signs or displays visible from the public street are particularly offensive” (New York Department of City Planning (1994) Adult Entertainment Study, pg 61] NEGATIVE SECONDARY IMPACTS DOCUMENTATION/EVIDENCE: HUMAN TRAFFICKING ASSOCIATIONS In 2012 the Canadian government moved to ban foreign strippers, escorts and massage-parlor workers “saying that cutting back on human trafficking and exploitation is at the heart of the decision”. Jason Kenney (the Conservative Party Government’s then Immigration Minister) “says the decision is part of a larger government effort to crack down on human trafficking, as the Royal Canadian Mounted Police has expressed repeated concerns over the link between escort agencies, brothels and massage parlors and human-trafficking and sexual-exploitation cases” [Newcomb, T. (2012, July 8). Canada Stripping Visas for Foreign Strippers. Time.com. Retrieved January 1, 2017, from http://newsfeed.time.com/2012/07/08/canada-stripping-visas-for-foreign-strippers/] May 2012, the City of Houston, TX and Harris County file a lawsuit asking that a strip club named Treasures, be ordered to be closed for alleged ties to human trafficking and drug activity. [Reed, M. (2012, May 16). Human trafficking, drug activity at Treasures strip club, alleged by prosecutors. Chron.com. Retrieved January 1, 2017, from http://www.chron.com/news/article/Human-trafficking-drug-activity-at- Treasures-9397283.php] May 2015, Greenville County, South Carolina, Sheriff states that his office began an investigation of the Platinum Plus strip club because women are lured into human trafficking. “Traffickers lure these girls with the idea of travel money and an easy life,” said the Greenville County Sheriff. [WSPA New Staff. (2015, May 8). Prostitution and strip clubs often linked to human trafficking, deputies say. WBTW.com. Retrieved January 1, 2017, from http://wbtw.com/2015/05/08/prostitution-and-strip-clubs- often-linked-to-human-trafficking-deputies-say/] June 2015, three strip clubs in Baltimore were raided in connection with a human trafficking case, Baltimore Police and FBI state [Khan, S. (2015, June 26). 3 Baltimore strip clubs raided in human trafficking case. WBALTV.com. Retrieved January 1 2017, from http://www.wbaltv.com/article/3-baltimore-strip-clubs-raided-in-human- trafficking-case/7094376] June 2015, Portland, Oregon. “Victim advocates say Portland is a hub for such exploitation (referring to sex trafficking), due to its abundance of strip clubs and online services…Sex trafficking is a transient crime, local police say – pumps and gangs will sell victims from California to Portland and when business is slow, they’ll move to Seattle or Vegas…”Strip clubs serve as fertile ground for the problem to fester”, said Sgt. Charles Lovell of the Portland Police Bureau. “Generally speaking, you have guys there, with money, already looking for sex. If you are a pimp or a sex trafficker, it’s a good place to peddle your services.” [Campbell, A. (2015, June 26). Where Strip Clubs Thrive In Portland, So Does Child Sex Trafficking. Huffingtonpost.com. Retrieved January 1, 2017, from http://www.huffingtonpost.com/2015/06/25/child-sex-trafficking-strip-clubs- portland_n_7650778.html] NEGATIVE SECONDARY IMPACTS DOCUMENTATION/EVIDENCE: IMPACTS TO THE PUBLIC’S HEALTH, SAFETY AND WELFARE “throughout the time that I have handled the adult entertainment issues for the City and County of Spokane the City and County have received numerous citizen complaints regarding the adverse secondary effects of adult retail use establishments in the communities in which they locate. Citizens have related finding discarded sexual paraphernalia around these adult retail use establishments, a high incidence of prostitution around these facilities, finding doors to the facilities open on hot days allowing minors to view the interior of the facility thereby being exposed to adult entertainment material…” Quote from a Declaration of Patricia Walker, Special Deputy Prosecuting Attorney for Spokane County. Ms. Walker also submitted copies of pornographic items citizens have found near adult entertainment facilities. Declaration of Londi Lindell, City Attorney of Federal Way, submitting photographs from a magazine found by Bob Evans, discarded in a parking lot of an Adult Retail Establishment Declaration of Marilyn Petersen (City Clerk for the City of Renton) submitting exhibits given to the Renton City Council from Phillip Beckley. Mr. Beckley’s exhibits included: a pornographic video cassette and pornographic video wrappers found in the parking lot of a video store located across the street from a school. Declaration of Karen Rel from World Wide Video of Washington, Inc v. City of Spokane (NO. CS-02-0074-AAM). Ms. Rel documents the impacts from an adult business near her home on her surrounding neighborhood. Mrs. Rel states that she has observed all of the following at the adult business near her home: public masturbation, public acts of prostitution or other sexual conduct, public urination, graphic erotic materials and other items that are harmful to minors found near her home. Testimony of Karen Roberts at a Planning Commission meeting on February 13, 2002. Ms. Roberts lived near an adult entertainment business and testified about the following: witnessing public masturbation, witnessing acts of prostitution, finding graphic erotic materials and other items that are harmful to minors littered near her home, finding used condoms that she would pick up every morning. Declarations from Dr. Joseph Asterino and Ron Hansen both from World Wide Video of Washington, Inc v. City of Spokane (NO. CS-02-0074-AAM). Dr. Asterino and Mr. Hansen both document finding graphic erotic materials and other items that are harmful to minors near their business located in close proximity to an adult entertainment use. Mr. Hansen also documents public urination and having been personally threatened in his parking lot by an individual that was visiting the nearby adult entertainment use. Declaration of Joseph Books from World Wide Video of Washington, Inc v. City of Spokane (NO. CS-02-0074-AAM). Mr. Books worked at an adult entertainment use and in his declaration stated that the following criminal acts took place at the adult entertainment use he worked at: prostitution, drug transactions, and lewd conduct. Mr. Books states that calls to the Police were avoided, i.e., it was an unwritten policy to not call the police for any crimes, except when a store was robbed. Mr. Books also stated, “it was common to have customers at the stores who were either strung out on drugs or drunk. These persons, along with those engaging in criminal conduct, would come into contact with minors in or around the stores…Some of the videos sold in the stores had minors performing on them”. Memorandum from the Blaine Department of Public Safety (Police Division) dated September 8, 1998 summarizing two reports of criminal activity alleged to occur near the Blaine Book Company – a business that sold pornographic materials. The first report was from a 27 year old female who was held against her will, beaten and raped by multiple persons within the Blaine Book Company. The second report was an allegation of solicitation of a minor for prostitution that occurred at a City Park that adjoins the Blaine Book Company. Declaration from Officer DeVore, City of Bellevue, regarding an incident with suspects that met at R & R Adult Toys store. Officer DeVore’s declaration states that two suspects taken into custody both stated they had just come from an adult entertainment use named R & R Adult Toys and that after meeting at this store they drove to a nearby lot and were discussing future sexual activities they wished to engage in. Declarations from Herbert Hall (customer of adult book stores), Officer Ricardo Bermudez, Officer Todd Elgin, Officer Gary Faust, Officer Mark Hutchinson and Declarations from the following persons describes as neighbors of A-Z Bookstore: Sherilyn Duarte, Lam-Son Trinh, Mr. and Mrs. Ron Foster, Erin K. Davis, Gary Adamson, Joe and Vera Moralez, Joe Keohane, and Buddy Allred, J. Gaynor [PAGE LEFT BLANK INTENTIONALLY] The Planning Advisory Service is a subscription service offered by the Research Department of the American Planning Association. Eight reports are produced each year. Subscribers also receive the PAS Memo each month and have use of the Inquiry Ansering Service. Frank S. So, Executive Director; Sylvia Lewis, Publications Director; William Klein, Director of Research. Planning Advisory Service Reports are produced in the Research Department of APA. James Hecimovich, Editor; Marya Morris, Assistant Editor; Lisa Barton, Design Associate. © November 2000 by the American Planning Association. APA’s publications office is at 122 S. Michigan Ave., Suite 1600, Chicago, IL 60603. E-mail: pasreports@planning.org. APA headquarters office is at 1776 Massachusetts Ave., N.W., Washington, DC 20036. Eric Damian Kelly, FAICP, is a planner and lawyer who is a Professor of Urban Planning at Ball State University. He continues a consulting practice with Duncan Associates, of Austin, Texas, for which he is a Vice President. He is general editor of Matthew Bender’s 10-volume treatise, Zoning and Land Use Controls, lead co-author of a new book from Island Press, Community Planning: an Introduction to the Comprehensive Plan, and a frequent contributor of planning law articles to Land Use Law and Zoning Digest. He is the author of three previous PAS reports, lead co-author of a fourth, and a chapter con-tributor to another. He is a past president of the American Planning Association Connie B. Cooper, FAICP, is president of Cooper Consulting Company, Inc., and a principal with Cooper Ross, with offices in Birmingham, Alabama, and Atlanta, Georgia. She specializes in comprehensive land-use planning, development regulations, and community outreach and goals setting for jurisdictions across the United States. She is a former president of the American Planning Association and is currently serving as President of the American Society of Consulting Planners. She is also the principal author of PAS Report No. 493, Transportation Impact Fees and Excise Taxes: A Survey of 16 Jurisdictions. Many people have supported our work on this report in a variety of ways. First and foremost, we want to thank our spouses—Sandra and Joe—whose patience, trust and good humor have allowed them to support us as we have undertaken the sometimes extensive field work, lengthy conversations, and end-less e-mails through which we have developed much of our understanding of the sex business and the issues surrounding it. The fact that Connie is still a welcome house-guest at the Kellys’ and that Eric can still stay at Coopers’ is an indicator of the level of their support for us. Second, we thank Bob Collins, Vicki Noteis, Virginia Walsh, and Patricia Jensen of the City of Kansas City, Missouri—our real initiation into this field began when they had the confidence to select us to carry out a sex business study for Kansas City. We note, also, that Ginny and Patricia cheerfully, if not enthu-siastically, accepted our invitations to join us in some of our late-night field work there. Max Scott and his staff at Oedipus, Inc., in Boulder, Colorado, conducted the household interviews in Kansas City—the carefully compiled results from those interviews educated us about a number of issues and continue to help us shape our thinking about the impacts of sex businesses on neighborhoods. We also want to thank many new friends in the industry who have helped us to understand the sex business better. We note particularly Dick Bryant, an attorney for the industry in Kansas City, the man-agement of Ray’s and Bazooka’s in Kansas City, and Mark Boyer, publisher of an industry advertising publication in upstate New York. Many neighborhood and other activists have spent time with us and helped us to understand their perspectives on the issue. We have been impressed at the calm and well-reasoned positions that some of these groups take, and, in that context, we note particularly Brian Kane of the Interfaith Action Coalition in Rochester and Bill Sheehan of the Christian Community Organization in Kansas City. We also must thank many people in planning and legal departments in the cities named in this report—they have cheerfully accepted our endless calls and faxes as we have tried to verify the latest versions of these oft-changing ordinances and to understand how they are administered. Finally, we thank our editor, Jim Hecimovich. Producing this report has been an interactive process to which he has contributed tremendously. He has edited our work before, but his role in this report was much more significant—he guided us to the creation of a far better report than we had when we started. The work, of course, is ours, and the findings and conclusions in the report are ours, not those of our clients, friends or colleagues. Except where otherwise noted, the views expressed in this report represent our combined and synthesized judgment. As that statement suggests, work on this project has been the best form of collegial undertaking—and one of the most interesting imaginable. Chapter 5 of this report was adapted from Chapter 11 of Zoning and Land Use Controls, edited by Eric Damian Kelly (New York: Matthew Bender & Co.) and is used with permission. The original source contains extensive statutory and case citations. For those without access to the complete 10-volume set of Zoning and Land Use Controls, the individual chapter can be purchased at http://www.bender.com. Cover design by Toni Thanasouras Ellis; this report is printed on recycled paper. Part 1. Legal Foundation iii TABLE OF CONTENTS Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Defining Pornography Today .................................2 Who Is the Audience for This Report?..........................6 How Do We Know?..........................................6 Organization and Content ....................................7 Chapter 1 . Fanny Hill to Voyeur Dorm . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Pornography and Censorship in Europe .......................10 Pornography and Censorship in the New World................10 Stag Films .................................................11 Mainstream Cinemas and Early “Independent” Film Makers .....12 Magazines Feature Nudity ...................................12 Pornography Goes Mainstream in the 1950s, 1960s, and 1970s ....13 Another Technological Revolution for Pornography.............16 Sex Goes Electronic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Chapter 2 . Understanding the Sex Business . . . . . . . . . . . . . . . . . . . . .21 Mainstream Businesses With Some Hard-Core Material .........21 Mixed-Retail Outlets ........................................23 Adults-Only or Sexually Oriented Retail Outlets................25 Sexually Oriented Entertainment .............................26 Other Businesses ...........................................33 Lessons Learned............................................35 Chapter 3 . Formal Studies of Sex Businesses . . . . . . . . . . . . . . . . . . . .39 The Kansas Study ..........................................39 A Survey of Appraisers in Rochester, New York ................45 Findings From Studies in Other Communities ..................51 Findings...................................................59 Lessons Learned............................................60 Chapter 4 . How Local Governments Regulate Sex Businesses . . . . . . . . .63 Zoning Techniques for Regulating Sexually Oriented Uses .......64 Licensing Techniques for Regularing Sexually Oriented Uses .....66 Separation Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Treating Specific Adult Uses Differently .......................73 Amortization of Sexually Oriented Uses .......................78 Lessons Learned............................................79 “everything you always wanted to know about regulating sex businesses” E ric Damian K E lly , faicp c onni E coopEr , faicp Webb Chappell Corbis Chapter 5 . Major Issues in the Regulation of Sex Business . . . . . . . . . . .81 Constitutional Context for the Authority to Regulate ............81 Zoning Techniques Applied ..................................86 The Importance of Studies ...................................87 Requirements for Availability of Sites .........................88 Licensing Ordinance ........................................93 Conditional Zoning .........................................95 Regulation of Nude Dancing .................................96 Regulation of Sex Toys and Novelties .........................99 Regulation of Arcades and Peep Shows ......................104 Regulation of Massage and Other Touching Businesses .........105 Signage As a Regulating Factor..............................107 Lessons Learned...........................................107 Chapter 6 . How To Prepare a Study of Sexually Oriented Businesses . . . .111 What Is the Value of a Study? ...............................111 Who Should Be Involved and Why ..........................112 Study Contents ............................................113 Findings and Recommendations.............................116 Chapter 7 . How To Prepare Zoning Regulations for Sexually Oriented Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119 Definitions................................................119 Land-Use Classifications ...................................123 Designation as Principal Use ................................123 In What Zoning Districts Are These Uses Appropriate?.........124 Should Sexually Oriented Businesses Be Clustered?............125 Should These Businesses Be Separated from Other Uses? .......126 What Is the Effect of the Proposed Restrictions? ...............129 Can Signage for Sex Businesses Be Limited? ..................130 Chapter 8 . How to Prepare a Licensing Ordinance for Sexually Oriented Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . .131 Why, When, What, and Who To License . . . . . . . . . . . . . . . . . . . . . . 131 Application Content and Review Criteria .....................136 Basic Operating Standards ..................................137 Categorizing License Violations .............................139 Procedures for License Suspension and Regulation ............140 Chapter 9 . Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .143 General Recommendations .................................144 Retail Businesses ...........................................10 On-Site Entertainment Businesses ...........................146 Separation Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 Appropriate Districts for Adult Uses .........................149 Studies ...................................................149 Zoning and Licensing ......................................149 Existing Nonconforming Establishments .....................150 Legal Context ............................................151 Sex Myths ................................................151 Appendix A . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .153 1 Foreword A WARNING The following PAS RePoRT conTAinS gRAPhic AdulT mATeRiAl! This report contains explicit language. We include that language and some suggestive, but not explicit, illustrations to educate, not to titillate. To understand approaches to regulating the business of sex, it is essential to understand the business. The first chapters in this report focus on pornography and its evolution in society and businesses dealing in por- nography and sexually oriented materials. We use words here that we do not use in ordinary conversation and that you have probably never seen in a technical report from a national organization, but this report is about the sex business and the sex business is about sex. If explicit discussion of sex in a technical report makes you uncomfortable, you may want to give this report to someone else to read. It is consciously explicit. THE SCOPE OF THIS REPORT In this report, we examine civil, not criminal regulation of lawful sex businesses and businesses carrying lawful sexually oriented mate- rial. By civil regulation, we mean zoning, licensing, and other non- criminal ordinances. To the extent that there may be drugs, prostitu- tion, or other illegal acts associated with a sex business that bring in police and criminal enforcement actions, the enforcement of the related criminal laws goes beyond the focus of this report. Lawful sex businesses discussed in this report include: • mainstream video stores and newsstands with adult material; • adult or XXX bookstores; • adult or XXX video stores; • adult or XXX motion picture theaters; • sex shops, a classification that we have developed; • video arcades containing video-viewing booths, also called peep shows; • nude or topless dancing establishments; • lap- and table-dancing establishments; • lingerie modeling and other encounter businesses; and • sexually oriented massage studios and other touching businesses. In this report, we examine civil, not criminal regulation of lawful sex businesses and businesses carrying lawful sexually oriented material. 2 Everything You Always Wanted to Know . . . Note that we do not necessarily recommend that all of the businesses listed above should be permitted to operate in your jurisdiction. These are simply businesses that many jurisdictions allow to operate openly under existing laws and ordinances. We discuss how to distinguish sexually oriented businesses from: • mainstream bookstores, most of which carry a variety of marriage manuals, self-help books, art books, and other media that would tech- nically fall within the definition of sexually oriented material under many local ordinances; • mainstream video stores that stock adult-rated general-release mov- ies; • mainstream movie theaters that show adult-rated general-release mov- ies; and • massage facilities operated by certified massage therapists. This report deals with the following to the extent that they may arise as local land-use issues, but the regulatory issues involved in these business are largely not place specific and thus are largely beyond the scope of this report. Those businesses are: • outcall and escort services, which are regulated legal adult businesses in some jurisdictions but which are difficult to effectively regulate civ- illy; and • sex businesses on the Internet, which are not controllable locally. This report does not deal with: • prostitution, which is illegal in 49 states and parts of Nevada DEFINING PORNOGRAPHY TODAY The old adage concerning the definition of pornography is “I can’t define it, but I know it when I see it.” That will not work when you are trying to draft effective regulations for dealing with the sex businesses we have listed above and that we describe in more detail in Chapter 2 of this report. Toward that end, we are here providing a comment about definitions of sexually oriented materials, performances, and services, and pornography as they currently exist in zoning ordinances. As the discussion that follows shows, we believe there should be an evolution in these definitions because, without that, definitions themselves may cause problems with effective enforcement of regulations for lawful sex businesses. (For more definitions, see the sidebar on the following pages and Chapter 7.) The definitions typically used in zoning ordinances refer to businesses that offer materials or performances that show “specified anatomical areas” or “specified sexual activities.” Many of the ordinances we reviewed, defined these terms in the following manner: Specified anatomical areas shall mean: (a) Less than completely and opaquely covered: (i) Human genitals, pubic region; (ii) Buttock; and (iii) Female breast, below a point immediately above the top of the areola; and (b) Human male genitals in a discernibly turgid state, even if com- pletely and opaquely covered. The old adage concerning the definition of pornography is “I can’t define it, but I know it when I see it.” That will not work when you are trying to draft effective regulations for dealing with the sex businesses. Foreword 3 Specified sexual activities shall mean: (a) Human genitals in a state of sexual stimulation or arousal; and/ or (b) Acts of human masturbation, sexual stimulation or arousal; and/ or (c) Fondling or other erotic touching of human genitals, pubic region, buttock or female breast. We find these rather commonly used definitions far too broad, encom- passing a variety of artistic materials, marriage manuals, and other self- help books and even materials presented in mainstream movies and magazines. Other than the “turgid” male genitals, virtually all of the areas and acts included in the above definition can be seen, at least occasionally, on network television, and all can be seen on popular, unrestricted cable channels like HBO and Showtime, as well as in general-release theaters. For purposes of this report, we find it more useful to refer to “soft- core” and “hard-core” pornography. Although these terms are used commonly, they are often used without clear definitions. Both are evolving concepts, as the concise history that appears in Chapter 1 will make abundantly clear. In 2000, the year in which we are writing this report, we provide the following examples to illustrate the differences between soft-core pornography and hard-core pornography as we cur- rently understand them and as we use the terms in this report. We use illustrations that describe movies, videos, and photos rather than text because those are the more common contexts in which the issue arises today; we believe, however, that the visual examples can be transferred to text-related ones where appropriate. Today, visual soft-core pornography can include: • full female frontal nudity; • full male frontal nudity; • full rear nudity; • simulated sexual intercourse; • actual sexual intercourse where the genitals cannot be seen (which has the effect of simulated intercourse); and • visible contact between the hands of one person and the genitals of another, regardless of the genders of the participants. Visible touching of the genitals is the most recent addition to this category; the last one to join this category before that was full male frontal nudity. Basic hard-core pornography clearly includes everything found in soft- core pornography, adding one or more of the following: • erect male organ; • contact of the mouth of one person with the genitals of another; • penetration of a finger or male organ into any orifice in another person; • open female labia; • penetration of a sex toy (usually a dildo) into an orifice, sometimes assisted by another person; • male homosexual activities beyond casual touching; and • the aftermath of male ejaculation. 4 Everything You Always Wanted to Know . . . GLOSSARY W e use the following terms frequently enough in this report that it may help the reader to have ready reference to them. Note that there is a full set of recommended definitions for local ordinances included in Chapter 7; although there is some overlap between the two lists, the list in Chapter 7 includes a more complete set of use-related definitions. If a term is defined elsewhere in this list, it has been set in italics. adult business Many communities refer to a sex business as an “adult business.” Because there are other adults-only products and businesses—alcohol, tobacco, and legal gambling being prominent examples—we prefer the more specific definition of sex business. adult arcade A term used in some local ordinances to describe a physical arrangement of one or more video-viewing booths. bookstore We use this term as a limiting term in this report to describe a store that primarily sells books and other print media. For reference, see also the definitions for sex shop and media. cabaret A term often used to describe an establishment that has a combination of live entertainment and alcoholic or other refreshments. hard-core [pornography] In the visual media, hard-core typically includes elements of soft core and adds to that one or more of the following: erect male organ; contact of the mouth of one person with the genitals of another; penetration of a finger or male organ into any orifice in another person; open female labia; penetration of a sex toy (usually a dildo) into an orifice, sometimes assisted by another person; the aftermath of male ejaculation. Most hard-core material includes one or more money shots. The definition is discussed in context in Chapter 1. lap dancing “Just riding on a guy’s lap.” See description in Chapter 2. media Anything printed or written, or any picture, drawing, photograph, motion picture, film, videotape or videotape production, or pictorial representation, or any electrical or electronic reproduction of anything that is or may be used as a means of communication. Media includes but shall not necessarily be limited to books, newspa- pers, magazines, movies, videos, sound recordings, cd-roms, digital video discs, other magnetic media, and undeveloped pictures. money shot Industry term for a visual depiction of male ejaculation, discussed in Chapters 1 and 2. obscenity or obscene These terms are applied in this report—and in the industry in general—to material that is illegal in the United States, generally because it fails to meet contemporary community standards or contains no redeeming social value. Compare to the definition of pornography. This definition is discussed in context in Chapter 1 and further explained in Chapter 5. pornography This term is used in this report, in the industry, and among scholars who study it, as a generic term that includes sexually oriented, soft-core and hard-core material. It is used as a descriptive term, not as a judgmental one. The use of the term has changed over the years; for a discussion of the definition and a brief history, see Chapter 1. public display The act of exposing, placing, posting, exhibiting, or in any fashion dis- playing in any location, whether public or private, an item in such a manner that it may be readily seen and its content or character distinguished by normal unaided vision viewing it from a street, highway or public sidewalk, or from the property of others, or from any portion of the person’s store or property where items and material other than sexually oriented media are offered for sale or rent to the public. Note that there is a good deal of material which may be inappropriate for public display but that is otherwise entirely legal and not a public policy concern; see soft core; specified anatomical areas sadomasochistic practices Flagellation or torture by or upon a person clothed or naked, or the condition of being fettered, bound, or otherwise physically restrained on the part of one so clothed or naked. Foreword 5 GLOSSARY (continued) sex business An inclusive term used to describe collectively: adult cabaret; adult motion picture theater; adult media store; bathhouse; massage shop; modeling studio; and/or sex shop. This collective term does not describe a specific land use and should not be considered a single-use category. This business is described in some depth in Chapter 2. sex shop This is the authors’ definition of a business that meets any of the following tests: • It offers for sale items from any two of the following categories: sexually oriented media; sexually oriented toys or novelties; lingerie; leather goods marketed or pre- sented in a context to suggest their use for sadomasochistic practices; and the combination of such items constitutes more than 10 percent of the stock-in-trade of the business or occupies more than 10 percent of the gross public floor area of the business; or • More than 5 percent of the stock-in-trade of the business consists of sexually oriented toys or novelties; or • More than 5 percent of the gross public floor area of the business is devoted to the display of sexually oriented adult toys or novelties. • It advertises or holds itself out in any forum as “XXX,” “adult,” “sex,” or other- wise as a sex business other than an adult media outlet, adult motion picture the- ater, or adult cabaret. sexually oriented toys or novelties Instruments, devices, or paraphernalia either designed as representations of human genital organs or female breasts, or designed or marketed primarily for use to stimulate human genital organs. soft-core [pornography] In the visual media, soft core today may include full frontal nudity of men or women, full rear nudity, simulated sexual intercourse, actual sexual intercourse where the genitals are not visible and limited forms of contact between the hands of one person and the genitals of another. Soft core, as it is understood in the United States in the year 2000, does not include penetration or erect male organs; see hard core. This definition is discussed in context in Chapter 1. specified anatomical areas As commonly used, this term includes: (1) less than com- pletely and opaquely covered: human genitals, pubic region, buttock and female breast below a point immediately above the top of the areola; and (2) human male genitals in a discernibly turgid state, even if completely and opaquely covered. Note that using this definition includes a good deal of soft core material, a fact which makes it inappropriate for describing materials in most sex businesses, although it may still be useful to define what materials should be allowed on public display. specified sexual activities Sexual conduct, being actual or simulated, normal or per- verted acts of human masturbation; deviate sexual intercourse; sexual intercourse; or physical contact, in an act of apparent sexual simulation or gratification, with a person’s clothed or unclothed genitals, pubic area or buttocks, or the breast of a female; or any sadomasochistic abuse or acts including animals or any latent objects in an act of appar- ent sexual stimulation or gratification. video store We use this term as a limiting term in this report to describe a store that primarily sells or rents videos. (See also media; sex shop.) video-viewing booth Any booth, cubicle, stall, or compartment that is designed, con- structed, or used to hold or seat patrons and is used for presenting motion pictures or viewing publications by any photographic, electronic, magnetic, digital, or other means or media (including, but not limited to, film, video or magnetic tape, laser disc, cd-rom, books, magazines, or periodicals) for observation by patrons therein. A video-viewing booth shall not mean a theater, movie house, playhouse, or a room or enclosure or por- tion thereof that contains more than 150 square feet. 6 Everything You Always Wanted to Know . . . There are at least two levels of hard-core pornography. The first includes five of the six representations above and can now be found on pay-per-view channels in hotel rooms, on some cable channels, and in a few magazines available in some airport and other mainstream news- stands. The second level, true hard core, adds the sixth and last key ele- ment—“the money shot,” showing male ejaculation (Williams 1999, citing Ziplow 1977). Given current trends, it is certainly possible that some of the mass dis- tribution hard-core material will begin to include money shots. Other activities, however, seem likely to remain part of the hard-core material that is available only through the sex business that we would label “extreme hard core.” Those include: • sexual activities involving bondage, sadism, and masochism; • activities involving interaction between humans and animals. Although the courts have not made the distinctions that we make here, we believe that society has. And while the trade seems to draw a line at the “money shot” now, reserving it for materials available only through adult outlets, the trend is such that it may logically join penetration as part of the more generally available hard core. While parents may wish to protect children from even soft-core pornography, and society is likely to help them do so, it is so widely available in mainstream channels that we do not feel that soft-core pornography is a land-use issue; when it is avail- able on network television and in general release (even if R-rated) films, it is an access issue, not a land-use one. Hard-core pornography, in contrast, remains primarily a product of the sex industry, which now includes videos, pay-per-view movies, and Internet sites, as well as the traditional media of magazines and movies. Where the sale or rental of hard-core pornography is available in a retail outlet or otherwise becomes place specific, or where sexually oriented entertainment is available to the public on site, in a theater or other venue, the activity becomes a land-use issue. The focus of this report is on the land-use characteristics and impacts of the activity rather than on the content of the performance or the materials. That approach is consistent with the approach of the courts, which have generally held that regula- tions of sex businesses must be justified by studies showing possible “secondary impacts” of the land use. Some pornography is obscene, and, as we explain in Chapter 5, obscen- ity lacks First Amendment protection and is generally illegal to sell or distribute—but legal to own. What is obscene? As we explain in Chapter 5, the U.S. Supreme Court has held that the definition of obscenity is gen- erally a matter of “contemporary community standards” as determined by a jury—but work that has socially redeeming value, or as the Court has held, work that, taken as a whole, includes any “serious literary, artistic, political, or scientific value” will not be found obscene. WHO IS THE AUDIENCE FOR THIS REPORT? We hope that active users of this report will include local planners, munic- ipal counsel, code enforcement personnel, police, public health officials licensing clerks, planning commissioners, and the public officials who enact codes and ordinances regulating sexually oriented uses in their communities. Although our focus is local, the material in this report should provide useful guidance to those interested in addressing some of these regulatory issues through state legislation. Hard-core pornography . . . remains primarily a product of the sex industry, which now includes videos, pay- per-view movies, and Internet sites, as well as the traditional media of magazines and movies. Foreword 7 A key component of this report focuses on the sex business itself, not just the regulatory schemes for addressing it. It is essential to under- stand a business before attempting to regulate it. It has been our experi- ence that few planners and public officials concerned with sex business regulation have any real familiarity with the sex business. Even the notion of treating the sex business as a single entity is misleading, because it is really many businesses, with many different characteristics and different impacts on communities. We have found police officers and prosecuting attorneys in some communities who understand the grayer edges of the business, but far too few local planning profession- als and public officials understand the business. We hope that this report will help to increase the understanding of the business by those who regulate it. HOW DO WE KNOW? In the past three years of our research for this report, we have gotten to know the industry better than many of its customers. We have visited dozens of adult businesses in Kansas City, Biloxi, Rochester, New Orleans, Atlanta, New York City, Palm Beach County, and in other cit- ies, including some in other countries. We have met with sex business owners and managers. We have examined the sex toys, tried the view- ing booths, watched lap dancing and, perhaps most important, watched other customers in these businesses. We have viewed police camera tapes of "dancers" performing in a booth a type of performance that we chose not to witness live. We have toured up-scale establishments and seedy ones, well-managed operations that serve as informal "neighbor- hood watch" coordinators, and poorly managed ones with soiled mat- tresses and tissues littering video-viewing booths. We have learned from operators and their attorneys that well-managed and successful sex businesses, like quality business in other fields, support effective regulation because it reduces community conflicts with their businesses and thus reduces the risk of community backlash against them. So now we're going to tell you everything you wanted to know about regulat- ing lawful sex businesses. ORGANIZATION AND CONTENT This report falls in three general parts. Chapter 1 through 5 are educational chapters, intended to inform the planning and policy-making process that ultimately implements regula- tions for sex businesses and other land uses. We suggest that you read all five of these chapters sequentially as you begin (or begin again) the pro- cess of reviewing or developing a set of regulations for sex businesses in your community. Chapters 6 through 8 are “how to” chapters, intended for use by the staff planners and lawyers who prepare local studies and draft ordinances dealing with sex businesses. These chapters should be used as checklists as you engage the process of creating or amending regulations for sex businesses. There is no new learning in these chapters—it simply orga- nizes the learning from the first five chapters in a way that is useful as the basis for a work program. Chapter 9 summarizes all of our recommendations from the report and is intended for use in summarizing the report as part of the record at leg- islative hearings or even in court. It provides a sort of “executive sum- mary,” but we have consciously not placed it at the beginning because we believe that reading only the summary is inadequate. Here are brief descriptions of the individual chapters that follow. We have toured up-scale establishments and seedy ones, well-managed operations that serve as informal "neighborhood watch" coordinators, and poorly managed ones with soiled mattresses and tissues littering video- viewing booths. 8 Everything You Always Wanted to Know . . . Chapter 1. From Fanny Hill to Voyeur Dorm: the Social Evolution of Pornography. This background chapter provides a philosophical, political, and practical history of pornography in society. Because pornography is something defined by society and not an absolute, it is important to understand how society came to its present definitions—and where it is probably headed. Chapter 2. Understanding the Sex Business: Classifying Types of Businesses that Offer Sexually Oriented Products and Services. Chapter 2 describes sex businesses as they actually operate. The material in this chapter is based both on our own field work and on secondary sources. In this chapter, we explain the land-use classification system that we recommend for sex businesses. Chapter 3. What Do Formal Studies Show About the Impacts of Sex Businesses on Communities? This chapter summarizes nine sex studies in communi- ties across the country. Some are famous, some are thorough, and all are interesting. Included in this chapter are the results of our own Kansas City study—based both on field work and on an unprecedented door-to-door survey around the businesses—and a new survey of appraisers in Rochester, New York. From this chapter, we draw important findings and conclusions that lay the foundation for many of our regulatory recom- mendations. Chapter 4. How Local Governments Regulate Sex Businesses. We can always learn from others, and this chapter includes a comprehensive review of the methods that 21 different local governments use to regulate sex busi- nesses. Although we believe that the recommendations in this report provide a better regulatory model than any of the individual communities cited, it is useful to consider the choices that other communities made— before our report was available. Some of our own recommendations, of course, are based on ideas that we gained from particular communities— although most are synthesized from our learning from the studies and the field work. Chapter 5. Major Legal Issues in the Regulation of Sex Businesses. This chapter is intended as an educational one for planners. It also provides good background for local government attorneys who are only gener- ally familiar with this complex field. It cites and discusses all of the major cases in the field and outlines the major principles that govern the regulation of sex businesses, which, like the regulation of signs, takes place at the intersection of the First Amendment and local regulation. Chapter 6. How to Prepare a Study of Sexually Oriented Businesses. This is the “how-to” chapter on preparing your own local study of sex busi- nesses. Although the courts have allowed local governments to use studies from other communities, a community that performs its own study will have a better factual, practical, and legal basis for develop- ing a regulatory program than one that does not. In this chapter, we guide you through the process of designing and conducting such a study. Chapter 7. How to Prepare Zoning Regulations for Sexually Oriented Businesses. This chapter includes a model set of definitions and a work program for creating viable zoning regulations for sex businesses—and then for checking them to be sure that they are defensible. The chapter discusses both the assignment of sex businesses to zoning districts and the establishment of separation requirements between sex businesses and a variety of other uses. Chapter 8. How to Prepare a Licensing Ordinance for Sexually Oriented Businesses. This chapter complements Chapter 7 by focusing on the cre- Foreword 9 ation of a licensing ordinance for sex businesses. As we explain in Chapters 2 and 3, many of the issues that concern residents and commu- nities about sex businesses are operating issues, not land-use issues; through a licensing ordinance, a community can directly address those operating issues. Chapter 9. Recommendations. In this chapter, we summarize our find- ings, conclusions, and lessons learned, and make specific recommenda- tions. We anticipate that you will use this chapter in preparing findings on which to ground an ordinance, for defending an ordinance in court, or as a “refresher.” W hy a history? It is important to understand that the sex business is big business, an old business, and a business that has evolved as values in society have changed. This is not a marginal part of society that we should ignore. It has been around for a long time, and it will be around for a long time. You, the reader, may or may not patronize these businesses, but the chances are excellent that some of your friends, colleagues, and neighbors do. Sex businesses play a role in a modern community and have a place in that commu- nity. As we will show in this report, that place is not next to the elementary school, but it is also not next to the junkyard. We hope that when you have read this report, you will understand the sex business well enough to make informed decisions about its place in your community. Pornography is a socially constructed concept. As Lynn Hunt (1996, 11) notes: Pornography was not a given; it was defined over time and by the conflicts between writers, artists and engravers on the one side and spies, policemen, clergymen and state officials on the other. Hunt traces the history of pornography back half a millennium: In early modern Europe, that is, between 1500 and 1800, por- nography was most often a vehicle for using the shock of sex to criticize religious and political authorities. (p. 10) As the history that follows shows, the evolution of pornogra- phy has followed societal change. In particular, pornography has been shaped by—and has arguably shaped—a series of techno- logical revolutions: the printing press; the 8-millimeter movie camera; the VCR; and the Internet. In fact, at least one author is convinced that the sex industry contributed substantially to the choice of VHS over Betamax technology, to the wide acceptance of VCRs, and to the explosive growth of graphic capabilities of the Internet (Lane 2000). 11 CHAPTER 1 The sex business is big business, an old business, and a business that has evolved as values in society have changed. Fanny Hill to Voyeur Dorm: The Social Evolution of Pornography 12 Everything You Always Wanted to Know . . . PORNOGRAPHY AND CENSORSHIP IN EUROPE The concept of pornography evolved with Western modernity as Europe emerged from the Middle Ages (Hunt 1996, 10-11). Although the material classified as pornography was created by writers, poets, and artists, it was defined as pornography by censors. The Catholic Church may have unin- tentionally helped the cause of pornography by publishing its “Index of Forbidden Books,” beginning in the sixteenth century and comprehen- sively compiled by Paul IV in 1559 (Findlen 1996, 55). In defining and identifying early pornography, scholars still refer to the Catholic lists and lists of materials kept under restricted access in major French and British libraries. Lynn Hunt (1996, 12) identifies episodes of censorship by the French police in the early eighteenth and nineteenth centuries; during each period, police apparently maintained a list of immoral books. Hunt says that the earliest use of the word “pornography” that she has found in extensive reviews of the literature (dating at least to 1500) is in an 1806 bibliography of suppressed books, compiled by the Frenchman Peignot. Hunt credits the evolution of pornography as a genre to a combination of the availability of the printing press and the definition provided by public censorship. Paula Findlen (1996) also traces the concept to the sixteenth century: All cultures produce some form of sexually explicit art and litera- ture. But not every culture distinguishes the erotic from the porno- graphic, nor is pornography defined in the same way in every instance. Pornography, a repository of multiple meanings with con- stantly shifting boundaries, emerged from the literature and imag- ery that purported to recount the lives of prostitutes . . . . This genre flourished in the erotic and obscene writings of sixteenth century authors…. (p. 52-53) PORNOGRAPHY AND CENSORSHIP IN THE NEW WORLD By the eighteenth century, attacks on pornography coincided with attacks on novels in general; both novels and pornography were associated with “libertinism” (Hunt 1996, 36-37). Late in the eighteenth century or early in the nineteenth, hard-core pornography became a commercial enterprise and lost many of its political connotations, at least in England and France. According to Frederick Lane (2000), one of the benchmarks of that change was the publication of John Cleland’s Fanny Hill: Memoirs of a Woman of Pleasure; the 20 guineas that he received for its publication secured his release from debtors’ prison—where he had written it. Lane’s account of the book’s publishing history notes the progress of the book’s and some various publishers’ success. Although religious groups controlled the early printing presses in the United States, by the early nineteenth cen- tury, an independent printer in this country had reproduced Fanny Hill; at least one publisher and two booksellers were prosecuted for printing and distributing the book. By 1846, however, another publisher produced the book in New York, apparently achieving great financial success and entirely avoiding legal penalties. Lane goes on to contend that the success of Fanny Hill and other mid- nineteenth century sexually oriented works led to efforts to regulate this new industry. Anthony Comstock became the leader of that movement, helping first to lead a crusade for the passage of an anti-obscenity law in New York State. Comstock joined forces with the YMCA, which was involved in a campaign against vice in general. With funding from the YMCA or its leaders, Comstock became head of the nongovernmental New York Society for the Suppression of Vice. In that capacity, he began This is an adult bookstore in 1958. The chances are good that works like Lady Chatterley’s Lover, Fanny Hill, and The Pearl were somewhere on these shelves. Had they been published in 1958, Lolita, Catcher in the Rye, and Naked Lunch would also probably have been available only in an adult bookstore. Now all are available from Amazon.com and other major bookstores. And several of these works are now considered classics of twentieth century literature. The Kinsey Institute for Research in Sex, Gender, and Reproduction, Inc. Chapter 1: Fanny Hill to Voyeur Dorm 13 “confrontational raids” on sellers of pornography in New York. From that political base, Comstock became involved in the efforts to strengthen fed- eral regulation of obscenity, which resulted in the passage of an 1873 law, An Act for the Suppression of Trade in and Circulation of Obscene Literature and Articles of Immoral Use. Apparently as part of a political deal and the law’s passage, Comstock was made a “special agent” of the U.S. Post Office to enforce the law. During his 42 years of service in that post, the law became known as the “Comstock law.” He was a ruthless enforcer: By January 1874, less than a single year after his initial appointment, Comstock reported that he had confiscated and destroyed “134,000 pounds of ‘books of improper character’ along with 194,000 pictures and sundries, like 60,300 ‘rubber articles’ and 5,500 ‘indecent’ playing cards.” In 1913, just two years before his death, Comstock boasted that he had destroyed more than 160 tons of obscene literature and had convicted enough individuals to fill nearly 61 passenger cars with 60 seats each. (Lane 2000, 15; internal citations omitted) Comstock’s war attacked more than erotic material—the law and the man also opposed the distribution of contraceptive devices, leading Comstock to what turned into his final battle—against Margaret Sanger, social reformer and pioneer of the birth-control movement. Although public outcry led federal prosecutors to drop charges against her, charges against her husband on similar grounds were pending when he died in 1915, the same year that Comstock died. During the remainder of the twentieth century, none of the controver- sies that we have encountered regarding the sex business have focused on the content of books that are not illustrated. Undoubtedly, there are those in society who remain concerned with James Joyce’s Ulysses, Vladimir Nabokov’s Lolita, J. D. Salinger’s Catcher in the Rye, and D.H. Lawrence’s Lady Chatterley’s Lover, and more who would be concerned if they read items like the much re-issued Fanny Hill and The Pearl. Although we have seen some sexually oriented paperbacks, usually by “Anonymous,” in some of the shops that we visit, they appear to constitute a very small part of the sexually oriented inventory available in the industry. All of the specific titles just named can be found in the major national book chains, as well as in the catalog of a traditionally conservative national book club. Those and other titles would meet our definition of hard core if filmed literally and explicitly, and yet they seem not to be at the heart of contro- versy today. In short, we do not believe that text-oriented books are a major factor in contemporary definitions of the sex business. STAG FILMS About the time of Comstock’s death, technology was creating the oppor- tunity for a new form of pornography—the stag film. Linda Williams (1999) traces the origins of sexually oriented movies to stag films from as early as 1910 to 1915. She contrasts the modern sex movies with early stag films in several ways: [Stag films include a] male film spectator who is encouraged to talk to, and even to reach his hands into the screen; a female film body who spreads her legs and (and labia) for the eye and hand behind the camera. (p. 76) The form and content of the stag film remained essentially unchanged for more than 50 years—a single, relatively short reel (usually 10 to 15 minutes in length), amateur participants, and heterosexual intercourse Comstock’s war attacked more than erotic material—the law and the man also opposed the distribution of contraceptive devices, leading Comstock to what turned into his final battle—against Margaret Sanger, social reformer and pioneer of the birth-control movement. Corbis 14 Everything You Always Wanted to Know . . . (albeit in a variety of positions and locations). The production of stag films was a “cottage industry.” Most of the stag films were shown first in the region in which they were produced, and then only slowly in other regions or countries. The industry received an important boost in 1923, when Kodak introduced a 16mm camera, projector, and film (Lane 2000, 21-22). MAINSTREAM CINEMAS AND EARLY “INDEPENDENT” FILM MAKERS Stag films were not the sole source of early sex in cinema. According to a history of the sexually oriented film industry (Muller and Faris 1996), Grindhouse: Prior to [1931], movies eagerly depicted all sorts of sex, vice and gen- eral moral corruption, from “exposes” of white slavery, like Traffic in Souls (Universal, 1913) to grandiose epics that featured nubile Christians lashed naked to the stake (Cecil B. DeMille’s Sign of the Cross) to all-out orgies (Eric von Stroheim’s The Merry Widow and The Wedding March). (p. 13) In 1931,the mainstream motion picture industry created the Motion Picture Producers and Distributors Association of America (MPPDAA). It defined pornography through its Production Code Administration office, often simply called “the Hays office” after the MPPDAA’s first president, Will Hays. Hays published an early list of “don’ts and be carefuls,” deal- ing with both sex and violence. The code was revised in 1934 under pres- sure from the private Legion of Decency and its leader, Martin Quigley; their boycott of Philadelphia theaters caused a 40 percent revenue loss in one week, persuading the industry to accept their proposed standards, which imposed much greater restrictions on sex than on violence (Lane 2000, 21-22; Muller and Faris 1996, 14). According to Grindhouse, into the breach created by the new limits imposed on mainstream films came a group of “former carnival opera- tors, con men, roadshow hucksters” who created the new adult industry and called themselves “the Forty Thieves”—producing, directing and distributing x-rated movies. In some cases, the “distribution” amounted to a member of the informal group taking a film on the road and physi- cally showing it in “tiny grindhouses” along the way:2 J.D. Kendis, one of the original Forty Thieves, helped create the basic recipe for exploitation chefs in his 1931 production Guilty Parents. Patrons left thirsty by [Prohibition] were shown lots of drinking, either in swanky urban social clubs or in grungy rural roadhouses. Fallen women presided over gaming dens, wearing filmy negligees. The heroine, typically a corn-fed blonde, had her hands full fending off the heavy-petting wolf who lived to corrupt her. (p. 19) Although these producers were operating decades before Supreme Court Justice Brennan injected the concept of redeeming social value into the dis- tinction between what is and is not obscene, they seemed to anticipate such a rule and often hung their sexual images on educational themes—themes like avoiding venereal disease, maintaining sex hygiene, and “exposing the vice rackets” (Muller and Faris 1996, 20-33). Other early themes included “naked natives” and “sex-crazed dope fiends.” Stars in this period even included Hedy Lamarr. MAGAZINES FEATURE NUDITY Although sexually explicit novels had become widely available by late in the nineteenth century, publications with explicit pictures had received Sally Rand, whose fan dance made a splash at the 1933 Chicago World’s Fair, starred in The Sunset Murder Case (1938). Her exotic dance in the film, according to a critic at the All Movie Guide (www. allmovieguide.com) was “by 1990s standards. . .about as erotic as a plastic shower curtain.” The movie was known as The Sunset Strip Case (no pun intended, we’re sure) on the grind house circuit. The Kinsey Institute for Research in Sex, Gender, and Reproduction, Inc. The Kinsey Institute for Research in Sex, Gender, and Reproduction, Inc. Jungle Virgin (1936), also known as Jaws of the Jungle was “stark realism” indeed. The credited cast (those “demons on a rampage”) included Gukar as the Rejected Suitor, Cliff Howell as the Narrator, Minta as The Girl, Teeto as The Boy, and, of course, Walla as The Ape. Chapter 1: Fanny Hill to Voyeur Dorm 15 limited distribution because of the fear of prosecution during the Comstock era. In the post-Comstock era, illustrated works evolved rap- idly: The magazine industry was particularly aggressive in its use of sexual imagery and themes. In 1931, The American Sunbathing Association began publishing the Nudist (later renamed Sunshine & Health) and a number of so-called “art photography” publications followed. And in 1933, Esquire magazine was founded by 29-year-old Arnold Gingrich, who hit upon the then provocative combination of top-notch writing, risqué cartoons, and drawings of scantily clad women. Despite a rather high cover price of 50 cents (particularly for a nation in the throes of a depression), Esquire went on to sell more than 10 million copies in its first three years. (Lane 2000, 22-23) The 1940s saw even more strict censorship and the evolution of “cheesecake.” (According to the Random House unabridged dictionary (2d ed.), cheesecake was also called “leg art” and “consisted of photo- graphs featuring scantily clothed attractive women.”) Cheesecake was available in burlesque films and early “peep shows,” coin-operated machines that each showed a short film loop for a coin (Muller and Faris 1966, 34-37). The 1940s also brought an expansion of the pornography industry as it served troops abroad with girlie magazines and porno- graphic films (Lane 2000, 26). PORNOGRAPHY GOES MAINSTREAM IN THE 1950s, 1960s, AND 1970s Hugh Hefner redefined sex and the media in the 1950s. He had started as promotion manager on one of the sunbathing magazines that evolved from the 1940s. In 1952, he quit that job and took a less demanding posi- tion with a children’s magazine, giving him time to work on his own publication. He raised $10,000 from friends and acquaintances, spent $500 of that to buy the rights to his first centerfold—a pin-up photo of Marilyn Monroe—and added to that illustration some articles that he wrote him- self and a variety of public domain material by well-known writers. The result was the first issue of Playboy, which sold more than 50,000 copies when it came out in 1950. He published 175,000 copies of the first-year anniversary issue and 400,000 of the second-year anniversary issue (Lane 2000, 23-24). Hefner’s blend of nudity (initially consisting only of bare female breasts) and sophistication brought sexually oriented materials into the mainstream. Although other men’s magazines soon offered sexually oriented photos of females to a mass audience, Hefner’s Playboy Enterprises dominated this part of the business for nearly two decades. He added the Playboy clubs, with scantily clad hostesses in “bunny” outfits, in 1960 (Lane 2000, 26). His major competitors entered the field in 1969 (Penthouse) and 1974 (Hustler). Playboy and Penthouse remain mainstream, relatively soft-core maga- zines—featuring full frontal nudity and, at least in Penthouse, erect male organs, but no penetration. Penthouse has also long featured letters that graphically define a variety of sex acts that would meet our definition of hard core if illustrated. Hustler is a grittier but still relatively mainstream and soft-core publication. Other publications found in airports and larger newsstands feature more explicit poses by female models—often includ- ing open labia—but still remain essentially soft core. High Society has begun including both penetration and “money shots” (ejaculation) and has now disappeared from airport newsstands. All of these are available through the mail and in major bookstores and newsstands. Although “I Ecstasy (1933) meant Hedy Lamarr taking a midnight nude swim. In the plot, she plays a sexually frustrated young wife who finds fulfillment in the arms of a roadway engineer. Her husband commits suicide, and she ends up “happy and contented. . ., the result of her secret liaison being the little baby in her arms” (www.allmovieguide.com). The film gets a four-star rating on the All Movie Guide site. The Kinsey Institute for Research in Sex, Gender, and Reproduction, Inc. 16 Everything You Always Wanted to Know . . . buy Playboy for the articles” is a sort of a pat male joke, it is not a joking matter to major publishers. Playboy and Esquire, which are no longer “on the edge” in this business, have both supported major fiction writers early in their career and later. It is important to consider that fact in the context of the Supreme Court’s determination in its decisions to protect “All ideas having even the slightest redeeming social importance.” It is also impor- tant to realize that both of these publications took risks on significant new authors before the leading Supreme Court decision (described below). The 1950s also saw the broad release of a number of nude films, includ- ing Adam and Eve.3 The Garden of Eden, a movie set in a nudist colony and focused on how the nudist colony was seeking to gain the respect of the community, was shown in 36 states. New York’s ban on it was struck down by the state’s own high court (Lane 2000, 26). Muller and Faris (1996) note that, at this same time, “many grindhouses became ‘art houses,’” showing imported movies that often included “frank, sexual content” and sexy stars like Sophia Loren. One early chain of art houses grew up in Ohio, created by its owner as much to keep noisy children out as to facilitate showing more adult fare. A landmark in the 50s was the release of Roger Vadim’s And God Created Woman, starring Brigitte Bardot—with her clothes ripped off in several scenes. Condemned and banned, it played to large audiences. The decision of the U.S. Supreme Court that defined obscenity grew directly out of this era. Roth v. United States, 54 U.S. 476 (1957), brought before the court consolidated appeals of New York State’s ban of the film version of Lady Chatterley’s Lover (1955) and an appeal of the criminal conviction of the manager of one of the Ohio theaters, who was convicted for showing The Lovers (1959), a Louis Malle film starring Jeanne Moreau. Although the Court’s position has changed on some issues arising in Roth, it reaffirmed a key holding from that case in Miller v. California, 413 U.S. 15 (1973): All ideas having even the slightest redeeming social importance— unorthodox ideas, controversial ideas, even ideas hateful to the pre- vailing climate of opinion—have the full protection of the [First Amendment] guaranties, unless excludable because they encroach upon the limited area of more important interests. But implicit in the history of the First Amendment is the rejection of obscenity as utterly without redeeming social importance. (Roth v. U.S., at 484-85; position affirmed in Miller v. California) Although this provided a philosophically solid definition of obscenity, broadly protecting First Amendment rights, it created a loophole large enough to handle the average local sanitation truck: But the ironic effect of Brennan’s clarification was that, subsequent to this ruling, all sorts of surprising works were discovered to be not without some “nugget” of social, historical, or even aesthetic worth. The Roth decision, then, marked “the opening of the floodgates” to U.S. publication of all the long-suppressed classics—My Secret Life (1888) and D. H. Lawrence’s Lady Chatterley’s Lover (1929) in 1959, John Cleland’s Fanny Hill in 1966—as well as newer works, such as Pauline Reage’s The Story of O and Henry Miller’s The Tropic of Cancer. (Williams 1999, 89, citing Kendrick 1987, 202-04) In 1966, the Supreme Court, in Attorney Gen’l of Mass., 383 U.S. 413 (1966), held squarely that Memoirs of Fanny Hill (which had been widely available for a century) was not obscene. A year later, the court handed down the first of some 30 opinions reversing obscenity convictions with- The Kinsey Institute for Research in Sex, Gender, and Reproduction, Inc. The Kinsey Institute for Research in Sex, Gender, and Reproduction, Inc. The Office Party (1968) promised “the funniest, wickedest orgy ever filmed!” Makes you wonder how many had been filmed before this. The previous effort of the director, Whit Boyd, was Spiked Heels and Black Nylons (1967). While we were glad to find this poster for I Want More (1970) in our research, we would have preferred to offer you the poster under the movie’s other title, Sock It To Me with Flesh (really), which certainly dates the era in which this movie was made. Chapter 1: Fanny Hill to Voyeur Dorm 17 out opinions. The first of those decisions, Redrup v. New York, 386 U.S. 767 (1967), held that two books, Lust Pool and Shame Agent were not obscene. The dismissal of those obscenity convictions brought the nation essen- tially to the polar opposite of the terrors of the Comstock years—to a position where there seemed little prospect of using criminal laws to sup- press most sexually oriented material (Lane 2000, 26-33). Two years after the Court’s decision in Roth, Russ Meyer, a former Playboy photographer, seized the opportunity offered by bringing nudity back into mainstream cinema and released The Immoral Mr. Teas. He made the film for $24,000 and made a million-dollar profit on the investment (Lane 2000, 26). Meyer’s work demonstrated to film-goers what Hefner had shown magazine “readers”—that nudity could be presented in the mainstream with some taste and style. In that context, the 1960s also saw the growth of drive-in movies, featuring sexy and suggestive movies without nudity—movies like Mamie Van Doren and Mel Torme in Girls Town, and one that introduced full nudity—Jayne Mansfield in Promises, Promises. Sexually oriented movies began to move into the mass market in 1967 with the showing of a Swedish import, I Am Curious Yellow, in what Williams calls “exploitation theaters,” noting that “the theaters showing such films became the testing ground and, ultimately, the outlet for hard- core material once exclusive to the illegal stags” (Williams 1999, 96). Although this and other early sexually oriented movies shown in theaters apparently emphasized female breasts and buttocks, commonly called “T&A” in the trade, the 1972 opening of Gerard Damiano’s Deep Throat in an exploitation theater marked a new era: [F]or the first time, cinematic works containing hard-core action were reviewed by the entertainment media and viewed by a wide spec- trum of the population, including, most significantly, women. . . . For the first time in the history of the American cinema, a penis central to the action of a story appeared “in action” on the big screen of a legiti- mate theater. . . . The audience was clearly no longer the much- maligned “raincoat brigade,” nor was attendance furtive. (Williams 1999, 98-99, 100) Other x-rated pictures that achieved wide circulation in that period included Behind the Green Door (1972) and The Devil in Miss Jones (1973). Other, less significant titles from this period that received wide distribu- tion included a Danish movie, Without a Stitch (1968) and another U.S. entry, The Curious Female (1969). Emmanuelle (1974) has been cited as “the film that really blazed the trail from grindhouse to multiplex” (Muller and Farris 1996, 146). This was a watershed period, which marked the “golden age” of adult theaters, with some 1,200 to 1,300 screens around the coun- try showing primarily x-rated fare (Lane 2000, 52). This same period saw the magazine industry become even more explicit, with the addition of Bob Guccione’s Penthouse, which he founded in London and brought to the U.S. in 1969. Guccione’s photographs showed models who were more directly sexual and less “girl next door” than Hefner’s, and Guccione broke major ground in mainstream media when, in 1971, he first showed a centerfold’s pubic hair (Lane 2000, 28-29). Larry Flynt, who already owned adult nightclubs in Cincinnati, used $100,000 to launch the much raunchier—and consciously less sophisti- cated—Hustler in 1974 (Lane 2000, 29). This period saw the peak circulation for the slick magazines that brought sex into the mainstream. Playboy’s peak year was 1972, when it sold 7 million copies. Industry figures for 1977 showed that total circula- According to Linda Williams in Hardcore: Power, Pleasure and the “Frenzy of the Visible” (University of California Press, 1999), the release of Deep Throat meant that “a penis . . . appeared ‘in action’ on the big screen of a legitimate theater. The audience was clearly no longer the much-maligned ‘raincoat brigade,’ nor was attendance furtive.” And “most significantly,” women made up part of the audience for the film. Corbis 18 Everything You Always Wanted to Know . . . tion of the top 10 men’s magazines was 16 million, generating circulation revenue of $400 million; of that circulation, Playboy accounted for 5 mil- lion copies, Penthouse for another 4.6 million, and Hustler, then only three years old, for 3 million copies (Cook 1978). This wide availability of relatively explicit, sexually oriented mate- rial helped to shape the nation’s view of sex and sexually oriented material, but the illustrations in these publications also essentially illus- trated what had become acceptable in the mass market. The evolution of the photos in these magazines from bare female breasts to full frontal nudity and, later, open labia and male genitals reflected changes in social acceptance. In 1973, the Supreme Court established the current (as of 2000) test of obscenity in Miller v. California, which was quoted above. Although later interpretations of the decision by courts and prosecutors have allowed the sexual revolution in the media to continue, early reactions to the decision included self-censorship, avoidance of shipping potentially obscene materi- als across state lines (to avoid federal prosecution), and an increase in the participation of organized crime in pornography (Lane 2000, 32). Enforcement was selective, however, according to one source, focusing then (as many ordinances do now) on “public” displays and ignoring sales of Penthouse and Playboy magazines kept under the counter in opaque covers, despite the fact that nothing in Miller suggests that such a distinction can be made (Lane 2000, 32-33). The last serious attention focused by the federal government on the issue of pornography was the formation of the so-called Meese Commission in 1986. Actually called the Attorney General’s Commission on Pornography, the commission came to be known by the name of President Reagan’s Attorney General Edwin Meese, who chaired and hand-picked the commission. Stacked with anti-pornography witnesses, the commission finally made no substantive legislative recommendations and may even have contributed to the distribution of pornography with its government- financed publication of an appendix with extensive excerpts from contem- porary pornography. Although the commission’s report did lead Presidents Reagan and Bush to launch the prosecutions of a number of business people involved in the distribution of pornography, the circulation of video tapes increased from about 75 million in 1985, the year before the commission’s report, to 490 million seven years later, at the end of the Bush Presidency (Lane 2000, 106-08). ANOTHER TECHNOLOGICAL REVOLUTION FOR PORNOGRAPHY Two technological innovations changed the industry and helped to define its current form. The first, and the most highly identified one within the sex industry, was the “peep booth”: The true economic potential of the peep show booth was not fully realized until 1971, when Sturman teamed with Swede Lasse Braun to produce the ubiquitous “peep booths,” a simple combination of coin-operated projector, a small screen and a lockable door. By the early 1970s, Sturman was distributing booths to adult bookstores and sex shops in virtually every state in the country. In a typical arrangement, Sturman would offer to provide a shop owner with one or more booths for free, in exchange for half the receipts the booth generated; customers were generally charged 25 cents for 30 seconds to two minutes of viewing. The booths proved phenome- nally popular: By some estimates, peeps grossed $2 billion during the 1970s alone, roughly four times the amount earned during the same decade by such full-length adult movies as Deep Throat and Behind the Green Door. … There have been many attempts to censor pornography over the years. Here, a movie theater expresses regret that police have seized More Language of Love. Note, however, that the theater is still showing Language of Love. Regulating pornography is so fraught with First Amendment issues that any regulation needs careful consideration. Corbis Chapter 1: Fanny Hill to Voyeur Dorm 19 By building and distributing thousands of what were essentially min- iature movie theaters, Sturman can be credited with doing for adult films what Hefner did for adult magazines: he created an industry. The demand for sexually explicit films to stock the booths created enormous opportunities for film makers interested in making such films, which in turn created a demand for actors. (Lane 2000, 48-49) The second technological innovation is one that is familiar to most con- sumers in the United States—the relatively low-cost home VCR. As Lane (2000, 32-33) notes: In 1973 . . . the only way to make money with a sexually explicit film was to show it in a theater or other public place, which made sexually explicit films disproportionately vulnerable to community censors. On top of everything else, despite the efforts of the Pussycat Theater to clean up the image of adult theaters, most local planners consid- ered adult theaters to be a blight on the community. What adult film makers needed was a means of distribution that offered the same relative anonymity employed by adult magazines. They got their wish in 1975, when Sony released its videocassette recorder. . . . The pornography industry was quick to recognize the economic potential of video. . . . A veteran of the adult film industry began to make x-rated tapes in 1977 and probably had a dozen competitors within six months. By 1985, the x-rated home video market (counting both sales and rentals) had grown to $1 billion, a figure that Lane (2000, 50-51) estimates probably tripled by 1995—to $3.1 billion. Rental videos offered consumers some significant advantages over movie theaters—primarily the option to watch them in the privacy of the home. Sales and rentals of sexually oriented videotapes totaled more than $4.2 billion in 1997 (Rivero 1998), surpassing the total revenues of the adult industry 20 years earlier (Cook 1978). In addition to rental and sale video- tapes, pay-per-view (PPV) movies have taken a part of the adult film market, although they may also have expanded it. In 1999, the total PPV market was estimated to have grossed a billion dollars, of which more than a third ($349 million) was paid for adult fare; where both hard-core and soft-core products are available, the hard-core outsells soft-core two to one (Neel 2000). Due to the popularity of the video market, there has been a resulting decline in the number of adult theaters and, undoubtedly, in their volume of business. The peak number of adult theaters in the nation had shrunk from 1,200 in the early 1970s, to 780 in 1978 (Cook 1978), a year or so into the movement of several adult film producers into the VHS format. We were unable to document the number of adult movie theaters remaining in the country in 2000, but press accounts over the last several years have reported events like the closing of the last adult theater in the South Bay area of San Diego and one of only two remaining in the city (Klimko 1998); the closing of one of two remaining adult theaters in Orange County, California (Grad 1995); and the closing of Seattle’s last x-rated theater (Talerico 1998). SEX GOES ELECTRONIC Sex began to go electronic with video games in the 1980s. The first sig- nificant video game was Atari’s “Pong,” a simple video ping-pong game BETAMAX VS. VHS: HOW PORN TURNED THE TIDE In the early days of VCRs, there were two formats—Sony’s Beta- max and VHS. According to Koer- ner (2000), “The adult industry's decision in the early 1980s to release their videos in the VHS format, for example, is credited with dooming Sony's rival Betamax machine.” Van Scoy (2000) traces that market shift to a decision by Sony not to license use of the Beta- max technology to adult indus try producers. The story is certainly consistent with Lane’s (2000) description of the role of pornogra- phy in developing technology. A MIDWESTERN SEX ENTREPRENEUR Ruben Sturman of Ohio began distributing sex magazines in the 1950s and over the next 30 years built one of the largest pornography empires in the nation’s history. In 1991, Time estimated that Sturman’s empire grossed roughly $1 million per day “from the sale of lewd magazines, videos and marital aids.” According to porn industry chronicler Luke Ford, Sturman’s personal fortune was estimated to be as high as $200 million to $300 million. (Source: Lane 2000, 48; internal citations omitted) 20 Everything You Always Wanted to Know . . . that could be played through a hook-up to one’s television. That game was developed by Atari, which gained capital and market strength when it was purchased by Warner in 1975. By 1982, a company known as American Multiple Industries came out with sexually explicit games for the Atari (Lane 2000, 56-57). From video games, it wasn’t a long jump to personal computers. Long before the World Wide Web, there were bulletin board systems (BBSs); users typically gained access by using a modem to dial a modem on the bulletin board. An early BBS entrepreneur developed Exec-PC BBS, which was one of the first to feature images—including images of nudity and sexual activity. Early BBS systems would allow customers to upload images in exchange for downloading others; other customers paid (Lane 2000, 64-67). According to Koerner (2000): As soon as Americans learned to dial into primitive electronic bulletin board systems, scores of them began swapping naughty pictures. It wasn't long before surfers were paying monthly fees of $30 and up for the privilege of viewing X-rated material, as well as ordering their erotic needs—steamy videos, "marital aids," latex corsets—in the comfortable anonymity of cyberspace. These dial-up bulletin boards were slow and cumbersome. The Web and several technical innovations changed all of that. First, researchers at the University of North Carolina, beginning in 1979, found ways to speed traffic over the Internet through a set of programs known as Usenet (Lane 2000, 66). Further expanding the usefulness of the Internet for pornogra- phy and other forms of e-commerce were the evolution of the World Wide Web system of creating identifiable “addresses” for documents or sites on the web and the related creation of Hypertext Markup Language (HTML), a protocol for embedding that address information in other documents. Finally, sites and documents became accessible to ordinary users with the development of Mosaic, the first graphic Internet browser; developed at the University of Illinois, the program provided the basis for Netscape (Lane 2000, 68-69). With these innovations, access to graphic materials—including pornog- raphy—on the Web became relatively easy. Entrepreneurs and customers were both there to take advantage of it. In the early to mid-1990s, up to 80 percent of all Internet traffic was adult related, and service providers smelled money. Larry Bell, chief operations officer for Florida-based ISP, Strictly Hosting.com, notes that his company was not created to cater to adult clients. "But it went that direction because of demand," he says. “We all know the adult enter- tainment industry drives the Internet.” Eighty percent of Strictly Hosting's business comes from adult sites, which require the highest- speed connections to transmit their bandwidth-gulping material (Koener 2000). The business has continued to grow, although there are now other sig- nificant forms of e-commerce. Koerner (2000), citing market studies, esti- mates that consumers spent $970 million visiting porn Web sites in 1998 and that purchases of novelties, videos, and other items from adult sites accounted for 8 percent of total expenditures on e-commerce, or about $1.4 billion and about the same amount as consumers spent on books purchased over the Web. Like the sex businesses that we visited, Internet porn attracts lots of people. According to Nielsen NetRatings, 17.5 million surfers visited porn sites from their homes in January [2000], a 40 percent increase compared with four months earlier. The top E-Porn site—PornCity. “We all know the adult entertainment industry drives the Internet.” —Larry BeLL, Chief operating offiCer striCtLy hosting.Com Chapter 1: Fanny Hill to Voyeur Dorm 21 net—boasted more unique visitors in January than ESPN.com, CDNOW, or barnesandnoble.com (Koerner 2000). Internet entrepreneurs include Seth Warshavsky, founder of IEG (Internet Entertainment Group), which had estimated revenues of $50 million in 1998 with as much as a 35 percent profit margin; the company may be best known to the general public as the host of “Club Love,” the site which first offered the nude photos of radio’s “Dr. Laura” (Lane 2000, 243-47). Material at the end of Chapter 2 tells other Internet porn success stories. When residents of a community choose to access pornographic—or political—sites on the Internet, the matter is not a land-use concern and is, under the Commerce Clause of the U.S. Constitution, beyond the legal— as well as the practical—control of local governments. When the originat- ing site, however, is located in a community, it may have significant land- use implications. Many of those sites are, of course, existing adult enter- tainment establishments that simply have a new outlet for performances. The availability of inexpensive Web Cams and related software, however, has essentially allowed anyone with a computer to become a porn pro- ducer if that is what they want to do. Directories of home Web Cam sites help those interested in amateur pornography find these new sites (Lane 2000, 249-58). A dialog modeled on those of “the Car Talk guys” appears in Chapter 2 of this report in which we exchange conflicting views on whether a local government has any interest in regulating an individual or a couple who chooses to photograph sexual or other activities in a private home and to make those available over the Internet or some other medium. Some sex businesses that started as home-based businesses are hardly what one would call amateur operations. Danni’s Hard Drive and Persian Kitty’s Web directory (see sidebar) are both sizable Web businesses, and both began as home-based businesses (Lane 2000, 99, 213). A significant land-use issue as regards the operations of a home-based business has recently arisen in connection with Voyeur Dorm, a very suburban-looking house in a suburban neighborhood, but one that fea- tures five or six young “college-aged women” living in full view of sev- eral dozen Web cams that constantly broadcast their activities to paid subscribers of a Web site (Huettel 1999). On November 6, 2000, as this publication was in the final editing process, a federal district judge, in Voyeur Dorm L.C. v. City of Tampa, Case No. 8:99-cv2180-T-24F (U.S. M. Dist. Fla. 2000), accepted the arguments of the City of Tampa that Voyeur Dorm was an adult business that was barred by local zoning from locating in a residential neighborhood. The judge’s reasoning in the case suggests that sexually oriented broad- casts can only originate from a site zoned to allow live entertainment, an approach that does not make sense; following that to its logical extreme would require that mail-order warehouses all be zoned for retail and that movie studios all be zoned to allow on-premises entertainment. The approach is not logical in the adult industry, either, because many of the land-use (or secondary) impacts of sex businesses relate to activities of customers visiting the establishments. While, as Connie urges in the side- bar in Chapter 2, a house used like Voyeur Dorm clearly may have impacts on the neighborhood that are greater than those of the average middle-class family that might otherwise occupy the house, it will not have the same impacts as a nude bar or adult movie theater. The decision is important, however because it shows that both cities and courts may choose to treat cottage pornographers as real sex businesses and force them out of residential areas. SEX ENTREPRENEURS ON THE INTERNETThe following statistics are pro- vided in Frederick Lane’s Obscene Profits: The Entrepreneurs of Pornog- raphy in the Cyber Age. (New York, London: Routledge 2000). • Internet entrepreneurs in the sex industry include Beth Mans field, a Tacoma, Washing ton, home- maker and mother of two whose “Persian Kitty” directory of adult Web sites had estimated reve- nues of $1 million in 1997. • A stripper named Danni Ashe developed a Web business called Danni’s Hard Drive and was grossing $4 million per year by 1999. • A home-based, Web-based, sex business run by a Tulane Uni- versity graduate grossed $10,000 per month with expen ses of about $3,500, allowing her to quit her regular job. • Total estimated revenues for the on-line sex industry were $2 bil- lion in 1999. 22 Everything You Always Wanted to Know . . . It is impossible to predict all of the ways in which Internet pornography will raise land-use issues. It is clear, however, that many communities need to think about the issue and probably to make provision in their zon- ing ordinances for regulating the dispersal of pornographic material on the Internet from a host site in the community. LESSONS LEARNED 1. Pornography is defined by society and shaped by the times; it is not an absolute. 2. Pornography and society have evolved together. 3. Technological change, such as mass printing, photography, movies, video cassettes, and the Internet, have facilitated the distribution of pornography, but there is significant evidence that the demand for pornography has actually facilitated several of those technological developments—notably the home movie camera, the VHS videocas- sette and related player, and the graphics capabilities of the Internet. 4. Pornography has existed for centuries and has been available to mass markets since printing presses came under the control of individuals not affiliated with a governmental agency or religious institution. 5. Today, the demand for pornography is large and growing. 6. Pornography is widely available through mail-order, the Internet, and cable systems and pay-per-view systems in hotel rooms. It is impracti- cal for any local government to think of “banning” or “stamping out” pornography within its borders (it is also unconstitutional, which is the subject of Chapter 5). Notes 1. See, for example, Lynn Hunt, ed., The Invention of Pornography, and other materials cited in bibliography. 2. For the story of Dwain Esper, who took his films on the road, see Muller and Faris (1996), page 20-23. 3. According to the All Movie Guide (www.allmovie.com), “the budget and quality of the Mexican Adam and Eve was once summed up by exploitation distributor David F. Friedman: ‘it couldn't have cost more than margaritas and the deluxe combination dinner for four in any good Los Angeles Mexican restaurant.’ Since the film only covers the first three chapters in Genesis, from the birth of Adam and Eve to their fall from grace, no more than two actors were required. Unknown Carlos Baena was Adam, while former Miss Universe Christiane Martel was Eve. Not a word of dia- logue is spoken in the film's 76 minutes; for the American release, a pompous English-language narration was slapped on. The film's chief selling angle was the near-nudity of Christiane Martel, who admittedly looks great in fig leaves.” The sex Business is not one Business But many. There are a num- ber of ways in which it can be classified. The simplest distinc- tion is that between retail businesses and entertainment busi- nesses, which, incidentally, is the same distinction that most com- munities make between liquor stores and bars (take-out and on- premise consumption). The retail businesses that need to be considered in classifying sex businesses include: • mainstream bookstores, newsstands, and video stores with some sexually oriented materials; • percentage stores—stores with a significant and noticeable percent- age of adult-oriented materials but also carrying substantial inven- tories of non-adult material, generally identified as video stores, bookstores, or newsstands, rather than as adult businesses; and • adults-only or sexually oriented outlets, including adult media outlets and sex shops. The on-premise entertainment businesses that need to be consid- ered in classifying sex businesses include: • movie theatres; • video-viewing booths, mini booths, preview booths; • live entertainment on stage; • participatory entertainment booths; and • touching and encounter businesses. The classification of businesses relies, in part, on the types of products or services they offer. The following sections describe those products and services. It is our hope that creating classifica- tions for businesses on the basis of the products or services they offer will lead to more effective and more direct regulation of those activities that each community seeks to control. CHAPTER 2 Understanding the Sex Business: Classifying Types of Businesses that Offer Sexually Oriented Products and Services Creating classifications for businesses on the basis of the products or services they offer will lead to more effective and more direct regulation. 25 26 Everything You Always Wanted to Know . . . MAINSTREAM BUSINESSES WITH SOME HARD-CORE MATERIAL Bookstores Most mainstream bookstores include art books, marriage manuals, male and female sexual health guides, and other materials that would easily fall within the traditional definition of “sexually oriented materials,” that include “specified body parts” and/or “specified sexual acts.” Most of the art books and health guides would be excluded from our definition of “explicit sexual material,” but some marriage guides would still fall within that, because they provide “how-to” illustrations and descriptions. Although many bookstores, and most major ones, devote a small percent- age of shelf space to such material, bookstores are a desirable land-use, not an undesirable one. Some conservative groups have objected to the appear- ance of any books containing nudity on the shelves of mainstream stores; that position, however, has no legal support (see Chapter 5) and appears to have too little political support to be worthy of serious discussion. Thus, we have excluded bookstores from the definitions of sexually oriented busi- nesses by defining “sexually oriented bookstores” (and other media outlets) to be those that include more than 10 percent “explicit sexual material.” Our opinion is that mainstream bookstores generally carry less than 5 percent of such material; in drafting the definitions, however, we wanted to create a limit that would be enough above the actual content in most stores that there would be no reason for an enforcement officer ever to attempt to count or otherwise measure the material. Newsstands Like bookstores, general newsstands are likely to have a certain amount of material that falls under the traditional definition of “sexually oriented material” and some that falls even under our more narrow definition, which focuses on hard-core materials. There is a broad range of sexually oriented magazines that include basic hard-core photos (see Chapter 1 discussion), often without the “money shot.” Unlike Playboy, Penthouse and Cosmopolitan, which are generally considered soft-core and are widely available in conve- nience stores and airports, these other magazines are often found only in major newsstands. Thirty years ago, our impression of the sex business (of which we each had far less knowledge than we do now) was that much of it consisted of sexually oriented magazines, placed in a separate rack or on high shelves in newsstands. As with bookstores, newsstands typically are neutral in impact, and there is little reason to deal with them under regula- tions focusing on sex businesses. For newsstands that have very limited inventories of explicit sexual material and that should be treated just as any other mainstream newsstand, we have used the same 10 percent factor that we have used for bookstores. Some newsstands, however, began a practice that has now extended to the video business—stocking larger quantities of explicit sexual material but offering it in a separate room, usually at the rear of the store. That type of store is discussed below. Video Stores Mainstream video stores are likely to contain a certain amount of material that falls within at least the soft-core category. Several award-winning mov- ies of the last decade or more have featured full frontal nudity of both gen- ders and barely disguised sexual intercourse. Even the major chains, which for a time had appeared to avoid carrying even those mainstream titles, now carry at least soft-core material on high shelves. There are certainly video stores that are like the bookstores inasmuch as they stock a certain amount of material that would fall within typical definitions of sexually oriented Chapter 2. Understanding the Sex Business 27 material. As with bookstores, carrying such limited quantities of even explicit sexual material mixed in with the general inventory does not create a land-use or regulatory problem of any concern. For video stores that have very limited inventories of explicit sexual material and should be treated just as any other mainstream video store, we have used the same 10 percent fac- tor that we have used for bookstores and newsstands. As we indicated under the description of newsstands, a number of video stores have adopted the practice of including relatively large quan- tities of sexually explicit material in back rooms, with a variety of access controls. This type of store is discussed below. MIXED-RETAIL OUTLETS Mainstream Retail Stores with Back Rooms of Sexually Explicit Material During our fieldwork on sexually oriented businesses, we have found both newsstands and mainstream video stores with back rooms contain- ing significant quantities of explicit sexual material. In the stores that we observed, space devoted to the explicit sexual material has ranged from 10 percent of the total floor area up to nearly 50 percent. On a pure item count, the percentage of the inventory devoted to explicit sexual material has been generally consistent with the percentage of the floor area devoted to it—that is, ranging from 10 percent to nearly half the inven- tory. In many of the video stores, regardless of space devoted to these adult videos, the rental rates for the hard-core materials are higher than the rates for other materials, so it is possible in some cases that the back rooms account for more than half of a business’s gross sales. In Kansas City, based on the number of customers whom we observed in various establishments, it is our strong impression that three mainstream video stores with large back rooms of hard-core material are responsible for the circulation of as much explicit sexual material in their neighborhoods as several of the sex businesses in their neighborhoods. However, in neighbor- hood surveys around three such stores, not a single neighborhood resident identified one of the mainstream video stores as a problem to the neighbor- hood. In fact, we consistently saw families with children in the front parts of those stores, all of which carried a broad inventory of current and classic movies of general interest. We have found such stores in every community in which we have looked for them—usually with little difficulty. What is interesting about these stores with back rooms—even large ones— is that they are not troublesome land uses. As noted above, our neighborhood surveys in Kansas City found that video stores with large quantities of mate- rial in a back room created no neighborhood protests or objections, and we believe that the same findings would apply to newsstands. (See the summary of the Kansas City study in Chapter 3.) Our regulatory recommendations (see Chapter 7) essentially treat as mainstream media stores businesses that have back rooms for sexually oriented books and videos where the room contain- ing such material material constitutes less than 40 percent of the floor area of the store and such material constitutes less than 40 percent of the store’s inventory. For these stores, we also recommend some level of access controls to the sexually oriented media. Although such back rooms are often separated from other parts of the store only with a curtain, café door, or L-shaped entry- way, we liked the design of two Kansas City video stores that controlled access to such room with a locked door, released by a button situated high above the door knob or by store personnel through a remote unlocking device. It is important to note that our recommendation to treat these busi- nesses as mainstream media stores only applies if they do not carry sexual novelties and do not devote more than the designated percentage of floor area or inventory to sexually oriented media. In Kansas City, based on the number of customers whom we observed in various establishments, it is our strong impression that three mainstream video stores with large back rooms of hard-core material are responsible for the circulation of as much explicit sexual material in their neighborhoods as several of the sex businesses in their neighborhoods. © Creators Syndicate and Dave Coverly 28 Everything You Always Wanted to Know . . . Retail Percentage Stores Some stores are clearly mainstream retail stores that happen to carry some sexually oriented material. Some stores are clearly adults-only stores (see below). Many stores fall in between, carrying a large quantity of sexually explicit material but also carrying a good deal of other inventory. These stores are often referred to as “percentage” stores because they carry sexu- ally oriented material but fall below the designated percent used to be clas- sified as a sex business. Local zoning and licensing ordinances must provide definitions or guidelines for determining whether a store with mixed inven- tory should be treated as a sex business or as a mainstream retail store. When we began our Kansas City study, the city used a “preponderance of the stock in trade” as its criterion for distinguishing between restricted, adult-oriented stores and mainstream stores, and used an item count as its unit of measure. In order to fall below the definition of “preponderance,” which at that time was less than 50 percent, many stores that qualified as percentage stores carried large quantities of the following items: • Beanie Babies, which retail in the $5 to $10 range (interestingly, the two adult stores that carried them actually seemed to have a significant trade in them) • Shelves of old paperbacks (e.g., every paperback edition of Zane Grey novels) or old library books, not organized by author, title, subject, or anything else • One copy each of dozens of recently published magazines • New Age tapes and greeting cards • Plastic protractors and other items that we remember using in about 7th grade • Pencils, each of which was counted as a single item by the inspectors • Inexpensive novelties and gag gifts Although Kansas City only considered the percentage of inventory devoted to non-adult versus adult merchandise, the amount of invest- ment was markedly different. The retail value of the non-adult items ranged from $10 (Beanie Babies) to 5 cents or so, compared to retail value of the sexually explicit books and tapes that ranged from $20 and up. For example, one store had hundreds of pencils. Sixty of those pencils, which might retail for 10 or 20 cents each, would balance 59 adult videos, with a retail value of $20 to $40 each; grossing up the figures, an investment in $9 worth of pencils provides the inventory necessary to remain a “per- centage store” with $1,200 worth of adult videos. On the other hand, simply using a percentage of floor area as the basis of measure is also not adequate. We have found many sex busi- nesses located in transitional, low-rent commercial areas. If a local government uses a percentage of floor area alone as the criterion for determining whether a business is sexually oriented for zoning pur- poses, an operator can simply lease twice as much space as he or she intends to use, leaving much of the space stocked very sparsely with low-value inventory. Note that it is also important to define what is to be included in the computations. Most communities include sexually oriented books and magazines in the definition of sexually oriented materials, and most also include videos. Oklahoma City separately regulates stores with sexually oriented devices and novelties (Oklahoma City Ordinance 20,792 (1997)). A “percentage store” will carry a wide range of materials to keep from being classified as a sex business. We recommend treating only “media” stores (e.g., video stores, bookstores) as percentage shops. When a percentage store uses items like Beanie Babies as part of its stock, it creates an additional problem—attracting children into a store that carries sexually oriented materials. Connie Cooper Chapter 2. Understanding the Sex Business 29 Such devices are specifically defined in the North Carolina statute as “any artificial or simulated specified anatomical area or device or parapherna- lia that is designed principally for specified sexual activities but shall not mean any contraceptive device” (North Carolina Statutes, Section 14-202.10(9) (1997)). Under the Kansas City approach, we treated stores with sex toys and novelties and stores that mixed explicit sexual material with lingerie, leather goods, and sex toys as “sex shops” and thus automatically treated them as a sex business (see below). Under our recommended regulatory approach, the only stores treated as “percentage” stores would be media outlets—news- stands, video stores, and bookstores. Using such criteria, it is, of course, necessary to count only the media items. Communities that choose to allow a broader variety of goods in percentage stores or other outlets that feature explicit sexual materials but that qualify as non-adult uses for zoning pur- poses should consider the discussion of “sex shops” below. Note that the physical separation of the inventory is very important. One of the stores in Kansas City that bothered neighbors and other local residents a lot was a well-managed store that featured Beanie Babies in a window display and that in fact carried a large stock of Beanie Babies; upon entering the store, however, one was immediately confronted with displays of very racy lingerie and sex toys. Parents complained that the Beanie Babies enticed children to want to enter the store, but the merchan- dising of the store then confronted the families with unacceptable wares. In contrast, the mainstream video stores with back rooms typically dis- play the latest Hollywood fare or family-oriented movies in the front, with the availability of adult materials identified only by a discrete sign by the door to the back room. In such stores, it is extremely unlikely that anyone will accidentally encounter such material, even if the access con- trols are limited or ineffective. Clearly the difference between the open display and potential for accidental encounters on the one hand, and the limited display in a controlled space is very important to parents and oth- ers who object to the availability of the materials. We do not recommend that local ordinances treat percentage stores as standard land uses. Our recommended classifications move from the mainstream stores, with no sex toys and under 10 percent sexually ori- ented material to adult-oriented media outlets (for those retail outlets carrying only media) and sex shops (for those that feature sex toys or a combination of sexually oriented goods). We include a conditional clas- sification in between, allowing a media store that elects to have an access- controlled back room to be treated as a mainstream media store. We have described the percentage stores because we have observed it in the field and many local ordinances permit such businesses to exist and treat them simply as bookstores under local ordinances. ADULTS-ONLY OR SEXUALLY ORIENTED RETAIL OUTLETS Adult Media Outlets Bookstores, video stores, or newsstands that focus on explicit sexual materials are obviously quite different from those that simply carry a large inventory of such materials in a back room. Because most “adult bookstores” that we have visited included sex toys and other products that turn them into what we consider “sex shops,” and because many also include video-viewing booths (discussed below), we have seen very few true adults-only media outlets. Someone may operate an adults-only bookstore or x-rated video store somewhere, but most of the hard-core media outlets that we have visited have included more than just media items, by mixing in lingerie, sex novelties, and perhaps bondage devices. IMPRESSIONS T he sex businesses that we have visited range from those as sleazy as our worst expectations to some that were glitzy. Most, of course, fell somewhere in between. We have come to know some fam- ily operations. A young woman introduced herself to us as the per- son who would inherit her family’s adult theater; her father told us with pride it had allowed him to put his children through college, buy his house, and buy two com- mercial buildings. Those were small operators—we have also met big ones who need accountants to track their income and taxes. Each store has its own clientele. The grungy ones tend to attract grungy customers, but the make- up of the clientele at other stores was more complex. One of the best-maintained and best-mer- chandised stores that we visited in one community clearly catered to a gay clientele of modest income; a nearby store that was less attrac- tive but better managed had a parking lot that often included late model, up-scale vehicles—some occupied by couples. There are stores that attract couples, and oth- ers that attract only men. Some of the sex shops that emphasize lin- gerie and novelties are clearly mer- chandised for—and succeed in attracting—women. We watched a 20-something couple in one percentage store exchange a Beanie Baby (which the clerk handled cheerfully) and buy a hard-core video and a sex toy all in the same transaction. We watched pairs of women gig- gling as they examined sex toys and videos. We visited operations where we felt safer inside the stores than on the streets outside; one manager told us that she regularly called the police to run off the prostitutes who hung out in a laundry across the street. We found a store around the corner from a city hall and told city officials that we knew several adult operators who would con- sider that store an embarrassment to the industry. 30 Everything You Always Wanted to Know . . . Sex Shops During our studies of sex businesses, we have found an astonishing array of sexually oriented books, magazines, pamphlets, and videos readily available. In particular, we have found large quantities of vid- eos available in establishments that drew no comment at all in our neighborhood surveys and were not named in the public meetings in which we participated. In contrast, two of the establishments drawing the most complaints from neighbors in Kansas City (First Amendment and Priscilla’s), both in an open meeting that we attended and in response to our neighborhood survey, were what we classified as “sex shops.” These businesses carried a good variety of sex toys, condoms of various colors, shapes and packaging, adult videos, bondage devices, and revealing lingerie. Interestingly, one of the establish- ments had only a small number of adult magazines and a very small selec- tion of adult videos, displayed with only the spines showing in a relatively inauspicious location within the store. Both of these establishments appeared to us to be exceptionally clean and very well managed; each, however, was located in close proximity to residential land uses. One of Connie’s claims to fame during all of our research is creating the sex shop classification of sexually oriented business. We define a sex shop as a retail operation that offers for sale items from any two of the follow- ing categories: adult media; sexually-oriented toys or novelties; lingerie; leather goods marketed or presented in a context to suggest their use for sadomasochistic practices; and the combination of such items constitutes more than a certain percentage of the store’s operation, etc. Some sex shops are clearly merchandised for women. They tend to emphasize lingerie, sex toys likely to be of interest to women, gag gifts, and novelties. Such stores are typically staffed by women. Probably not surprisingly, they tend to be among the cleanest and best-merchandised establishments in the business. Most customers we have seen in such stores have been women, sometimes alone, sometimes in pairs or threes, and, occasionally, with a male companion. Most of the products available in these stores are available in other sex shops or media outlets, but these stores clearly provide a more comfortable shopping environment for people who may not normally patronize adults-only businesses. Because most local ordinances do not count lingerie, gag gifts, and body lotions as adult inventory in determining whether a store is to be regulated as an adult business, many of these businesses can operate in neighborhood retail zones; note, however, that in our recommendations we classify most of these types of businesses as sex shops, which we recommend allowing only in more intense commercial zones. SEXUALLY ORIENTED ENTERTAINMENT Movie Theatres—The Land Use Is the Medium Two of the leading cases in the field of regulation of sexually oriented business deal with movie theaters. (See Chapter 5 for the implications of the decisions in City of Renton v. Playtime Theatres, Inc., 475 U.S. 41 (1986) and Young v. American Mini Theatres, Inc., 427 U.S. 50 (1976).) From these two Supreme Court cases, it is clear that where the First Amendment and zoning meet, a movie theater is quite different from a retail store handling adult materials. With a movie theater, the land use is the medium—the only logical use of a movie theatre is to show movies, and any attempt to treat an adult movie theater differently from other movie theatres can have the impact of removing the availability of the message entirely—if the theater cannot regularly show adult movies, there may be no other theater in the community that does so. Sex shops carry a good variety of sex toys, condoms of various colors, shapes, and packaging, adult videos, bondage devices, and revealing lingerie. Eric Damian Kelly Chapter 2. Understanding the Sex Business 31 A lthough some states have attempted to classify many sex toys and novelties as “obscene devices” (see the discussion in Chap ter 5), many people view them otherwise. Betty Dodson has sold many copies of a book called Sex for One: the Joy of Self-loving (Crown 1996), which includes detailed instruc- tions on self-pleasure, both with and without such devices. Two of the court cases that have dealt with (and struck down) “obscene device” statutes included thoughtful discussions of the use of the devices. We include excerpts from them because they provide a perspective on the legitimate purposes of the devices. The cases involved statutes that attempted to ban devices like “vibrators, clitoral stimulators, vacuum pumps, and massagers” (State v. Brenan, 2000 La. LEXIS 1271, at 29). The same court noted that the Food and Drug Administration has even published regulations concerning powered vaginal mus- cle stimulators and genital vibrators. The court continued with this scholarly examination of the evolution of vibrators: “From a historical perspective, the creation of the vibrator has its roots in the field of medicine. See Natalie Angier, In the History of Gynecology, a Surprising Chapter, N.Y. Times, Feb. 23, 1999, at D5 (discussing historian Dr. Rachel Maines's work, The Technology of Orgasm: 'Hysteria,' the Vibrator, and Women's Sexual Satisfac tion (Johns Hopkins Press, 1999) (Maines's work traces the development of the vibrator in the 19th century as a matter of accepted historical fact.)). Vibrators were mar- keted to the medical community as an aid in treating pelvic hypermia, or congestion of the genitalia. At least two dozen models of vibrators were available to the medical profession. Not withstanding their reputation as a naughty novelty item, vibrators remain an important tool in the treatment of anor- gasmic women who may be particularly susceptible to pelvic inflammatory diseases, psychological problems, and diffi- culty in marital relationships. Margaret Ramage, Manage ment of Sexual Problems, British Medical Journal, November 28, 1998, at 1509; Marilyn Elias, Late-life love Sexuality, Harvard In contrast, a retail establishment handling adult materials is a store, whether it has some adult materials or not—and the building can be eas- ily adapted to a variety of retail uses. Furthermore, the custom of the theater business appears to be such that theatres that offer true sexually oriented material offer only that, although there are some that also pro- vide video-viewing booths and sexually oriented books and videos. Motion picture theaters have become a less important part of the sex business since the 1970s, when home ownership of VCRs became common and the video sex industry began to grow. For those that remain, it is important to remember an adult movie theater is a building, a land use, and a physical entity that, under applicable decisions of the U.S. Supreme Court, is entitled to certain First Amendment protections. In contrast, a store is the current use of a retail build- ing, and it can easily provide a wide array of sexually oriented materials with- out being an “adult bookstore.” Thus, a land-use regulation governing theatres directly confronts the First Amendment in a way that a land-use regulation affecting retail establishments does not—as to the theater, the First Amendment may well protect the building because the building is the medium, but as to a retail establishment handling adult media, we are convinced that the First Amendment protects the contents—not the establishment. Health Letter, November, 1992, at 1. Likewise, penis vacuum constriction devices or "pumps" as well as penile rings are frequently used in the treatment of men suffering from erec- tile dysfunction. Keith Hawton, Integration of Treatments for Male Erectile Dys function, The Lancet, Jan. 03, 1998, at [Pg 16] 7-8. There are many medical and health journals which dis- cuss sex therapy and the medical uses of sexual devices in the course of treatment of sexual dysfunction.” (at 34-35) When an Alabama statute forbidding the sale of obscene devices was tested in the courts, an assistant attorney general was quoted in the Birmingham News (19 February 1999) as say- ing that there is no “fundamental right for a person to buy a device to produce an orgasm.” The court apparently agreed with the assistant attorney general, but the state lost the case anyway, with the court finding that there was no “rational basis” for the statute (Williams v. Pryor, 41 F. Supp.2d 1257 (N.D. Ala. 1999)). The statute was finally upheld on appeal. (See page 112 below.) differed from most litigation over sexu- ally oriented businesses, because this case included female users of vibrators as plaintiffs and included evidence that, in addition to the availability of such devices at some retail stores, they were also available at “Saucy Lady” parties, which had been attended by more than 7,000 Ala bamans in the previous year, resulting in retail sales of $160,000 in one year (at 1263-64). The retail stores, which were owned by the lead-named plaintiff, focused on lingerie, oils, and sex toys, with only a limited supply of “R-rated” media. The judge in the Alabama case wrote thoughtfully about the use of vibrators for sexual pleasure as an alternative to casual sex or unwanted or unavailable love affairs. The judge cited a number of magazines and books available at well- known booksellers that advocate or describe the use of the devices and, in a bow to technology, also cited web sites to the same effect. He cited offers of proof for two prospective expert witnesses, both involved in research and treatment of women with sexual problems. HEALTH SCIENCE AND “SEX TOYS” 32 Everything You Always Wanted to Know . . . Video-viewing booths are descendants of the peep shows that intrigued GIs during World War II. We can find no public benefits that offset the health and safety issues that these booths raise. Webb Chappell Video-viewing Booths—The Anachronism of the Peep Show A portion of the market for hard-core movies and videos is satisfied through showings in small booths. These video-viewing booths are sub- stantive descendants of the peep shows that intrigued GIs during World War II. Like those early peep shows, which showed brief film loops for the deposit of a coin, the booths allow individual viewers to watch any num- ber of videos after depositing the requisite $1 to $10 bill. Although we refer to them generically throughout this report as video-viewing booths or, in some cases, “peep shows,” we have actually seen three different variations of them. 1. Video-viewing booths. The standard video-viewing booth is a module about three feet by four feet, enclosed on three (or, where allowed, four) sides from the floor to a height of seven or eight feet. Where permitted by municipal code, booths can have doors that lock and a light outside the booth to indicate the booth is occupied. Inside the booth is a television screen (ranging in size from 13 inches to as much as 19 inches), slots for the deposit of coins, tokens, or, in many cases, bills, and controls to change “channels.” Seating often consists of a folding or plastic chair in the mid- dle of the booth. By inserting a token, coin, or bill, the customer can watch seconds or minutes of one or more of the video channels, which run con- tinuously. Where we timed them, it appeared that $1 offered about two minutes of video. 2. Preview booths. As the name suggests, preview booths offer a cus- tomer the opportunity to preview one of the tapes offered for sale or rent in the store. For a fee of $5 to $10, management inserts the tape in a VCR and the customer then watches the movie in a private booth similar to a standard video-viewing booth but without the money slots and controls. 3. Media rooms. Large booths generally appear to be the industry’s attempt to modify standard viewing booths to get around local bans against doors on any viewing booths that would accommodate 10 or fewer persons (anything above that number the industry calls “media rooms,” which are usually not prohibited by local regulation from having a door). To create media rooms, local operators joined two or three former video viewing booths together to create a space about seven feet long and perhaps four feet wide; they installed a wooden bench about 12 inches deep along one end and one side and marked it off with painted stripes every 15 or so inches, a figure that was apparently taken from football stadium seats. Any sane fire marshall would have been horrified to find more than three persons in these media rooms. This is a prime example of what we have come to learn through our extensive research—the sex industry is very creative in the face of adversity! Although presented to us by industry representatives as a desirable context in which to offer a variety of movies (several operators told us of their pride in the variety of non-adult titles available for selection in the viewing booths), the booths vary from prison-like to dismal. The best of them were clean rectangles occupied by a single folding chair or kitchen- type chair. Booths at other establishments offered only wooden benches for seating; in a few cases, these were supplemented with grungy-looking cot mattresses. The screens on which the videos are offered in the booths are generally the size of a computer screen, not the size on which people watch home videos in their family rooms. One of the striking things we found in our field studies was that only in establishments with video-viewing booths did we encounter loitering and any sort of real discomfort in being there. The loitering near the video-viewing booths gave these businesses many of the characteristics Chapter 2. Understanding the Sex Business 33 that most concern neighbors—characteristics having to do with use pat- terns and the behavior of customers rather than the inventory of the stores. Furthermore, in several cases, these booths, which essentially offer the same sort of on-premises entertainment as a movie theater, have been allowed to evolve as accessory uses to bookstores in locations that may be entirely appropriate for retail uses like bookstores but that are not appro- priate for on-premises entertainment. The setting of the booths is itself unattractive and, in some cases, intimidating. In several establishments that we visited, the booths lie along winding corridors that are not well lit. Although we gradually learned that the management at most adult establishments is alert enough to call the police or otherwise deal with serious problems, at first we were, frankly, somewhat frightened to enter these dark warrens, often staked- out by customers doing nothing but apparently sizing up other custom- ers. As the establishments in Kansas City implemented the “doors-off” policy that became law during (but entirely independently) of our study, we noted that use of the booths seemed to taper off somewhat (a fact con- firmed by at least one manager), and the booths most likely to be occupied after that time were the ones at the farthest ends of the corridors, with the least exposure to public view. In short, we have been unable to determine any good reason why any- one would want to watch a video in such a booth unless what he/she wanted was the illusion of privacy in essentially a public place. Although some of the booths are called preview booths, we have frequently observed the opportunity for previewing materials in very public settings in mainstream video stores and again see no message-related reason why it is necessary to offer previews in a quasi-private setting. When we asked industry representatives at a meeting what purpose the video-viewing booths serve, one articulate representative explained that, “Many of our customers are businessmen who cannot watch this material at the home or at the office.” That may be true, but that is not a First Amendment issue. Nothing in the First Amendment requires that a local government use its regulatory scheme to create opportuni- ties for people to do in public what they may be embarrassed to do at home or at work. Further, the fact that the Tucson study (see Chapter 3) reported that the police found sperm in an overwhelming proportion of the fluid samples they collected from video-viewing booths confirms what we suspected from our own observations and what courts considering the issue have addressed. One chain that we visited included wall-mounted boxes of facial tissues and wastebaskets in each booth. We can think of no reason for those accessories other than management assuming that, during the brief time in which patrons use the booths, they will generate bodily flu- ids of which they wish to dispose. In response to similar findings, a New Jersey court, in Chez Sex VIII, Inc., v. Poritz, 688 A.2d 119 (N.J. Super 1997), cert. denied, 694 A.2d 114 (N.J. 1997), cert. denied, 118 S.Ct. 337, upheld the constitutionality of a statute banning viewing booths, noting that the legislature had adequate evi- dence of the public health hazards of the sort of “anonymous sex” facili- tated by such booths. The incidence of indecent exposure arrests in and near such establish- ments reported in several of the studies further confirms these suspicions. We can conceive of no compelling reason why any city ought to facilitate that behavior in a small cell in a quasi-public location. We can find no public benefits that offset the significant public health and safety concerns that we have identified. REVENUE FROM A SINGLE OPERATION O ne operator provided us with figures from recent operations. All these figures were provided to the authors from the internal reports of a chain; we pledged con- fidentiality and believe that the figures are reliable. In round num- bers, revenues from the video- viewing booths and preview booths ranged from $3,000 to $6,000 per location per week; retail sales in the stores that we visited (nei- ther of which had an ideal location) ran from $6,000 to $9,000 per day per store, with video sales account- ing for 20 to 30 percent of revenues, video rentals from 20 to 30 percent, magazines and books from 10 to 20 percent, and novelties from 20 to 25 percent, with negligible sales of lingerie and leather goods. 34 Everything You Always Wanted to Know . . . Live Entertainment Called Gentlemen’s Clubs, Juice Bars (where alcohol is not allowed in the same establishment with nudity), Adult Cabarets, and, more classi- cally, simply Strip Clubs, a variety of establishments provide nude or near-nude entertainment. The Supreme Court has struggled with the legal issues related to nude dancing and has concluded that it has very limited Constitutional protection (see the discussion in Chapter 5). Note, however, that several states, including New York, Oregon, and Washington, offer somewhat stronger state constitutional protection to expression and/or nudity than does the U.S. Constitution as presently interpreted—thus, this activity has protection in some states that it lacks in others. Regardless of its legal status, nude or near-nude entertainment remains a popular form of entertainment, supporting some of the most prosperous establishments that we have seen. It is a business that seems to prosper in Sunbelt areas popular with retirees and in areas around convention hotels and outside military bases. Such establishments are also found along some major trucking routes, although those do not appear to offer the same ambience as those that cater to convention attendees. Nudity is not uncommon today in movies and can even be found on network television. Major stage plays occasionally feature nude scenes. Society clearly accepts nudity under some circumstances—certainly more than it did half a century ago—and strip clubs clearly flourished, at least in major cities, even then. In that context, there is probably a place for nude dancing in many com- munities today. It is a legitimate subject of public policy debate and one on which we have recommendations in Chapters 7 and 8. Like other dis- cussions of sexually oriented businesses, it should be an informed debate. The following discussion describes the very different sorts of activities that occur in sexually oriented businesses under the guise of “dancing.” Dancing on stage. There is a range of nude, on-stage performances. The performances range from nude acrobatics—often around a pole—to something that more resembles dancing as the term is usually used. Many, but not all, involve some element of a striptease, with the dancer beginning the performance clothed and gradually revealing her (or, in some cases, his) body. Attempting to define which is art and which is not seems to us to be next to impossible. What distinguishes this subcategory of performances from the others that follow is that it takes place on a stage that features horizontal and/or physical barriers to prevent contact between the dancers and the audience. Participatory dancing. Some nude-dancing establishments allow patrons to sit at the edge of the stage or along the runway. In some estab- lishments, customers are allowed to touch the performers, particularly if they are providing tips; in other establishments, management enforces rules that allow the dancers to touch the customers but that allow the customers to touch only the dancers’ hands—to put cash in them. This is the most limited form of participatory dancing. Lap dancing. A fairly common form of entertainment in some communi- ties is the “table dance” or “lap dance.” One Florida establishment adver- tised “friction dancing,” which we assume is similar. Although table danc- ing may have begun as dances on tables, those that we observed looked like lap dances to us. A dancer wearing a bikini bottom rubbed the front and back of her body against the front of the body of a male customer lounging across the chair but keeping his hands at his side. In other establishments the performer was totally nude while performing suggestive movements. A participant in a study of sex workers described it this way: Strip clubs have very limited Constitutional protection. But regardless of its legal status, nude or near-nude entertainment remains a popular form of entertainment. Corbis Chapter 2. Understanding the Sex Business 35 All it was, really, was just riding on somebody’s lap. . . . I tell them what they can do up front. “This is what you can touch; this is what you can’t touch, this is how you can touch me, and this how you can’t touch me, and if you go over that line the dance is over, I get up and leave.” (Lewis 2000, 211) Interviews with performers who provide such dances indicate that the male beneficiaries of it clearly reach climax, at least in some cases (Lewis 2000, 211). It is our opinion that lap dances are not dancing. Whether they ought to be illegal is a matter for each community to determine. In our opinion, however, they are much closer to prostitution (sexual services for a price) than dancing, and they ought to be treated accordingly under local law and policy. Stage dancing and participatory dancing are not as directly trouble- some from a values perspective; touching is acceptable in our society if it is acceptable to both people involved. In most cases, it appears that the contact between the dancers and the customers consists of little more than a quick touch of a leg or a hand on a shoulder or some other body part, and the contact from the customers to the performers is usually in the form of tucking a bill in a g-string or top. The problem with lap dancing is that any limit a community would put on the amount of allowable con- tact would be impossible to monitor and enforce—it would essentially require one or more vice officers stationed in every such establishment. This is why we recommend the use of a raised stage and bars to keep the patrons (or the performers) back from the edge of it. This makes any physical contact difficult and makes the enforcement effort much easier— if the dancer is off the stage or the customer is on it, there is a violation. Dancing in booths. Some establishments feature dancers in private booths. These performances typically place the dancer in one booth that is enclosed on three sides and that has a window on the fourth side; on the other side of the window is a second booth, which is where the cus- tomer sits or stands. We are aware of two different types of financial arrangements for these booths: 1) the customer pays a flat fee based on the type of performance he (or she) wishes to see (usually $10 for a strip, $20 for masturbation and so forth) for a five-minute performance; 2) there is an electrically operated shade or curtain that opens for a set period (a minute or two) based on the amount of money inserted. In some arrange- ments of both types, it is made clear to the customer that the performance will be relatively dull—and in at least a bikini—unless the customer also slips tips through a slot under the window. We cannot say what occurs in all such booths, but Eric had the opportu- nity to view police videotapes from such booths in one community. In those tapes, the performers consistently stated their tip expectations up front. The “dance” consisted of the performer then taking a variety of poses to show various body parts to the customer—including wide-open labia—and then lying on the floor and demonstrating the use of a dildo. Like lap dancing, this display bore no resemblance to dancing and is not the type of perfor- mance that seems to be protected by the First Amendment. Like lap dancing, it is certainly something that a community can allow if it chooses to do so— but no community should do so under the delusion that it is dancing or with any thought that it has First Amendment protection. The Touching and Encounter Businesses The sexually oriented businesses that seem to come the closest to legal- ized prostitution are what we call the touching and encounter businesses. There is probably a place for nude dancing in many communities today. It is a legitimate subject of public policy debate. Like other discussions of sexually oriented businesses, it should be an informed debate. Webb Chappell 36 Everything You Always Wanted to Know . . . Those include: • lingerie modeling studios; • nude encounter studios; • nude photography studios; • massage parlors not operated by medical professionals or certified massage therapists; and • body-painting studios. The first three types of businesses need not involve touching, but they typically take place with the customer and a nude or nearly nude enter- tainer in a closed booth or private room; although some have peepholes for management or other employees to check on the safety of employees, most of these appear to have enough privacy that no one other than the patrons and employees of the establishment will ever really know what happens there. We visited one lingerie-modeling studio with several long- term employees and came away convinced that it was, at least in general, not a touching business. This studio placed the model and the customer (apparently sometimes a couple) in a closed room, with the customer(s) presumably remaining seated and the model putting on a lingerie model- ing performance. We have read and heard about a different type of lingerie modeling that is essentially a participatory striptease. In this type of business, which usually involves an audience of several dozen people (we have heard of it occurring as a program for a men’s luncheon club), a customer “buys” an item of lingerie that a model is wearing and she delivers it on the spot, thus reducing the amount of clothing that she is wearing. We have put the term “buy” in quotation marks because we are skeptical about whether anyone really takes the used items with them—at least for use as lingerie. Obviously a business of this type poses less risk of illegal sex acts taking place than the other type of lingerie modeling because it occurs in a some- what public setting. On the other hand, like nude dancing that comes off the stage, it creates the opportunity for—and probably encourages— direct physical contact between an entertainer and a customer. Our information about the sexually oriented massage business is all second-hand—we have made no effort to explore such establishments. To indicate the nature of the business, however, we quote from judicial find- ings in a case involving such an establishment: 7. Since its inception, the primary source of income of the business run by the Babins have been fees paid by male clients for massage services. Virtually all of these massages include the stimulation of the male genitals to produce ejaculation. 8. The massage referred to in the preceding paragraph is commonly known as the hand release and represents the very basic and cheapest massage. Patrons of the King of Clubs [the establish- ment operated by the Babins] who were willing to pay for it could massage the female attendant while he himself was being mas- saged. 9. The exercise equipment at the King of Clubs was essentially there to give an appearance of a club where one could exercise in vari- ous ways. It appeared from both the testimony and the pictures to be virtually untouched and unused. . . . As we found out in our research, sex business owners and operators can be very creative. The combination of a lingerie retail business with one-on-one modeling sessions in private rooms, for instance, creates a hybrid business that can promote difficulties for the zoning authorities. David Clark Chapter 2. Understanding the Sex Business 37 12. The Babins from the outset knowingly, willfully, and intionally [sic] violated the conditions of the special exception and contin- ued to do so even after the notice of violation was sent to them on February 12, 1982. 13. While the Babins professed a lack of understanding as to the meaning of the term "massage parlor," the inference from the depositions and testimony at the hearing is that this alleged mis- understanding could only result from a naivete which the Babins certainly do not have. 14. The Babins knew at all times pertinent to this action that the con- ditions of the special exception did not permit the type of mas- sages referred to in Findings of Fact 7 and 8. (Babin v. City of Lancaster, Pa. Commwlth. 527, 493 A.2d at 144, note 2) Clearly, there are legitimate massage therapists who provide a very different service than that described above. So how can a community allow such massage therapists to operate while barring sexually ori- ented massage parlors? The simple answer is through licensing of mas- sage therapists. We recommend that communities consider allowing massage studios only as accessory uses to medical or physical therapy facilities operated by licensed medical professionals or a stand-alone facility operated by a massage therapist licensed under a state or local licensing program. Although our research did not include nude photography, nude encounter, and body-painting studios, many of the issues related to the sexually oriented activities discussed above are relevant to these estab- lishments. Like the massage parlors and other businesses described here, there is no First Amendment or other special protection for body painting, “nude encounters,” or even private booths for nude photography. A com- munity should allow such businesses to operate only because it believes that to do so represents good public policy. OTHER BUSINESSES There are a number of other businesses that fall in the general category of sex businesses. We treat none of them in depth, but we offer passing com- ments on several here. Adult Motels We have seen reference to adult motels in some local ordinances, and a licensing dispute over an adult motel was involved in one of the major Supreme Court decisions, FW/PBS, Inc. v. City of Dallas, 837 F.2d 1298 (5th Cir. 1988), modified, 493 U.S. 215, 110 S. Ct. 596, 107 L. Ed. 2d 603 (1990). Once someone rents a hotel or motel room, we view that as pri- vate space, similar to a home, and we find it difficult to be very con- cerned about how they use the room, as long as it is within the law. To the extent that a particular motel may serve as a base of operation for prostitutes or drug dealers, we believe that the issue should be addressed as a criminal one, prosecuting and running off those who engage in illegal behavior. If such behavior is a chronic problem at a particular local establishment, most communities have existing ordi- nances that can be used to declare a particular place a public nuisance and close it down. Although some motels and hotels openly advertise “adult movies,” most hotels today offer them, including most major chains. Marketing adult movies as an attraction certainly marks a dif- ferent kind of hotel or motel, but most people who choose to lodge in such a place are not surprised by the broadcast content. For more inFormation . . . about certification programs from masseuses, you can contact one of the following organizations or consult your state Department of Health to see if your state has certification stan- dards and an examination. American Massage Therapy Association 820 Davis St. Evanston, IL 60201 (847) 864-0123 FAX: (847) 864-1178 www.amtamassage.org National Certification Board for Therapeutic Massage and Bodywork 8201 Greensboro Dr. Suite 300 McLean, VA 22102 (703) 610-9015 FAX: (703) 610-9005 Automated Information Line: (800) 296-0664 www.ncbtmb.com 38 Everything You Always Wanted to Know . . . Kenneth Starr’s investigation into Bill Clinton’s affair with an intern led to a published report on the Internet (and elsewhere) that, in parts, was pornographic. The irony that a government concerned with access to pornography on the Internet would, in fact, do this was not lost on comedians and cartoonists. © Grimmy, Inc. F igures in the billions are sometimes hard to comprehend, so it provides a useful illustration to consider the figures for some individual Internet entrepreneurs in the sex industry. Those include Beth Mansfield, a Tacoma, Washington, homemaker and mother of two whose “Persian Kitty” directory of adult Web sites was esti- mated to earn $1 million in 1997 (Lane 2000, 99). A stripper named Danni Ashe developed a Web business called Danni’s Hard Drive and was grossing $4 million per year by 1999 (Lane 2000, 99). An amateur, home-based operator and Tulane graduate developed a home-based, Web-based, sex business that grossed $10,000 per month with expenses of about $3,500, allowing her to quit her other job (Lane 2000, 213). INTERNET SEX BUSINESS PROFITS: BILLIONS AND BILLIONS Bathhouses We lack first-hand experience with bathhouses, but, from what we have read and heard, we believe that bathhouses fall into two categories. In some, atten- dants provide bathing services, which would make them very much like mas- sage studios. We would refer the reader to the discussion of touching and encounter businesses above to see our recommendations in how to deal with them. In others, individuals bathe themselves and, as we understand it, often make contacts for—or engage in—casual sex, which would place these in the same category as sex clubs, which are described below. Sex Clubs We have read and heard a little about sex clubs, where people go for appar- ently casual sexual encounters. Although freedom of association and privacy provisions in some state constitutions may provide some degree of protection for such establishments, they would not appear to have any First Amendment protection. Because they appear to encourage sex in public places and the public policy that underlies much of the regulation of sex businesses seems to be to discourage sex in public places, we would recommend banning them except where there is a good reason to allow them. Escort Services This report deals with land use issues and the operational impacts of busi- nesses at particular physical locations. As a land-use, an escort service is usually just an answering service and is thus beyond the scope of this report. To the extent that an escort service may be a front for unlawful prostitution, that is a matter for the vice squad and beyond the scope of this report. Phone Sex Businesses Phone sex represented another blending of technology and sex. Today, the industry consists primarily of services that connect a calling customer with a performer who engages in a usually explicit conversation with the customer for a fixed period of time or for a per-minute fee. Charges can be made to major credit cards or to a telephone number, through the use of a 900-exchange. The phone-sex industry can be lucrative for its performers but also for the phone companies. New York Telephone may have made as much as $25,000 per day in 1983 from a single phone-sex arrangement with High Society magazine (Lane 2000, 153). Many “900,” pay-per-call services use out-of-country exchanges. One of those, the Guyana Telephone and Telegraph Company, earned $91 million from pay-per-call services— many of them sexually oriented—in 1995 (Lane 2000, 156). Like Internet businesses, discussed below, phone sex businesses are largely beyond local regulation. As a land-use, the headquarters of such a business would have, at least as we understand the business, exactly the same characteristics as an answering service—it would be distinguishable from many other business offices only because it, like an answering ser- vice or security firm, would be staffed around the clock. Performers gen- erally work from home and not from a business location, and that raises the issues of sex businesses as home occupations—discussed below in this chapter. Internet Sex Businesses The growth industry in the year 2000 is the Internet. Penthouse and Playboy have both added pay-sites to their product lines, but they compete with a large number of sex entrepreneurs—many of them literally cottage indus- tries, or, in zoning terms, home occupations. In 1998, adult businesses on line generated an estimated $1 billion, or between 5 and 10 percent of all Chapter 2. Understanding the Sex Business 39 revenues from the Internet (Lane 2000, 34), a figure that increased to roughly $2 billion in 1999 (Lane 2000, 115). Nearly one-third of Internet users visit adult-oriented sites (Miller and Schwartz 1999). Some Internet sex businesses appear simply to represent a new medium for existing businesses. To the extent that an existing adult cabaret decides to tape and broadcast some of its performances over the Web, there is no dif- ference in the land-use impact on the community—it is still a sexually ori- ented business with live entertainment. Much of the production of sexually oriented videotapes now takes place in Southern California’s San Fernando Valley, in locales not very different from those in which traditional movies have been made (Gettelman 1999). As a land use, a movie studio is simply a movie studio—and that is not a land use that is an issue in many communi- ties. The Internet, however, lends itself to cottage industries, and those industries can fall into the increasingly gray area of home-based Internet occupations, discussed in the next section. A Sex Business as a Home Occupation The earliest examples of lawful sex businesses as home occupations were undoubtedly those involving performers in the phone-sex industry, most of whom receive incoming calls through a switchboard to their homes. Today, Internet businesses raise many of the same issues regarding sex businesses as home occupations. Danni’s Hard Drive, and Persian Kitty’s, described in the sidebar, at least began as home-based businesses. A more notorious example, at least with the general public, is Voyeur Dorm, a rather traditional house located in a neighborhood in Tampa. It differs from other houses in the neighbor- hood, however, because it has been fitted with 75 cameras that purport- edly film all of the activities of the six, “college-age” young women who live in the house (Huettel 2000). As with other sexually oriented busi- nesses, our question is What is the impact? According to the St. Petersburg Times, not much. The Tampa Zoning Administrator told a reporter that she had not received a single complaint about the house during the several months that she spent reviewing an application for a business license for it. Most neighbors apparently learned about it from the news media, which began to cover the story after the city denied the business license applica- tion; police were unaware of the existence of the “dorm” until the zoning administrator told them about it (Huettel 1999). As this report was in the final publication process, the Federal District Court for the Middle District of Florida ruled that Voyeur Dorm was an adult business that was not permitted in its residential location (Voyeur Dorm L.C. v. City of Tampa, Case No. 8:99-cv2180-T-24F (U.S. M. Dist. Fla. 2000)). For a discussion of whether these operations should be banned as home occupations, see the “Zoning Talk” sidebar on the following pages. Mail-Order Sex Businesses Mail-order sex businesses typically provide materials—whether visual, text, toys, or something else—for individuals to use in their own homes. This report focuses on land-use and licensing issues of business establish- ments. We value our own privacy and respect that of others in their own home. As a practical matter, there is no way for a particular local com- munity to regulate the receipt of material by mail. A mail-order sex business ought to be little different as a land-use than any other shipping and warehousing operation. Life is not always so simple, however. Adam & Eve, a major catalog and Internet supplier of sex toys, videos, and magazines, with a strong emphasis on women’s interests, sub- mitted a site-plan for a new warehousing operation and faced a large protest This innocent-looking house was the home to Voyeur Dorm where 75 cameras provided visual daily coverage of the activities of six “college-age” women for a fee. The business ran into trouble when it applied for a license. A federal district court found it to be, by definition, a commercial sex business and ordered it shut down. Chris Waldman 40 Everything You Always Wanted to Know . . . Eric: I am just suggesting even-handed treatment. If the average home occupation can have one outside employee, why not an Internet business? I certainly agree with you that a single-family residence should not become a movie studio—and that is true whether the subject matter of the mov- ies is sex or salvation. I am simply saying that if people who otherwise lawfully live in a residence choose to take pictures of their activity to mail to friends—or custom- ers—or choose to broadcast sound or video images of their activities, they ought to be able to do that—whether their activities involve reading tea leaves, predicting the stock market, analyzing crop circles, or demonstrating sex techniques. Connie: I am not giving up on this. Another example might be the "escort" who comes by the office in the home- based escort business for payday. This increases the potential for a person who may, in fact, be a prostitute to be in a residential neighborhood. Eric: At one point, I lived next door to a contractor who ran his business out of his residence, and payday was a pain in the neck. I think that is a good argument for not allowing a business with several employees to be based in a residence, regardless of what it does or whether the employees are there every day. The issue of escort services still puzzles me. I have no experience with them, but I assume that most involve some form of sex for pay, which means they violate laws against prostitution and ought to be handled by the Vice Squad. I am fine about banning escort services in gen- eral. Connie: Let’s talk about "phone sex" busi- ness as a home occupation. I think it could be successfully argued that those engaged in such business are running the risk of sexual predatory activity in a residential neighborhood. Yes, a bit far-fetched, but as you may recall, most zoning disputes tend to deal with the far-fetched . . . like the [Editor’s Note: The Planning Advisory Service has received a number of phone calls in the past year or two about regu- lating sex businesses as a home occupation. The editor asked the authors to specifically address the question. They could not agree, and the result is this Point/Counterpoint dialog, which we print here for your consideration.] Dear Eric and Connie: Should commercial sex businesses be allowed as home occupations? Eric: Come on, Connie. There is an even greater possibility that a child will walk in on two consenting adults having non- broadcast sex because there are far more couples doing that. Most people simply will not let that happen. Furthermore, from what I read, much of the time watching Voyeur Dorm is dull, dull, dull. The genesis of the idea for Voyeur Dorm, as I recall, was “Jenny Cam,” which was a single camera that a co-ed used to broadcast her life on line. Which part of this would you ban? Do the Jenny Cams have to be turned off at 8 p.m.?, or do we have an ordinance that they are not allowed in the bedroom?, or do we sim- ply say that no one can originate Internet broadcasts from home? Will you apply that ordinance to someone who pub- lishes an investing newsletter on-line? Connie: Obviously, operational standards for commercial sex businesses as home occupations are not the solution. That would suggest their location is fine, as long as they follow certain operational guidelines. Not permitting them as a home occupation is the solution. As you recall, residential neighborhoods are at the top of the “protected” uses list. Your suggestion that we then would have to prohibit investment news publishing as a home occupation is far from the point. I can’t recall where these activities have been proven to have negative secondary impacts to residential neighborhoods. On another point, many communities allow home- based businesses to employ a limited number of nonresident members. What if a sex business is operated from a home that is essentially broadcasting porn mov- ies that are made in the home either by the residents or an employee? Remember, I am not suggesting we regulate personal sexual activities occurring in the home, but I am saying that a commercial sex business should be prohibited from becoming a legal home-based business because of its secondary impacts. Eric: Voyeur Dorm probably most dra- matically confronts social sensibilities because it represents what appears to be a sexually oriented group-living situa- tion in a residential neighborhood. Or consider, Danni, a mother with children at home, who broadcast her limited sex- ual activity from her home onto the Internet (see page 35). Or the phone-sex performer. What if a married couple simply photographs its own sexual— and other—activities and makes that available on the Web? On what grounds would a community ban such businesses? In some communi- ties, Voyeur Dorm might violate occu- pancy limits designed to limit occupancy of single-family homes to families or only two or three unrelated people living together, but there is little else about the operation that would run afoul of most local zoning ordinance’s home occupa- tion standards such as: • changes to the structure that are visi- ble from the exterior; • signs advertising the home occupation; • employees who are not residents of the home working on the premises; • customers coming to the premises; and • inventory. Connie: Eric, dear, be real! A commercial sex business operated in a residential neighborhood as a home occupation has all the potential for creating the negative secondary impacts that we have docu- mented in this PAS Report. Is it not true that there is the potential for loss of real estate value due to the discovery your home is next door to one that is being used to operate a commercial sex busi- ness as a home occupation? Is there not a potential for minors to unwittingly be enticed to enter a home wherein sexually oriented activities are taking place for commercial purposes? What about a nice friendly sex orgy conducted by family members for "pay per view"? Chapter 2. Understanding the Sex Business 41 lady that kept her horse in the garage! Eric: I am assuming that the answering service for the phone sex business is law- fully established in a district that allows answering services and that the only activ- ity that occurs at home is a worker han- dling the call. In that context, Connie, your scenario is really far-fetched. Remember that we recommend that licenses for nude entertainers be kept in a file and not posted because sex entertainers who per- form in person value their privacy and security. These phone-sex calls come in through a switchboard and are traceable back to it—which, I have stipulated, ought to be an answering service in a business location that allows them. There is no rea- son to think that someone participating in such a call from home wants to or will attract sexual predators to the neighbor- hood—as a matter of fact, there is abso- lutely no evidence that sexual predators pay for phone sex as a way of identifying victims. There is a greater risk that some- one who lost a bundle on a bad dot-com stock will find that securities advisor, operating out of her home, and come after her with a weapon. Connie: Some zoning administrators would say, Well, we're not planning to expressly identify in our code sex busi- nesses as permitted home occupations; we're just not going to regulate them. To that I say, if it does become a problem, you have no way of dealing with it from a land-use position; once it becomes a known home occupation within a resi- dential neighborhood, it is a land-use issue and has the potential for secondary land-use impacts like those of other sexu- ally oriented uses. Some would say, Well, just prosecute on the basis of criminal issues. But what if the business has not violated any criminal codes? Eric: Okay, on this you might actually have a point. If people learned that a notorious sex business was operating in the neighborhood, maybe—and I do mean maybe—that would have an adverse effect on property values. But remember that my starting point was that there be no signs, no exterior changes to the home, probably no outside employ- ees—so that limits the risk of impacts. But clearly a Voyeur Dorm that is loca- tion specific does create some risks of land-use impact that Sally Sophomore taking a few phone sex calls each night in her off-campus apartment does not cre- ate—no one will ever know who Sally Sophomore is or what city she is in unless she chooses to tell them. But I am still willing to go down this road a little. Maybe we need a local version of the military’s “don’t ask, don’t tell” policy— only our policy is, if you let anybody find out this is here, it is illegal because then it starts to have land-use impacts. There is another, very practical, aspect to the consideration of whether and how to regulate home-based sex businesses, and that is enforcement. Most family- occupancy limitations are enforced only on a complaints basis or enforced through an inspection-based rental housing code. Voyeur Dorm apparently triggered a zon- ing review by applying for a business license, but it might have avoided the problem by seeking the business license for an office address where it processes payments and handles other business matters. The fact that neighbors and police did not notice Voyeur Dorm until they read about it in the paper is an indication of the difficulty of identifying such busi- nesses even to begin an enforcement pro- cess—and, once such a business is identi- fied, any enforcement action would require search warrants and other com- plex, time-consuming measures that most zoning offices try to avoid. Incidentally, on November 6, 2000, Voyeur Dorm was, infact, found by the court to be an adult use and will be forced to close. Connie: So make it illegal and enforce it when someone finds out. Most home occupation ordinances are only enforced on a complaints basis anyway. Eric: I have a problem with that philoso- phy—I regularly advise clients that they ought to adopt an ordinance only if they intend to enforce it actively. Any other approach raises issues of “selective enforcement,” which raises the Constitu- tional issue of “equal protection.” One of the problems with occupancy restrictions that attempt to limit occu- pancy to family members or a limited number of unrelated individuals is that no enforcement officer I have ever met wants to enforce such limits because enforcement of occupancy limits requires going inside a house. I have read that domestic disturbances are among the most dangerous police calls because police are entering a private residence in a contentious situation—that is why they almost always call for backup. Having an enforcement officer enter a private residence to find out if anyone is having sex with a camera turned on is going to be at least that contentious. As a practi- cal matter, it will require a search war- rant, which ought to be handled by offi- cers in blue who know how to do those things. That takes us back to the point that we ought to address these activities only if they are illegal—and then we ought to let the police handle it. Connie: The real problem is that you would not be upset to find that Voyeur Dorm and its “six college-aged women” was in your neighborhood, but I don’t want it in mine. Eric: There may be a grain of truth in that—but what about Dude Dorm, which the same outfit is now operating some- where in Texas? But the real problem, in my view, is twofold. First, we have based all of our other recommendations in this report on documented or at least highly probable impacts—here you are basing a recommendation on a bizarre supposition about something that might happen. Second, where there is no evidence of secondary impacts (and Voyeur Dorm, which ought to be one of the highest- impact types of home occupations, has clearly not had such impacts at this point), what you are trying to do is regulate speech—you will allow the securities ana- lyst, the palm reader, or the massage therapist to work out of her home, but you want to censor the message of a phone-sex worker who is simply trying to pay her college tuition. That raises the very fundamental Constitutional issue that we discuss throughout Chapter 5. Connie: Well, here we go with the First Amendment arguments . . . but you for- get that residential neighborhoods have Constitutional protections also; it’s not all “sex-sided”! Well, we’re never going to resolve this one. Eric: So let’s do what Click and Clack do in the newspaper version of Car Talk— we’ve each expressed our opinions; now let the readers make up their own minds. Connie: It’s OK with me, as long as I get the last word. Eric: That’s fine. I’ll be Clear and Clean, and you be Clunk, and you get the last word. Connie: Last...if a city wants to allow these activities, allow them in a business district just like other sex businesses are permitted! There, I feel much better! 42 Everything You Always Wanted to Know . . . at the site-plan review stage. The local board of zoning adjustment denied site plan approval because of the protests; Adam & Eve sued. It is our under- standing that the North Carolina city involved elected not to defend the action and simply let the court issue an order effectively granting the com- pany its site-plan approval and building permit. Industrial zones are the location of choice for sex businesses in many communities. Most of the objections to sex businesses relate to signs and other interactions with the community. A mail-order sex business, based in an appropriate industrial district that allows other warehousing uses, simply raises none of those issues. LESSONS LEARNED 1. The sex business is big business, with video sales and rentals alone amounting to approximately $20 per U.S. adult per year. The sex busi- ness has, in its customer base, moved into the mainstream, serving men and women, couples and individuals, and people from all walks of life. 2. Sex toys and novelties have well-documented therapeutic uses. 3. There are stores and other outlets that primarily market sex toys and related items for women. 4. There is every reason to believe that some of the increase in the use of sex toys, and sexually oriented videos and other visual media has occurred as people have shied away from casual sex because of fear of AIDs and herpes and substituted self-satisfaction for that casual sex. 5. Most mainstream bookstores, video stores, and newsstands include at least some material that could be classified as soft-core pornography, and many include at least some material that would meet our defini- tion of hard-core pornography. 6. Many mainstream video stores (although none of the national chains with which we are familiar) include back rooms with large stocks of hard-core videos. 7. Many large newsstands include separate racks or back rooms with large stocks of hard-core magazines and other publications. 8. Mixing lingerie, leather goods, and sexually oriented media or adding sex toys to the product mix of a retail outlet causes it to take on the image of selling sex, which makes it very different from a store that sells books or videos, some of which happen to be sexually oriented. We have applied the term “sex shop” to such an outlet. 9. Some motion picture theaters specialize in sexually oriented movies and enjoy considerable Constitutional protection. 10. Motion picture theaters represent a medium and a land use. 11. Video-viewing booths generate a lot of revenue. The also have the undesirable impact of serving as “masturbation booths” and other- wise serving as a place that encourages quasi-public sex acts. 12. Dancing is an art form that may sometimes allow and perhaps even require nudity. 13. Although “art” can be difficult to define, some of the forms of partici- patory dancing that are found in sexually oriented establishments seem much closer to prostitution than art and thus seem distinguish- able from the kind of art that enjoys Constitutional protection. Chapter 2. Understanding the Sex Business 43 14. Lap dancing verges on prostitution, in some cases taking a male cus- tomer to climax. 15. Although other forms of participatory dancing or dancing that allows customers to make brief contact with the dancers—or vice versa—may be more innocent, allowing any touching but then trying to limit it to “appropriate” touching creates major enforcement problems. 16. The simplest way to limit sexual contact between dancers and custom- ers is to keep the dancers on stage and the customers in the audi- ence. 17. If a dancer is performing a dance or other art form and not obscene acts, there is no reason for it to take place in a closed booth as a per- formance for a single, tipping customer. 18. Touching and encounter businesses in a sexual context create signifi- cant risks by placing a customer and an entertainer in a seemingly private but still quasi-public space with a sexually charged atmo- sphere. There is evidence that some of these provide male (and, undoubtedly in some cases, female) customers with sexual satisfac- tion; although others may not provide such a complete service, with two people in a closed space, it is very difficult to tell—and enforce— the difference. The simple solution is to avoid creating the situation. 19. There are massage therapists who are not medical practitioners but who provide nonsexual, therapeutic massage—they can best be iden- tified by relying on the National Certification Board for Massage Therapy and Body Work or a similar licensing or certification board to certify them. 20. There is a philosophical inconsistency in local policies that prohibit prostitution but that allow lap dancing, sexually oriented massage establishments, and other sexually oriented touching and encounter businesses. 45 T his Chapter examines fieLd studies addressing the impaCts and perCeived impaCts of sexuaLLy oriented Businesses. It first presents two original surveys in which we were directly involved: (1) a comprehensive door-to-door survey of residents and business owners/managers in neighborhoods around sexually ori- ented businesses and some other businesses with sexually oriented materials in Kansas City, Missouri; and (2) a survey mailed to prop- erty appraisers in Rochester, New York, seeking their opinions on the impacts of different types of businesses on commercial and residential property values. This chapter also includes our summa- ries and analyses of 10 other studies and reports on the regulation of sexually oriented business completed by Denver; Fort Worth; Indianapolis; New York City; Newport News, Virginia; Phoenix; St. Paul; Tucson; and Whittier, California. We found that some of the studies we reviewed have significant limitations on their useful- ness. We have included them because they are often cited as sup- porting documentation of “studies from other cities” incorporated by cities that are adopting sexually oriented business regulations, a procedure that has been allowed by the courts as a substitute for a city conducting its own survey of secondary effects of sexually ori- ented businesses. THE KANSAS CITY STUDY As part of a larger study that we conducted of Kansas City’s sexually oriented businesses, we contracted with Oedipus, Inc., a professional public opinion research firm from Boulder, Colorado, to conduct a series of interviews with residents and business managers of the neighborhoods surrounding the sexually oriented establishments included in the study. Oedipus has an extensive history of conducting surveys related to land-use issues and to issues surrounding the licensing and approval of particular businesses, typically establish- ments offering liquor or adult materials or entertainment. Results of surveys in neighborhoods around sexually oriented businesses show clear concern with the land-use impacts of sex businesses. CHAPTER 3 Formal Studies of Sex Businesses: What They Tell Us About Real and Perceived Impacts 46 Everything You Always Wanted to Know . . . The Survey The survey involved a total of 1,049 “door-knocks” that resulted in 360 successful interviews. At 577 locations, no one answered the door, the business was closed, or the business was open but the manager was not available; another 112 locations were not included because respondents were not residents of the neighborhood or preferred not to participate. We reached our target goal of at least 20 completed surveys from neighbor- hoods around each business involved in this study except for one busi- ness located in the heart of downtown, for which the survey team was able to obtain only 18 completed surveys. Our study design for the survey was quite different from those used in other communities. Surveys in other communities that have focused on sexually oriented businesses asked direct questions like, Does the adult busi- ness in your neighborhood create any problems for you? We wanted a more objective response and designed a survey method in which the survey teams never mentioned sexually oriented businesses or any others. After the sur- vey eligibility questions, the first eight questions in the survey were on general topics such as the upkeep of homes and businesses in the neighbor- hood, traffic congestion, and pedestrian safety. In other words, we buried the intent of the survey with questions about general neighborhood issues and took significant steps to avoid “leading” the responses in any way. Beginning at question 9, the survey teams asked general questions that intended to elicit responses related to the substance of our study. Those questions were: 9. Is there a business in your neighborhood that is a problem or not good for your neighborhood? 10. Is there a business not located in your neighborhood that your neigh- borhood needs? [irrelevant to study and not discussed further] 11. Is there a business operating in your neighborhood that should not be in your neighborhood? 12. If you listed a business that should not be in your neighborhood in question #11, which, if any, of these businesses has adversely affected your ability to sell or rent your property? 13. If you operate a business, has any other business affected your ability to hire or retain employees? We studied neighborhoods around what we later characterized as five main types of businesses dealing in sexually oriented materials. • Video stores, which emphasized the sale of videos but which included some—or many—hard-core, sexually oriented videos • Sex shops, which included a variety of sexually oriented goods, usu- ally featuring sex toys, some media, and, in some cases, very racy lin- gerie, leather goods, and other accessories • Retail outlets with a variety of consumer goods and a substantial stock of sexually oriented inventory • Sexually oriented motion picture theaters • Adult cabaret There was one variation that affected our classifications—the inclusion of video-viewing booths as an accessory use. (See the list of our classifications in Table 3-1 where we also indicate whether video-viewing booths were included in the business.) There was also one business with live entertain- Our study design for the survey was quite different from those used in other communities. . . . We wanted a more objective response and designed a survey method in which the survey teams never mentioned sexually oriented businesses or any others. Chapter 3. Formal Studies 47 TABLE 3-1 . CLASSIFICATION OF ADULT BUSINESSES IN THE KANSAS CITY RESIDENT/BUSINESS SURVEY Business Name City Classification Authors’ Classification 1st Amendment Less than substantial portion Sex shop Adrienne’s Book Store & Arcade Video-viewing booths Sex shop with viewing booths Bazooka’s Showgirls Adult entertainment; video-viewing booths Adult cabaret; adult mini-motion picture theater; viewing booths; adult video rentals and sale; live encounter booth Ellwest Stereo Theatre (After Dark) Video-viewing booths Sex shop with viewing booths N.Y. Times Square Video Video-viewing booths Sex shop with viewing booths Old Chelsea Theatre Video-viewing booths Adult motion picture theater; adult live theater with viewing booths; live encounter booth Passion Pit Video-viewing booths Sex shop (more than 40% adult video sales and rentals) Pleasure Chest Adult Bookstore Video-viewing booths Sex shop with viewing booths Priscilla’s Less than substantial portion Sex shop Ray’s Over 21 Video-viewing booths Sex shop with viewing booths Ray’s Video (Main St) Video-viewing booths; less than substantial Sex shop with Beanie Babies, newspapers, portion and viewing booths SRO Video Less than substantial portion Video store Stadium News (After Dark) Video-viewing booths Sex shop with viewing booths Strand Video Video-viewing booths Sex shop; adult mini-motion picture theater with viewing booths Time for News Video-viewing booths Sex shop with viewing booths Valentine Video Less than substantial portion Video store Video Mania Less than substantial portion Video store ment, as well as books, videos, two small motion picture theaters, and video- viewing booths. Note that our classification, which is discussed in more depth in Chapter 8, differed from the one Kansas City had used before our study. The city had distinguished between adult and non-adult retail outlets on the basis of the percentage of the store’s stock-in-trade that involved sexu- ally oriented media. Stores with “less than a substantial portion” of the stock in trade, which the city at that time interpreted to be 50 percent of the number of inventory items, were considered non-adult uses. Responses Oedipus, the public opinion research firm, reported the responses sepa- rately for the two categories of businesses included in this study: those with video-viewing booths (referred to in the Oedipus report as “adult businesses”) and businesses with “less than a significant or substantial portion of their stock in trade” in adult materials, referred to in the Oedipus report as “other businesses with adult materials.” The responses from different neighborhoods were very similar. In response to questions 9 and 11, 57 and 63 percent, respectively, of the 360 respondents said there was no business in the neighborhood that was a problem or should not to be there. (See Table 3-2.) However, 102 respondents indicated that there was some business in the neighborhood that was a prob- lem or should not to be there. Of these respondents, 97 named an adult busi- ness or another business with adult materials. (See Table 3-3.) Ninety percent 48 Everything You Always Wanted to Know . . . TABLE 3-2. RESPONSES TO KEY QUESTIONS IN KANSAS CITY SURVEY (percentage of respondents) No Opinion or     Question  No  Yes Not Applicable Don’t Know (Q9) Business in your neighborhood that is a problem? 56.94 36.39 .28 6.39 (Q11) Business in your neighborhood that should not be there? 63.06 28.33 8.61 (Q12) Business from previous question affected your ability to sell/rent property? 5.28 7.78 84.44 2.5 Source: Oedipus, Inc., Survey Regarding Businesses with Video-viewing Booths or with Less than a Significant or Substantial Portion of Their Stock in Trade in Adult Materials, Kansas City, Missouri (Boulder, Colo.: Oedipus, Inc., 1998); from responses to Questions 9, 11, and 12, pages 4, 5, 7. TABLE 3-3. TYPES OF BUSINESS LISTED AS “SHOULD NOT BE IN NEIGHBORHOOD” Named by Business Type Respondents1 Adult business or business with adult materials Liquor store Bar Hotel Nonprofit rehab, halfway houses, blood bank, Planned Parenthood 8 Check-cashing 6 Pawn shop Convenience store/gas station Temporary employment/day labor Fast-food restaurant Car salvage yard/car lot Industrial [in residential area] Auto body shop/motorcycle repair Recycle center “Hippie” shop Business with overflow parking Other 1. Sample size = 102 respondents who answered Yes to Question 11. (See Table 3-2.) Source: Oedipus, Inc., Survey Regarding Businesses with Video- viewing Booths or with Less than a Significant or Substantial Portion of Their Stock in Trade in Adult Materials, Kansas City, Missouri (Boulder, Colo.: Oedipus, Inc., 1998); from responses to Question 11, pages 5-6. 97 13 12 9 8 6 5 4 3 3 3 3 2 2 2 2 2 Chapter 3. Formal Studies 49 of the respondents gave land-use impacts as to why they believed the sexu- ally oriented businesses did not belong in the neighborhood. Reasons given included such things as “trashy,” “trashy store front,” “lowers property value,” “draws bad crowd,” draws unsavory people,” or “bad influence on children.” ” A small number of respondents cited the content of the materials handled by the business. The businesses named most frequently by respondents to Question 11 were: First Amendment (20 times), Priscilla’s (13 times), Ray’s Video (12 times), Ray’s Over 21 (11 times), Pleasure Chest (11 times), Ellwest (9 times), Old Chelsea (8 times), Bazooka’s (7 times), Strand (6 times), Passion Pit (3 times), After Dark Video (formerly Stadium News 3 times), New York Times (2 times), and First Amendment and Adrienne’s (1 time each), and unnamed stores (4 times); note that First Amendment, the Passion Pit, and Priscilla’s do not have video-viewing booths. Businesses that were not listed, although the survey teams worked the neighborhoods around them, included: SRO Video; Time for News; Valentine Video; and Video Mania. SRO Video was essentially a control establishment—a mainline video store with a few hardcore videos on a high shelf. Valentine Video and Video Mania are mainstream video stores with large back rooms of hard-core material. Time for News is clearly a sexually oriented business, but it is located in an entirely com- mercial area. In response to question 12, related to the impact of a particular busi- ness on one’s ability to sell or rent a property, most did not identify a problem. Of those who did identify a problem, 26 of the 28 named an adult business or another business with adult materials. Only five respondents indicated that a particular business had impaired their ability to hire employees. Analysis We were surprised at the survey results. We certainly anticipated that some adult businesses would be named in response to our relatively neutral ques- tions regarding problem businesses, but we anticipated a fairly even mix of bars, used-car lots, junkyards, and marginal convenience stores, along with businesses included in this study. The fact that 96 percent of the persons identifying a business that “should not be in [their] neighborhood” specifi- cally named adult businesses or businesses with adult materials is very significant. The fact that 90 percent of those responding to the question about why they objected to the businesses gave reasons related to land-use (i.e., they used descriptions of the property or actions around it) for oppos- ing those businesses is also significant. In a public hearing, accompanied by counsel for neighborhood groups, those testifying might be expected to couch their testimony carefully to avoid tripping over First Amendment issues. In response to an unscheduled personal interview, however, one normally obtains direct, unrehearsed responses; in that context, we would have expected more responses that focused on the moral issues, responses like “we don‘t need porn in this neighborhood,” or “that business is immoral.” Because these responses are given in a nonpublic and direct sense, we give them great legitimacy. And this, in turn, affects how commu- nities might best respond to the issues that arise from sexually oriented businesses. In other words, the respondents’ complaints focused on business activities rather than on the message content of communications, and those factors can be addressed through zoning and licensing procedures without having to confront First Amendment issues. Our own observations of these businesses (see Chapter 2) confirmed many of the perceptions of the respon- dents to the survey. Bazooka’s was one of the Kansas City businesses that was deemed by nearby residents as “a business operating in your neighborhood that should not be in your neighborhood.” This, despite the fact that the business was one of the classiest the authors visited in their research. Connie Cooper 50 Everything You Always Wanted to Know . . . There are two other aspects to the survey results that are particular significant. The responses from the neighborhoods surrounding what the industry calls “percentage stores” (stores carrying adult materials but fall- ing below the percentage the city uses to classify the use as an “adult business”) were essentially similar to responses from neighborhoods sur- rounding businesses that were clearly adult businesses. The similarity of these responses did not surprise us. We believe that Kansas City’s former distinction between adult uses and “percentage stores” missed the real distinction between these businesses. We found several establishments that were objectionable to neighborhoods but that had "less than a sub- stantial portion" of their inventory in sexually oriented merchandise. In each case, the establishment involved had a significant inventory of sex toys, racy lingerie, and novelties (none of which was then included by Kansas City in computing the adult-oriented inventory); we subsequently classified such businesses as “sex shops,” a finding discussed in more depth below. The survey showed no respondents naming mainstream video stores with adult videos in a back room (viz., SRO Video, Valentine Video, and Video Mania) as the type of business that should not be in the neighborhood. (See Table 3-4.) SRO Video had a small number of adult titles, kept high on the wall and displayed with only the spines showing. We did not expect it to turn up in the survey responses, and it did not. Valentine Video and Video Mania, in contrast, had very large inventories of sexually oriented video- tapes and, in contrast to some of the other businesses, many customers. It would be safe to say that we saw 15 or 20 times as many customers in the adult sections of Valentine Video and Video Mania as we saw in First Amendment, but First Amendment turned up 20 times on the survey TABLE 3-4. ADULT BUSINESSES OR BUSINESSES WITH ADULT MATERIAL THAT “SHOULD NOT BE IN NEIGHBORHOOD” (Authors’ Classification) Number in Studied Percentage of Type of Business1 Neighborhoods Times Mentioned2 Mentions3 Adult live theater 1 7 6.2 Adult movie theater 1 8 7.1 Sex shop with viewing booths 9 58 51.3 Sex shop without viewing booths 3 36 31.9 Unamed store with adult materials 4 3.8 Mainstream video store with adult videos in back room 2 0 0 Mainstream video store with few adult videos 1 0 0 Notes: 1. Where business included multiple businesses, it is identified here only in the first category in which it falls, because the categories are listed in order of their impact on neighborhoods. 2. Number of mentions was 113 from a total of 97 respondents who identified an adult business in response to Question 11. 3. Total varies from 100 percent because of rounding. Source: Tabulated by authors from follow-up responses to Question 11, as reported separately for two different groups on pages 13 and 21 in the Oedipus study, eliminating double-counting. Total number of mentions exceed number of persons identifying an adult business, as show in Table 3-3, because some mentioned multiple businesses. We believe that Kansas City’s former distinction between adult uses and “percentage stores” missed the real distinction between these businesses. Chapter 3. Formal Studies 51 responses as regards types of businesses that should not be in the neighbor- hood, and Valentine Video and Video Mania were not mentioned once. Consistent with the findings about First Amendment are the survey results involving Priscilla’s. Priscilla’s was mentioned by survey respon- dents 13 times. It was probably the nicest store that we visited in terms of quality of décor and fixtures, care in merchandising, lighting, cleanliness, and general management attention. Although we ultimately recom- mended that sex shops like Priscilla’s be included under the new licensing ordinance in Kansas City, we did not anticipate that it would have any difficulty meeting the many standards regarding operations and mainte- nance of the premises. Priscilla’s featured lots of lingerie, lots of novelties, lots of sex toys, and a relatively small number of videos—roughly comparable to the number of sexually oriented videos at SRO. In short, the emphasis in Priscilla’s was not on media but on accessories. Within a block of Priscilla’s is Roscoe’s, a large and comprehensive video store with a large backroom with adult videos—similar to those we found at Valentine Video and Video Mania. In contrast to Pricilla’s, Roscoe’s did not turn up once in the survey responses, although its neighborhood is the same as Priscilla’s. If neighbors were concerned about the specific content of the materials (sexually oriented videos), they would have named Roscoe’s. People that we spoke to characterized Priscilla’s as a retail store selling “sex” with its mixture of lingerie, XXX videos, and sexual oriented paraphernalia—that view would completely explain the multiple survey responses naming the store. Roscoe’s was a video store that just happened to carry XXX-rated videos as an ancillary to its main operation as a video store. We believe there are two reasons why Priscilla’s and First Amendment were such significant issues for neighbors, while three other stores that traded in much larger quantities of sexually oriented media did not: 1. First Amendment and Priscilla’s were, according to our categories, sex shops. In addition to videos, they carried sex paraphernalia and maga- zines, along with extraneous merchandise, such as reading glasses, caps, and ceramic cups. Valentine and Video Mania are comprehensive video stores that choose to carry many adult-oriented videos (confined to a controlled back room), along with lots of family-oriented videos. This is a land-use distinction, based on the context in which the material is sold or rented and not on the content of the material. 2. First Amendment and Priscilla’s were located on blocks that abutted residential properties, while Video Mania, Roscoe’s, and Valentine Video were clearly located in major commercial areas. The recommendations we make in the later chapters of this report are based on our recommendations to Kansas City to address these issues, although we have continued to refine our thinking and the resulting rec- ommendations. Kansas City adopted those recommendations in the form of zoning ordinance amendments and a new licensing ordinance similar to those for which we provide drafting checklists in Chapters 7 and 8. For a detailed treatment of how we resolved these issues, see those chapters. A SURVEY OF APPRAISERS IN ROCHESTER, NEW YORK The City of Rochester, with the assistance of Duncan Associates, con- ducted a survey of property appraisers in Rochester/Monroe County, New York, to determine their perceptions of impacts of specific busi- nesses, including sexually oriented businesses, on residential and com- mercial property values. The recommendations we make in the later chapters of this report are based on our recommendations to Kansas City to address these issues, although we have continued to refine our thinking and the resulting recommendations. Kansas City’s Ziegfield’s promises that there’s “nothing on but the jukebox” in this “gentlemen’s club.” Venues with live entertainment pose a whole different set of problems than retail uses that do not. The authors suggest that the distinctions are similar to those between a bar and a liquor store. Connie Cooper 52 Everything You Always Wanted to Know . . . The survey was conducted in the context of a larger study of sexually oriented businesses. Because any question focusing simply on the ques- tion of whether such businesses may have a negative impact on prop- erty values clearly biases the respondent to answer affirmatively, this survey placed such businesses in context, by including such businesses in a list of other businesses that are sometimes considered LULUs (Locally Unwanted Land Uses). Furthermore, rather than lumping all sexually oriented businesses together, the survey included several dif- ferent types of such businesses, ranging from passive retail uses (sale or rental of sexually oriented books and videos) to higher impact uses, such as those with live entertainment. These businesses as a group (that is, all the LULUs) are generally called “the studied businesses” in the rest of this analysis. The categories of businesses sent to the appraisers are listed in Table 3-5. TABLE 3-5 . TYPES OF BUSINESS NAMED ON ROCHESTER SURVEY OF APPRAISERS Business Type Bar Bar with live entertainment Bar or juice bar with nude dancers or servers Bookstore Bookstore that includes some sexually oriented materials Bookstore that advertises itself as XXX or “Adult” Bowling alley Convenience store Convenience store with gas Convenience store with alchohol Newsstand Newsstand with back room of sexually oriented materials Pawn shop Salvage yard “Sex shop” featuring leather goods, lingerie, sex toys Video rental shop Video rental shop with back room of sexually oriented materi- als Video rental shop that advertises itself as XXX or “Adult” Source: Survey of Appraisers by Department of Zoning, City of Rochester, New York; study design and data compilation by Most local ordinances dealing with sexually oriented businesses address the apparent impacts of such businesses on property values by requiring sexually oriented businesses to be separated by some specified distance (typically between 500 and 1,500 feet) from certain categories of land uses. Thus, the survey attempted to find a relationship between dis- tance or other locational factors and impacts on property values. Finally, recognizing that all of the possible LULUs included on the list are com- Because any question focusing simply on the question of whether such businesses may have a negative impact on property values clearly biases the respondent to answer affirmatively, this survey placed such businesses in context, by including such businesses in a list of other businesses that are sometimes considered LULUs (Locally Unwanted Land Uses). Chapter 3. Formal Studies 53 mercial enterprises and that any commercial enterprise will have a differ- ent impact on residential property than on commercial property, the sur- vey asked separately about the probable impacts on residential property values and on commercial property values. The survey included questions designed to determine the distance from a given residential or commercial property at which appraisers would determine the impact of studied businesses. It also provided an opportunity for the appraisers to rank the potential negative impacts on a property’s value caused by subcategories of the studied busi- nesses. The survey allowed additional comments, but review of those comments is not included in this report. The survey was conducted in spring 2000. Thirty-nine responses were received and analyzed. All returned sur- veys were included in the data analysis. Portions of some returned sur- veys were left blank, and those portions were not included in analysis. Thirty of the 39 responding appraisers had some type of real estate appraisal certification in New York State. Their average number of years of experience in appraising was 20.2, and the average number of years of experience in Monroe County was 19.7. Appraisers were given an opportunity to rank 18 different business types by the potential adverse impact they might have on the value of either residential or commercial property. The Relationship between Proximity and Use Tables 3-6 and 3-7 show the responses to questions about separation dis- tances. The greatest factor affecting both residential and commercial uses was whether a potentially negative influence was located on the same block. TABLE 3-6. DISTANCE/SEPARATION FACTORS IN IMPACTS OF BUSINESSES ON VALUES OF NEARBY RESIDENTIAL PROPERTY Consideration Factor Percent1 Total Studied business located on same block 57 17 Distance affected by type of business impact generator 47 14 Distance related to impacting business fronting on same street 23 7 Studied business located within 500 feet 10 3 Studied business located within 1,000 feet 13 4 Studied business located within 1,500 feet 0 0 Note: 1. Percent indicates how many of the 30 useable responses indicated the given consid- eration factor. The percents total higher than 100 percent because the survey allowed respondents to make multiple selections Source: Survey of Appraisers by Department of Zoning, City of Rochester, New York; study design and data compilation by Duncan Associates, Austin, Texas, Table 2. Note that, due to inconsistencies in the method of responding to the survey, the table repre- sents a scoring of the responses by Duncan Associates and not a straight compilation of answers. Some responses ranked all of the studied businesses, from the most negative to least negative impacts on property value; some simply assigned point values to their perceptions of the impacts of some of the businesses. Because of this inconsistency in responses, all useable responses were re-coded, converting the wide range of respon- dents’ ranking or rating systems into a quartile system (rating from 1 to 4, with 1 being the highest potential negative impact). There were 23 useable responses for residential property impacts and 14 useable responses for commercial property impacts that underwent this recoding. We believe that the intent of each respondent was clear and that the recoding accurately reflects the responses of participants. The survey provided an opportunity for the appraisers to rank the potential negative impacts on a property’s value caused by subcategories of the studied businesses. 54 Everything You Always Wanted to Know . . . The next highest consideration was the type of business generating the impact. The analysis did not correlate this result with the rankings of potentially negative impacts because the sample size was not large enough to allow a statistically significant analysis. It is possible, however, that a larger sample size would show a positive correlation among the character of a business, its distance from the protected land use, and the impacts on the land use; that is, higher-impact businesses (those with on- premises entertainment) may have an impact at a greater distance than lower-impact, retail uses. Whether a studied business fronted on the same street as the other property was the next highest consideration among the appraisers. TABLE 3-7. DISTANCE/SEPARATION FACTORS IN IMPACTS OF BUSINESSES ON VALUES OF NEARBY COMMERCIAL PROPERTY Consideration Factor Percent1 Total Studied business located on same block 72 13 Distance affected by type of studied business 8 Distance related to studied business fronting on same street 17 3 Studied business located within 500 feet 11 2 Studied business located within 1,000 feet 11 2 Impacting business located within 1,500 feet 6 1 Note: 1. Percent indicates how many of the 18 useable responses indicated the given consid- eration factor. The percents total higher than 100 percent because the survey allowed respondents to make multiple selections. Source: Survey of Appraisers by Department of Zoning, City of Rochester, New York; study design and data compilation by Duncan Associates, Austin, Texas, Table 3. Note that, due to inconsistencies in the method of responding to the survey, the table repre- sents a scoring of the responses by Duncan Associates and not a straight compilation of answers. Some responses ranked all of the studied businesses, from the most nega- tive to least negative impacts on property value; some simply assigned point values to their perceptions of the impacts of some of the businesses. Because of this inconsis- tency in responses, all useable responses were re-coded, converting the wide range of respondents’ ranking or rating systems into a quartile system (rating from 1 to 4, with 1 being the highest potential negative impact). There were 23 useable responses for residential property impacts and 14 useable responses for commercial property impacts that underwent this recoding. We believe that the intent of each respondent was clear and that the recoding accurately reflects the responses of participants. The Ranking of Business Types Tables 3-8 and 3-9 show the studied business types separated into three categories based on their relative potential to have an adverse effect on either residential or commercial property values. It is important to note that the results of this survey are descriptive only. They quantify only the opinions of real estate appraisers in Rochester/Monroe County, New York, about the potential impact of cer- tain types of businesses on property values. This survey does not com- pare actual property values or appraisals to the responses collected, nor is there any reliable statistical method to infer the actual effect on prop- erty values from the information collected by this survey. Analysis The responses to the impacts by business type are, in part, counterintui- tive. The investigators anticipated that salvage yards would have been a 44 Chapter 3. Formal Studies 55 TABLE 3-8. TYPES OF STUDIED BUSINESSES WITH ADVERSE EFFECTS ON RESIDENTIAL PROPERTY Greatest Potential Impact Moderate Potential Impact Minimal Potential Impact Bar or Juice Bar with nudity Video rental with SOM* Pawn shops XXX or “Adult” video rental Newstand with SOM* Convenience store with alco- hol XXX or “Adult” bookstore Bar Convenience store with gas “Sex shops” Bookstore with SOM* Bowling alley Salvage yards Convenience store Bar with live entertainment Video rental shop Newstand Bookstore * “SOM” indicates sexually oriented materials. Source: Survey of Appraisers by Department of Zoning, City of Rochester, New York; study design and data compilation by Duncan Associates, Austin, Texas, Table 4. Note that, due to inconsistencies in the method of responding to the survey, the table represents a scoring of the responses by Duncan Associates and not a straight compilation of answers. Some responses ranked all of the studied busi- nesses, from the most negative to least negative impacts on property value; some simply assigned point values to their perceptions of the impacts of some of the businesses. Because of this inconsis- tency in responses, all useable responses were re-coded, converting the wide range of respondents’ ranking or rating systems into a quartile system (rating from 1 to 4, with 1 being the highest potential negative impact). There were 23 useable responses for residential property impacts and 14 useable responses for commercial property impacts that underwent this recoding. We believe that the intent of each respondent was clear and that the recoding accurately reflects the responses of participants. TABLE 3-9. TYPES OF STUDIED BUSINESSES WITH ADVERSE EFFECTS ON COMMERCIAL PROPERTY Greatest Potential Impact Moderate Potential Impact Minimal Potential Impact Bar or Juice Bar with nudity Salvage yards Bookstore with SOM* XXX or “Adult” video rental Video rental with SOM* Pawn shops “Sex shops” Newsstand with SOM* Bar XXX or “Adult bookstore” Bar with live entertainment Convenience store with alcohol Video rental shop Bowling alley Bookstore Convenience store Convenience store with gas Newsstand * “SOM” indicates sexually oriented materials. Source: Survey of Appraisers by Department of Zoning, City of Rochester, New York; study design and data compilation by Duncan Associates, Austin, Texas, Table 5. Note that, due to inconsistencies in the method of responding to the survey, the table represents a scoring of the responses by Duncan Associates and not a straight compilation of answers. Some responses ranked all of the studied businesses, from the most negative to least negative impacts on property value; some simply assigned point values to their perceptions of the impacts of some of the businesses. Because of this inconsistency in responses, all useable responses were re-coded, converting the wide range of respondents’ ranking or rating systems into a quartile system (rating from 1 to 4, with 1 being the highest potential negative impact). There were 23 useable responses for residential property impacts and 14 useable responses for commercial property impacts that underwent this recoding. We believe that the intent of each respondent was clear and that the recoding accurately reflects the responses of participants. Also note that the total number of responses to surveys regarding impacts on com- mercial properties was much smaller (18) than the total responses regarding residential properties. 56 Everything You Always Wanted to Know . . . use with significant impact on commercial properties (they were in the highest impact group for residential properties) and that convenience stores selling gas and/or alcohol would have been perceived as having moderate potential impacts on residential properties. But the appraisers did not see them that way. Rather, they responded that video stores and bookstores with back rooms of adult material would have greater poten- tial impacts on property values than such convenience stores and ranked them with salvage yards and bars with live entertainment in their poten- tial effect on the property values of commercial properties. These results seem inconsistent with the summary of the Kansas City survey results above; in that survey, no respondents identified video stores and book- stores with back rooms of sexually oriented materials as having any adverse impact on their neighborhood. There was a critical difference in methodologies, however. In the Kansas City study, neighbors were required to identify problem businesses by name. In this survey, the busi- nesses were identified only as “types” that included sexually oriented materials. The authors suspect that many of the respondents to the Kansas City survey were totally unaware of the back rooms and that others paid little attention to them. There are several such businesses in Rochester, and local planners and enforcement officers have reported no problems with them. The researchers suspect that the appraisers may not be any more aware of these types of businesses than the respondents in Kansas City and may have responded to the question based on their perceptions about true adult uses. Classification of the “adult bookstore” in the same high-impact cat- egory as “sex shops” and sexually oriented businesses with live enter- tainment is also somewhat suspect. One of the investigators visited all of the identifiable sexually oriented businesses in Rochester and found no true adult bookstores that sold only books; many businesses that called themselves adult bookstores also had video-viewing booths, which are a form of on-premises entertainment, and all included sex toys and other items that would bring them within the authors’ classi- fication of a sex shop. Thus, to the extent that the appraisers responded from their own experience in Rochester, the attempt by the investiga- tors to distinguish an adult bookstore from a sex shop appears to have been unsuccessful. Survey Findings Based on the results of the survey, appraisers in the Rochester/Monroe County area have the following views on the impact of the studied busi- nesses, which included sexually oriented businesses. 1. Bars with nude servers or live entertainers clearly have the greatest potential negative impact on surrounding property values. 2. Sexually oriented businesses have a potential negative impact on the value of some neighboring property. That impact is greater than the impacts of some other types of businesses considered as undesirable neighborhood land uses. 3. To the extent that studied businesses have a potential negative impact on property values, they have significantly more negative impact on the value of neighboring residential property than on the value of neighboring commercial property. 4. The greatest potential impact on property values of the studied busi- nesses is on properties located on the same block. Based on the results of the survey of appraisers in Rochester, New York, bars with nude servers or live entertainers clearly have the greatest potential negative impact on surrounding property values. Chapter 3. Formal Studies 57 5. For uses located on different blocks, the location of a studied business on the same street as a protected use is more significant in measuring impact than is any particular separation by distance. 6. Based on a combination of responses, if two properties are equidistant from the same studied business, with one located on the same street as the studied business and the other on another street, the property located on the same street as the studied business will suffer the greater impact. 7. The impact of studied businesses on neighboring properties decreases with distance; the potential negative impacts stop somewhere between 1,000 and 1,500 feet. Please note that interpolation of the distance/separation data suggests that pedestrian or driving distance is a critical factor and is far more important than absolute distance, but that interpolation goes somewhat beyond what the data says directly. Although staff from the City of Rochester participated in the survey and accepted the survey, the city has taken no action to accept the findings and conclusions based on the survey as of the date of the publication of this PAS Report. The analysis and summary we provide here are entirely the responsibility of the authors of this report. FINDINGS FROM STUDIES IN OTHER COMMUNITIES Denver “A Report on the Secondary Impact of Adult Use Businesses in the City of Denver” was prepared by multiple city departments for the Denver City Council in January 1998. It is detailed and carefully done. According to the study, after applying the mandatory separation requirements (500 feet from designated uses, such as parks, schools, and religious facilities, and 1,000 feet from other adult uses), “at least 67 business-zoned sites are available in addition to the 20 existing adult use businesses” (p. 16). Thus, there are a substantial number of available sites for adult use businesses in Denver. Most adult businesses in Denver are licensed; the only exceptions are bookstores without video-viewing booths or other on-premises entertain- ment. In a discussion of licensing, the Denver report notes: Most adult use businesses in Denver have had their licenses sus- pended on one or more occasions for criminal violations by patrons or employees (or, in some cases, for licensing violations short of criminal behavior). The overwhelming majority of such violations involved public indecency, including masturbation, fondling and deviate sexual intercourse. . . . Among the four groups of licensed adult use businesses, Amusement Class 15 licenses, which offer adult books and material and adult pic- ture show devices, do not seem to generate the same amount of viola- tions as those businesses with live entertainment or movies. (p. 20) The Denver study also involved surveys of local residents and business owners. Questions on the survey were directed at uncovering people’s per- ceptions of the impacts of adult uses. The analysis revealed the following. The study found that people who live or own businesses near adult businesses—particularly pop shops, [nude dancing establishments that serve soda “pop” rather than alcohol] adult cabarets, and theaters—feel their presence in the neighborhood lowers property values, generates crime, and contributes to an overall decrease in quality of life. (p. 25) PAS HAS STUDIES AVAILABLE T he Planning Advisory Service (PAS) staff has copies of the studies of the impacts of sex busi- nesses on communities listed in this report as well as studies from other cities, including the Kansas City study performed by the authors and summarized above. These studies are available on loan to PAS subscribers. If you are not a PAS subscriber, you will be charged a research fee. Of course, you can also contact the cities directly. A review of the cities’ web sites did not turn up these studies (with the exception of New York City), although most ordinances govern- ing sex businesses from the cities cited here are available on line. Purchase information for the New York City study is available below in the sidebar by that city‘s case study. 58 Everything You Always Wanted to Know . . . This perception was reinforced by the results of focus group meetings held to discuss this topic. Field observations of the adult businesses found a variety of problems, although most of the problems were such that they may have been char- acteristic of the neighborhood rather than related to the adult businesses. Regarding crime: The study showed that the percentage of calls for police service linked to disturbance, prowler and sex-related crimes was roughly the same in the areas surrounding adult businesses as for the city as a whole. However, the incidence of such calls at the individual adult businesses, exclusive of surrounding areas, was proportionately higher than citywide averages. (p. 33) Regarding property values: The study found that the increase in values of commercial property in “adult business groups” were less than the increase in comparable prop- erties in 9 out of 14 case studies. Similarly, the increases in values for residential properties “abutting the adult business blocks” were less than the neighborhood average values in 10 out of 13 cases. (p. 54) The most dramatic evidence from the Denver study involves the license suspensions and revocations for adult businesses. Clearly a number of these businesses have not been operated fully within the licensing law, although others have had no violations. Because many of the license vio- lations involve crimes, the incidents at the businesses with problems may account for the difference in crime reports between adult businesses and others. The impacts on property values, particularly on residential values on abutting blocks, appear to be significant. Although this report does not establish any significant new findings, it reinforces the findings from studies in other cities and makes some important distinctions among types of adult businesses. Fort Worth The 1986 Fort Worth, Texas, study, “Documentation of Secondary Effects of Sexually Oriented Businesses,” includes large portions of other studies as appendices, including those of Los Angeles, Phoenix, St. Paul, Detroit, Amarillo (Texas), Beaumont (Texas), Houston, and Indianapolis. What we found of interest is a comment made by a police captain in Forth Worth. These [sexually oriented] businesses have an effect on both neighbor- ing business and residential areas by the elements they attract. The levels of criminal activity in areas around and near these adult estab- lishments are disproportionately high compared to areas without such businesses. These businesses contribute to neighborhood decline by increasing vice-related activities, such as prostitution, obscenity, violations, and public lewdness. Open manifestation of prostitution and increased traffic of those seeking their services is detrimental to neighboring residential areas. [Sexually oriented businesses in two specifically-cited neighbor- hoods] cause the concentration of these activities and aggravate the crime rate in the areas they are located. (p. 5) Indianapolis This often cited study, “Adult Entertainment Businesses in Indianapolis, An Analysis,” was completed in 1984. It compared crime rates and “real The impacts on property values, particularly on residential values on abutting blocks, appear to be significant. Although [the Denver] report does not establish any significant new findings, it reinforces the findings from studies in other cities and makes some important distinctions among types of adult businesses. Chapter 3. Formal Studies 59 estate value appreciation” in six areas that included sexually oriented businesses (“study areas”) with six similar areas that did not have such businesses (“control areas”) and with the city as a whole. A summary of the study’s findings indicates that: • the major crime rate in the study areas was 23 percent higher than in the control areas and 46 percent higher than in the police jurisdiction at large; • the “sex-related crime rate” in the study areas was 46.4, or some 80 percent higher than the rate for the same crimes in the control areas over the same period; • although the property values within the study areas were distinctly higher than those in the control areas, those values appreciated at only one-half the rate of the control areas’ and one-third the rate of Center Township [central Indianapolis] as a whole during the period 1979- 1982; and • twice as many houses were placed on the market at substantially lower prices than would be expected had the study area’s market performance been typical for the period of time in question. This study also included responses from a national survey of apprais- ers wherein some 75 percent responding “felt that an adult bookstore located within one block would have a negative effect on the value of both residential and commercial properties,” but that “at a distance of three blocks” the impact of an adult bookstore fell of sharply so that the impact was negligible on both residential and commercial” (p. 34). The report included four major recommendations. 1. Adult entertainment businesses should be allowed to locate in areas that are predominantly zoned for district-oriented commercial enter- prises. 2. No adult entertainment businesses should be allowed to locate in areas that are predominantly zoned for neighborhood-oriented com- mercial enterprises. 3. Each location eligible to house an adult business should require a special exception that, among other things, would ensure that devel- opment standards to buffer and protect adjacent property values were employed. 4. Adult uses should not be allowed to locate within 500 feet of a resi- dential, school, church, or park property line, nor within 500 feet of an established historic area (p. iv). The survey of appraisers in this study is broad and important. The fact that the appraisers concluded that the impacts diminished substantially over a reasonable distance (three blocks, or about 1,000 feet in most cities) enhances the credibility of the findings. Because the Indianapolis study is more sophisticated than several others, particularly in examining trends in property values and listings for sale, the evidence is certainly compel- ling as to the impacts of these businesses In considering the Indianapolis study, it is important to recognize that Indianapolis has continued to allow these businesses to exist as uses by right in some major commercial zones (consistent with the findings of the city’s study and the recommendations of the study). 60 Everything You Always Wanted to Know . . . New York City New York City’s Department of City Planning 1994 Adult Entertainment Study made some interesting specific findings. As regards signage on sexually oriented businesses, staff concluded the following. [T]he signage for the adult entertainment establishments is character- istically at odds with that of other establishments. In half of the study areas, signage for the adult uses occupies a greater percentage of storefront surface area than any other commercial uses located within the same blockfronts…. On blockfronts in four of the sex study areas, adult use signage tends to be illuminated when that of non-adult commercial uses is not…. In half of the study areas, graphic material for adult use signage was noted. For example, in [study area], the outline of the female figure was a component of the adult use business sign. (p. 51) Their findings about police responses to criminal complaints in areas with sexually oriented businesses indicate that police officers, at least, do not necessarily correlate an increase in only adult uses with increases in crime. When the survey and control blockfronts were compared for criminal complaints and allegations, the officers generally did not link higher incidents with adult uses.… One officer stated that if more adult entertainment establishments were to locate in the study area, crime probably would increase. However, that officer and another responded that more bars, movies or theaters or video/bookstores of any kind would effectively increase crime in the study area. (p. 53) Responses from real estate brokers emphasized the importance of sepa- ration distances and commented further on the notion of concentration. It is significant that more than 80 percent of the brokers responding (11 of 13) reported that an adult entertainment establishment tends to decrease the market value of property that lies within 500 feet of it. When the distance is increased from between 500 to 1,000 feet of an adult use, a majority of brokers (7 of 13) indicated that the same phe- nomenon would occur. At 1,000 or more feet, less than 25 percent of the brokers (3 of 13) responded in this manner. The pattern of response was basically unchanged when the question referred to two adult uses (a concentration) instead of one. (p. 53) It must be noted that the study’s analysis of trends in assessed property values relative to the location of adult entertainment uses was inconclusive. In sum, the New York City study is one of the most complete and detailed studies available. Most of the data appears transferable to other communi- ties facing similar issues. The responses of real estate brokers are consistent with findings from the Indianapolis survey of appraisers and the Rochester survey of appraisers reported in this chapter. The crime findings are gener- ally consistent with those from other communities, although it would have been helpful to have the study address the issue of crime in areas with high concentrations of adult uses. Some communities regulate the signage on adult businesses directly; this study shows the results where a community has inadequate sign regulations in general or does not address the specific issues involved with signs on sexually oriented businesses. We make some recommendations concerning possible controls on signage (and the legal limits of such controls) in Chapter 5. For more inFormation The “Adult Entertainment Study” of the City of New York (November 1994) is available for $5 at www.ci.nyc.ny.us/html/dcp/ Chapter 3. Formal Studies 61 Newport News The Newport News, Virginia, study, conducted by the city’s Department of Planning and Development, published in March 1996, consists of cita- tions of other adult use studies as well as some local findings. One part of the analysis examined police calls to specific establish- ments. Over a 20-month period, it found an average of 23 calls per adult entertainment establishment, 14 calls per nightclubs that did not feature adult entertainment, and two calls per adult book, merchan- dise, or video store. It then made a paired comparison between two adult entertainment establishments and two restaurants that served liquor, finding a greater number of police calls per occupancy for the adult entertainment establishments than for the restaurants. The study also paired two nightclubs with two other restaurants and found a higher rate of police calls per occupancy for the nightclubs than for the restaurants (pp. 8-10). The second part of the study compared police calls and crime rates in paired study areas with and without adult businesses and found an increased crime rate in the areas with adult businesses (pp. 10-11). THE NEW YORK CITY ADULT ENTERTAINMENT STUDY W e found New York City’s “Adult Entertainment Study” of great interest and value because of the high visibility of the city’s efforts to successfully address adult uses in the nationally recognized area of Times Square as well as other areas of the city. The overall findings and conclusions of the city’s report, extracted from the executive summary, follow. Numerous studies in other localities found that adult entertain- ment uses have negative secondary impacts, such as increased crime rates, depreciation of property values, deterioration of community character, and the quality of urban life. There has been a rapid growth in the number of adult entertain- ment uses in New York City. Between 1984 and 1993, the number of such uses increased from 131 to 177. The number of video/ book stores/peep shows almost tripled and there was a 26 per- cent increase in topless/nude bars. Adult theaters declined by 52 percent. Adult entertainment is more readily accessible in NYC than it was ten years ago. There are more such establishments in a greater number of communities. Adult videos are produced in greater numbers and at lower costs. Cable television has signifi- cantly increased the availability of adult viewing material. Adult material is also available at newsstands and book stores. Adult entertainment uses tend to concentrate. The number of community districts with seven or more adult uses increased from three to eight over the last ten years. Seventy-five percent of the adult uses are located in ten of the city’s 59 Community Districts. In Manhattan, adult uses cluster in central locations, such as the Times Square area. In the other boroughs, adult uses appear to cluster along major vehicular routes, such as Queens Boulevard and Third Avenue in Brooklyn, that connect outer reaches of the city and suburbs to the central business district. Studies of adult entertainment uses in areas where they are highly concentrated, such as Times Square and Chelsea, identi- fied a number of significant negative secondary impacts. In the Times Square area, property owners, theater operators, and other business people overwhelmingly believe that their businesses are adversely affected. An analysis of criminal complaints indicated a substantially higher incidence of criminal activity in the Times Square area where adult uses are most concentrated. In addition, the study found that the rate of increase in assessed property values for study blocks with adult uses grew at a slower rate than control blocks without adult uses. DCP’s [The Department of City Planning’s] survey of areas with less dense concentrations of adult uses found fewer impacts than the study of the Times Square area. However, community leaders expressed concerns that adult uses impact negatively on the com- munity and they strongly fear the potential results of proliferation. The strongest negative reactions to adult entertainment uses come from residents living near them. • Where respondents indicated that their businesses or neigh- borhoods had not yet been adversely affected by adult uses, this typically occurred in study areas with isolated adult uses. Moreover, these same respondents typically stated that an increase in such uses would negatively impact them. Community residents fear the consequences of potential proliferation and concentration of adult uses in tradition- ally neighborhood-oriented shopping areas and view the appearance of one or more of these uses as a deterioration in the quality of urban life. • Most real estate brokers report that adult entertainment establishments are perceived to negatively affect nearby property values and decrease market values. Eighty percent of the brokers responding to the DCP survey indicated that an adult use would have a negative impact on nearby prop- erty values. This is consistent with the responses from a similar national survey of real estate appraisers. • Adult use accessory business signs are generally larger, more often illuminated, and graphic (sexually-oriented) compared with the signs of other nearby commercial uses. Community residents view this signage as out of keeping with neighborhood character and are concerned about the exposure of minors to sexual images. 62 Everything You Always Wanted to Know . . . The findings regarding police calls are hardly surprising. The nature of the nightclub and live entertainment business is likely to attract more police-related problems than a typical restaurant. That is a reason for cau- tion in siting such establishments and for careful patrolling. Those find- ings, however, provide little that is useful to other communities in dealing with retail establishments and other businesses that do not involve on- premises entertainment. In the neighborhood comparisons of crime statistics, the city made a rea- sonable effort to control for population variables, but it is not at all clear that the study controlled for other relevant variables (e.g., it is not clear that the control areas had any entertainment businesses likely to be open during the evening hours). Furthermore, for some other communities, it will be difficult to use this data because it includes 14 adult entertainment establishments (all involving live entertainment), nine nightclubs, and eight book and video stores. Without separating the uses with alcohol and live entertainment from the more passive uses, it is very difficult to draw conclusions from this study that are useful to communities dealing primarily with establishments where the only on-premises entertainment consists of video-viewing booths or in addressing those establishments “with less than a significant or substantial portion of their stock in trade” in adult materials. Phoenix The Phoenix study, conducted by the city planning department and pub- lished in May 1979, compares crime rates in “control areas” to rates of similar crime in two paired areas, one with a single adult business and the other with several adult businesses. The study found “about 40 percent more property crimes and about the same rate of violent crimes per 1,000 persons in the Study Areas [with sexually oriented businesses] as com- pared to the Control Areas” (p. 8). Phoenix relied on this study in adopting its adult use ordinance, but the city no longer cites the study, and it is difficult to attach a great deal of significance to it. Although the study found a higher rate of sex crimes in the areas around the sexually oriented businesses than in the paired “con- trol areas,” it actually found a lower rate of violent crime in the areas with sex businesses than in the paired areas. In fact, the difference in sex- related crimes was almost entirely explained by the incidence of “inde- cent exposure.” That is certainly a logical finding in an area with adult businesses, consistent with the expressed concerns of some neighbors. St . Paul The St. Paul, Minnesota, study, “Effects on Surrounding Area of Adult Entertainment Businesses in Saint Paul,” was conducted in 1978 by the City of Saint Paul Division of Planning, Department of Planning and Management, and the Community Crime Prevention Project of the Minnesota Crime Control Planning Board. It found that: Given the measures of neighborhood condition chosen (crime rate and value of housing), the presence of adult entertainment establish- ments correlates statistically with poor neighborhood condition…. These businesses tend both to locate in areas of poorer residential condition and to be followed by a relative worsening of the residen- tial condition. (p. 2) The study also found, however, that a proliferation of adult entertain- ment businesses in an area was associated with increased effects on prop- erty values and crime rates. The findings regarding police calls are hardly surprising. The nature of the nightclub and live entertainment business is likely to attract more police- related problems than a typical restaurant. Chapter 3. Formal Studies 63 One or even two adult entertainment businesses in an area might not be associated with noticeable change, but … two or more adult enter- tainment businesses in an area is associated with a statistically signifi- cant decrease in property value. Likewise, more than one adult entertainment business in an area is associated with a statistically significant increase in crime rate. (p. 2) There are some serious limitations to the St. Paul study. First, it is always important in a study that finds correlation to recognize that cor- relation does not demonstrate causation. There may be some third factor, not studied or not properly controlled, that both attracts adult businesses and leads to deterioration. More important, however, is the definition of “adult entertainment business” used in the study. Any alcohol-serving establishment, as well as adult bookstores, adult movie theatres, and saunas/massage parlors. (p. 2) Table 1, at page 10 of the report, actually found no statistical correla- tion between sexually oriented businesses and “neighborhood quality/ deterioration.” There is one important lesson to be learned from the St. Paul study— concentration of adult businesses of any type significantly increased the impacts. Because the study included bars and cabarets as “adult busi- nesses,” this finding also applies to such businesses, but its broader appli- cation does not affect its relevance to the sexually oriented businesses that are the subject of this report. Tucson The Tucson, Arizona, study consists of two separate parts, a memo from the Citizens Advisory Planning Committee addressed to the Mayor and City Council, dated May 14, 1990, and a memo from an Assistant Chief of Police to the City Prosecutor, dated May 1, 1990. The citizens committee memo largely contains recommendations for ordinance amendments, without factual information to substantiate the reasons for those amend- ments. Because of that lack of factual content, we have chosen not to dis- cuss that portion of the study here. On page 2 of the police memo, on the other hand, we found two important findings worth mentioning here. 1. The police found repeated violations of a variety of laws at some estab- lishments. 2. Inspecting the video-viewing booths produced two sets of liquid samples from the floors of the booths, with 81 percent of one set of samples and 96 percent of the other set of samples testing positive for semen. The finding that the video-viewing booths are used for masturbation or other sex acts that leave semen residue on the floors of the booths could prove a useful one for cities attempting to draft purpose statements for any regulations governing those particular activities at sexually oriented businesses. Whittier The 1994 Whittier, California, report on adult business regulations included a pair of recommended ordinances, a copy of an ordinance that had been struck down by the federal courts in Walnut Properties, Inc. v. City The finding that the video-viewing booths are used for masturbation or other sex acts that leave semen residue on the floors of the booths could prove a useful one for cities attempting to draft purpose statements for any regulations governing those particular activities at sexually oriented businesses. 64 Everything You Always Wanted to Know . . . of Whittier, 808 F.2d 1331 (9th Cir. 1986), cert. denied, 490 U.S. 1006 (1989), and the 1978 staff report that had supported the adoption of that earlier ordinance. The 1978 study involved a staff comparison of the area with the largest concentration of adult businesses to an area similar in land-use patterns but without adult businesses. Here are some facts about and findings from the 1978 study. • There were 13 separately identified adult businesses in the city at that time. • Of those, six were “model studios,” four were massage parlors, one was a theater, and there were two book stores. • All but the theater and one massage parlor were located between 10529 Whittier Blvd. and 11531 Whittier Blvd. (pp. 1-2) The findings were mixed, showing, for example: • an increase in owner-occupancy of dwelling units in the area with the adult businesses; • a decrease in business vacancies in the area with the adult businesses; • a higher rate of turnover of residential units in the area with the adult businesses than in the control area; and • a significantly higher rate of increase of crime in the area with the adult businesses than in the city as a whole (pp. 4-5). One very important finding was that the area with six sexually oriented businesses had a significantly higher rate of turnover of residents in the neighborhood than any other areas, including those with fewer sexually oriented businesses (p. 8). Whittier also responded in its 1994 ordinance to a special problem that affects the implementation of separation requirements. The vast majority of the commercial properties in the City of Whittier are relatively narrow or shallow, and most abut residential properties or are separated from residen- tial or public uses, such as parks and schools, by on the width of the street or alley. Thus, a separation requirement measured in a straight line might eliminate most commercial sites from consideration, raising site availability issues (discussed in Chapter 5). As a result, the 1994 ordinance based mea- surements on distances along street right-of-way lines as an approximation of pedestrian routes, meaning that an adult use facing on one street might be several hundred feet from a residence directly behind it; in 1999, how- ever, the city amended the ordinance and went back to using straight-line measurements from property line to property line. In considering the findings from this study, it is important to note that most (11 of 13) of the businesses in the study had on-premises entertainment or other activities, and that nine of those involved live interaction with patrons; the entertainment activity without live interaction was a movie theater, and the other two establishments were bookstores. Although this data would be useful to another community with a heavy clustering of uses with on-premises entertainment, it is hard to apply to communities with more dispersed uses or with a different mix of uses. Compounding the prob- lem are the subsequent findings that many of the establishments in the study involved prostitution and were successfully closed under a "red-light abate- ment" ordinance even after the federal court (in Walnut Properties) struck down the city's ordinance regulating adult businesses. It is possible that most or all of the negative impacts found in the Whittier Study could be One very important finding was that the area with six sexually oriented businesses had a significantly higher rate of turnover of residents in the neighborhood than any other areas, including those with fewer sexually oriented businesses. Chapter 3. Formal Studies 65 attributed to the businesses with illegal activity, in which case it would show nothing about lawful adult businesses, which are the focus of this report; at best, it is impossible to separate the apparent impacts of the unlawful busi- nesses from that related to the lawful ones, which makes it difficult to use the data in other communities. FINDINGS There is direct evidence from the collective studies to support the follow- ing findings. 1. Real estate professionals believe that there is a significant negative impact of sexually oriented businesses and other adult-related enter- tainment businesses (such as bars with live entertainment) on both residential and business properties within 500 feet of those types of businesses. The impacts are less significant if the separation between the studied use and the other use is 500 to 1,000 feet. Beyond 1,000 feet, there may be some impact, but beyond 1,500 feet there is no basis for believing that there will be any impact on property values. (See the studies from Rochester, Indianapolis, and New York City; there is also some supporting data from Denver.) 2. The greatest impacts on property values are on other properties on the same block. (See the Denver and Rochester studies.) 3. The impacts on property values are greater on residential properties than nonresidential properties. (See the Rochester and Indianapolis studies.) 4. The studies showing the most significant impacts of sexually oriented businesses on neighborhoods involved significant numbers of busi- nesses with live entertainment and/or direct interaction between patrons and entertainers or other employees. (See the Newport News, St. Paul, and Whittier studies.) 5. There is a lower correlation of crime incidents with retail sexually oriented businesses than with those that involve on-premises enter- tainment of any kind. (See the Denver study.) 6. The Tucson study found sperm samples on the floors and walls of almost all video-viewing booths that police inspected. 7. Although there is some evidence of an increase in crime, particularly around concentrations of sexually oriented businesses (see the Phoenix, Denver, Indianapolis, Whittier, and St. Paul studies), the increase is not necessarily in violent crimes (see the Phoenix and Denver stud- ies). 8. The patterns of increased criminal activities related to sexually ori- ented businesses appear similar to, or in some studies are indistin- guishable from, patterns of increased criminal activities related to bars, nightclubs, and other adult-oriented entertainment enterprises, including those who do not have sexually oriented entertainment. (See the St. Paul and Newport News studies.) 9. At least one very thorough study reached no clear conclusion regard- ing a relationship between sexually oriented businesses and criminal activity. (See the New York City study.) 10. At least two cities that studied the issue clearly had prostitution flour- ishing in some adult businesses (see the Denver and Whittier studies), but also see “Lessons Learned” below. The studies showing the most significant impacts of sexually oriented businesses on neighborhoods involved significant numbers of businesses with live entertainment and/or direct interaction between patrons and entertainers or other employees. 66 Everything You Always Wanted to Know . . . LESSONS LEARNED We believe that the following lessons can be drawn from the synthesis and analysis of evidence from the studies. 1. Some sexually oriented businesses and other high-impact commercial uses are incompatible with nearby residential and institutional uses. a. There is clear evidence of the adverse effect of some businesses on property values of residential properties. b. There is cumulative evidence of a variety of land-use compatibility problems between some businesses and residential properties. c. Religious, educational, and other institutional uses commonly found in residential neighborhoods are generally afforded—and typically need—the same protection from incompatible land uses that is offered to residential uses. 2. Sexually oriented businesses with on-premises entertainment have more significant neighborhood impact than other sexually oriented businesses. We believe that the comparison is somewhat analogous to a liquor store and a bar—both sell alcohol, but the one that encourages people to stay and enjoy the alcohol there has a greater effect on the community than the one that simply provides retail, take-out goods. 3. Concentrations of sexually oriented businesses significantly increase the negative impacts; in some studies, it is difficult to identify signifi- cant impacts of a single retail outlet. 4. Video-viewing booths provide on-premises entertainment and serve as masturbation booths. 5. Stores with a variety of sexually oriented goods—including sex toys and, in many cases, leather goods and lingerie—seem to be selling sex and thus have much greater impacts on neighborhoods than retail outlets that simply deal in media. We have called such stores “sex shops,” a classification that we explain more fully in Chapter 7. 6. A mainstream video store with sexually oriented videos in a back room or otherwise separated from the general stock does not create neighborhood problems, even if the stock of sexually oriented videos is large and includes hard-core videos. 7. We believe that it is a reasonable extrapolation of the same conclusion to say that a sexually oriented bookstore or video store will have fewer negative neighborhood impacts than a sex shop. 8. Zoning and other standards requiring separation between high- impact commercial enterprises (including but not limited to sexu- ally oriented businesses) and residential uses and certain institu- tional uses are clearly justifiable based on secondary impacts, including negative impacts on property values and problems with land-use compatibility. 9. Evidence regarding the correlation of criminal activity and high-impact commercial enterprises, including both sexually oriented businesses and businesses that combine live entertainment and the service of alcohol, is mixed; it can be read to support the need to separate the high-impact uses from residential and institutional uses or it can be read as neutral, but it in no case suggests that these uses are compatible. Concentrations of sexually oriented businesses significantly increase the negative impacts; in some studies, it is difficult to identify significant impacts of a single retail outlet. Chapter 3. Formal Studies 67 10. Communities using such distance separation requirements between high-impact commercial enterprises and other uses should generally bar the high-impact uses from the same block as the protected use. 11. Communities using such distance separation requirements should consider using pedestrian or driving distances in measuring the separation. 12. Using pedestrian or driving distances between the high-impact uses and protected uses, a minimum separation of 500 feet is easily justified and a separation of 1,000 feet may be justified, based on local circumstances. A separation requirement of up to 1,500 feet may be justifiable where the distance is measured along the same street. Separation requirements beyond 1,500 feet cannot be justified from the available data. 13. There is a clear basis for imposing a greater separation requirement between sexually oriented businesses with on-premises entertainment and sex shops, on the one hand, and protected uses on the other, than for separation between other sexually oriented businesses and pro- tected uses. Although the responses indicated strongly that the neces- sity for a separation requirement depended on the type of studied business involved, the data, considered in context, do not justify other specific distinctions. 14. Bars with live entertainment should be subject to the same separation requirement from protected uses as sexually oriented businesses with live entertainment. There is a clear basis for imposing a greater separation requirement between sexually oriented businesses with on-premises entertainment and sex shops, on the one hand, and protected uses on the other, than for separation between other sexually oriented businesses and protected uses. T here has Been a proLiferation of aduLt entertainment estaB- Lishments in reCent deCades. Concern about their secondary impacts has prompted jurisdictions across the United States to pass zoning and licensing ordinances to address these concerns. In response to a challenge to amendments to its Zoning Resolution regu- lating sex businesses, New York City presented evidence that showed the number of sex businesses in the city had increased from nine in 1965 to 177 by 1993. In this chapter, we share with you our knowledge of what 21 local governments are doing regarding licensing and zoning of sexually ori- ented businesses. It was interesting but perhaps not surprising that eight of these jurisdictions have adopted new ordinances or significant amend- ments in the last five years; 14 have done so in the last 10 years. In some cases, the impetus for adoption of the new ordinances clearly relates to litigation experienced locally, while in other cases it is due to litigation occurring elsewhere but having ramifications for their regula- tory approach. Many of the recent amendments, however, seem to have resulted from political initiatives, apparently arising from constituent pressures. Denver, in response to findings from an adult use study (1998), revised its regulations, eliminating adult uses from neighborhood- oriented commercial districts; Charlotte also adopted a new adult licens- ing ordinance (1999) in response to constituent concerns and actual expe- riences. In one case, a store hung a number of its adult titles from the ceiling of the business in an effort to expand their inventory while attempting to conform to the percentage of floor area limitation for adult media under Charlotte’s old ordinance. Portland is examining its options in light of the extremely broad pro- tection given adult uses by its state constitution. The city continues to have concerns about adult uses near residential neighborhoods. Public officials are frustrated by the fact that they have a permit process for businesses such as dealers of second-hand merchandise but cannot similarly regulate adult businesses. The city does have a “chronic nui- sance” ordinance that it can use against particularly troublesome busi- nesses of any sort, and it does use that provision occasionally. 69 CHAPTER 4 How Local Governments Regulate Sex Businesses Our research included a look at what 21 local governments are doing regarding licensing and zoning of sexually oriented businesses. 70 Everything You Always Wanted to Know . . . These amendments and revisions reveal a remarkable level of legisla- tive activity on a relatively narrow topic. Most of these local governments have had zoning in place for 60 years, and several of the programs for regulation of adult business in these communities date to the 1950s or 1960s. Nevertheless, many of these communities are actively seeking bet- ter ways to address the complex balancing of interests involved in regu- lating sexually oriented businesses. Table 4-1 provides an overview of the regulatory techniques employed by each surveyed jurisdiction. TABLE 4-1. REGULATORY METHODS USED BY SURVEYED JURISDICTIONS Licensing Zoning Jurisdiction Ordinance Ordinance Atlanta, Georgia X X Austin, Texas1 X X Charlotte, North Carolina X X Cincinnati, Ohio X X Cleveland, Ohio X Denver, Colorado2 X X Fort Worth, Texas3 X X Indianapolis/Marion County, Indiana X Louisville, Kentucky4 X X Manatee County, Florida X X Minneapolis, Minnesota X Newport News, Virginia5 X New York City, New York X Oklahoma City, Oklahoma5 X Phoenix, Arizona X X Portland, Oregon Saint Paul, Minnesota6 X San Diego, California7 X X Seattle, Washington X X Tucson, Arizona X X Whittier, California X8 Notes 1. Austin requires a certificate of occupancy for sexually oriented uses. 2. Denver licenses adult theaters and businesses having live entertainment or selling alcohol. 3. Fort Worth requires a special certificate of occupancy for sexually oriented businesses. 4. Louisville relies more on licensing to regulate sexually oriented uses. 5. Newport News and Oklahoma City regulate sexually oriented uses as condi- tional uses. 6. Saint Paul requires sexually oriented uses to apply for a special conditions use permit. 7. San Diego, through its Business Permits and Licenses’ “Police Regulated Business Regulations,” regulates peep show establishments, massage businesses, massage technicians, nude entertainment businesses, and nude entertainers. 8. Whittier requires sexually oriented uses to apply for a “conditional adult use permit.” Chapter 4. How Local Governments Regulate Sex Business 71 ZONING TECHNIQUES FOR REGULATING SEXUALLY ORIENTED USES In all jurisdictions surveyed, we find that zoning is the first line of defense in regulating sexually oriented uses. Zoning ordinances typi- cally specify which zoning districts allow sexually oriented uses and set standards for the separation of the use from places frequented by fami- lies and children, as well as separation from other uses classified as sexually oriented. Some ordinances specify special signage and exterior design standards. New York City goes a step further and stipulates that no adult establishment is permitted to exceed 10,000 square feet in floor area and cellar space. Basic Zoning Definitions A community’s basic definition of a “sexually oriented use” clearly delin- eates the scope of businesses activities covered by that term. Most local ordinances base the definitions of sexually oriented uses on definitions of “specified anatomical areas” and “specified sexual activities.” Those defi- nitions are consistent throughout the ordinances we examined and are consistent with those tested before the Supreme Court in City of Renton v. Playtime Theaters, 475 U.S. 41 (1986) and Young v. American Mini-Theater, 427 U.S. 50 (1976). (See Chapter 5 for a discussion of these and other important cases in this field.) New York City adds to its definitions of adult businesses the terms ”characterized by an emphasis on” and “regularly features” to the phrase “specified anatomical areas or specified sexual activities”; however, the city does not further define the phrases ”regularly features” or ”character- ized by an emphasis.” We find an interesting pattern of definitions in many zoning ordi- nances. Quite often the ordinances have a lengthy list of definitions for different types of sex businesses, stretching over four or five pages. In spite of this effort to define almost every sexually oriented activity, the ordinances typically regulate the businesses in the same manner, regard- less of their difference in operational characteristics and impacts. With the increased use of licensing ordinances to regulate sexually oriented uses, however, we are beginning to see a better differentiation in regulatory approaches among types of uses. A case in Cleveland illustrates how important definitions are, particu- larly defining a use as “adult” by percentage of stock-in-trade (discussed below). The city closed down a video store that was found to be an adult use operating in violation of the adult entertainment regulations. The business’s inventory consisted of about 40 percent adult videos, thus making it an “adult” video store; the operators then gave up the adult titles rather than close the store. Moral to the story: definitions matter. Zoning Districts Permitting Sexually Oriented Businesses All of the zoning ordinances we reviewed appear to allow sexually ori- ented uses as uses by right in at least some general commercial and/or industrial zones, subject to separation requirements. Atlanta, Austin, Cleveland, San Diego, and Manatee County, Florida, allow adult uses in the same districts as similar nonadult uses, subject to the separation requirements. Oklahoma City has a similar approach but over- lays operating standards for adult uses through the zoning ordinance and allows them only in commercial districts. Seattle expressly prohibits adult panorams (an alternate name for peep shows) and adult movie theatres in all residential and most commercial and industrial zones; however, the city does permit these and other adult-oriented uses in certain downtown zones that have a commercial emphasis. Charlotte, Fort Worth, Newport News, In spite of this effort to define almost every sexually oriented activity, the ordinances typically regulate the businesses in the same manner, regardless of their difference in operational characteristics and impacts. 72 Everything You Always Wanted to Know . . . New York City, Phoenix, Saint Paul, San Diego, Tucson, and Whittier allow adult uses in a variety of commercial and industrial zones. Denver and Indianapolis permit adult uses only in their general commercial zones, while Cincinnati allows them in only two manufacturing zones, although adult outcall services are allowed anywhere within the city. The liberal treatment of escort services was apparently adopted in response to threatened litiga- tion by a “nude outcall service”; the proprietors argued, and apparently the city agreed, that it did not need to meet the location requirements for an adult business because there was no adult business conducted at the “out call” location and thus the regulations did not apply. In Minneapolis, adult uses are permitted in only one district, its central business district. This pro- vision has brought with it some unintended consequences. The Central Business District, B-4, includes much of the developed area of downtown and a number of available sites on the fringe of downtown. Adult uses have located on the fringe of downtown, as the city hoped. There is now mixed- use gentrification occurring in some of that fringe area, leading to com- plaints from residents who have moved into the area even though the adult uses already existed. Table 4-2 reviews the zoning districts where adult uses are permitted in the surveyed jurisdictions. Special Zoning Conditions Although ordinances often allow adult uses by right, these uses are some- times subject to conditions. In other words, the zoning for adult uses is expressly conditioned on the existence of appropriate licenses and com- pliance with certain locational standards; these are objective, determin- able conditions and not ones that require additional, discretionary proce- dures. (Note: If your ordinance does not have objective conditions, it should; see Chapter 5.) For instance, the cities of Newport News and Oklahoma City regulate sexually oriented businesses as “conditional uses”; in Saint Paul, adult uses must obtain a “special conditions use permit.” Saint Paul requires an annual review of the special conditions use permit; all of the conditions are subject to review by the planning commission. Whittier, California, requires adult entertainment establishments to apply for an “adult condi- tional use permit” under its zoning code. This permit is very similar to many jurisdictions’ licensing ordinances (discussed below) in the way that it addresses operational issues. For example, conditions of the permit require that graffiti be removed within 48 hours; bathrooms be free of sexually oriented materials; video-viewing areas be viewable from the manager’s stations; and a video surveillance system be installed in the parking areas, entrances, and manager’s stations. LICENSING TECHNIQUES FOR REGULATING SEXUALLY ORIenteD USeS Many of the issues related to sexually oriented businesses are operational issues—issues that are very difficult to control through zoning. Thus, many jurisdictions turn to licensing for additional controls on sexually oriented businesses. Louisville, and Seattle strongly rely on licensing to control adult uses; Atlanta, Charlotte, Cincinnati, Denver, Manatee County, Phoenix, San Diego, and Tucson rely equally on licensing and zoning. Fort Worth has created a licensing program based on a certificate of occupancy that requires annual renewals. Licensing standards often stipulate the following: • manner in which the business must control access to the premises or sections of the store containing adult materials; • age threshold (e.g., 18 years or older or 21 years or older); Many of the issues related to sexually oriented businesses are operational issues—issues that are very difficult to control through zoning. Thus, many jurisdictions turn to licensing for additional controls on sexually oriented businesses. Chapter 4. How Local Governments Regulate Sex Business 73 TABLE 4-2. ZONING DISTRICTS PERMITTING SEXUALLY ORIENTED USES: SURVEYED JURISDICTIONS Jurisdiction Permitted Districts Atlanta, Georgia Same districts as non-adult versions of same use Austin, Texas Central Business District (CBD); Downtown Mixed-Used (DMU) District; Commercial Liquor (CS-1) District; Commercial Highway (CH) District Charlotte, North Carolina Some business and industrial districts Cincinnati, Ohio Temporary overlay district; Intermediate Manufacturing and Heavy Manufacturing Districts Cleveland, Ohio General Retail Business Districts; Industrial Districts Denver, Colorado B-4, B-5, B-7 and B-8 Business Districts Fort Worth, Texas F General Commercial; G Intensive Commercial; H Heavy Commercial; I Light Industrial; J Medium Industrial; K Heavy Industrial Indianapolis/Marion County, Indiana Community-Regional Commercial (C-4) District (but only in “an integrated center”); General Commercial (C-5) District; Thoroughfare Service (C-6) District; High-Intensity Commercial (C-7) District; Commercial-Industrial (C-8) District Louisville, Kentucky C-2 Commercial; C-3 Commercial; CM Commercial Manufacturing Districts Manatee County, Florida GC Commercial District Minneapolis, Minnesota Central Business (B-4) District Newport News, Virginia Conditional uses in the following districts: C-1 Retail Commercial; C-2 General Commercial; C-3 Regional Business New York City, New York Certain commercial and manufacturing districts that do not permit residential uses Oklahoma City, Oklahoma C-3, C-4 General Commercial Districts; Central Business District (CBD) Phoenix, Arizona C-2 District (Intermediate Commercial); C-3 District (General Commercial); two Industrial Districts; A-1 and A-2 (under cumulative provisions, from the respective commercial zones); and in the Downtown Core District, but only on land previously zoned C-2, C-3, A-1 or A-2 Portland, Oregon N/A Saint Paul, Minnesota B-3, B-4, and B-5 General Business Districts; I-1and I-2 Industrial Districts San Diego, California CN Commercial Neighborhood (with limited hours); CR Commercial Regional; CV Commercial Visitor; CC Commercial Community; IL Industrial Light; IH Industrial Heavy; IS Industrial Small Lot Seattle, Washington Commercial downtown zones emphasizing commercial uses Tucson, Arizona Permits all adult activities in the Commercial-1, Commercial-3, Office Commercial Retail-1 and 2; permits all adult activties in the I-1 Industrial zone Whittier, California C-2 and C-3 Commercial; M Industrial zones 74 Everything You Always Wanted to Know . . . • facility cleanliness; • conduct of customers (no loitering or illegal activities); • manner in which the business is operated (e.g. requirement that a licensed manager is on duty to enforce operational standards); and • hours of operation. Phoenix enforces a no loitering policy in the viewing rooms and outside the premises. The city’s license ordinance also requires nonporous cover- ings on walls, floors, and seating, and establishes a daily cleaning require- ment for the premises. Louisville prohibits sexually oriented live, film, or videotape entertainment, or massage between midnight and 6 a.m. Many licensing ordinances we reviewed stipulate that owners and managers have no felony convictions or operational violations and require a background check of them. In addition to “character checks,” jurisdictions often require that the owner be current on all local taxes. (See Chapter 8 on licensing.) An important aspect of licensing is that it enables a jurisdiction to set standards for suspension or revocation of the adult establishment’s busi- ness license, something that is not possible with zoning. Typical reasons for revocation are the sale of a controlled substance, sex acts, solicitation for prostitution, intoxication of the manager on premises, or falsifying information on the license application. In Fort Worth, in order to establish reasons for suspension, the city enumerates a variety of “sexually ori- ented business offenses” that may lead to license suspension, including: • interfering with inspections or enforcement; • failing to have a manager on duty; • employing anyone under 18 years of age; • allowing nudity where it can be observed by the general public; • operating an “internal video surveillance system” without prior per- mission from the Police Department; and • failing to maintain a current registration card, with detailed descrip- tion and drivers’ license information, on each employee. Many of the above operational issues are of major concern to neighbor- ing properties and are ones that zoning is often powerless to control; thus, licensing greatly enhances a jurisdiction’s regulatory reach. Table 4-3 summarizes some of the licensing requirements and standards for sexu- ally oriented businesses that are typically required by jurisdictions. These are discussed in detail in Chapter 8. License Fees and Reviews Licensing fees can be substantial for sexually oriented uses. Louisville sets an annual license fee of $5,000 for the business license and requires separate licenses for performers ($100). Manatee County establishes license fees, ranging from $2,000 for an adult bookstore and $2,000 for an adult massage establishment to $100 per video-viewing booth. As the discussion in Chapter 8 illustrates, it is important that these fees bear a relationship to the amount of work involved in reviewing the license application and are not so high that they appear to be punitive or look more like a tax than a fee. In addition to fees, a number of jurisdictions require sexually oriented uses to be subject to periodic review. Fort Worth’s certificate of occupancy An important aspect of licensing is that it enables a jurisdiction to set standards for suspension or revocation of the adult establishment’s business license, something that is not possible with zoning. Chapter 4. How Local Governments Regulate Sex Business 75 stipulates that uses are personal and nontransferable, and that the certificate automatically expires in two years, unless renewed. In addition, the city council “may” hold a public hearing on the renewal application in response to a petition containing signatures of 25 percent or more of the “residents or property owners” located within 1,000 feet of the property line. The city also allows the council to deny renewal if the business “has, or will likely, cause undesirable and material secondary impacts on the immediate neighbor- hood within said 1,000-foot radius.” Although we have not found any cases directly testing such a criterion, the standard is vague enough that it seems likely to face a difficult time in the courts. (See the discussion in Chapter 5 about the need for standards in licensing ordinances.) SEPARATION REQUIREMENTS Both zoning and licensing ordinances typically set standards for separa- tion distances between sexually oriented uses and land uses that may be affected negatively by the sexually oriented use. Based on extensive stud- ies, as discussed in Chapter 3 of this report, jurisdictions have found that sexually oriented uses do have secondary impacts, and thus the likeli- hood of these negative impacts is reduced by imposing distance require- ments between the sexually oriented uses and what are considered “pro- tected” land uses. Our survey revealed that most jurisdictions had separa- tion standards from public gathering places, family-oriented uses (e.g., places of worship, schools, parks, and playgrounds, day care centers, and museums), and residential neighborhoods. Cleveland requires the separa- tion of adult uses from pool and billiard halls, video arcades, and pinball arcades. Atlanta imposes a greater separation from protected uses if a sexually oriented use serves alcohol. Manatee County’s 2,500-foot separa- tion requirement from schools and churches is the largest we identified in TABLE 4-3. SUMMARY OF LICENSING REQUIREMENTS AND STANDARDS USED License Required of: Business license required for business Permit required for managers, employees, and dancers Licensing Standards—Consideration of: Control of access to adult materials Design and lighting of premises Minimum age restriction for employees and customers Previous convictions of sex-related offenses Other convictions Tax delinquencies and nonpayment of fees Building code compliance Responsibilities and conduct of employees and customers Revocation, Suspension—Consideration of: Sex acts on premises Prostitution on premises Sale of controlled substance on premises Access of restricted areas to minors Licensee or manager intoxicated on premises Violation of other operational requirements Those ordinances that specify how they measure separation distances often measure the distance as a straight line (radial). Although that seems like a simple measuring technique, it is not the most accurate measure of impacts—clearly pedestrian or travel routes are a much better measure of impact. 76 Everything You Always Wanted to Know . . . TABLE 4-4. SEPARATION REQUIREMENTS FOR ADULT USES AND PROTECTED USES From a Park, From Other From School, or Day From a Adult Uses Residential Uses Care Facility House of Worship Jurisdiction (in feet)* (in feet)* (in feet)* (in feet)* Atlanta, Georgia1 1,000 from 2** 500 1,000 1,000 Austin, Texas2 1,000 1,000 1,000 1,000 Charlotte, North Carolina3 500 and 1,000 1,000 and 1,500 1,000 and1,500 1,000 and1,500 Cincinnati, Ohio 1,000 1,000 1,000 1,000 Cleveland, Ohio4 1,000 1,000 1,000 1,000 Denver, Colorado5 1,000 from 2** 500 500 500 Fort Worth, Texas 1,000 1,000 1,000 1,000 Indianapolis, Indiana 500 from 2** 500 500 500 Louisville, Kentucky 500 1,000 400 400 Manatee County, Florida6 1,000 500 2,000 2,500 Minneapolis, Minnesota7 N/A 1,000 500 500 Newport News, Virginia8 500 500 500 500 New York, New York9 500 500 500 500 Oklahoma City, Oklahoma10 1,000 500 500 500 Phoenix, Arizona 1,000 500 500 N/A Portland, Oregon N/A N/A N/A N/A Saint Paul, Minnesota11 2,640 and1,320 800 and 400 400 and 200 400 and 200 San Diego, California12 1,000 1,000 1,000 1,000 Seattle, Washington13 N/A N/A 300 N/A Tucson, Arizona 1,000 1,000 1,000 1,000 Whittier, California 250 250 500 N/A Notes: * Where two numbers are provided, the separation requirement varies by zone. ** “x,000 from 2" means “x,000 feet from any two other such businesses.” 1. Atlanta requires a separation distance of 2,000 feet from parks, schools, day care centers, and churches if the estab- lishment serves alcohol. 2. In Austin, a 1,000-foot separation is required if 50 percent or more of lots within 1,000 feet are “zoned or used for residential purposes.” 3. In Charlotte, an adult bookstore or adult mini motion picture theatre must be separated by at least 1,500 feet from any protected use and 1,000 feet from other adult establishments. Other adult establishments (live entertainment and adult movie theaters) must be separated by at least 1,000 feet from protected uses and 500 feet from similar adult uses. 4. Cleveland also requires a 1,000-foot separation from billiard halls, pinball/video arcades, and training facilities for persons with mental or physical disabilities. 5. In Denver, a 125-foot separation distance is required from a pedestrian or transit mall. 6. Manatee County requires a 2,500-foot separation for schools. 7. Minneapolis prohibits adult use on any property with its main public entrance on Nicollet (the transit mall through downtown Minneapolis). 8. Newport News establishes standards for “adult novelty shops” that require at least a 1,000-foot separation (mea- sured from wall of building to property line of other use) from a house of worship, public or private school, public or private park or playground, public library or land zoned or used for residential purposes. 9. New York City does not permit an adult use in zoning districts that permit residential dwellings either by right or special permit. Parks are not a protected use. 10. Oklahoma City requires novelty stores to have a 1,000-foot separation from protected uses. 11. Saint Paul has different separation requirements based on the zoning district where the use is located (Central Business District requires less separation). 12. San Diego also requires separation from social service institutions. 13. Seattle requires “peepshows” to be separated 300 feet from a public school. Chapter 4. How Local Governments Regulate Sex Business 77 the jurisdictions surveyed. New York City was the only jurisdiction that did not include parks in its list of “protected” uses. Table 4-4 illustrates the separation requirements of the jurisdictions included in our survey. How Separation Distance Is Measured Cities measure separation distances in a variety of ways. Those ordinances that specify how they measure separation distances often measure the dis- tance as a straight line (radial). Although that seems like a simple measuring technique, it is not the most accurate measure of impacts—clearly pedestrian or travel routes are a much better measure of impact. Adult businesses have the potential for impact when persons walk or drive by, not “as the crow flies,” which is the implication using straightline measurements. We also find significant variations in the determination of the starting and ending points of the separation distance. Some jurisdictions measure from the lot line of the adult use to the zoning district boundary line of the “protected” district (residential district). In cases where a protected use is within the same zoning district as the adult use, the measurement is often from property line to property line. Minneapolis requires that measure- ments be made in a straight line “from the main public entrances of the adult use to the lot lines of properties in residentially zoned districts.” Unfortunately, many ordinances do not specify how they measure the separation distance, which can create significant problems with measure- ment interpretations by enforcement personnel. Table 4-5 illustrates how different jurisdictions calculate separation distances. Concentration or Separation of Adult Uses In contrast to Boston’s once infamous “combat zone”—a specified area of the city designated for location of sexually oriented uses—most jurisdic- tions have implemented separation requirements that also prohibit “undue concentrations” of sexually oriented uses. These standards require sexually oriented uses to meet certain separation requirements from each other. Atlanta, Denver, and Indianapolis allow two sexually oriented uses to be located adjacent to one another or within the same building (co-loca- tion). In contrast, Charlotte, Cleveland, and Saint Paul specifically pro- hibit the co-location of sexually oriented uses. Charlotte and Cleveland have particularly strong and clear language regarding co-location. Charlotte provides that no more than one adult use may be allowed in the same structure. Cleveland’s ordinance has two relevant provisions, one requiring that “no two adult uses may be located in the same premises or on the same lot,” and another providing that an adult use may not be an accessory use. Most of the other surveyed jurisdictions also had specific separation distances between adult uses. (See Table 4-4.) Several ordinances expressly define each adult use as a separate use and apply separation requirements between adult uses. Interestingly, Austin’s ordinance requires a 1,000-foot separation between adult uses but allows some on-premises viewing of videos and films in adult bookstores. Variances to Separation Requirements Some jurisdictions give the planning commission latitude to allow flexi- bility with specific separation standards. Saint Paul has an interesting provision. The city allows the planning commission to waive separation requirements (except between adult uses) with a consent petition indicat- ing approval by 90 percent of the property owners within 800 radial feet of the proposed use; while this provision has been in effect for more than a decade, it has never been used. Manatee County uses very general cri- Unfortunately, many ordinances do not specify how they measure the separation distance, which can create significant problems with measurement interpretations by enforcement personnel. 78 Everything You Always Wanted to Know . . . TABLE 4-5. CALCULATING SEPARATION MEASUREMENTS Point of Measurement (Separation) Jurisdiction From Protected Use From Adult Use to Adult Uses Basis of Measurement Atlanta, Georgia Property line to property line Property line to property line Straight line Austin, Texas1 Property line to property line Property line to property line Straight line Charlotte, North Carolina Boundary of residential district, property line of other protected uses to edge of adult building From each use Straight line Cincinnati, Ohio Boundary of residential district or protected use From each use Not specified Cleveland, Ohio Boundary of residential district or lot line of protected use From each use Straight line Denver, Colorado Boundary of residential district or lot line of protected use or wall of use in commercial center Structure to structure Straight line Fort Worth, Texas Property line to property line Property line to property line Straight line Indianapolis, Indiana2 Boundary of residential district to nearest district boundary From structure to structure Straight line Louisville, Kentucky From public entrance to adult use to residential district From each use Straight line From entrance to entrance Manatee County, Florida3 Property line to property line Property line to property line Straight line Minneapolis, Minnesota Main entrances of adult use to lot lines of residentially zoned property Only one adult use per block face Straight line Newport News, Virginia Structure of adult use to property line of protected use From structure to structure Straight line New York, New York Entrance to entrance Entrance to entrance Straight line Oklahoma City, Oklahoma Property line to property line Property line to property line Straight line Phoenix, Arizona Exterior wall of adult use to district boundary Exterior wall to exterior wall Straight line Portland, Oregon Not applicable Not applicable Not applicable Saint Paul, Minnesota Property lot line to property line Property lot line to property line Straight line San Diego, California Exterior wall of adult use to property line of protected use From structure to structure Straight line Seattle, Washington Not applicable Not applicable Not applicable Tucson, Arizona Property lot line to lot line From each use Straight line Whittier, California Property lot line to lot line From each use Straight line Notes: 1. Austin uses a weighted calculation of actual residential use within 1,000 feet. 2. Indianapolis measures the separation distance for an adult business located in an “integrated center” only from the exterior wall nearest the space actually leased by the adult business. 3. Manatee County prohibits adult entertainment establishments “within or adjacent to property designated as entranceways.” Chapter 4. How Local Governments Regulate Sex Business n 79 teria that allow “waivers” of locational provisions by the zoning board, related to “public interest,” “injur[y] to nearby property,” or “develop- ment of a ‘skid row’ or blighted area.” (For a discussion of the need for standards in making decisions about uses protected by the First Amendment, see Chapter 5.) Fort Worth’s zoning ordinance permits the granting of variances, like all zoning ordinances, based on demonstrated hardship, such as extraordinary conditions that are peculiar to a piece of property because of its size, shape, or topography. Based on conversation with Fort Worth staff, there continues to be concern about the granting of variances from the distance separation requirements for sexually oriented businesses. According to Texas statutes, however, the ordinance cannot preclude the granting of such variances if the request meets the standards for relief of a hardship imposed by the strict application of the zoning ordinance standards. Sexually oriented businesses, however, have found ways to comply with separation requirements. For instance, in one of the cities surveyed, as a solution to complying with the city’s separation requirement, an operator tore one corner off a building to create an adequate separation from another adult use. In another city, an operator constructed an interior “corner wall” from which the city agreed the separation distance could be measured. These are perfect examples of what we have come to learn about people in the sex entertainment business—they are very creative! TREATING SPECIFIC ADULT USES DIFFERENTLY Of the 21 local governments included in this study, only a few make sig- nificant distinctions among adult uses in regulating where they are per- mitted to locate. Denver permits adult media to be carried in mainstream bookstores if the gross floor area or shelf space does not exceed 10 percent and access to the materials is limited to those 18 years or older. Austin separates “adult lounges” from other adult uses, and there is a separate ordinance with design and operating requirements applicable only to adult arcades. It treats all adult uses other than arcades the same. Neither Seattle nor Phoenix applies its licensing regime to adult bookstores that do not have video-viewing booths, and Seattle does not distinguish adult bookstores from other bookstores in its zoning. All of the other local ordinances we reviewed permitted all types of adult uses within the same zoning district and generally made them sub- ject to the same separation requirements. Most of these ordinances define a variety of adult uses separately but then lump them into a single cate- gory (such as “adult entertainment” or “adult use”) for purposes of regu- lation. Saint Paul lists each of the adult uses separately in the applicable zoning districts, as though it considered varying the list by district, but the same list of adult uses appears within each district. Charlotte, Newport News, Oklahoma City, Seattle, and Whittier, however, did require larger separation requirements for certain sexually oriented uses, such as adult book and novelty stores and peep shows. Treating different sex businesses differently for separation purposes is a good start. Cities, however, also need to consider placing different sex busi- nesses in different districts. The following material discusses some regula- tory issues related directly to specific adult uses: adult bookstores, video- viewing booths (peep shows), exotic dancing, and clothing modeling. Adult Bookstores We have found a wide variation in the manner in which surveyed jurisdic- tions choose to define and regulate adult bookstores or bookstores that carried adult media. Despite these variations, almost all surveyed jurisdictions Of the 21 local governments included in this study, only a few make significant distinctions among adult uses in regulating where they are permitted to locate. 80 Everything You Always Wanted to Know . . . include videos and adult novelties in their computation of “adult” stock-in- trade for defining businesses adult bookstores. (See Table 4-6.) Although adult novelties are included, a number of jurisdictions provide for more stringent standards for businesses that are defined as “adult novelty stores.” Most ordi- nances, however, were never quite clear as to when an adult bookstore crosses over from being an adult bookstore to an adult novelty store. Portland and Seattle do not regulate adult bookstores as adult busi- nesses. In contrast, Charlotte uses higher separation requirements for adult bookstores and video-viewing booths than for adult live entertain- ment and motion picture theaters. The most problematic question is, when does a bookstore cross the line from a traditional bookstore to an adult bookstore? Many jurisdictions use the terms “substantial,” “significant,” “preponderance,” or “percentage stores” to differentiate adult bookstores from mainstream bookstores. New York City defines adult bookstores as bookstores that have a “sub- stantial portion” of their stock-in-trade in books, magazines, photographs, films, video cassettes, or other printed matter or visual representations that are "characterized by an emphasis upon the depiction or description of ‘specified sexual activities’ or ’specified anatomical areas’.” The city has an administrative operations policy that specifies that “40 percent or greater” will be used to define “substantial portion” and includes the fol- lowing factors. • The amount of such stock accessible to customers as compared to the total stock accessible to customers in the establishment • The amount of floor area and cellar space accessible to customers con- taining such stock • The amount of floor area and cellar space accessible to customers con- taining such stock as compared to the total floor area and cellar space accessible to customers in the establishment Like New York, Charlotte, Indianapolis, and Minneapolis make the determination based on a “preponderance of stock-in-trade” or “sig- nificant or substantial portion of the stock-in-trade” tests. Added to this, Atlanta and Indianapolis include a test based on dollar volume as a determinant. The percent of adult media is often used to define the terms “substan- tial,” “significant,” or “preponderance.” Atlanta defines “significant stock and trade” as 25 percent of the floor area, gross sales, or the dollar value of inventory as the threshold for determination. Newport News defines adult bookstores as those containing “magazines and other periodicals, or sex aids or paraphernalia of which more than 25 percent are distinguished or characterized by their emphasis on or having as its dominant theme or purpose, matters depicting, describing or related to sexual activities.” Saint Paul and the two California cities, Whittier and San Diego, use a threshold of 15 percent of floor display area. Manatee County and Denver are the most restrictive in their definition of an adult bookstore. They use a threshold of greater than 10 percent of the “business stock” and measure it by gross floor area (Denver also includes shelf space area and monthly sales). Some cities, such as Louisville, mix the measurement standards, using 10 percent of the stock-in-trade and 15 percent of the floor space that is open either to the public generally or to members of the public other than minors or more than a total of 160 square feet. Table 4-6 illus- trates the criteria used by jurisdictions in distinguishing adult bookstores from general bookstores. The most problematic question is, when does a bookstore cross the line from a traditional bookstore to an adult bookstore? Many jurisdictions use the terms “substantial,” “significant,” “preponderance,” or “percentage stores” to differentiate adult bookstores from mainstream bookstores. Cities employ the term “substantial portion” or something similar to help them define sex businesses. New York City, for example, uses 40 percent of stock or floor area devoted to sexually oriented materials to define a sex business. This store had its substantial portion of stock in t-shirts, sunglasses, baseball caps, and toys to avoid being classified a sex business. Connie Cooper Chapter 4. How Local Governments Regulate Sex Business 81 TABLE 4-6. CRITERIA FOR DEFINING ADULT BOOKSTORES Included in Computation Books and Jurisdiction Based on Proportion Magazines Videos Devices Atlanta, Georgia stock/floor area/value/sales “significant portion” defined X X X as 25% Austin, Texas floor area “holds itself out” and 35% X X Charlotte, North Carolina1 stock “principal business purpose” X X X “substantial or significant” Cincinnati, Ohio stock/excludes minors/ “substantial or significant” X X revenues/interior floor area Cleveland, Ohio2 floor or shelf area “principal purpose” X X X Denver, Colorado shelf space/monhtly sales >10% floor area or sales X X receipts/floor area “substantial or significant” Fort Worth, Texas inventory or receipts 35% of principal operation X X X Indianapolis, Indiana stock/“dollar volume” “preponderance” X X Louisville, Kentucky stock, measured by floor 10% stock/15% floor area X X X area “substantial or significant” or 160 square feet of store Manatee County, Florida stock, measured by floor 10% of total gross floor area area Minneapolis, Minnesota stock “substantial or significant” X X X “segment or section devoted” (viewing as 10% booths) Newport News, Virginia stock 25% “stock in trade” X X X (viewing booths) New York, New York stock and floor area “sustainable portion” X X X (defined as 40% or more) Oklahoma City, Oklahoma3 stock significant portion X X X Phoenix, Arizona “substantial portion” or X X X “principal purpose” Portland, Oregon not applicable Not applicable Saint Paul, Minnesota floor area 15% “significant portion” or X X X greater than 150 square feet San Diego, California display or floor area 15% X X X Seattle, Washington not applicable Not applicable Tucson, Arizona stock “principal business purpose” X X X Whittier, California floor area >15% X X Notes: 1. In Charlotte, video stores are not deemed “adult” video stores if they have no more than 10 percent of their square footage devoted to sexually oriented videos, the videos are in a separate room with access limited to persons 18 years or older, and the number of videos offered in the general circulation portion of the business reflect a typical quantity of new release videos. 2. Cleveland’s standard of floor or shelf area and >20 percent are not part of ordinance; that is an administrative decision. 3. Oklahoma City regulates adult novelties in a separate part of their code so that police can enforce compliance. 82 Everything You Always Wanted to Know . . . The purpose or business activity of the bookstore is often used as a measure in determining whether a bookstore is an adult bookstore. Zoning and/or licensing officials in Charlotte, Phoenix, and Tucson use a test based on the “principal business purpose” or “principal business activity.” (See discussion in Chapter 5 of the need for objective standards.) As a practical matter, our interviews with local officials have found no examples in which a local government took a business to court in a dis- pute over the interpretation of such a subjective standard. Some cities, such as Austin, use a combination of business purpose (“holds itself out as”) and floor-area (35 percent threshold). The city finds the use of floor area as a method of distinguishing adult bookstores works well for its small inspections staff. In part, Cincinnati relies on whether the business “regularly excludes minors” from the business or a portion of it ”because of the sexually explicit nature of the items sold, rented or displayed therein.” The rest of the Cincinnati criterion uses the “substantial or sig- nificant portion of the business” test. There is a certain appeal to basing the distinction between x-rated bookstores and mainstream bookstores on the respective percentage of sales. In our interviews of attorneys and enforcement officers in these jurisdictions, however, we found absolutely no one who had any success in implementing such a measure. As with any enforcement issue, simpler is better—and simpler measures like percentage of stock or percentage of floor area are clearly more enforceable. In our survey, we found that jurisdictions often include sex novelties or “marital aides” in determining whether a bookstore meets the “adult” classification threshold. Nine of the local governments we surveyed (half of those specifically regulating adult bookstores) include sex novelties in measuring the proportion of floor area or stock-in-trade devoted to the adult use; those local governments are Atlanta, Charlotte, Cincinnati, Cleveland, Louisville, Newport News, Saint Paul, San Diego, and Whittier. The definition of “adult novelty shop” in Phoenix includes stores that include both novelties and printed material; an adult “book- store” includes only printed material. Austin and Oklahoma City define adult novelty stores separately, although Austin treats them no differently from adult bookstores. The City of Portland, Oregon, has a particularly difficult time in regu- lating adult bookstores due to provisions in the state constitution. In the City of Portland v. Tidyman, 759 P.2d 242 (Or 1988), the city declared an adult bookstore as a public nuisance due to its location in an area prohib- ited by city ordinance. When the bookstore owners successfully defended their operation at the circuit court and appeals court levels, the city peti- tioned for review by the Oregon Supreme Court. The lower courts’ judg- ments were upheld with the supreme court affirming that the city’s ordi- nance imposing location and spacing restrictions on "adult businesses" was an invalid restraint on free expression under the state constitution. At this point, Portland’s regulatory scheme in the field is limited to the regu- lation of nude, live entertainment activities, which are defined as “adult businesses” and which are required to obtain “adult business permits,” a form of local licensing. Video-Viewing Booths We have found that the treatment of video-viewing booths or “peep shows” varies considerably from jurisdiction to jurisdiction. This is most likely due to the local perspective that video-viewing booths encourage, or at least allow, pernicious behavior. (See discussion in Chapters 2 and 3.) In examining local ordinances, it appears that jurisdictions are spending There is a certain appeal to basing the distinction between x-rated bookstores and mainstream bookstores on the respective percentage of sales. In our interviews of attorneys and enforcement officers in these jurisdictions, however, we found absolutely no one who had any success in implementing such a measure. Chapter 4. How Local Governments Regulate Sex Business 83 an inordinate amount of regulatory time on this form of sexually oriented land use, with the exception of Portland, where the state constitution does not allow for local ordinance regulating sexually oriented uses. Cincinnati, Cleveland, Fort Worth, Indianapolis, San Diego, and Whittier address this use separately; most of them refer to a collection of the booths as an “arcade,” but San Diego uses the term “peep show estab- lishments.” Three cities (Atlanta, Charlotte, and Saint Paul) have a defini- tion of “adult mini-motion-picture theater” that clearly includes video- viewing booths. In three others (Denver, Newport News, and Tucson), this activity appears to fall under the definition of “adult motion picture theater.” Those cities make no distinctions in size of theater. Austin has a separate ordinance that regulates “adult arcades” and establishes interior design standards as well as operational requirements. Although Whittier addresses arcades in its ordinance as though they may be permitted, the ordinance expressly prohibits the showing of films in closed private view- ing rooms. Fort Worth, Indianapolis, and Whittier define an “adult arcade” as one in which images are shown to “five or fewer persons per machine at any one time.” In contrast, Phoenix limits the number of persons in viewing booths to one person at a time. As we have indicated in Chapters 2 and 3, the booths encourage sexual activity in a quasi-public place; allowing multiple persons in the booths simply increases the likelihood and/or the variety of sexual activity occurring in the booths. In addition to regulating the seating capacity of video-viewing booths, many jurisdictions have very specific standards for the design of the video-viewing space. Seattle and San Diego set minimum aisle widths. Seattle allows doors but specifies minimum lines of sight and requires the bottom of the door to be 24 inches off the floor; allows a chair in the booth only if there is also a window through the door; prohibits door locks and steps and risers into booth; and prohibits holes between booths unless covered with a ventilation device. Cincinnati’s licensing ordinance includes provisions that address man- agement’s role in controlling the behavior of patrons within the booths, such as requiring the management to ensure that “no sexual activity” (defined to include masturbation) occurs on premises. In addition, the licensing ordinance mandates that no more than one person can be pres- ent in a viewing room at any time; daily cleaning be done to remove, among other things, “bodily fluid”; and that a view of the interior of each viewing room be available from the manager’s station. Exotic Dancing and Clothing Modeling Like video-viewing booths, live adult entertainment, such as exotic dancing (the industry’s name for “erotic” dancing) and clothing model- ing (the clothing is typically lingerie), presents unique challenges for cities trying to regulate such uses. Seattle requires that entertainers exposing specified anatomical areas be on a stage at least 18 inches above the floor and 6 feet from the nearest patron, and prohibits certain acts or simulated acts and most physical contact. Many adult entertain- ment ordinances limit the physical contact to a patron “tucking” the gratuity in the performer’s costume or touching the performer’s hand. In Denver, the Excise and Licensing Code permits totally nude enter- tainment but only in establishments that do not serve alcohol, and thus they are referred to as “pop shops.” Some jurisdictions also call these juice bars. Topless dancing in establishments that serve alcohol is per- mitted in what Denver refers to as cabarets. In Phoenix, establishments serving alcohol with adult entertainment are restricted to specific com- “Live” lingerie sessions can result in the same kind of unwanted activities that can occur with lap dancing and other kinds of “touching” and live entertainment businesses. Those businesses should be restricted to locating in the same zoning district because they have the same kind of impacts. Connie Cooper 84 Everything You Always Wanted to Know . . . mercial and industrial districts and must be 500 feet from a residential district and 1,000 feet from other adult uses. As mentioned above, Atlanta imposes a much greater separation requirement from adult entertainment establishments that serve alcohol. Charlotte recently amended its “Businesses and Trades” ordinance to include licensing of sexually oriented businesses, which include adult live entertainment and clothing modeling. The ordinance uses most of the tradi- tional provisions but adds a few unique features. Live adult entertainment (meaning nude dancing) must be in spaces 750 square feet or greater, on a raised stage, and visible to other patrons and employees. The ordinance also prohibits private or semi-private room dancing (what are sometimes called VIP booths). Clothing modeling cannot result in the exposure of specified anatomical areas, nor touching by the model or patron below the waist and above the knee, or on the breasts, and no straddling is allowed. The ordi- nance further stipulates that the modeling must be visible to another employee who is not a model, and fees or gratuities must be offered and accepted before the modeling session begins. IMAGE IS EVERYTHING The image that sexually oriented uses project to the passing public is often a major concern of local government. To address the image issue, Minneapolis limits signs to flat wall signs no more than a total area of one square foot of sign per foot of lot frontage; prohibits the display of mer- chandise that can be seen from the sidewalk; and requires that windows be covered with opaque materials. Whittier zoning officials prohibit tem- porary and changeable copy signs, outdoor loudspeakers, and “painting of the exterior with any design that would simulate a sign or advertising message” or maintaining the exterior “substantially inconsistent with the external appearance of structures of abutting properties.” Although we have some concerns about the apparent subjectivity of a standard like this (see Chapter 5), a policy to ensure that adult businesses on the outside conform to the character of the area is a legitimate one. One city, which shall remain nameless, tests the Supreme Court’s “time, place, and man- ner” rule. It established more restrictive regulations and conditions in certain zoning districts for adult uses. These restrictions included limiting signage to one wall sign of less than 10 square feet, barring flashing lights, and limiting sign content. A real problem with the appearance of adult businesses involves the treatment of windows, particularly where such a business is located in an older, traditional business district. Most such businesses protect minors and the general public from accidental exposure to sexually explicit mate- rial by keeping it out of the windows, but that leaves open the question of what to do with the windows. Many adult businesses simply paint or board over their windows. Such a strategy, however, elicited protests from neighbors in one traditional Rochester neighborhood; they believed that neighborhood revival would depend in part on maintaining an interest- ing street front, with continuous rows of windows for pedestrians to view. On the other hand, a percentage store in Kansas City, with an eclectic mixture of adult and non-adult goods, upset neighbors with its creative display of Beanie Babies in the window; neighbors there argued that the Beanie Babies would encourage young children to want to go into the store, where they would be greeted inside the door with a variety of racy lingerie and leather goods. In short, although there are legal hazards in treating adult businesses differently from other businesses, several local governments have attempted to address the issue of exterior appearance and compatibility. A real problem with the appearance of sex businesses is the treatment of windows. Windows end up being painted or boarded over to prevent visual access to the materials inside. In some locations, like this one, not only is ugliness an issue, but the copy area likely exceeds limits in the sign ordinance. Eric Damian Kelly Chapter 4. How Local Governments Regulate Sex Business 85 There has been some support in the courts for special restrictions on signs for sexually oriented businesses (see Chapter 5), and at least the New York City study (Chapter 3) provides some basis for such regulations. Nevertheless, imposing special restrictions on the signs of adult busi- nesses raises essentially a double First Amendment issue and places a great burden on the local government to defend its regulations. AMORTIZATION OF SEXUALLY ORIENTED USES It is often the case that undesirable or inappropriately located sexually oriented uses do not go away on their own; they often need encourage- ment. One city that has taken its fight against sexually oriented businesses to a new level and, consequently, has garnered a lot of national attention is New York City. In 1995, the New York City Planning Commission approved amend- ments to the Zoning Resolution governing adult entertainment estab- lishments. The resolution took effect on October 25, 1995. A key provi- sion of the ordinance was the nonconforming use provision. This states, “Non-conforming adult establishments must, under the resolu- tion, terminate within one year of the effective date of the resolution” (Article V, Section 52-77). The resolution included special "amortiza- tion" provisions, however, for owners of nonconforming establish- ments who have not recovered substantially all of their capital invest- ment in the establishment (or a nonconforming sign). It permitted these owners to apply to the Board of Standards and Appeals for per- mission to continue for additional time sufficient for the owner to recover "substantially all of the financial expenditures incurred related to the non-conformity" (Article VII, Section 72-40.h). The impact of this amortization provision was a significant reduction in the number of adult establishments within the city. (See sidebar.) Note that New York City could make a compelling case for amortization, which was the need to change the combat-zone image of Times Square. Although there is little question that the city has succeeded in doing so, at least one critic argues that the real motive of the administration was to facilitate profitable real estate development rather than to benefit the general public (Delany 1999). Oklahoma City provided for amortization of nonconforming adult novelty shops within three years of date of adoption of their ordinance regulating these businesses. Phoenix prohibits conversion of a noncon- forming adult use to another adult use to reduce the likelihood of the use continuing. Newport News, in creating a new regulatory scheme, requires condi- tional use permits for adult uses. The city did not automatically grant any of the existing establishments conditional use permits; thus, all are non- conforming, even where they exist in zones that would permit the uses, subject to the conditional use requirements. Newport News has observed that some nonconforming businesses have been abandoned for two years, which is the period required to lose protected status as a nonconforming use under their ordinance. In contrast to these cities, Manatee County provides specific protection for established adult uses that are classified as nonconforming uses. LESSONS LEARNED 1. Regulating sex businesses is complex. 2. Zoning is an essential but inadequate tool to regulate sexually ori- ented businesses. MAYOR GIULIANI”S PRESS RELEASE ON NYC SEX SHOPS ex shops destroy neighbor- hoods,” Mayor Rudolph Giuli-“S ani said. . . . “Our adult-use zoning regulations not only mean that valuable commercial areas like Times Square will be cleaned up, but that sex shops will no longer be allowed to destroy the quality of life in residential neighborhoods. And when our plan is fully imple- mented, only 29 of the 177 sex shops that existed in 1993 will be permitted to remain open. . . .” The new zoning requirements and com- bined efforts of the Mayor's Office of Midtown Enforcement and 42nd Street Development Corporation, have resulted in the closure of more than 80 percent of the adult-use establishments in the Times Square and 42nd Street Area (www.ci.nyc. ny.us, Release #554-97, September 1997). 86 Everything You Always Wanted to Know . . . 3. As we demonstrate throughout this report, the sex business is really many businesses—in this chapter, we have found that at least some communities have recognized that fact in their zoning ordinances, treating retail sex businesses differently from those that provide on- premises entertainment 4. A handful of communities treat bookstores that feature mostly x-rated material the same as other bookstores 5. Most communities attempt to distinguish between “adult” bookstores and mainstream bookstores that happen to include some material that falls within the local definition of sexually oriented material. 6. The most effective units of measure for making a distinction between “adult” bookstores and mainstream bookstores that happen to include some material are those that are easiest to implement—percentage of stock, or percentage of floor area, or the fact that the business “holds itself out” or advertises itself as an adult use. 7. Most communities that regulate sexually oriented businesses require that they be separated by specified distances from uses likely to attract children and families—schools, houses of worship, parks, play- grounds, and daycare centers. 8. Today, most communities have rejected the “combat zone” approach (viz., concentrating adult uses) and also require that sexually oriented businesses be separated from each other. 9. A few communities prohibit the operation of multiple sexually ori- ented businesses in the same location. 10. The communities with the most detailed operational controls use busi- ness licensing ordinances coupled with zoning to implement those controls. The materiaL in this Chapter, Like the rest of the report, is pro- vided for eduCationaL purposes onLy. A local government or other interested party should take formal action in this field only with the advice of counsel licensed in the state. The material in this chapter may be useful to attorneys who do not regularly work in the field, and readers may want to provide copies of this report to their attorneys. This chapter discusses legal issues involved in the regulation of lawful sexually oriented businesses. It thus deals with the regulation of movie theaters that show sexually oriented movies, stores that carry sexually oriented books and magazines, stores that carry sexu- ally oriented novelties, stores that rent sexually oriented videos, and establishments dealing with a variety of live entertainment with a sexual orientation. The chapter consistently uses the term “sexually oriented business” or “sex business” to refer to businesses subject to special regulation because of their sexual focus. Although “adult busi- ness” is a somewhat more commonly used phrase, it is a broader concept that arguably includes businesses that sell lottery tickets, alco- hol, and tobacco goods—all products limited to adult consumption in most states. CONSTITUTIONAL CONTEXT FOR THE AUTHORITY TO REGULATE As the cases discussed in this chapter indicate, local governments clearly can regulate the location of sexually oriented businesses through zoning, and, in many states, some or all local governments can also regulate the conduct of the business directly through licens- ing. Zoning for sexually oriented businesses can be challenged on any of the same grounds on which other zoning can be challenged. The focus of this chapter, however, is on the interplay between the First Amendment and local regulation. Clearly some of the products han- dled by sexually oriented businesses—certain sexually oriented books, magazines, videos, and movies—enjoy First Amendment pro- tection. The extent and nature of that protection, and the extent to which it applies to sexually oriented businesses (which in most cases are distinct from the materials handled) are far from clear. CHAPTER 5 Major Legal Issues In the Regulation of Sex Business 89 Local governments can regulate the location of sexually oriented businesses through zoning and can also regulate the conduct of the business directly through licensing. This chapter was adapted from Chapter 11 of Zoning and Land Use Controls, edited by Eric Damian Kelly (New York: Matthew Ben-der & Co.) and is used with per-mission. The original source con-tains extensive statutory and case citations. For those without access to the complete 10-volume set of Zoning and Land Use Controls, the individual chapter can be pur-chased at http://www.bender.com. 90 Everything You Always Wanted to Know . . . Basic Constitutional Principles The basic constitutional principles involved in the regulation of commer- cial speech were set forth by the Supreme Court as a four-part test in Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980), as summarized by the plurality in Metromedia, Inc., v. City of San Diego, 453 U.S. 490 (1981), a billboard case, as follows: (1) The First Amendment protects commercial speech only if that speech concerns lawful activity and is not misleading. A restriction on otherwise protected commercial speech is valid only if it (2) seeks to implement a substantial governmental interest, (3) directly advances that interest, and (4) reaches no further than necessary to accomplish the given objective. Although sexually oriented communication is not necessarily commer- cial, virtually all the litigation in this field involves commercial enterprises offering adult fare. There are occasional news articles about controversy over an explicit book in a library, but in reviewing hundreds of cases in the field, we have encountered none involving a library or educational institution offering sexually oriented materials. All of the cases have involved the sex business. Although not often citing the Central Hudson test in adult use cases, the courts clearly apply the same standards to those cases. Much of the work and the writing in the field focuses on the first part of the Central Hudson test, which recognizes that commercial speech involving unlawful activity is not protected by the First Amendment. Obscene material lacks First Amendment protection (see Roth v. United States, 354 U.S. 476 (1957)), although the Supreme Court and lower courts have had a good deal of difficulty in defining obscenity. In Miller v. California, 413 U.S. 15 (1973), the Supreme Court held that a work is obscene if: 1) the average person, applying contemporary standards, would find that the work, taken as a whole, appeals to the prurient interest; 2) the work depicts or describes, in a patently offensive way, sexual con- duct specifically defined by applicable state law; and 3) the work, taken as a whole, lacks serious literary, artistic, political, or scientific value. Although most states have statutes on obscenity, the U.S. Supreme Court has held that a state statute is not determinative of “contemporary community standards” regarding obscenity, in part because the state is too large a geographical jurisdiction to be a “community” and in part because the issue of “contemporary community standards” is a factual one to be left largely to the jury (Smith v. U.S., 431 U.S. 291 (1977)). The Court provided this further explanation: Our decision that contemporary community standards must be applied by juries in accordance with their own understanding of the tolerance of the average person in their community does not mean, as has been suggested, that obscenity convictions will be virtually unre- viewable. We have stressed before that juries must be instructed properly, so that they consider the entire community and not simply their own subjective reactions, or the reactions of a sensitive or of a callous minority. . . . The type of conduct depicted must fall within the substantive limitations suggested in Miller. . . . The work also must lack serious literary, artistic, political, or scientific value before a con- viction will be upheld; this determination is particularly amenable to appellate review. Finally, it is always appropriate for the appellate court to review the sufficiency of the evidence. (at 305-06) Although most states have statutes on obscenity, the U.S. Supreme Court has held that a state statute is not determinative of “contemporary community standards” regarding obscenity, in part because the state is too large a geographical jurisdiction to be a “community” and in part because the issue of “contemporary community standards” is a factual one to be left largely to the jury. Chapter 5. Major Legal Issues 91 The Nebraska Supreme Court has applied Smith in two cases there and in doing so has offered a useful explanation of the Supreme Court’s guidelines on defining obscene material: We first independently review the material to determine whether the material in question depicts or describes patently offensive sexual conduct that may be regulated. The Court in Miller gave two plain examples of what a state statute could define for regulation: (1) patently offensive representations or descriptions of ultimate sexual acts, normal or perverted, actual or simulated, and (2) patently offen- sive representations or descriptions of masturbation, excretory func- tions, and lewd exhibition of the genitals. Therefore, our initial inquiry is not whether the material is obscene, but whether the mate- rial depicts or describes patently offensive sexual conduct that may be regulated as set forth in Miller. If the material does not, then as a mat- ter of law the material cannot be found to be obscene. (Main Street Movies, Inc., v. Wellman, 598 N.W.2d 754, at 764-65 (Neb. 1999); see also State v. Harrold, 256 Neb. 829, 593 N.W.2d 299 (Neb. 1999), cert. denied 145 L. Ed. 2d 939, 120 S. Ct. 992 (U.S. 2000). In Wellman the court went on to provide what amounts to a decision tree for dealing with obscenity: For purposes of our analysis, we designate this independent review [cited as “initial inquiry” in the quotation above] “part A.” Part A of the independent review conducted by an appellate court in First Amendment cases is intended “both to be sure that the speech in question actually falls within the unprotected category and to confine the perimeters of any unprotected category within acceptably narrow limits in an effort to ensure that protected expression will not be inhibited.” [citation to its own decision in Harrold, quoting another Supreme Court decision, which has been omitted] In part A of the review, our initial focus is on the substantive content of the material. If we determine as a matter of law that the material depicts or describes patently offensive types of sexual conduct that may be regulated. . . , then we proceed with what we designate “part B” of our analysis. Part B is concerned with whether, as a matter of fact, the material taken as a whole predominantly appeals to the pru- rient interest or a shameful or morbid interest in nudity, sex, or excre- tion, part B(1); is patently offensive, part B(2); and lacks serious liter- ary, artistic, political, or scientific value, part B(3), as set forth in Section 28-807(10). Part B adopts the three-prong framework announced in Miller. . . . (at 760) Applying this type of analysis in Wellman, in which it affirmed (with modifications) a trial court decision finding that the materials were not obscene, the Nebraska high court cited the trial court finding that: the existing contemporary community standard in Sarpy County per- mits the presence of sexually explicit films for sale or rent by the plain- tiffs on the following conditions: (1) The films do not depict violence in sexual relations; (2) The films do not depict sexual relations with chil- dren or family members; (3) The films do not depict sexual relations with animals; (4) The films are not available to minors; and (5) The films are not displayed in a manner or place where they might be viewed, in whole or in part, by non-consenting adults. (at 761) Although it is clear that obscene material lacks First Amendment pro- tection, it may not be clear what is obscene. The Harrold case in Nebraska arose when an adult business operator brought a declaratory judgment action to determine whether the material was obscene; it was decided by Although it is clear that obscene material lacks First Amendment protection, it may not be clear what is obscene. 92 Everything You Always Wanted to Know . . . the courts under criminal standards because criminal standards would apply if the materials were found to be obscene and Harrold were prose- cuted for distributing them. The only clear rules for a local government to understand are that: 1. if any part of the work has “serious literary, artistic, political or scien- tific value, it is not obscene; 2. only if the work includes material that is patently offensive may it be found obscene. From examples given in Miller and cited above in Smith, it appears that “patently offensive” material is generally what we have defined as “hard core,” including in some cases what we have defined as extremely hard core; 3. if the work includes material that is patently offensive, then the ques- tion of whether the material is obscene is one to be resolved by a jury under “contemporary community standards.” Supreme Court Landmark Decisions The United States Supreme Court has decided five major cases directly on the issue of substantive regulation of sexually oriented uses. In all five, the Court was concerned with the First Amendment issues raised by the ordi- nances in question. Young v. American Mini Theatres, Inc. The first of the five cases was Young v. American Mini Theatres, Inc., 427 U.S. 50 (1976), in which the Court upheld a “dispersal” ordinance against constitutional challenge. The heart of the 1972 ordinance was a requirement that a sexually oriented business be separated by at least 1,000 feet from any two other such uses as well as 500 feet from any residential area. In a 5-4 decision, the Court found that this was a simple “time, place, and manner” regulation, rather than a prior restraint on protected speech. In a separate, concurring opin- ion, Justice Powell suggested that the ordinance was little different from any other zoning ordinance. Schad v. Borough of Mt. Ephraim. Six years after Young, the Supreme Court again addressed the issue of zoning for sexually oriented busi- nesses in Schad v. Borough of Mt. Ephraim, 452 U.S. 61 (1981). The local government had adopted a simple zoning ordinance and claimed that it had tried to limit commercial uses to those designed to serve only its residents’ needs. The defendants operated an adult bookstore, where they sold books, magazines, and films. They offered coin-operated video- viewing booths (discussed below in this chapter) and at some point installed a coin-operated device that opened a shade into a booth and allowed the customer to watch nude dancing in the privacy of a booth. The operators were prosecuted and convicted of municipal violations. The New Jersey court affirmed the conviction, framing the case by finding that the ordinance banned nude dancing. Defendants appealed, and the Supreme Court reversed the appellants' convictions. This case directly confronted the First Amendment issue because it completely banned a form of communication that, at least as Justice White suggested, was entitled to First Amendment protection. The Court rejected the contention that the “alternative avenues” requirement was met by the fact that live entertainment, including nude dancing, was eas- ily and widely available outside the borough, in nearby communities. The biggest problem that the borough had with many of its arguments was that there was no evidence in the record of the problems that it alleged to occur in and around sexually oriented businesses. It could not demon- strate from the record that a sexually oriented business was any more likely than a restaurant or other use permitted under the ordinance to lead to prob- The biggest problem that the borough had with many of its arguments was that there was no evidence in the record of the problems that it alleged to occur in and around sexually oriented businesses. It could not demonstrate from the record that a sexually oriented business was any more likely than a restaurant or other use permitted under the ordinance to lead to problems with trash, noise, or general disorderliness. “Contemporary community standards” play a role in determining what is obscene. What goes on in Cheetah’s in Las Vegas might not be obscene by Las Vegas standards, even if someone deemed it “patently offensive.” Steve Marks, Las Vegas Sun Chapter 5. Major Legal Issues 93 lems with trash, noise, or general disorderliness. Clearly, in this case the Court began to lay the foundation for the now well-accepted requirement that a community must have objective evidence of the impacts of sexually oriented businesses if it treats such businesses significantly differently from other businesses that would otherwise seem to fall in the same use group. Barnes v. Glen Theatre, Inc. A decade after its decision in Schad, the Supreme Court again dealt with a nude dancing case. In this case, Barnes v. Glen Theatre, Inc., 501 U.S. 560 (1991), the Court considered a constitu- tional challenge to an Indiana statute that prohibited all public nudity (Indiana Code, Section 35-45-4-1) and that had been interpreted by the parties to require that erotic dancers would have to wear at least “‘pasties’ and a ‘G-string’” (at 563). The action arose when two adult business operators sought an injunc- tion against enforcement of the statute. Glen Theatre, Inc., was the opera- tor of the Kitty Kat Lounge in South Bend, where it wished to offer nude dancing in a bar. The other challenger was an adult bookstore that wanted to have dancers perform in enclosed booths, separated by a glass partition from customers—much like the arrangement in Mt. Ephraim. The Supreme Court, in a confusing set of separate opinions, upheld the stat- ute, with the leading opinion (signed by only three Justices) holding squarely that the statute did not violate the First Amendment. The case is discussed in more detail in this chapter, under the heading “Regulation of Nude Dancing.” City of Renton v. Playtime Theatres, Inc. Five years after confusing the issue of the regulation of nude dancing, the Supreme Court once again addressed the First Amendment implications of an ordinance limiting the locations of movie theaters showing primarily sexually oriented material. In City of Renton v. Playtime Theatres, Inc., 475 U.S. 41 (1986), Renton, a Seattle suburb, had enacted a zoning ordinance that prohibited any adult motion picture theater from locating within 1,000 feet of any residential zone, single-family or multifamily dwelling, church, or park, or within one mile of any school. The ordinance also specifically defined “adult motion picture theater.” The parties challenging the ordinance had purchased two existing theaters with the intention of using them to show sexually oriented films. In the meantime, the city passed its ordinance, and the theater owners sued to invalidate it. The district court upheld the ordinance, but the Ninth Circuit found that the ordinance violated the First Amendment, reversed the trial judge, and remanded the case for reconsideration and the city appealed (Playtime Theatres, Inc. v. City of Renton, 748 F.2d 527 (9th Cir. 1984), rev’d, 475 U.S. 41, 106 S. Ct. 925 (1986)). The case involved two basic issues: (1) Did the ordinance substantially restrict First Amendment interests?, and (2) Could Renton rely on evi- dence or experiences from other cities in establishing proof of secondary effects of adult entertainment on surrounding areas? The Supreme Court reversed the Ninth Circuit and upheld the ordinance in a 6-1-2 decision. Justice Rehnquist, writing for the majority, relied on Young to hold that the ordinance did not violate the First and Fourteenth Amendments per se. The Court held that the ordinance in question was a content-neutral time, place, and manner regulation, even though a motivating factor may have been control of protected speech. The Court found that the govern- mental interests asserted in this case, relating largely to quality of life, were valid grounds for the ordinance, and it further held that the city was entitled to rely on earlier Seattle studies of the problems with such busi- nesses without conducting its own studies. The aspect of the ordinance that distinguished it from Young was the fact that only about 5 percent of the commercial land in the city could The Court found that the governmental interests asserted in this case, relating largely to quality of life, were valid grounds for the ordinance, and it further held that the city was entitled to rely on earlier Seattle studies of the problems with such businesses without conducting its own studies. 94 Everything You Always Wanted to Know . . . meet the separation requirements imposed under the ordinance. In lan- guage that remains important, the Court held: That respondents must fend for themselves in the real estate market, on an equal footing with other prospective purchasers and lessees, does not give rise to a First Amendment violation. [W]e have never suggested that the First Amendment compels the Government to ensure that adult theaters will be able to obtain sites at bargain prices. (at 54) The dissenters were troubled by the extremely limited land area available to movie theaters intending to show sexually oriented film and by the lack of significant evidence in the record to show any likely adverse effects of the theaters on the city, on neighborhoods, or on other land uses. City of Erie v. PAP’s A.M. tdba Kandyland. The Supreme Court revis- ited this issue in 2000 in City of Erie v. PAP’s A.M. tdba Kandyland, 146 L.Ed.2d 265, 120 S.Ct. 1382 (U.S. 2000). The case has a convoluted history. The trial court permanently enjoined enforcement of the City of Erie’s ordinance regulating adult uses; the Commonwealth Court reversed that order, and the Pennsylvania Supreme Court reversed the Commonwealth Court (553 Pa. 348, 719 A.2d 273 (1998)). The ordinance at issue made it a “summary offense” to appear in a “state of nudity”; the effect of that ordinance, as to an adult female, was a requirement that she wear “at a minimum, what are commonly known as ‘pasties’ and a ‘G-string’” (719 A.2d, at 276). After a lengthy recitation of the Pennsylvania court’s decision (dis- cussed in the “Regulation of Nude Dancing” section of this chapter), Justice O’Connor in the plurality opinion moved to the issues, first reiter- ating the plurality position from Barnes: Being “in a state of nudity” is not an inherently expressive condition. As we explained in Barnes, however, nude dancing of the type at issue here is expressive conduct, although we think that it falls only within the outer ambit of the First Amendment's protection. (2000 U.S.LEXIS 2347 at 23-24) Her opinion went on to say: We now clarify that government restrictions on public nudity such as the ordinance at issue here should be evaluated under the framework set forth in O'Brien for content-neutral restrictions on symbolic speech. (at 23-24) Applying that test, the plurality opinion found that the ordinance here was directed at public nudity in general and not at expressive conduct in particular. That opinion said more than once that it considered the ban on public nudity to be directed at the secondary effects of sexually oriented businesses, not at the expressive conduct. If an ordinance is not in violation of First Amendment doctrine given one of the bases discussed above, it is analyzed as a “time, place, and manner” restriction. The classic formulation of the four-part “time, place, and manner” test was presented by the Supreme Court in United States v. O'Brien, 391 U.S. 367 (1968): (1) the regulation is within the power of the government; (2) it furthers an important government interest; (3) the government interest is unrelated to the suppression of speech; and (4) the incidental restrictions on free speech are no greater than are essen- tial to further the interest. The U.S. Supreme Court has made it clear that nude dancing is not a protected form of speech, so Kandy’s may have been (the business is closed) a headquarters for First Amendment rights, but it could no longer allow all-nude dancing. The recent decision is significant for the 3,000 adult cabarets nationwide. AP/Wide World Photos Chapter 5. Major Legal Issues 95 ZONING TECHNIQUES APPLIED Zoning is the basic technique used by local governments to regulate the loca- tion of sexually oriented businesses—just as it is the basic technique used by local governments to regulate the location of other businesses. In Young and Renton, the U.S. Supreme Court upheld the application of zoning techniques to sexually oriented businesses as a distinct category of land use. Chapter 4, with specific examples from 21 cities, illustrates the variety of ways in which zoning is applied to sexually oriented businesses. Zoning restrictions follow standard zoning practice by restricting defined busi- nesses to particular zones. Many local ordinances also include requirements that sexually oriented businesses be separated by a specified distance from one another and/or from residential and related uses. All of the communi- ties studied allow adult uses as "uses by right" in at least some general com- mercial and industrial zones, subject to separation requirements.1 The much-publicized New York City adult entertainment ordinance of 1995 relied on a combination of traditional zoning and separation require- ments to eliminate sexually oriented businesses in many areas near resi- dences. In Stringfellow’s of New York v. City of New York, 91 N.Y.2d 382, cert. den. 142 L.Ed.2d 658, the New York Court of Appeals upheld the ordi- nance, which limited such uses to commercial and manufacturing zones, removing them as permitted uses from several mixed-use zones that were designated commercial but that also permitted residential uses. Most communities that regulate sexually oriented businesses include some sort of separation requirement that results in dispersal of the busi- nesses, as upheld in Young and Renton. The distance requirements vary widely, as do the uses that are being "protected" from the adult entertain- ment. A typical ordinance prohibits adult uses from locating within 500 to 1,500 feet of certain other uses, such as residential areas, schools, and reli- gious institutions. Although establishing specific separation requirements among uses is somewhat unusual in local zoning, it is a technique that is certainly consistent with both the purpose and the letter of most zoning enabling legislation. Since the United States Supreme Court upheld dispersal-type ordi- nances in both Young and Renton, it would seem that such spacing require- ments are generally permissible.2 A Texas appellate court, in Schleuter v. City of Fort Worth, 947 S.W.2d 920 (Tex. App. 1997), specifically upheld a 1,000-foot separation requirement from residential neighborhoods in a case involving a topless bar. Less frequently used is the "combat zone" technique, which concentrates adult uses in one area. Kentucky’s enabling statute, in Section 82.088 (1977), specifically addresses both approaches. The Supreme Court has never decided whether these "combat zone" regu- lations are permissible, but no doubt they would be subject to the same sort of analysis as the regulations in Young and Renton. One of the issues discussed in some depth in Chapter 4 and in the drafting suggestions (Chapter 7) and recommendations (Chapter 9) is how to define an adult business under the zoning ordinance. An interesting New York case that supports one of the recommendations of the report is City of New York v. J & J Yummies, Inc., 679 N.Y.S.2d 807 (S.Ct. Queens Co. 1998), which upheld the city’s consideration of the business’s own advertisement (in this case, “The Greatest Nude Club in New York”) as a determining factor in deciding whether it should be treated as a sexually oriented business. Zoning for sex businesses raises many of the same legal and practical issues raised by zoning for any business. Issues dealing with mapping, enforcement, administration, and other matters characteristic of zoning in general are beyond the scope of this report. The rest of this chapter focuses on those unique legal issues that arise in the context of regulating sex businesses. Most communities that regulate sexually oriented businesses include some sort of separation requirement that results in dispersal of the businesses, as upheld in Young and Renton. The distance requirements vary widely, as do the uses that are being "protected" from the adult entertainment. 96 Everything You Always Wanted to Know . . . THE IMPORTANCE OF STUDIES This report presents an approach to regulating sexually oriented businesses that focuses on the specific land-use activities characteristic of such busi- nesses, thus allowing the application of zoning to sex businesses under tra- ditional principles. Many existing regulations focus on the content of the message offered by the business; even our distinctions among businesses depend to some extent on a determination of the content of the message. The Supreme Court’s decisions make it clear that a community cannot regulate the message directly but can limit the message if it is shown to have unac- ceptable secondary effects. The classic law school example of that principle is that one’s free speech rights do not include the right to yell “fire” in a crowded theater—the public’s interest in preventing the resulting panic overrides the individual’s right to express herself or himself. Applied to the regulation of sex businesses, this principle means that a community must document the secondary effects that it intends to address through any regulations that limit First Amendment rights. A number of communities have conducted studies of the secondary effects of sex businesses and other adult businesses. Chapter 6 of this report gives guidelines for conducting a local study. The material in this section discusses its legal significance. It is in the context of addressing secondary effects that background studies, reflected in the legislative history, are critical. In Stringfellows, the New York Court of Appeals held that the city was justified in relying on a combination of studies from other jurisdictions, supplemented by spe- cific local analysis and findings. The court included these comments: Based on the material before it, the Department of City Planning (DCP) determined that there were significant adverse impacts attrib- utable to adult enterprises in the City, including downward pressure on property values and increased crime rate in areas where adult uses are most concentrated. A pivotal finding of the DCP was that a large majority of surveyed business and community organizations believe that their neighborhoods are adversely affected by the presence of adult uses and that this perception itself leads to disinvestment and a marked decline in economic and pedestrian activity. (at 412) In analyzing the facts before it, the New York high court summarized the balancing test facing it as follows: [W]hether the “predominant purpose” of the challenged ordinance was to ameliorate the negative secondary effects of adult uses rather than to suppress their content, whether the ordinance was “narrowly tailored to affect only those uses shown to produce the unwanted secondary effects” and whether it provided adequate alternative locations for adult businesses within the Town. (at 415) [Citations, including Young and Playtime, as previously cited, omitted.] REQUIREMENTS FOR AVAILABILITY OF SITES One of the grounds for challenging zoning for sexually oriented busi- nesses is that zoning may be so restrictive that it practically excludes a use from all or most parts of a community. With regulations of sexually ori- ented businesses, the basic zoning provisions may appear to allow the businesses to exist, but overlaying the separation requirements effectively removes many potential sites from consideration. The legal implications of practical exclusion of such uses are the subject of the following section. Note that a community may also exclude most or all such uses through an onerous conditional use process. The courts have generally struck down local regulations that permit sexually oriented businesses only as One of the grounds for challenging zoning for sexually oriented businesses is that zoning may be so restrictive that it practically excludes a use from all or most parts of a community. Police in Tucson found liquid samples on the floors of video- viewing booths that were 96 percent semen. The presence of a tissue dispenser on the wall of this booth indicates that management knows exactly what patrons will be doing in those booths. Such findings based on studies would be useful for communities seeking support of restrictive regulations for booths. Patricia Jensen Chapter 5. Major Legal Issues 97 conditional uses, a topic that is addressed in a separate section, following the section on licensing, to which it is closely related. An explicit principle established in Renton and addressed in subse- quent cases is that the zoning or other restrictions must leave a reasonable number of alternative sites for such businesses. While various forms of restriction on adult uses have been upheld as constitutional, an ordinance that seeks to completely ban from a community a variety of sexually explicit forms of speech is likely not to survive constitutional scrutiny. Specifically, the Supreme Court's decision in Renton required that regula- tions restricting the availability of sites for protected businesses leave alternative avenues of access, generally interpreted as a requirement that there be some sites available in the community. In Renton, the United States Supreme Court stated that while govern- ment may not “effectively deny” adult businesses “a reasonable opportu- nity to open and operate,” adult businesses “must fend for themselves in the real estate market on an equal footing with other prospective purchas- ers and lessees. . . .” Since the Renton decision, courts have struggled to develop a standard for judging the reasonableness of location restrictions. The standard emerging from recent cases focuses on whether there are an adequate number of potential sites for adult businesses within the rele- vant local real estate market. The 7th Circuit applied the Renton rule in Chicago and examined the realistic availability of opportunities for adult uses in North Avenue Novelties, Inc. v. City of Chicago, 88 F.3d 441 (7th Cir. 1996). In doing so, it found that it was not necessary that Chicago follow any set formula in allowing for adult uses; although it had less land theoretically available for such uses than some other communities, evidence in the case indicated that there were more than enough sites reasonably available to satisfy cur- rent and projected demand. An early decision addressing the availability of sites was Woodall v. City of El Paso, 959 F.2d 1305 (5th Circ. 1991), modifying 950 F.2d 255, cert. denied, 113 S. Ct. 304 (1992), where, after recognizing that the Supreme Court in Renton had “contemplated that there was a market in which [adult] businesses could purchase or lease real property on which busi- ness could be conducted,” the court ruled that “land with physical char- acteristics that render it unavailable for any kind of development, or legal characteristics that exclude adult businesses, may not be considered ‘available’ as alternative sites under Renton.” The appellate court declined to address “the relationship between the economics of site location and the constitutionality of an adult business zoning ordinance” (at 1306). A leading case expanding upon and filling in some of the blanks in the Supreme Court’s Renton decision is Topanga Press v. City of Los Angeles, a 9th Circuit decision, 989 F.2d 1524 (9th Circ. 1993), as amended, cert. denied, 511 U.S. 1030, 128 L. Ed. 2d 190, 114 S. Ct. 1537 (1994). There the court wrestled with the question of what makes a site “available” or “not available” under the Renton decision: This easily blurred line between economic and physical suitability creates doctrinal problems. If the unsuitability of a relocation site always can be couched in terms of economic suitability, under Renton no relocation site could ever be considered unreasonable. On the other hand, if a court attempts artificially to maintain the line between physical and economic suitability, it may often be led to consider the economic factor sub rosa which is forbidden under Renton. (at 1529) The narrow issue in Topanga Press involved the availability of sites to which existing businesses, made nonconforming by a new ordinance, could The numbers on the map correspond to the ads in this magazine. The number of sites here indicates that this city has probably provided an adequate number of available sites for sex businesses, but there is no exact formula. Very small communities, in particular, may have a difficult time in determining, to a court’s satisfaction, what presents an adequate number © Extremely Hot, Used with permission 98 Everything You Always Wanted to Know . . . move. The 9th Circuit set out the following five-part test, which, although referring to relocation sites, provides a good measure of the reasonable availability of sites as required by the Supreme Court in Renton. (Please note that we have substantially edited the following excerpt, primarily by delet- ing material, to highlight the five parts of the test.) First, although Renton stressed that the First Amendment only requires a relocation site to be potentially available rather than actu- ally available, the requirement of potentiality connotes genuine pos- sibility.... [P]roperty is not potentially available when it is unreason- able to believe that it would ever become available to any commercial enterprise. Second, and focusing our attention on relocation sites that are within manufacturing or industrial zones, relocation sites that are reasonably accessible to the general public may also be part of the market. Third, areas in manufacturing zones that have a proper infrastructure such as sidewalks, roads, and lighting may be included in the market. Fourth, when a relocation site suits some generic commercial enter- prise, although not every particular enterprise, it too may be said to be part of the real estate market. While it is constitutionally irrelevant whether relocation sites located in industrial or manufacturing zones suit the particular needs of an adult business, potential sites must be reasonable relocation sites for some commercial enterprise before they can be considered part of the relevant market. Consequently, whether one defines a warehouse, a swamp, or a sewage treatment plant as physically or economically unsuitable, it is not reasonable to define these sites as part of the real estate market that any business would choose. We need not answer the question of whether, under Renton, a business has been afforded a reasonable opportunity to relocate if all relocation sites are within an industrial zone and no commercial zones are offered; in this case, the City has offered both commercial and noncommercial relocation sites. Fifth, and most obvious, those relocation sites that are commercially zoned are part of the market. We emphasize that, assuming a reloca- tion site is part of the relevant market, it is not relevant whether a relocation site will result in lost profits, higher overhead costs, or even prove to be commercially infeasible for an adult business. The issue is whether any site is part of an actual market for commercial enter- prises generally. (at 30-31) Levi v. City of Ontario, 44 F.Supp.2d 1042 (C.D.Cal. 1999), applied Topanga Press in determining whether the Ontario, California, ordinance left open adequate alternative sites for the location of adult businesses. Although the city argued that there were 25 potentially available sites, the court found only one and held that the availability of that one site was inadequate to pass Constitutional muster: Whether an ordinance provides adequate alternative means of com- munication is measured according to a reasonableness standard tak- ing into account community needs, the incidence of nude bars in other comparable communities, the goals of the city plan, and the kind of city the plan works towards [sic]. Courts facing this question have implied that, at a minimum, there must be more sites available than existing businesses with a demand for them. At present, the Ontario ordinance permits only one site for which the two existing businesses must compete. Even if the 0.616-acre parcel, 23808124, were included, Ontario would permit only two possible locations for its two existing businesses. This is an unreasonably, and therefore unconstitutionally, low number of sites. (at 1052) Chapter 5. Major Legal Issues 99 The Levi court’s analysis of potentially available sites is one of the most detailed and helpful appearing in the case law: The Ontario ordinance, by its terms, requires all adult businesses to locate in areas zoned M2 or general industrial. Sites located in manu- facturing or industrial zones may be part of the relevant market if (1) they are reasonably accessible to the general public; (2) they have a “proper infrastructure,” such as sidewalks, roads and lighting; and (3) they suit some “generic commercial enterprise,” even if the site is unsuitable for an adult business or any other specific business. [Citations to Ontario ordinance omitted.] Seven of the City's proposed sites…would have to be subdivided in order to meet zoning requirements for adult businesses. In other words, as a matter of law, an adult business could not locate on one of these sites without a change in the legal status of the site. It strains credulity to believe that sites on which an adult business cannot legally operate are reasonable adequate alternatives. These sites are thus not part of the relevant market and must be excluded from the analysis. Similarly, four of the City's proposed sites are contiguous parcels which are partially developed in a manner inconsistent with com- mercial use. Property is not “potentially”available when it is unrea- sonable to believe that it would ever become available to any com- mercial enterprise. [Citation omitted.] The fact that portions of these sites have been developed as warehouses or similar uses undermines the City's argument that these sites could become available for com- mercial use at some time in the future. Nor does the City provide any evidence of a reasonable expectation of mixed-use development of this sort on these or similar parcels. The Court thus concludes that these sites are not within the relevant market for a general commer- cial enterprise in Ontario. Thirteen of the remaining proposed sites are vacant land. Eleven of these sites are parcels of 3.2 acres or greater, with seven sites greater than 10 acres. Defendants contend that, notwithstanding the size of these parcels, they are “potentially available sites” because they could be either subdivided for freestanding structures or developed for multi-tenant use. As with those sites on which some development has already occurred, defendants provide no evidence of a real possibility of commercial development on these sites. Moreover, the City offers no evidence that the sites contain the required infrastructure—water, sewer, sidewalks, etc.—to support a generic commercial enterprise. Accordingly, the Court concludes that these sites are also outside the relevant market. Eliminating these locations leaves the City with three potential sites. Site 23808139 contains two multi-use, multi-tenant buildings on which one adult bookstore could locate. Because the Court has deter- mined that site 23808138 is outside the relevant market, there is no need to subdivide this site. Moreover, although the [Ontario Municipal Code] prohibits some commercial businesses from locating in the M2 zone, it permits a sufficient variety of other businesses to make the zone available to the “generic commercial enterprise.” The Court thus concludes that this site is potentially available to a generic commer- cial enterprise. See Woodall, 49 F.3d at 1126 (holding that large multi- tenant, office-warehouse buildings in which retail businesses could and occasionally did locate were part of the relevant market). The buildings on site 23808139 are nonconforming in that they do not comply with the setback requirements for the Vintage Industrial Overlay District. Ontario prohibits the conversion of “residential structure[s] or other nonconforming structures” for use as adult busi- 100 Everything You Always Wanted to Know . . . nesses. Plaintiffs argue that they are prohibited from locating in these buildings by this code provision, and therefore this site is outside the relevant market. Scott Murphy, assistant City Planner for the City of Ontario, testified at trial that locating an adult bookstore in an exist- ing commercial building was not a “conversion” and thus did not trigger the prohibition in [the ordinance]. The Court credits Murphy's testimony and holds that a change in use from a generic commercial enterprise to an adult bookstore is not a conversion. Site 23808139 is therefore not affected by [the ordinance]. Two other sites are both vacant land comprising less than one acre. The Vintage Overlay District requires sites to be of a size greater than one acre. . . . [Absent the one-acre limit, one of these sites has no other defects which would remove it from the relevant market. Because of the size requirement, however, the Court must find that this site is not potentially available to a generic commercial enterprise.] The second site comprises 0.167 acres. This site is not serviced by an existing road. . . . Sites such as this, which lack “a proper infrastructure such as sidewalks, roads and lighting,” are outside the relevant market. [Citation omitted.] In sum, only one of the 25 sites proposed by the City is, in fact, within the relevant market for a generic commercial business. (at 1051) This detailed analysis by the California court that decided Levi is useful because it shows how a court approached the issue of site analysis, in this case rejecting most of the sites that the city claimed were available and thus striking down the ordinance. In D.H.L. Associates, Inc., v. O’Gorman, 199 F.3d 50 (1st Circ. 1999), the court upheld a local ordinance under which the only available sites were concentrated in one small area. Specifically, the available land area was 10.4 acres, which is a little more than two city blocks in a typical commu- nity; a rectangular parcel of 10.4 acres would be approximately 1,300 feet by 350 feet. D.H.L. owned a restaurant in the Town of Tyngsborough and had sought for many years to obtain an adult entertainment license to allow nude dancing at its establishment; the town had consistently denied the application because the restaurant was not located in the small area of the town that was zoned to allow such a use. Although the B-4 zone that would allow such a use applied to less than 1 percent of the acreage in the town, the court of appeals rejected D.H.L.’s claim that such area was too restrictive; in doing so, the court relied on the district court’s findings that the town was a small, rural one with a limited commercial area and that all five lots located in the area zoned for B-4 were potentially available sites for adult entertainment establishments. In contrast, in N.W. Enterprises, Inc., v. City of Houston, 27 F. Supp. 2d 754 at 864-65 (S.D.Texas 1998), a Texas court invalidated a new 1,500-foot separation requirement for such businesses, restoring the 750-foot and 1,000-foot separation requirements from an earlier ordinance because the legislative record showed that the intent of the new separation require- ments was to limit unduly the number of available sites. One of the questions that remains open is the extent to which a small com- munity must address such needs. In Diamond v. City of Taft, 29 F. Supp. 2d 633 (E.D.Calif. 1998), a federal court in California found that three sites for sexually oriented businesses were adequate in a community of about 6,800 people. An issue of application that is not discussed in the reported cases is the relevance of non-adult outlets for sexually oriented materials. Remember that two of the leading cases in the field involved adult movie theaters. For a movie theater, the building, the land use, and the medium are all the same thing. This detailed analysis by the California court that decided Levi is useful because it shows how a court approached the issue of site analysis, in this case rejecting most of the sites that the city claimed were available and thus striking down the ordinance. Chapter 5. Major Legal Issues 101 Without that building, which is controlled by zoning, there is no way to con- vey the message, at least not in that format. In contrast, sexually oriented videos are available in the back rooms and on the top shelves of some main- stream video stores, sexually oriented books are similarly available in some mainstream bookstores, and sexually oriented magazines are often carried in back rooms or high shelves of newsstands. Bookstores, video stores, and newsstands are simply retail stores, adaptable to a number of purposes. Thus, while a limit on sexually oriented movie theaters will directly affect the offer- ing of sexually oriented movies, restrictions on XXX bookstores and other media outlets will not necessarily prevent the wide circulation of sexually oriented media. It is thus very important to ensure that local ordinances aimed at the truly X-rated operations not be overbroad and restrict the merchandis- ing policies of mainstream book and video stores and newsstands. See Chapter 7 of this report for a further discussion of these regulatory issues. A community should also consider the availability of sexually oriented material through mainstream sources when it conducts studies related to such material, when it makes findings in support of the adoption of a new ordinance, and when it defends an ordinance against a challenge that the ordinance is unduly restrictive under the First Amendment. Although some local officials argue that the ready availability of such material on the Internet reduces or eliminates the need for local outlets, that is like arguing 10 years ago that people could get it through the mail and thus did not need to shop locally. This argument misses the point that the courts have estab- lished the principle that every community must allow relatively free distri- bution of all nonobscene material through outlets available in the commu- nity. Perhaps a small community with no retail outlets at all might succeed in arguing that the material is available from other sources without bringing in a local outlet, but any community that has bookstores and video stores and that attempts to restrict ones labeled XXX must be prepared to respond to a challenge by demonstrating that there are adequate alternative local channels through which such material is available. LICENSING ORDINANCES A number of communities, including Cincinnati and Kansas City, use licensing to address operating issues related to sex businesses. Through licensing, a community can address: • qualifications (and disqualifying characteristics) of owners, managers, and entertainers; • responsibility for controlling behavior on the premises; • operating hours; • actions of employees, including entertainers; • lighting and security in the premises; and • maintenance of the premises. Although some communities try to address such issues through condi- tions imposed on zoning, once zoning has been granted, it is difficult to take away. In contrast, a license typically must be renewed annually and is subject to revocation for cause. Licensing requirements will usually be upheld unless the court finds that the licensing process vests too much discretion in the issuing author- ity. In FW/PBS, Inc. v. City of Dallas, 837 F.2d 1298 (5th Cir. 1988), modified, 493 U.S. 215, 110 S. Ct. 596, 107 L. Ed. 2d 603 (1990), a majority of the court found that a licensing ordinance (here applied to a proposed adult motel) Any community that has bookstores and video stores and that attempts to restrict ones labeled XXX must be prepared to respond to a challenge by demonstrating that there are adequate alternative local channels through which such material is available. 102 Everything You Always Wanted to Know . . . amounted to a “prior restraint” on speech. Although prior restraints are not always found unconstitutional, the effect of classifying a regulation of speech as a “prior restraint” subjects the regulation to “strict” scrutiny, a standard under which the burden of proof essentially shifts to the local government. Although there was disagreement among the Court majority on the actual burden that should be imposed on a local government in such a case, all agreed that such ordinances: • must not “place unbridled discretion in the hands of a government official or agency”; • must require a definite time limit within which the decision maker must issue or deny the license, during which time the status quo must be maintained; and • must allow for prompt judicial review if the license is erroneously denied. Later decisions applying the decision in FW/PBS have struck down licensing ordinances that lacked effective time limitations (Chesapeake B & M, Inc. v. Harford County, 831 F. Supp. 1241 (D. Md. 1993)) or failed to limit the discretion of city officials to grant or deny a license (Wolff v. City of Monticello, 803 F.Supp. 1568 (D. Minn. 1992)). Another ordinance was struck down where the newly adopted ordinance required any adult busi- ness operating at the time of adoption to cease operations until it obtained a license (Grand Brittain, Inc. v. City of Amarillo, 27 F.3d 1068 (5th Cir. 1994); see also, T.K.'s Video, Inc. v. Denton County, 24 F.3d 705 (5th Cir. 1994)). The 9th Circuit has struck down a licensing ordinance for sexually ori- ented businesses as an unconstitutional prior restraint (Baby Tam & Co., Inc., v. City of Las Vegas, 199 F.3d 1111 (9th Circ. 2000); see also, 11126 Baltimore Blvd. v. Prince George's County, 684 F.2d 884 (D. Md. 1988). In Baby Tam, the court provided this analysis and conclusion: Section (B) defines the Director's duty to act “within the thirty days.” The use of the definite article “the” identifies this period as the thirty days just referred to in (A). Under (A) the thirty days begin to run “from receipt of a complete application and fees upon compliance with the requirements of this Section and any applicable provisions of Title 6 of this Code.” Other applicable provisions of the Code include “the standards of the health, zoning, fine and safety laws of the State of Nevada and ordinances of the City of Las Vegas applicable thereto.” No time limit is set within which satisfaction of these requirements must be found. The time is as indefinite as in the invalid Dallas ordinance. The thirty days within which the Director must act may be indefinitely postponed. The ordinance fails to meet the requirements of the First and Fourteenth Amendments. (at 1115) [Citations to local ordinance omitted.] In East Brooks Books v. City of Memphis, 48 F.3d 220, (6th Cir. 1995), reh. den., cert. den. 516 U.S. 909 (1995), the court applied FW/PBS to the Memphis, Tennessee, licensing scheme for adult businesses and found it constitution- ally infirm. In doing so, the court cited this language from FW/PBS: The core policy underlying Freedman is that the license for a First Amendment-protected business must be issued within a reasonable period of time, because undue delay results in the unconstitutional sup- pression of protected speech. Thus, the first two safeguards are essential: the licensor must make the decision whether to issue the license within a specified and reasonable time period during which the status quo is maintained, and there must be the possibility of prompt judicial review in the event that the license is erroneously denied. (at 224, citing FW/PBS, 493 U.S. at 230, and referring to Freedman v. Maryland, 380 U.S. 51 (1965)) Later decisions applying the decision in FW/PBS have struck down licensing ordinances that lacked effective time limitations or failed to limit the discretion of city officials to grant or deny a license. Chapter 5. Major Legal Issues 103 One issue that arises in a licensing program is the effective control of the operator. Many sexually oriented businesses are incorporated. There is little point in conducting a criminal background check on a corporation. Thus, the local licensing laws, like alcoholic beverage and similar licens- ing laws, tend to require disclosure of the identity of officers, directors, and shareholders. The 11th Circuit has found unconstitutional for its chill- ing effect a requirement that a sexually oriented business disclose the names of principal shareholders, noting that the city could achieve ade- quate control of the conduct of the business through the officers and directors (Lady J. Lingerie v. City of Jacksonville, 176 f.3d 1358 (11th Circ. 1999), cert. den. 2000 U.S.LEXIS 2386 (April 3, 2000)). In contrast, the 6th Circuit has suggested that a requirement of disclosure for substantial shareholders may be defensible, although it did so essentially as dicta3 in a case in which it struck down as “impermissibly broad” a provision requiring that every corporate shareholder sign a license application.4 In short, the law regarding the disclosure of and background checks on shareholders and partners is unsettled. Because of the 11th Circuit deci- sion, communities in Alabama, Georgia, and Florida cannot require such disclosure or background checks. Communities in most other states prob- ably can require such disclosure, although we recommend limiting it to substantial shareholders (i.e., those who own 10 percent or more of the business or are part of a “control group”). CONDITIONAL ZONING Some communities have used conditional zoning essentially as an alter- native to licensing, attempting to establish through zoning conditions the same types of operational controls and detailed review process that char- acterize licensing procedures. Because zoning remains a legislative and largely discretionary action in most states, any requirement that all or most adult uses be subject to a discretionary zoning process is likely to be considered a prior restraint and be considered under essentially the same rules as those applied to licensing ordinances. A leading case holding that it is unconstitutional “prior restraint” to subject most sexually oriented businesses to such a review is Lady J. Lingerie, which followed FW/PBS in striking down a requirement that most sexually oriented businesses in Jacksonville apply for zoning “exceptions” before being allowed to operate; the facts of the case apparently showed that only two sites allowed such uses by right. The court found that, under the facts of this case, the “exception was the equivalent of a license” (at 1361), and it then applied the licensing criteria, providing the following analysis: As a form of prior restraint, licensing schemes commonly contain two defects: discretion and the opportunity for delay. An ordinance that gives public officials the power to decide whether to permit expres- sive activity must contain precise and objective criteria on which they must make their decisions; an ordinance that gives too much discre- tion to public officials is invalid. Licensing ordinances must also require prompt decisions. An ordinance that permits public officials to effectively deny an application by sitting on it indefinitely is also invalid. Jacksonville's zoning exceptions process contains both defects. (at 1361-1362) [Citations omitted.] The district court had struck down and severed a provision of the ordi- nance that allowed the zoning board to impose additional criteria on the application, and that decision was not appealed. The district court, how- ever, had upheld criteria related to “compatibility” and what the appel- In short, the law regarding the disclosure of and background checks on shareholders and partners is unsettled. . . . Communities in most states probably can require such disclosure, although we recommend limiting it to substantial shareholders (i.e., those who own 10 percent or more of the business or are part of a “control group”). 104 Everything You Always Wanted to Know . . . late court called “other, run-of-the-mill zoning criteria” (at 1362). The appellate court reversed that part of the decision, finding that the effect of the local ordinance was to give the officials unbridled discretion: None of the nine criteria is precise and objective. All of them—indi- vidually and collectively—empower the zoning board to covertly dis- criminate against adult entertainment establishments under the guise of general “compatibility” or “environmental” considerations. Even the seemingly innocuous fire safety provision is too broad. It does not say “there must be x number of doors per square foot”; it says that buildings must be “sufficiently accessible to permit entry onto the property by fire, police, rescue and other services.” This is neither pre- cise nor objective. (at 1362) [Citations to local code omitted.] The court also found that the lack of a time limit on a decision was a fatal flaw in the scheme: The board must hold a public hearing within 63 days after a business applies for an exception. . . . But nothing requires a decision within 63 days, or any other time period. The ordinance's failure to require a deadline for decision renders it unconstitutional. (at 1363) [Citations to local code omitted.] The court discussed a provision that allowed a business to begin oper- ating 45 days after filing the license application, but it found that such a conditional right to operate temporarily was inadequate to cure the Constitutional defects in the ordinance. The court provided the operators with effective relief, striking the requirement for a zoning exception and allowing the businesses to operate in the zone in which the exception had been required subject only to the distance requirement: To conclude, we want to emphasize that it is not difficult to draft an ordinance that addresses the harmful secondary effects of adult busi- nesses without running afoul of the First Amendment. This ordi- nance, however, is unconstitutional because it channels nearly all adult entertainment establishments through the exceptions process. That process in turn gives the zoning board discretion to delay a deci- sion indefinitely or to covertly deny applications for content-sensitive reasons. The plaintiffs may operate as of right in the CCBD and CCG-2 zones, as long as they comply with the distance limitations. We leave it to the district court on remand to decide whether they may also operate in other parts of the City. (at 1363) REGULATION OF NUDE DANCING The Supreme Court's first nude dancing case was Schad v. Borough of Mt. Ephraim, 452 U.S. 61 (1981). The defendants operated an adult bookstore, which included video-viewing booths. The dispute with the borough arose when the operators began to offer live, nude performances in a booth with a coin-operated device that opened a window shade to allow a view of the dancer for a limited period of time. The operators were pros- ecuted for violating the live entertainment provisions of the ordinance. The ordinance appeared to prohibit all live entertainment within the bor- ough. The Supreme Court reversed the appellants' convictions in a 6-1-2 decision. Justice White's opinion for the majority noted that even live nude danc- ing had some First Amendment protection, but that this ordinance went beyond the regulation of that protected activity and prohibited all live entertainment. He concluded that the asserted government interests were insufficient to support such a total ban. The Court rejected the borough's To conclude, we want to emphasize that it is not difficult to draft an ordinance that addresses the harmful secondary effects of adult businesses without running afoul of the First Amendment. This ordinance, however, is unconstitutional because it channels nearly all adult entertainment establishments through the exceptions process. —lAdy J. lingeRie v. ciTy of JAckSonville Chapter 5. Major Legal Issues 105 argument that the ordinance was a simple “time, place, and manner” regulation. The Court relied on its decision in Grayned v. City of Rockford, 408 U.S. 104 (1972), which first requires a showing that the restricted use is inconsistent with the other, permitted uses in the zone. The Court had already rejected that argument since other commercial uses were permit- ted and the Court could perceive no inherent incompatibility, nor had the borough introduced evidence of any. Second, in order to be a reasonable “time, place, and manner” regulation, there must be adequate “alterna- tive avenues” of communication open. Here, the borough excluded all forms of the protected activity. The Court rejected the contention that the “alternative avenues requirement was met by the fact that live entertain- ment, including nude dancing, was easily and widely available outside the borough, in nearby communities” (at 77). The Court held that the fact that one could exercise the right to free speech somewhere else did not justify its suppression in Mt. Ephraim. A decade after its decision in Schad, the Supreme Court again dealt with a nude dancing case. This case, Barnes v. Glen Theatre, Inc, 501 U.S. 560 (1991), tested an Indiana statute that prohibited all public nudity (Indiana Statutes, Section 35-45-4-1) and that had been interpreted by the parties to require that erotic dancers would have to wear at least “pasties” and a “G-string” (at 563). The action arose when two adult business operators sought an injunction against enforcement of the statute. Glen Theatre, Inc., was the operator of the Kitty Kat Lounge in South Bend, where it wished to offer nude dancing in a bar. The other challenger was an adult bookstore that wanted to have dancers perform in enclosed booths, sepa- rated by a glass partition from customers. After numerous decisions by the district court and the 7th Circuit, the case went to the full Court of Appeals, where it ruled that nonobscene nude dancing was protected by the First Amendment (904 F.2d 1081 (7th Circ. 1990)) and, thus, the statute did violate the First Amendment. The case was appealed to the U.S. Supreme Court. The Supreme Court, in a leading opinion (5-4) written by Chief Justice Rehnquist, held squarely that the statute did not violate the First Amendment. The leading opinion applied the four-part O’Brien test (dis- cussed above) and found that the Indiana statute passed muster. It noted specifically: • the long history of regulation of public nudity and indecency and the state’s clear constitutional authority to regulate those; • the substantial governmental interest in regulating public indecency, citing the long history of regulating such matters; • the fact that “The history of Indiana's public indecency statute shows that it predates barroom nude dancing and was enacted as a general prohibition,” illustrating the point that the statute met the third part of the O’Brien test, that the state’s primary interest was not in limiting free expression. On this point, the Court further noted, “This and other public indecency statutes were designed to protect morals and public order. The traditional police power of the States is defined as the authority to provide for the public health, safety, and morals, and we have upheld such a basis for legislation.” [citation omitted]; and • essentially a factual finding that the covering by pasties and a G-string is the “bare minimum necessary to achieve the state’s purpose” (at 569). Citing O’Brien repeatedly, the leading opinion cited Schad only once, noting essentially in passing that “as the state courts in this case recog- In order to be a reasonable “time, place, and manner” regulation, there must be adequate “alternative avenues” of communication open. Mount Ephraim excluded all forms of the protected activity. The Court rejected the contention that the “alternative avenues requirement was met by the fact that live entertainment, including nude dancing, was easily and widely available outside the borough, in nearby 106 Everything You Always Wanted to Know . . . nized, nude dancing is not without its First Amendment protections from official regulation” (at 565), but going on to say, “We must determine the level of protection to be afforded” (at 566). The opinion then went on to say “Indiana, of course, has not banned nude dancing as such, but has proscribed public nudity across the board” (at 569). The dissenting justices agreed with the Court of Appeals that dance is protected expression, citing a list of references on dance as an art form (at 587-88). They also distinguished between the public interest in preventing nudity in truly public places and preventing it in this context: The purpose of forbidding people to appear nude in parks, beaches, hot dog stands, and like public places is to protect others from offense. But that could not possibly be the purpose of preventing nude danc- ing in theaters and barrooms since the viewers are exclusively con- senting adults who pay money to see these dances. The purpose of the proscription in these contexts is to protect the viewers from what the State believes is the harmful message that nude dancing communi- cates. (at 590-91) The Supreme Court revisited this issue in 2000 in City of Erie v. PAP’s A.M. tdba Kandyland, 146 L.Ed.2d 265, 120 S.Ct. 1382 (U.S. 2000). The case has a convoluted history. The trial court permanently enjoined enforcement of Erie’s ordinance regulating adult uses; the Commonwealth Court reversed that order, and the Pennsylvania Supreme Court, in this decision, reversed the Commonwealth Court (553 Pa. 348, 719 A.2d 273 (1998)). The ordinance at issue made it a “summary offense” to appear in a “state of nudity”; adult females were required to wear “at a minimum, what are commonly known as ‘pasties’ and a ‘G-string’” (at 276). The Pennsylvania high court began its analysis by determining that: The act of being in the nude is not, in and of itself, entitled to First Amendment protection because no message is being conveyed.5 The court continued with this analysis, however, when it wrote, Yet the act of dancing nude, with its attendant erotic message, is an expressive act entitled to First Amendment protection. (at 276) The Pennsylvania court then applied the O’Brien test to determine if the ordinance was content neutral or related to the suppression of expression. It found that “Inextricably bound up with this stated purpose is an unmen- tioned purpose that directly impacts on the freedom of expression: that purpose is to impact negatively on the erotic message of the dance” (at 279). Having found clearly that the ban on public nudity was unconstitu- tional, the court went on to determine that the public nudity ban was distinct from and severable from the other bans contained in the ordinance (at 281). The other prohibited activities were: publicly engaging in sexual intercourse; publicly engaging in deviate sexual intercourse; and publicly fondling genitalia (at 281, note 11). The background on the state court decision in this case is important to an understanding of what the Supreme Court did when it decided the case, rul- ing in favor of the city and upholding its ordinance requiring that dancers wear at least “pasties and a G-string.” After a lengthy recitation of the Pennsylvania’s court’s decision, Justice O’Connor in the plurality opinion moved to the issues, first reiterating the plurality position from Barnes: Being “in a state of nudity” is not an inherently expressive condition. As we explained in Barnes, however, nude dancing of the type at issue here is expressive conduct, although we think that it falls only within the outer ambit of the First Amendment's protection. (2000 U.S.LEXIS 2347 at 23-24) Being “in a state of nudity” is not an inherently expressive condition. As we explained in Barnes, however, nude dancing of the type at issue here is expressive conduct, although we think that it falls only within the outer ambit of the First Amendment's protection. —u.s. supreme Court JustiCe sandra day o’Connor Chapter 5. Major Legal Issues 107 Her opinion went on to say: We now clarify that government restrictions on public nudity such as the ordinance at issue here should be evaluated under the framework set forth in O'Brien for content-neutral restrictions on symbolic speech. (at 23-24) Applying that test, the plurality opinion found that the ordinance here was directed at public nudity in general and not at expressive conduct in particular. That opinion said more than once that it considered the ban on public nudity to be directed at the secondary effects of sexually oriented businesses, not at the expressive conduct (at 31). The majority considered the impact of the ordinance on expression to be minimal (at 32-33). The plurality held: We conclude that Erie's asserted interest in combating the negative secondary effects associated with adult entertainment establishments like Kandyland is unrelated to the suppression of the erotic message conveyed by nude dancing. The ordinance prohibiting public nudity is therefore valid if it satisfies the four-factor test from O'Brien for evaluating restrictions on symbolic speech. (at 37-38) Justice Stevens wrote a dissenting opinion, joined by Justice Ginsburg and, in part, by Justice Souter (at 61). Stevens distinguished the “pasties and G-string” ordinance from land-use ordinances addressing similar businesses: But if Erie is relying on the Seattle study as well . . . , its use of that study is most peculiar. After identifying a problem in its own city similar to that in Seattle, Erie has implemented a solution [pasties and G-strings] bearing no relationship to the efficacious remedy identified by the Seattle study [dispersal through zoning]. But the city of Erie, of course, has not in fact pointed to any study by anyone suggesting that the adverse secondary effects of commercial enterprises featuring erotic dancing depends in the slightest on the precise costume worn by the performers—it merely assumes it to be so. . . . If the city is permitted simply to assume that a slight addition to the dancers' costumes will sufficiently decrease secondary effects, then presumably the city can require more and more clothing as long as any danger of adverse effects remains. (at 67) Stevens carried the analysis further, relating it squarely to the back- ground studies: The reason we have limited our secondary effects cases to zoning and declined to extend their reasoning to total bans is clear and straight- forward: A dispersal that simply limits the places where speech may occur is a minimal imposition whereas a total ban is the most exacting of restrictions. The State's interest in fighting presumed secondary effects is sufficiently strong to justify the former, but far too weak to support the latter, more severe burden. (at 68-69) REGULATION OF SEX TOYS AND NOVELTIES The sale of sex toys and novelties raises different issues from the sale of books, magazines, and videos. Unlike the media with adult messages, the sex toys have no First Amendment protection.6 Although several states, through statutes cited in the material that follows, have attempted to limit or ban the sale of sex toys,7 the courts have found some degree of protec- tion for these items. The legal principle that underlies most of the cases The sale of sex toys and novelties raises different issues from the sale of books, magazines, and videos. Unlike the media with adult messages, the sex toys have no First Amendment protection. 108 Everything You Always Wanted to Know . . . dealing with sex toys is the right to privacy, an issue litigated earlier in the context of the dissemination of birth control information and devices. Typical of the sex-toy bans challenged in the cases discussed below is the Georgia law that prohibits the sale of obscene matter and that includes this language: Additionally, any device designed or marketed as useful primarily for the stimulating the human genital organs is obscene matter under this act. (Georgia Code Annotated, Section 26-2101(c), cited in Sewell v. State of Georgia, 238 Ga. 495, 233 S.E.2d 187, 188 (1977), app. dism. 435 U.S. 982, 56 L. Ed. 2d 76, 98 S. Ct. 1635 (1978)) The U.S. Supreme Court has not addressed the validity of statutes ban- ning or limiting the sale of sex toys, and it appears that only one Federal Circuit court has addressed the issue. Nevertheless, there are decisions of the Supreme Court that are relevant to the resolution of these cases. Interpreting statutes that treat sex toys and novelties as “obscene devices” was the issue in Roth v. U.S., 354 U.S. 476 (1957), which held that obscene material lacks First Amendment protection. Another case important to the consideration of this issue may be Miller v. California, 413 U.S. 15 (1973), which established the test for determining what is obscene; it is interesting, however, that none of the cases discussed below addressed the question of whether the dildos and other toys involved were actually obscene. Essentially the sex toy cases are resolved on the basis of the “right to privacy.” In this context, Stanley v. Georgia, 394 U.S. 557 (1969), is a defin- ing case—it was in Stanley that the Supreme Court held that the right to privacy protected the possession of even obscene material. Perhaps in a nod to Stanley, the statutes involved in the cases discussed in this section all addressed the sale of sex toys rather than the possession of them, and some specifically provided that possession of “six or more” similar devices established a presumption that they were held for sale;9 the corol- lary, of course, is that mere possession of such devices for personal use does not violate those statutes. That, however, is where the law in this field gets interesting. The stat- utes typically prohibit the sale but not the possession of the devices. Thus, those challenging the statutes are typically retailers facing actual or poten- tial civil or criminal penalties for selling the devices. How can they raise the “right to privacy” of the ultimate users, whose possession of such devices is not directly addressed by the statute? A key case in answering that question is Carey v. Population Service Int’l., 431 U.S. 678 (1977, as amended), which addressed the right to privacy in the context of sexual matters (in this case dealing with contraceptive devices). Population Service International was a nonprofit organization that dis- tributed contraceptive information and devices; in this case, the organiza- tion challenged a New York statute that: (1) made it unlawful to distribute contraceptives to anyone younger than 16; (2) allowed the distribution of contraceptives only by registered pharmacists; and (3) prohibited the advertising of contraceptive devices. The Court framed the privacy issue in this way: Although “[t]he Constitution does not explicitly mention any right of privacy,” the Court has recognized that one aspect of the “liberty” protected by the Due Process Clause of the Fourteenth Amendment is “a right of personal privacy, or a guarantee of certain areas or zones of privacy.” (at 684, citation omitted) The Court, however, went on to address directly the crux of this prob- lem, which amounts to a standing issue: The U.S. Supreme Court has not addressed the validity of statutes banning or limiting the sale of sex toys, and it appears that only one Federal Circuit court has addressed the issue. Nevertheless, there are decisions of the Supreme Court that are relevant to the resolution of these cases. Chapter 5. Major Legal Issues 109 A total prohibition against sale of contraceptives, for example, would intrude upon individual decisions in matters of procreation and con- traception as harshly as a direct ban on their use. Indeed, in practice, a prohibition against all sales, since more easily and less offensively enforced, might have an even more devastating effect upon the free- dom to choose contraception. (at 687-88) Sex Toy Limits Upheld The Georgia statute quoted above is one that has been upheld. Sewell v. State of Georgia, 238 Ga. 495, 233 S.E.2d 187 (1977), app. dism. 435 U.S. 982 (1978), was the appeal of the conviction of the owner of an adult book- store for selling an allegedly obscene magazine and an artificial vagina. The sale of the artificial vagina allegedly violated the state obscenity stat- ute (quoted above). In another case, the Georgia Supreme Court in Chamblee Visuals, LLC v. City of Chamblee, 270 Ga. 33, 506 S.E.2d 113 (1998), upheld the denial of a building permit for a store that apparently would have been used for the sale of “obscene devices,” among other items, in a location near a middle school. The other state in which the constitutionality of a statute prohibiting the sale of sex toys has been squarely upheld is Texas. Regalado v. State of Texas, 872 S.W.2d 7 (Tex.App. 1994), cert. den., 513 U.S. 871 (1994), affirmed the action of the trial court, in which a jury found Regalado guilty of sell- ing obscene devices and the court sentenced him to a $250 fine and 30 days in jail (at 7). Regalado was a clerk in a store called After Hours News. He was arrested and charged after a police officer found 17 “Flexilover” devices in the store. Under the applicable state statute, possession of more than six obscene devices was presumed to indicate intent to sell them (at 8). Although the court acknowledged the right to privacy under both U.S. and Texas Constitutions, it said: However, we do not agree with appellant that the right to privacy protects the use of or possession with intent to promote obscene devices. (at 9) Although the defendant introduced a doctor who testified that he fre- quently prescribed similar devices for medical use by patients, the court held that Regalado had no standing to raise that issue—that he could only challenge the statute as it applied to him (at 9). (Note that the court’s con- clusion on this issue appears to be at variance with the Supreme Court’s conclusion in Carey and is at variance with other decisions cited in this section.) Chief Justice Brown, who sat as a member of the three-judge panel, joined in the decision without enthusiasm. His opinion, in full, reads: Here we go raising the price of dildos again. Since this appears to be the law in Texas, I must concur. (at 11) The other Texas decision on the subject seems better reasoned, although it is a decision to which three members of the appellate court vigorously dissented. Yorko v. State of Texas, 690 S.W.2d 260 (Tex. App. 1985), also affirmed a conviction for selling an obscene device. A midlevel court had previously affirmed the conviction, which resulted in a fine of $750 and a three-day jail sentence. The Texas Appeals Court characterized the case this way: Thus the question is: Does the due process clause of the Fourteenth Amendment guarantee a citizen the right to stimulate his, her or another's genitals with an object designed or marketed as useful pri- marily for that purpose? Put another way, is there a right to stimulate Here we go raising the price of dildos again. Since this appears to be the law in Texas, I must concur. —texas appeaLs Court Chief JustiCe Brown 110 Everything You Always Wanted to Know . . . human genital organs with an object designed or marketed as useful primarily for that purpose, such that the right is a “fundamental” one “implicit in the concept of ordered liberty”? . . . The statute does not criminalize the use of obscene devices, or the mere possession of such devices without the intent to promote them. Nevertheless, appellant argues that by inhibiting the citizen's ability to acquire obscene devices, the statute unconstitutionally burdens the citizen's fundamental right to possess and use them. . . . (at 263) The Texas court expressly rejected the Carey analysis regarding the stand- ing of a retailer to raise the issue of the right of privacy of a consumer. The court did so by distinguishing between contraceptives and sex toys (at 265). Sex Toy Limits Struck Down In contrast to the decision in Texas and the seemingly inconsistent deci- sion in Georgia, other state courts that have considered the issue have struck down bans on the sale of sex toys, generally acting under interpre- tations of state rights to privacy. In State v. Brenan, 739 So.2d 368 (La. App. 1999), affirmed, La. 99-2291, 2000 La. LEXIS 1271, Brenan had been charged with two counts of promoting obscene devices, in violation of an anti- obscenity law (Louisiana Statutes Annotated, Section 14:106.1). Brenan was convicted and sentenced to two years at hard labor, plus a $1,500 fine on each count, although the trial court suspended the sentences and put her on five years’ probation (at 369). The Louisiana appellate court relied heavily on the right-to-privacy provi- sion of the Louisiana constitution in reversing the decision and finding the statute unconstitutional (at 370, citing the Louisiana Constitution, Article I). The Kansas high court has also found a statute prohibiting the sale of sex toys to be unconstitutional, although on somewhat more narrow grounds. In State of Kansas v. Hughes, 246 Kan. 607, 792 P.2d 1023 (1990), the trial court in a criminal case found that the statute was unconstitution- ally overbroad and thus refused to convict the operator of a bookstore for selling two “obscene devices.” The only witness in the case was a psy- chologist, who testified about the therapeutic uses of dildos (at 1025). The statute provided this definition: “Obscene device” means a device, including a dildo or artificial vagina, designed or marketed as useful primarily for the stimulation of human genital organs. (Kansas Statutes Annotated, Section 21-4301(c)(3)) Concerned with the fact that the statute, on its face, applied even to a device obtained for a woman and provided to her by her therapist, the court held that the statute was overly broad, invading the right of privacy both in the home and in the office of a therapist (at 1032). The statute remains on the books, with an amendment to the definition: “Obscene device” means a device, including a dildo or artificial vagina, designed or marketed as useful primarily for the stimulation of human genital organs, except such devices disseminated or pro- moted for the purpose of medical or psychological therapy. The Colorado statute on the sale of obscene devices received its test in a civil action, People ex rel Tooley v. Seven Thirty-Five East Colfax, Inc., 697 P.2d 348 (Colo. 1985). The case tested the combination of two parts of the statute; namely, Colorado Revised Statutes, Section 18-7-102(2)(a)(I), pro- Concerned with the fact that the statute, on its face, applied even to a device obtained for a woman and provided to her by her therapist, the court held that the statute was overly broad, invading the right of privacy both in the home and in the office of a therapist. Chapter 5. Major Legal Issues 111 vides that a person is guilty of a class 2 misdemeanor if he “promotes or possesses with intent to promote any . . . obscene device . . .”. An obscene device was separately defined as “a device including a dildo or artificial vagina, designed or marketed as useful primarily for the stimulation of human genital organs” (Colorado Revised Statutes, Section 18-7-101(3)). In the case, the people sought injunctive relief, declaring that certain nov- elties were obscene and thus unlawful to display. It was consolidated on appeal with two other cases; the district judges in all three had held that the statute was unconstitutional as applied: A number of the parties who challenge the Act contend that the provi- sions regulating the promotion of obscene devices unconstitutionally infringe on their free speech rights and on the due process rights of purchasers of those devices. We hold that the statutory scheme imper- missibly burdens the right of privacy. (at 368) The court held: We need not decide whether the state may properly regulate the kinds of devices sought to be prohibited by this statute. Sections 18-7- 101(3) and 102(2)(a)(I), however, sweep too broadly in their blanket proscription of all devices “designed or marketed as useful primarily for the stimulation of human genital organs.” The statutory scheme, in its present form, impermissibly burdens the right of privacy of those seeking to make legitimate medical or therapeutic use of such devices. The effect of the statute as now written is to equate sex with obscenity. The state has demonstrated no interest in the broad prohi- bition of these articles sufficiently compelling to justify the infringe- ment on the privacy right of those seeking to use them in legitimate ways. Thus, we hold the statutory prohibition against the promotion of obscene devices to be unconstitutional. (at 369-70) The case remains good law in Colorado and has been cited a dozen times by the state high court since it was decided, although the citations focus on several different issues in the case.10 A federal court in Alabama similarly found Constitutional fault with a statute that included this prohibition: It shall be unlawful for any person, being a wholesaler, to knowingly distribute, possess with intent to distribute, or offer or agree to dis- tribute, for the purpose of resale or commercial distribution at retail, any obscene material or any device designed or marketed as useful primarily for the stimulation of human genital organs for any thing of pecuniary value. (Alabama Code, Section 12A-12-200.2(2)) An assistant attorney general was quoted in the Birmingham News (February 19, 1999) as saying that there is no “fundamental right for a person to buy a device to produce an orgasm,” and the federal court that considered the case appeared to agree, although it still struck down the statute in Williams v. Pryor, 41 F.Supp.2d 1257 (N.D. Ala. 1999). The case differed from most litigation over sexually oriented businesses because it included female users of vibrators as plaintiffs and included evidence that, in addition to the availability of such devices at some retail stores, they were also available at “Saucy Lady” parties, which had been attended by more than 7,000 Alabamans in the previous year, resulting in retail sales of $160,000 in one year (at 1263-64). The retail stores, which were owned by the lead-named plaintiff focused on lingerie, oils, and sex toys, with only a limited supply of “R-rated” media (at 1261-62). The Brandeis- like opinion featured discussion of therapeutic uses of the devices, includ- 112 Everything You Always Wanted to Know . . . ing citations to Food and Drug Administration regulations addressing but not banning such devices (at 1265-67). The judge wrote thoughtfully about the use of vibrators for sexual pleasure as an alternative to casual sex or unwanted or unavailable love affairs (at 1267). The judge cited a number of magazines and books available at well-known booksellers that advocate or describe the use of the devices and, in a bow to technology, also cited websites to the same effect (at 1267-69). He cited two prospec- tive expert witnesses, both involved in research and treatment of women with sexual problems (at 1269-72). On appeal, the Eleventh Circuit Court of Appeals reversed the district court’s finding of unconstitutionality (229 F.3d 1331, 11th Circ. (2000)), holding: We conclude the district court erred in determining the statute lacks a rational basis. The State's interest in public morality is a legitimate interest rationally served by the statute. The crafting and safeguarding of public morality has long been an established part of the States' ple- nary police power to legislate and indisputably is a legitimate govern- ment interest under rational basis scrutiny. A statute banning the com- mercial distribution of sexual devices is rationally related to this inter- est. Alabama argues "a ban on the sale of sexual devices and related orgasm stimulating paraphernalia is rationally related to a legitimate legislative interest in discouraging prurient interests in autonomous sex" and that "it is enough for a legislature to reasonably believe that commerce in the pursuit of orgasms by artificial means for their own sake is detrimental to the health and morality of the State." Appellant's Brief at 13, 16. The criminal proscription on the distribution of sexual devices certainly is a rational means for eliminating commerce in the devices, which itself is a rational means for making the acquisition and use of the devices more difficult. Moreover, incremental steps are not a defect in legislation under rational basis scrutiny, so Alabama did not act irrationally by prohibiting only the commercial distribution of sex- ual devices, rather than prohibiting their possession or use or by directly proscribing masturbation with or without a sexual device. Thus, we hold the Alabama sexual devices distribution criminal statute is constitutional under rational basis scrutiny because it is rationally related to at least one legitimate State interest. (229 F.3d at 1335). The appeals court remanded the case to the district court for more thorough examination of the "as-applied" Constitutional issues raised by the individual plaintiffs described above. Because the district court had found the statute unconstitutional on its face, it did not engage in a detailed legal analysis of the status of those plaintiffs, although it provided factual background about them and their use of the devices. The appellate court suggested in its analysis that the district court might still find the statute unconstitutional as applied to such individu- als (229 F.3d at 1341-43). REGULATION OF ARCADES AND PEEP SHOWS Video-viewing booths, or peep shows, create their own set of problems. One approach is to prohibit enclosed individual booths for viewing adult enter- tainment or to require their construction in such a way that they are open to public view. Courts have not been very sympathetic to the booths. A New Jersey court upheld the constitutionality of a statute that provides as follows: In addition to any activities proscribed by the provisions of [New Jersey Statutes, Section 2C:33-12], a person is guilty of maintaining a nuisance when the person owns or operates a sexually oriented busi- ness which offers for public use booths, screens, enclosures or other devices which facilitate sexual activity by patrons. (New Jersey Statutes, Section 2C:33-12.2.b) Chapter 5. Major Legal Issues 113 The statute was upheld in Chez Sex VIII, Inc., v. Poritz, 688 A.2d 119 (N.J. Super 1997), cert den., 694 A.2d 114 (N.J. 1997), cert. den. 118 S.Ct. 337 (1998), where the court found that, based on studies in other states and cited cases, the legislature had adequate evidence of the public health hazards of the sort of “anonymous sex” facilitated by such booths. The Third Circuit upheld an open booth statute in Delaware, finding that it met all three prongs of the Renton test, noting specifically that the open booth requirement was content neutral and would “apply to the showing of Rebecca of Sunnybrook Farm as well as to the showing of adult videos.”11 In Ben Rich Trading, Inc., v. City of Vineland, 126 F.3rd 155 (3rd Circ. 1997), the Third Circuit interpreted an ordinance banning the use of “conversa- tion booths” in adult establishments as an open booth ordinance and sustained it. An appellate court in Pennsylvania reached a similar conclu- sion in Adult Golden Triangle News, Inc., v. Corbett, 689 A.2d 974 (Pa. Comm. 1997), regarding a statute addressing both openness and lighting for such booths. The Eighth Circuit has upheld open booth requirements three times, most recently in 1998, in Scope Pictures of Missouri, Inc., v. City of Kansas City, 140 F.3rd 1201 (8th Circ. 1998). REGULATION OF MASSAGE AND OTHER TOUCHING BUSINESSES The most problematic types of sexually oriented businesses are those that involve actual or potential direct contact between an entertainer (or other employee) and a customer. Examples of those that include direct contact include nontherapeutic massage and lap dancing. Examples of businesses that include a significant risk of direct contact include “conversation stu- dios,” “nude photography studios,” “body painting studios,” and “linge- rie modeling studios.” Of the six activities listed here, all but lap dancing typically occur in a booth or closed room, virtually eliminating any effec- tive social (or other) control on sexual behavior. The Georgia Supreme Court has directly addressed this issue, upholding a local ordinance banning “one-on-one activity between customers and employees where the employees display their bodies in order to excite cus- tomers sexually.” In Quetgles v. City of Columbus, 491 S.E.2d 778, (Ga. 1997), the city’s ordinance was challenged by a lingerie modeling studio. A federal court of appeals, in Mitchell v. Commission on Adult Entertainment Establishments, 10 F.3d 123, 139 (3rd Circ. 1993), has referred to “massage parlors, conversa- tion parlors and call services [as operations], which have no First Amendment protection.” Another federal appellate court rejected a First Amendment challenge, as well as vagueness challenge, to an ordinance setting out a dress code for massage parlors in Mini Spas, Inc., v. South Salt Lake City Corp., 810 F.2d 939 (10th Circ. 1987). In People v. Janini, 75 Cal. App. 4th 347, 89 Cal. Rptr. 2d 244 (1999), a California court considered an appeal of a decision that had found seven lap dancers and two managers guilty under a local ordinance barring prostitu- tion. The court upheld civil (licensing) penalties imposed for lap dancing but found that the application of local criminal penalties to the same act to be preempted by California law. In Tily B., Inc., v. City of Newport Beach, 69 Cal. App. 4th 1, 81 Cal. Rptr. 2d 6 (1998), reh.den.; review den., 1999 Cal. LEXIS 1621, the same court had separately upheld noncriminal anti-touching pro- visions. It described those provisions this way: The [plaintiff] challenges three no-touching rules. One prohibits, in gen- eral terms, “physical contact between entertainers and patrons.” Two others are more detailed. The city code also states that “[n]o operator, entertainer, or employee . . . shall permit to be performed, offer to per- form, perform or allow patrons to perform” sexual intercourse, copula- tion, “fondling or stimulation” of the genitals, breasts, buttocks or pubic The Georgia Supreme Court has directly addressed this issue, upholding a local ordinance banning “one-on- one activity between customers and employees where the employees display their bodies in order to excite customers sexually.” 114 Everything You Always Wanted to Know . . . area. And it also says that no “operator, entertainer, or employee . . . shall encourage or permit any person” to touch, caress or fondle the breasts, buttocks, anus or genitals of “any other person.” The remaining rules attacked by the Mermaid deal with stage height and distance, tipping, and restroom attendants. Newport Beach requires entertainers to perform on a stage at least 18 inches high and 6 feet away from patrons. It prohibits direct tipping of entertainers by patrons, and requires an attendant be stationed in the restroom to prevent specified activities. (at 19-20) [Citations to local ordinance and one note omitted.] The court held: In enacting the general no-contact rule prohibiting patrons from hav- ing physical contact with entertainers, the city could reasonably con- clude that separating entertainers from customers reduces the oppor- tunity for prostitution and drug dealing. The restriction is no more than necessary, for the message of the erotic dance is not lessened by allowing customers to look but not touch, and the provision is consti- tutional. (at 20) [Citation to local ordinance and one note omitted.] Another approach to the problem of businesses that do or may involve touching is to keep them out in the open. The 11th Circuit, in Lady J. Lingerie v. City of Jacksonville, 176 f.3d 1358 (11th Circ. 1999), cert. den. 2000 U.S.LEXIS 2386 (April 3, 2000), upheld a requirement that adult live enter- tainment take place in a room of at least 1,000 square feet. Courts have had little difficulty in dealing with businesses that operate unlawful massage parlors. The Babins operated a massage parlor in Lancaster, Pennsylvania, under a special exception allowing operation of a “health club” in an industrial zone. The case, Babin v. City of Lancaster, 89 Pa. Commw. 527, 493 A.2d 141 (1985), arose from a zoning enforcement action to close the operation because it was operating in violation of its special exception. The appellate court upheld the trial court’s dismissal of the Babins’ complaint, challenging the enforcement action. In a subsequent proceed- ing, the same appellate court upheld the collection by the city of a $200 per day fine for 851 days during which the business continued while the case was on appeal; the court held that a court order in the case had the effect of delaying collection of the penalty and enforcement of the rest of the original order, but the order, including the penalty, remained in effect for implementation when they were sustained on appeal (125 Pa. Commw. 470, 557 A.2d 464 (1989)). A Kansas City sexually oriented massage parlor lost its legal noncon- forming use status when it was closed for a year under court order after the county gathered evidence that prostitution was occurring there (Acton v. Jackson Co., 854 S.W.2d 447 (Mo.App. 1993)). When the owner attempted to reopen the massage parlor, the county refused to allow it, determining that during the closure the massage parlor lost its legal nonconforming status. Although the trial court ruled for the massage parlor operator, the court of appeals reversed. In short, the authors have found no Constitutional or other protection for the touching businesses, ranging from lap dancing to massage and body painting. None of the nude dancing cases goes so far as to protect lap dancing or other contact dancing. Of course, a community is free to permit these businesses if it chooses to do so to the extent that they do not violate a state law. Just as some communities in Nevada continue to allow regulated prostitution, other communities may choose knowingly to Courts have had little difficulty in dealing with businesses that operate unlawful massage parlors. In short, the authors have found no Constitutional or other protection for the touching businesses, ranging from lap dancing to massage and body painting. Chapter 5. Major Legal Issues 115 allow these touching businesses. They should do so, of course, with full knowledge of the facts and with no misconception that there is Constitutional protection for these businesses. Of the touching businesses, the massage parlors are the ones that seem most difficult to regulate. There are, of course, entirely legitimate therapeu- tic massage parlors. Some operate as part of medical clinics and can be protected as incidental uses there. But there are independent massage therapists who are no more in the sex business than is the average physician or lawyer. How can a community distinguish between such businesses and others that are mere fronts for prostitution? Through licensing. Many states have licensing laws for massage therapists. For example, New York’s law (New York Education Law, Section 7804) requires that a massage therapist complete at least 500 hours of training in a pre- scribed program and pass an examination administered by the state. In those states that do not have licensing statutes, local governments may want to consider adoption of local licensing ordinances. The National Certifi cation Board for Therapeutic Massage and Bodywork (www. ncbtmb.com) has established a 500-hour educational requirement for the massage therapists, administers an exam, and certifies educational programs, providing an easy model for a local ordinance or a state law. Having established massage therapy as a certified profession, a local government should be able to ban massage establishments other than those operated by a certified massage therapist or supervised by a medical professional. SIGNAGE AS A REGULATING FACTOR The city of Houston enacted a provision that required sexually oriented businesses to employ only “simple signs” in advertising their businesses. In SDJ, Inc. v. City of Houston, 837 F.2d 1268, 1278 (5th Cir. 1988), cert. denied, 489 U.S. 1052 (1989), the 5th Circuit upheld the provision since the government interest in shielding the public from “lurid advertising” was strong and legitimate. An appellate court in New Jersey, in Hamilton Amusements v. Poritz, 689 A.2d 201, 203 (N.J. Super. 1997), cert. granted 695 A.2d 667 (N.J. 1997), considered the constitutionality of a statute that restricted signs on sexually oriented businesses: No sexually oriented business shall display more than two exterior signs, consisting of one identification sign and one sign giving notice that the premises are off limits to minors. The identification sign shall be no more than 40 square feet in size. (citing New Jersey Statutes Annotated, Section 2C:34-7(c)) The trial court had ruled for the operator, applying a “strict scrutiny” standard normally applied only to noncommercial speech. The appellate division reversed that decision, applying an “intermediate scrutiny” stan- dard and upholding the sign limits. Although content-based limits on signs are always risky, there is at least limited judicial support for special sign regulations affecting sexually oriented businesses. Certainly to the extent that such regulations carry out a public policy of banning the public display of sexually explicit images and messages, they are fully defensible. Local governments should go beyond that basic limit only with care and with explicit legal advice. LESSONS LEARNED Drawing from all of the analysis above, without additional citations, here are some clear lessons from the cases. All recommendations throughout this report are governed by these lessons. There is limited judicial support for special sign regulations for sex businesses. The justification for those limits is to protect the public from “lurid advertising.” These signs are clearly not a problem. Efforts to get sex businesses to employ simplicity, innuendo, moderate colors, and less graphic symbols in their signage, however, may prove to be an uphill battle. Connie Cooper Eric Damian Kelly 116 Everything You Always Wanted to Know . . . 1. Regulations of sex businesses should, to the maximum extent practi- cable, avoid First Amendment issues. Regulations should focus on the land-use activities and impacts of sex businesses, not the content. 2. Where regulation of sex businesses is defined in part by the content of materials or performances offered by the businesses, the regula- tions must be supported by studies or other findings. Those studies will need to show that there will be unacceptable “secondary impacts” from the offering of such materials or performances in some locations. 3. Obscene materials lack First Amendment protection. It follows that the rule stated in the previous paragraph does not apply to businesses offering obscene materials or performances. 4. Obscenity is defined through a combination of laws and factual find- ings. Specifically, if any part of the work has “serious literary, artistic, political or scientific value,” it is not obscene; only if the work includes material that is patently offensive may it be found obscene (from examples given in Miller and cited above in Smith, it appears that “patently offensive” material is generally what we have defined as “hard core,” including in some cases what we have defined as extremely hard core); if the work includes material that is patently offensive, then the question of whether the material is obscene is one to be resolved by a jury under “contemporary community standards.” 5. Studies in support of the action are essential. Local studies are better than studies from other communities, but the Supreme Court has been willing to accept the use of studies from other communities. 6. General regulations are the most likely to withstand scrutiny. Banning all public nudity or the showing of any movies in enclosed booths is much safer than regulating a particular class of performance or movies. 7. Content-neutral regulations are more likely to withstand scrutiny than those that are content oriented. This recommendation is similar in principle to the preceding one; banning all video-viewing booths is a general regulation, but banning all video-viewing booths in sexu- ally oriented businesses (regardless of what videos are actually avail- able in them) is not general but is arguably content-neutral. 8. Making all sexually oriented businesses conditional uses appears to be unconstitutional, although the Supreme Court has not directly addressed the issue. 9. Permitting systems (licensing and conditional use) should have stan- dards. Discretionary permitting systems (including conditional use zoning) run the risk of being found to be prior restraints on speech. Standards should be clear. 10. Permitting systems must have time limits on the decision. Simply requir- ing that the hearing be held within a specified time or that the decision be made within 30 days after completion of all inspections or some other open-ended process is inadequate; there must be a firm deadline within a reasonable period after the submission of a complete application. 11. Licensing offers a means of continuing control. The industry often challenges local regulations on the theory that they are directed at theoretical problems that will not occur. A local government can use licensing to allow those businesses where in fact there are no prob- lems to operate and to shut down those where problems occur repeat- Chapter 5. Major Legal Issues 117 edly. Note that licensing is most relevant and most defensible in deal- ing with businesses that involve on-premises consumption of enter- tainment; it is much less relevant and less defensible in dealing with bookstores and other protected retail uses. 12. Reasonable operating restrictions are acceptable. Standards on lighting, monitoring of booths, control of age of customers, and even on operating hours are generally acceptable. Operating hours are most likely to be troublesome where many other businesses are allowed to operate 24 hours per day but sexually oriented businesses are not; where operating hours are generally applicable, they are probably a safe approach. 13. Separation requirements (namely, separating sexually oriented busi- nesses from specified other uses) make sense and are defensible, but they must be reasonable. If they have the effect of eliminating most practicable sites for such businesses, they are too stringent. Certainly separation requirements keeping sex businesses off residential blocks are reasonable and defensible. 14. There must be actual sites available for uses protected by the First Amendment. The courts have been clear in requiring that there must be sites reasonably available on the open market; the courts are much less clear about how many sites is enough. As a practical matter, if a community can show that there are enough available but unused sites to increase the number of local businesses by a reasonable percentage, the limits are probably defensible. 15. Dispersal ordinances are common and defensible. Note that dispersal ought to apply to multiple sexually oriented businesses in a single building (book store, theater, arcade) as well as to separate enterprises located near each other. 16. Jurisdictions must ensure that uses protected by the First Amendment are allowed by right somewhere. 17. Nude dancing is at the outer edge of First Amendment protection. Except in states like Washington, Oregon, and New York, which have strong freedom of expression provisions in their state constitutions, communities can probably ban and can certainly limit nude dancing. 18. Prostitution is not protected by the First Amendment. These concerns ought to be addressed directly through criminal ordinances rather than used as the basis for regulating legitimate adult businesses. 19. Touching businesses, including lap dancing and nontherapeutic mas- sage, are not protected by the First Amendment. Local governments should permit such businesses only because they want to, not because officials believe that they are entitled to the same protection as other sexually oriented businesses. 20. Businesses that create the risk of touching can be regulated. Typical regulations include requirements that activities be carried on only in a large and thus presumably fairly public space. It is also possible to ban many of these businesses. There is simply no Constitutional protection for body painting and similar activities. 21. Although the courts have become confused on the issue, it is important to remember that the First Amendment protects the message and, indi- rectly, its medium, not the business. With a movie theater, the medium and the business are essentially the same. With books and videos, they are quite different. Stay focused on protecting the message. 118 Everything You Always Wanted to Know . . . NOTES 1. Atlanta Code, Section 10-89 (from Code of 1977, amended through 1995), Section 16-28-016 (from Code of 1977), and Section 16-29.001; Austin Ordinance No. 86-1023-G and Chapters 8-2 and 8-8 (both from 1981 Code); Charlotte Code Section 12.518 and Section 2.201 (1994); Cincinnati Ordinance No. 231 (1996); Cleveland Ordinance No. 876-97 (1997); Indianapolis-Marion County Comprehensive Zoning Ordinance (adopted 1993, amended through 1997); Denver Municipal Code, Zoning Section 59-2 [definitions], various parts of Chapter 59 [specific districts] (1997); Manatee County Land Development Code Section 707 (1997); Minneapolis Zoning Code Section 540.10 (1997); Newport News Zoning Ordinance, Definitions and Section 45-524 (1997); Phoenix Zoning Code, Chapters 2 [definitions] and 6 [regarding specific districts]; Portland Code Chapter 14 (1997); St. Paul Municipal Code Section 60.201 [definitions] and 60.544(9)—(17) [typical conditions on adult uses, this in B-3 district]; San Diego Municipal Code Section 101.1800-1899 (1997); Tucson Ordinance No. 7411 (1990); Whittier Ordinance No. 2630 (1994). 2. See, for example, D.G. Resturant Corp. v. Myrtle Beach, 953 F.2d 140 (4th Cir. 1991); Thames Enters. v. City of St. Louis, 851 F.2d 199 (8th Cir. 1988); and Genusa v. City of Peoria, 619 F.2d 1203 (7th Cir. 1980). 3. A term used to describe legally irrelevant comments of a court in the context of an opinion; the comments typically relate to the subject matter but, because they go beyond the issues squarely presented in the case or are not material to the decision, are not considered a binding part of the court’s decision. 4. East Brooks Books v. City of Memphis, 48 F.3d 220, (6th Cir. 1995), reh. den., cert. den. 516 U.S. 909, 133 L. Ed. 2d 198, 116 S. Ct. 277 (1995). The court said: We agree that the City has a legitimate interest in identifying those who are legally accountable for the operation of a sexually oriented business, and perhaps those who have a controlling or significant share in such a business. The requirement that every person with any ownership interest, regardless of how small, sign the application, however, is impermissibly broad. (at 226) 5. 719 A.2d at 276, citing Texas v. Johnson, 491 U.S. 397 (1989), a case holding that the mere act of desecrating a flag is not in itself protected communication. 6. The issue appears to have been raised only rarely. The courts that have addressed the issue have found squarely that there is no First Amendment protection for sex toys and novelties. See, for example, Hall v. State of Texas, 661 S.W.2d 101 (Ct. Crim. App. 1983), and the subsequent Southwick v. State of Texas, 701 S.W.2d 927 (Tex.App. 1985). 7. The devices involved in the cases cited here were mostly dildos, although one case involved an artificial vagina. 8. See general discussion of sex toys and novelties in Chapter 2. See, for example, the Texas statute, Texas Penal Code, Section 43.23, challenged in Regalado v. State of Texas, 872 S.W.2d 7 (Tex.App. 1994), cert. den., 513 U.S. 871, 130 L. Ed. 2d 126, 115 S. Ct. 194, (1994). 9. See, for example, Lorenz v. State, 928 P.2d 1274 (Colo. 1996), Denver Publishing Co. v. City of Aurora, 896 P.2d 306 (Colo. 1995), and Tattered Cover, Inc., v. Tooley, 696 P.2d 780 (Colo. 1985), a case involving explicit materials in a general bookstore. 10. Mitchell v. Commission on Adult Entertainment, 10 F.3d 123, 140 (3rd. Circ. 1993); see, also, Ellwest Stereo Theatres, Inc. v. Wenner, 681 F.2d 1243, 1245-46 and note 2 (9th Cir.1982). 11. Note that the court ruled against the city on other issues in the case, discussed elsewhere in this chapter. T o reguLate something effeCtiveLy, you reaLLy need to under- stand it. to reaLLy understand it, you need to study it. This chapter provides what we believe are the basic components for preparing a study of sexually oriented businesses in a community. We describe the value of such a study, who should play an active part in the design of the study and its conduct, what the study should con- tain, and the value of the findings and recommendations that come out of that study WHAT IS THE VALUE OF A STUDY? Studies of sexually oriented uses within a community are almost always undertaken as a basis for making changes in the regulatory approach to these uses. There are a number of key benefits to doing such a study. The following paragraphs explain those benefits. Better understanding of the businesses to be regulated. Fully under- standing the differences in sexually oriented merchandising, on-site entertainment, and operations of the variety of sexually oriented busi- nesses helps a city tailor its regulations to address the specific issues related to specific businesses. Better understanding of the problem. The study also helps a com- munity, its citizens, its regulating authorities, and even the busi- nesses being regulated gain a better grasp of the nature of the prob- lem. Too often regulations are drafted without understanding the real problem that the community wants to address. We have found that many objections to adult businesses relate to operational issues (e.g., inadequate monitoring of customer activities, limiting access to minors, loitering, or hours of operations) rather than to the mate- rials themselves (consider the fact that neighborhood video stores may be renting x-rated videos). Without an on-site assessment of operations and neighborhood concerns, regulations may miss the real issues. 121 CHAPTER 6 How to Prepare a Study of Sexually Oriented Businesses A study will help you understand, among other things, what specifically needs to be regulated. 122 Everything You Always Wanted to Know . . . Identification of what is important politically. In addition to identify- ing the nature of the problem, a study makes clearer what is important politically. Local studies provide opportunities for elected officials, the planning commission, community groups, and staff to share their opin- ions before undertaking the often contentious task of actually promulgat- ing new regulations. Findings, assessments, and recommendations can be hammered out before entering the amendment or drafting process. Identification of what needs to be regulated. Finally, a study goes a long way in identifying more specifically what needs to be regulated. Regulation for the sake of regulating is pointless and, when dealing with First Amendment issues, risky. A local study provides a road map for developing regulations that focus on substantive issues. For example, consider the video store with a substantial back room with adult videos. As long as the store stays under a reasonable floor area, it only needs to limit access to the adult section. In contrast, video-viewing booths that prove to be “masturbation booths” or related to activities associated with prostitution will require much stronger regulations regarding loitering, access, visibility, lighting, surveillance, and penalties, including the sus- pension or revocation of the business’s license. WHO SHOULD BE INVOLVED AND WHY It is important to make sure that key people are involved in designing and/or conducting the study. The government, community citizens, and even the owners of sexually oriented businesses offer valuable input. Their respective expertise ensures that no important topic is skipped and no perspective overlooked. This makes for a comprehensive study that provides all the necessary information to complete a local regulatory pro- gram governing sexually oriented businesses. Getting outside expertise is also helpful in drafting and carrying out such a study. It helps guarantee that political motives do not jeopardize the fairness in the design of the study or its execution. Elected officials. From the government’s side, elected officials, the planning commission, the planning staff, legal counsel, licensing officials, the building inspections staff, the police department, and even health officials may all play a part in helping design the study. The following paragraphs describe briefly their respective roles. The buck stops with elected officials, so they must be on board of any study effort. They provide feedback on how far they feel the regulations need to go while remaining comfortable that they have responded to com- munity needs. Their involvement is educational for them and provides a basis for support when it comes time to have the regulations passed by the legislative body. The planning commission. The planning commission considers any changes to zoning regulations. Their comments should be sought early and often. The planning staff. The planning staff should be strongly involved in the study. Knowledge of regulatory control and land-use issues as well as the use of mapping capabilities makes the planning staff a natural. The legal staff. Legal staff needs to be involved from the start since, as the material in Chapter 5 made clear, the legal issues affecting the regula- tion of sex business are complex. If the attorneys are not familiar with this area of the law, suggest that they start by reviewing Chapter 5 of this report and then refer to the additional resources identified there. Licensing officials. Licensing officials address issues related to the local government’s business privilege licensing function. In some communi- ties, this function is largely a matter of registering local businesses and Rochester, New York, sought citizen input in its redraft of its regulations for sexually oriented businesses. This billboard provides the phone number for the city’s zoning revision project and focuses on gathering input on citizens’ opinions about topless bars. City of Rochester Chapter 6. How to Prepare a Study 123 may be handled through the local government clerk or tax administrator. In other communities, there is a regulatory licensing function dealing with businesses that involve alcohol, coin-operated amusement machines, or live entertainment. If there is a regulatory licensing function in the community, a representative of that office or department should be included in the study. Building inspectors. The building inspections staff helps address any issues dealing with building code requirements (e.g., acceptable stan- dards for public gathering places, such as lighting, access and size of rooms). This staff is usually responsible for approving new construction or renovations of establishments housing sexually oriented businesses; therefore, review of adult use facilities must be integrated into the existing building inspections process. The police. The police department can provide valuable information on complaints and criminal activity occurring within or near sexually oriented uses. These problems may be related to prostitution, indecent exposure, public drunkenness, loitering, robberies, burglaries, and other criminal activities or nuisances that may have occurred at specific adult establish- ments. The police department may also be responsible for site visits to deter- mine violation of the respective ordinances. Having police as participants in the study process and in the development of the regulations enhances the prospect that the regulations are something that they can and will enforce. Health inspectors. Health inspectors may need to be involved in cases where the community suspects that sexual encounters are taking place on the premises. These personnel can provide advice as to what constitutes a public health hazard and what does not, thereby creating more defensible findings of fact. In some communities, the health department takes no interest in sexually oriented businesses. It is useful to know early in the process whether local health officials will participate in design and imple- mentation of the regulations and ordinance. Neighborhood and other activist groups. Residents of the neighbor- hood and other community activist groups should always be involved. All of the usual reasons for involving citizens in the process apply here, along with an additional one—it is important for citizens who are con- cerned about pornography to understand the legal context in which the city regulates these businesses. When Kansas City had its public hearing on its new standards for regulating sex businesses, one religious group testified that it would like to see the regulations go further, but it under- stood that the city had gone as far as it could reasonably go legally; con- sequently, the group supported the regulations. They had been part of the process and clearly learned from it. Involve citizens but make it clear from the beginning that the First Amendment that protects their right to express opinions on such matters also constrains the extent of public regulation of sexually oriented businesses. Owners and operators of businesses. The owners of sexually oriented businesses, operators of those businesses, and their legal counsel should be involved because, ideally, no regulation should be conceived without the input of those being regulated. Having a working relationship with the owners and operators and their legal counsel provides for open dis- cussion of issues and a better understanding of what are reasonable regu- latory controls from their perspective and what are not. This open dia- logue may avoid litigation of the ordinance. It is also true that, like other businesses, it is in the best interest of these owners to support regulations that make it difficult for poorly run sex businesses to continue to operate in their present manner, thereby continuing to create problems for well- run establishments. BASIC PRINCIPLES FOR CONDUCTING A STUDY OF SEX BUSINESSES W hen undertaking any study about how to appropriately regulate sexually oriented uses, some basic principles should be kept in mind. Applying these basic principles will help ensure that the end product of your study provides regulations that are legally defensible and that can be implemented. In our research, we have found that well- run adult establishments do not mind regulations if they feel the regulations were fairly constructed and they had an opportunity for input. • Be inclusive, include proponents and opponents to the issues • Be fair • Fully understand how businesses in your community operate • Document the problems and the lack of problems • Keep facts separate from supposition • Be well-versed on existing regulations, both local and state • Be well-versed on the legal framework • Understand the prospective impacts of your recommendations • Recognize enforcement staff limitations • Use experts for sound advice and guidance 124 Everything You Always Wanted to Know . . . Consultants. Finally, outside experts can be of help because of the com- plexity of issues involved in such a study as well as making sure that the study is fair. It is important that the findings are accurate and have a sound foundation. The process must be above question and thorough. Much is gained by employing experts to either complete the study or assist in an advisory capacity. We have also found that perception is important. It is often the opinion of adult business operators that a city “has it out” for the industry; bringing in outside experts can go a long way in allaying these fears. It brings to the process an atmosphere of fair and unbiased deliberation, as well as some well-versed expertise. STUDY CONTENTS Now that you know who should be involved, the next step is determining what should be included in the study of adult uses. There is no “stan- dard” study because different cities have different needs. The following paragraphs describe the key elements that we believe are beneficial to a study of sexually oriented businesses. Studies from other jurisdictions. We can always learn from someone else’s efforts, so including studies and ordinances from other jurisdic- tions is a good start. In fact, the courts have recognized the transfer- ability of findings from adult use studies from one city to another. These studies as well as a city’s own are helpful in substantiating find- ings of fact that are included in the preamble or purpose section to your regulations. Chapter 3 discusses the adult use studies from some of the cities we surveyed and summarizes some key findings in those studies. In addition, reviewing zoning and licensing ordinances from other jurisdictions will provide you with ideas. Before implementing any ideas from other jurisdictions, however, make sure they are reviewed by your local counsel who will check state enabling legislation and other local laws (see the next section) to make sure that you are in com- pliance and that you are not repeating a legal “mistake” adopted by another jurisdiction. A review of local codes, state law, and court decisions. You must review local codes and ordinances, state statutes, and court decisions because they may already regulate the operations of sexually oriented businesses. An examination of the existing zoning regulations is the obvi- ous starting point, but there are often other regulating entities. You need to be aware of: • county or state statutes that might regulate health-related issues; • licensing standards for massage therapists; • separation requirements for businesses serving alcohol; • licensing provisions for businesses serving alcohol; • limitations in state law on businesses that combine nudity and serving alcohol; and • specific statutes defining various types of adult uses or establishing minimum setback provisions for adult uses. Georgia, for example, not only prohibits nudity and the performance of sex acts on premises licensed for service of alcoholic beverages, but it prohibits allowing patrons of the licensed establishment to view nudity or sex acts on other premises (“by glass partition or other device”) or to carry alcoholic beverages to another premises to view nudity or sex acts (Official Code of Georgia Annotated, Sections 3-3-41, 3-3-43, and 3-3-44). You must review local codes and ordinances, state statutes, and court decisions because they may already regulate the operations of sexually oriented businesses. Chapter 6. How to Prepare a Study 125 A CHECKLIST FOR EFFECTIVE ON-SITE VISITS for A STUDY OF SEXUALLY ORIENTED BUSINESSES • Make multiple site visits. The number and character of the business clientele changes based on the time of day and day of the week; multiple visits at varying times provide a more accurate reflection of business operations. The most inter- esting visits will be outside your normal working hours. • Inspect exterior and interior conditions. Is the establishment clean and well main- tained on the interior and exterior? • Examine the mix of merchandise (videos, magazines, books, sex toys and novelties, creams, oils, type of non-adult merchandise). It is important to understand the mix of merchandise, what is available, and how it is displayed, and the context of the merchandise layout. Although the First Amendment protects much sexually oriented merchandise, it does not protect leather goods and lingerie—and the mix of merchandise ultimately defines the type of land use within the broad category of retail sales. • Assess operations and activities. Negative impacts are often due to operational characteristics; it is helpful to provide a general description of the business operation, the level of comfort felt during the visit, what type of on-site enter- tainment is offered, and how it is presented. This should include an estimate of the percentage of floor area devoted to adult and non-adult merchandise. Having a complete understanding of the good and the bad operational practices will help you craft the regulatory content of the ordinance. • How are operations monitored? Most ordinances aimed at sexually oriented businesses require that management prevent sexual acts and other activities on the premises, but management can only prevent what it can see. Some businesses are designed to provide good visual control of the premises from a central counter; others use video cameras or mirrors to monitor remote parts of the store; others, deliberately or oth- erwise, isolate parts of the store from public and management view. • Note store layout. Note how the store is arranged. Where is merchandise dis- played? Where does on-site entertainment take place? What size are the rooms or booths? As noted above, can the manager see what’s going on in the store? • Examine lighting. Is there adequate lighting to deter potential sexual encounters and to provide a measure of security to customers? • Describe the customers. Who are the clientele? You may discover that it’s not only the “seedier” characters who frequent such establishments. • Are people loitering? Is this an establishment where people hang out in the halls or outside? Does it appear that there is a potential for solicitation? • Is there control of access? To what extent does the business limit access to minors? Is the adult section physically separated from any non-adult section? Is access controlled by the management? • What are the hours of operation? Does the business stay open 24 hours or well past traditional business hours, creating potential problems with late night distur- bances for adjacent properties? • Did you observe any illegal activity? Was there any illegal activity observed during the site visit or activities that appeared suspicious? • Parking lot condition, lighting, and surveillance. Is there enough parking and is it well lit? Is it n good condition? Can outside activities be monitored from inside? • What are the adjacent land uses? The potential for impact on adjacent land uses is important to record. Are there residential properties or public gathering places in proximity to the adult business? • Consider the existing zoning. How is the business zoned? Does it have noncon- forming use status? What is the zoning of adjacent land uses? 126 Everything You Always Wanted to Know . . . One example of a state law establishing setback or separation require- ments for sex businesses is a 2000 Mississippi law requiring a 1,500-foot separation between “strip clubs” (defined as any place where “public displays of nudity are present”) and “any church, school, kindergarten or courthouse” (2000 General Laws of Mississippi 558). Oklahoma requires a 1000-foot separation between an “adult novelty shop” and a religious institution, public or private school, public park or playground, or land zoned or used for residential purposes (Oklahoma Statutes Title 22-109.1). In addition, there are state and federal court decisions that provide guid- ance as far as what the courts have deemed as reasonable regulatory actions. (See Chapter 5 of this report for a summary of those rulings.) Reports from city departments. Beyond local codes, state statutes, and court decisions, reports from city departments can be useful inclusions to the study. The police department, health department, or another organi- zation within city government may have prepared reports on some aspect of sexually oriented businesses in the past. The law department may have been involved in litigation affecting one or more such businesses. Review the files and reports from other departments as background information early in your study. Reports about on-site visits. Carrying out the study should involve on-site visits. These visits, like the ones we conducted for our work in Kansas City and Biloxi, are the only way to find out what sexually ori- ented uses are really like in your city. The visits provide valuable informa- tion about the merchandise, operations, condition, and management of these uses. (See the sidebar for a checklist of things to keep in mind.) Such visits also give insight into the differences in the types of sex businesses and why there is a need to treat different businesses differently. This is particularly important in establishments that carry sexually oriented material but should not be considered as sex businesses. It is desirable to visit the businesses without disrupting their normal operations. Although we saw many prosperous looking customers in these establishments, we saw very few in business clothes. Dress casually and leave the clipboard for notes in the car. Take a colleague or a friend; extra eyes are always good, and you will be more comfortable with another person. Results from meetings with owners, operators, and their legal counsel. You should provide an opportunity for those potentially most affected by prospective regulations to share their views; these are the owners and operators and their legal counsel for adult business operations within your community. We have found that group interviews and meetings with similar types of adult businesses work well; often proposals can be “floated” out to the group for reactions. Open dialogue with these per- sons will enhance your understanding of their operations, and yield a better end product that may actually avoid costly litigation. Results from meetings with citizens and activist groups. Like meetings with the owners and operators of sexually oriented businesses, informa- tion gained from meetings with neighborhood groups can prove helpful to the study’s effort. Residents can provide information on land-use and operational problems they have encountered, as well as their perspective on what types of regulations they feel are appropriate. What works best are public meetings at the start of the process, followed by meetings at the point recommendations are drafted. As with meetings with owners and operators, these meetings can serve as forums for proposals to be floated out to the group for reactions. Keep in mind that information gained through the public process should be used as a backdrop for the study effort; the study may, in fact, prove that the information is inaccurate, incomplete, or both. We have found that group interviews and meetings with similar types of adult businesses work well; often proposals can be “floated” out to the group for reactions. Open dialogue with these persons will enhance your understanding of their operations, and yield a better end product that may actually avoid costly litigation. Chapter 6. How to Prepare a Study 127 FINDINGS AND RECOMMENDATIONS Upon completion of the “inventory and assessment” portion of the study, the preparation of findings is essential to capture what you have learned as a foundation for your licensing and zoning ordinance provisions. Findings essentially build “legislative history.” Courts often consult this legislative history when interpreting the intent of laws. For findings to be most effective, it should be clear that they are findings of the governing body, not simply material drafted by legal and planning staff. Thus, cop- ies of all studies—or at least executive summaries of all studies—should be provided to governing body members. It is also important to note that the members of the legislative body have been provided these summaries or the actual studies. In addition, it is a good idea for a staff member tes- tifying in support of the study’s recommendations to direct the specific attention of governing body members to central findings and to ask the recording clerk or secretary to make specific note of that discussion in the record. The final section of the study is the “recommendations” section. These recommendations can be general or quite specific. The study’s recommen- dations might identify zoning districts that would be appropriate for the location of specific sex businesses, appropriate separation standards between adult uses and from protected uses such as residences, schools, and parks, and general licensing and operation standards. The recom- mendations may begin the process of crafting definitions and regulations that recognize distinctions between sexually oriented businesses and other businesses that offer some sexually oriented materials but would not be classified as adult uses. Based on the findings from the study, a community may be able to establish percentage standards for floor area, material, or sales that clearly make these distinctions. Imagine creating standards that inadvertently result in a local bookstore or local video store suddenly being “converted” into an adult use. It is important that recommendations build on the information pre- sented in the study findings. The findings, for example, might document that sexually oriented uses have the potential to have a negative effect on family-oriented land uses. A general recommendation building on this finding would be to “create adequate distance separations between sexu- ally oriented uses and family oriented land uses and other public gather- ing places.” A more specific recommendation would take this a step fur- ther and recommend a certain amount of separation between the two uses, such as a 1,000 feet, and would identify the types of family-oriented land uses (i.e., residences, parks, schools, day care centers, and places of worship) to be protected through the regulations. We have found that the more specific the recommendations, the better everyone can respond to them. Participants must remember that they are reviewing “recommenda- tions for regulations” and not actual regulations. In the best of circum- stances, both proponents and opponents should feel that there is oppor- tunity for discussion and, if needed, modification and compromise. Full discussion of the recommendations also makes for more streamlined ordi- nance drafting for all concerned. Based on the findings from the study, a community may be able to establish percentage standards for floor area, material, or sales that clearly make these distinctions. Imagine creating standards that inadvertently result in a local bookstore or local video store suddenly being “converted” into an adult use. C ommunities have historiCaLLy used zoning to ControL Land uses reLated to the sex Business. Zoning is ideal for identifying appropriate districts for a variety of sexually oriented businesses as well as noting in which districts such uses are inappropriate. Zoning works well to differentiate between purely retail activities and on-premise entertainment, such as the differentiation between liquor stores and night- clubs. A basic purpose of zoning is to separate uses that are not compatible. To do this effectively, it is best to differentiate among the types of sexually oriented land uses. Some catego- ries of sexually oriented uses have little if any impacts, while others have significant land-use impacts. Define the differ- ences and then identify appropriate locations within your community. This chapter discusses what land-use issues zoning effectively addresses, offers some suggestions for improving land-use dis- tinctions and calculating separation standards, and describes ways to ensure that your regulations provide sufficient areas for sexually oriented businesses to locate. DEFINITIONS Following are definitions that we recommend for use in a zoning ordinance addressing sexually oriented businesses. Note that many of these definitions are also transferable to a licensing ordi- nance, although they are not repeated there. Terms in italics are defined elsewhere in the list. adult cabaret A building or portion of a building regularly featuring dancing or other live entertainment if the dancing or entertainment that constitutes the primary live entertainment is distinguished or characterized by an emphasis on the exhibiting of specific sexual activities or specified anatomical areas for observa- tion by patrons therein. 129 CHAPTER 7 How to Prepare Zoning Regulations for Sexually Oriented Businesses A basic purpose of zoning is to separate uses that are not compatible. To do this effectively, it is best to differentiate among the types of sexually oriented land uses. 130 Everything You Always Wanted to Know . . . adult media Magazines, books, videotapes, movies, slides, cd-roms or other devices used to record computer images, or other media that are distinguished or characterized by their emphasis on matter depicting, describing, or relating to hard-core material. adult media store An establishment that rents and/or sells media, and that meets any of the following three tests. 1. 40 percent or more of the gross public floor area is devoted to adult media. 2. 40 percent or more of the stock-in-trade consists of adult media. 3. It advertises or holds itself out in any forum as “XXX,” “adult,” “sex,” or otherwise as a sexually oriented business other than an adult media store, adult motion picture theater, or adult cabaret. adult motion picture theater An establishment emphasizing or pre- dominantly showing sexually oriented movies. display publicly The act of exposing, placing, posting, exhibiting, or in any fashion displaying in any location, whether public or private, an item in such a manner that it may be readily seen and its content or character distinguished by normal unaided vision viewing it from a street, high- way, or public sidewalk, or from the property of others, or from any por- tion of the premises where items and material other than adult media are on display to the public. establishment Any business regulated by this Article. explicit sexual material Any hard-core material. gross public floor area The total area of the building accessible or vis- ible to the public, including showrooms, motion picture theaters, motion picture arcades, service areas, behind-counter areas, storage areas visible from such other areas, restrooms (whether or not labeled “public”), areas used for cabaret or similar shows (including stage areas), plus aisles, hall- ways, and entryways serving such areas. hard-core material Media characterized by sexual activity that includes one or more of the following: erect male organ; contact of the mouth of one person with the genitals of another; penetration with a finger or male organ into any orifice in another person; open female labia; penetration of a sex toy into an orifice; male ejaculation; or the aftermath of male ejacula- tion. lingerie modeling studio An establishment or business that provides the services of live models modeling lingerie to individuals, couples, or small groups in a room smaller than 600 square feet. massage studio An establishment offering massage therapy and/or body work by a massage therapist licensed under [REFERENCE] or under the direct supervision of a licensed physician. Commentary: The space for a reference should be used to point to state licensing law for massage therapists or, if there is no state law, to a local licens- ing ordinance or requirements stipulated by the National Certification Board for Therapeutic Massage and Bodywork (www.acbtmb.com) or other recog- nized national group; see discussion of licensing ordinances in Chapter 8. media Anything printed or written, or any picture, drawing, photo- graph, motion picture, film, videotape or videotape production, or picto- rial representation, or any electrical or electronic reproduction of anything Many neighborhoods contain “media shops,” like “Mom’s,” that rent x-rated videos. The definitions and regulations in a zoning ordinance governing sexually oriented businesses need to make clear that, unless a business exceeds a community- established threshold for either floor area or stock in sexually oriented materials, it should be treated as a regular business. Eric Damian Kelly Chapter 7. How to Prepare Zoning Regulations 131 that is or may be used as a means of communication. Media includes but shall not necessarily be limited to books, newspapers, magazines, movies, videos, sound recordings, cd-roms, other magnetic media, and undevel- oped pictures. media shop A general term, identifying a category of business that may include sexually oriented material but that is not subject to the special provisions applicable to adult media shops. In that context, media shop means a retail outlet offering media for sale or rent, for consump- tion off the premises provided that any outlet meeting the definition of adult media shop shall be treated as an adult media outlet. See special conditions in [REFERENCE] for media shops in which adult media constitute more than 10 percent but less than 40 percent of the stock in trade or occupy more than 10 percent but less than 40 percent of the floor area. Commentary: The definitions section of an ordinance is not the ideal place for standards or conditions; in a community that lists conditions applicable to a number of permitted use, this language should also be included in that section. The 10 percent benchmark is intentionally high. Our estimate is that, after counting marriage manuals, health guides, art books, and some explicit novels, a major bookstore may have up to 5 percent ot its stock comprised of sexually oriented material; the intent of choosing 10 percent was to avoid any sort of dispute with mainstream retailers. Note that the 40 percent benchmark can be adjusted to fit local circumstances. A store with more than 50 percent of its floor area or stock in sexually oriented media is making a statement that its focus is on such material; thus the benchmark should be less than 50 percent. We observed two businesses in Kansas City that devoted a third or a little more of their floor area to sexu- ally oriented material but neither turned up as problem uses on our neigh- borhood surveys; we thus selected a number that was less than 50 percent but large enough to include those businesses in regulations that controlled access to the adult material. The “reference” should point to language dis- cussed in the next section of this Chapter about the conditions applicable to mainstream media outlets with more than 10 percent sexually oriented material. primary live entertainment On-site entertainment by live entertainers that characterizes the establishment, as determined (if necessary) from a pattern of advertising as well as actual performances. sadomasochistic practices Flagellation or torture by or upon a person clothed or naked, or the condition of being fettered, bound, or otherwise physically restrained on the part of one clothed or naked. sex shop An establishment offering goods for sale or rent and that meets any of the following tests. 1. The establishment offers for sale items from any two of the follow- ing categories: (a) adult media, (b) lingerie, or (c) leather goods mar- keted or presented in a context to suggest their use for sadomasoch- istic practices; and the combination of such items constitutes more than 10 percent of its stock in trade or occupies more than 10 percent of its floor area. 2. More than 5 percent of its stock in trade consists of sexually oriented toys or novelties. 3. More than 5 percent of its gross public floor area is devoted to the display of sexually oriented toys or novelties. The “pattern of advertising” at The Playpen makes it clear that the club is characterized by “primary live entertainment” of a sexually oriented nature. Eric Damian Kelly 132 Everything You Always Wanted to Know . . . sexually oriented business An inclusive term used to describe collec- tively: adult cabaret; adult motion picture theater; video arcade; bathhouse; massage shop; and/or sex shop. sexually oriented toys or novelties Instruments, devices, or parapher- nalia either designed as representations of human genital organs or female breasts, or designed or marketed primarily for use to stimulate human genital organs. specified anatomical areas (1) Less than completely and opaquely covered: human genitals, pubic region, buttock, and female breast below a point immediately above the top of the areola; and (2) human male genitals in a discernibly turgid state, even if completely and opaquely covered. specified sexual activities Human genitals in a state of sexual stimula- tion or arousal or acts of human masturbation, sexual intercourse, sod- omy, or fondling or other erotic touching of human genitals, pubic region, buttock, or female breast. video-viewing booth or arcade booth Any booth, cubicle, stall, or com- partment that is designed, constructed, or used to hold or seat patrons and is used for presenting motion pictures or viewing publications by any pho- tographic, electronic, magnetic, digital, or other means or media (including, but not limited to, film, video or magnetic tape, laser disc, cd-rom, books, magazines, or periodicals) for observation by patrons therein. A video- viewing booth shall not mean a theater, movie house, playhouse, or a room or enclosure or portion thereof that contains more than 600 square feet. LAND-USE CLASSIFICATIONS If there is one principal lesson that we believe everyone who reads this report should remember, it is that the sex business is many businesses— and zoning should treat it accordingly. Different uses should be subject to different regulations, placed in different zoning districts, and subject to different separation standards. Recommended Land-Use Classification System Our suggested hierarchy of uses, from those with the least impact to those with the most, is: • mainstream media outlets with less than 10 percent sexually oriented material; • mainstream media outlets with less than 40 percent sexually oriented material and complying with conditions outlined below; • sexually oriented media outlets; • sex shops; • sexually oriented motion picture theaters; • sexually oriented cabarets; • any of the touching businesses. Note that this classification system does not include video arcades or video-viewing booths. If a community wants to allow them, which we do not recommend, they have the same potential impact on the community as the touching business in that they either encourage or attract sexual acts in quasi-public places. If there is one principal lesson that we believe everyone who reads this report should remember, it is that the sex business is many businesses—and zoning should treat it accordingly. Different uses should be subject to different regulations, placed in different zoning districts, and subject to different separation standards. Chapter 7. How to Prepare Zoning Regulations 133 Simplified Land-Use Classification System A simpler classification system would include the the following: • Mainstream media outlets, including those that include less than 40 percent sexually oriented material but that comply with the conditions outlined below • Sexually oriented retail establishments, including sexually oriented media shops and sex shops • Establishments with on-premise sexually oriented entertainment, including motion picture theaters and cabarets Explanation of the Land-Use Classification Systems At the root of both classification systems are two guiding principles that we have found to be important in the regulation of sexually oriented businesses. 1. Establishments where people enjoy sexually oriented entertainment on the premises have a higher impact than sexually oriented retail outlets, just as bars (with on-premise consumption of alcoholic bever- ages) have a higher impact than retail liquor stores. 2. Distinctions among retail outlets should be based on the character of the use, as it is presented to the community. As we found in the Kansas City study and have confirmed in many field visits, the businesses that include sex toys or that add racy lingerie and leather goods to an inventory of sexually oriented media appear to the community to be selling sex, in contrast to a video store that sells (or rents) videos, of which a substantial number happen to be sexually oriented. A subcat- egory of this principle is that a business that holds itself out as sexually oriented should be considered sexually oriented. (See the definitions of “adult media store” and “sex shop” above.) We have indicated above that the most important land-use distinction among types of sex businesses is the one between retail businesses and establishments that offer on-premises entertainment. Another distinction that is also important is among establishments with on-premises enter- tainment. Establishments with live entertainment are likely to have greater impacts than those that simply show movies. The reason is sim- ple—at the live entertainment establishments, there is a risk of inappropri- ate interactions between entertainers and patrons, regardless of whether the establishment’s management encourages such activities. The businesses that pose the greatest risk of creating undesirable sec- ondary effects are the touching and encounter businesses—the massage parlors, lap dancing establishments, sex encounter parlors, body-painting studios, bath houses, lingerie modeling businesses, and nude photogra- phy studios. Such businesses often seem to invite sexual activity between customers and entertainers; when such activity occurs and money changes hands, it begins to look a lot like prostitution—which is currently illegal in 49 states and much of Nevada. DESIGNATION AS PRINCIPAL USE Every defined sexually oriented business should be defined as a principal use. If a community allows more than one such principal use in one build- ing or otherwise on one premises, it should do so explicitly. Sexually ori- ented businesses should not be allowed as accessory uses. The industry “PORNOSPRAWL”: IS YOUR COMMUNITY READY? A ccording to Ellen Perlman in an article, “Pornosprawl,” in Gov- ern ing (October 1997), many x-rated businesses are moving out of large cities that have cracked down on them in an attempt to clean-up their image and improve the quality of life for their citizens. Where are they going? To sur- rounding small towns and suburbs who do not have zoning or licens- ing regulations in place to deal with the businesses. Jan Larue, for- mer senior counsel for the National Law Center for Children and Fam- ilies (www.nationallawcenter.org), which focuses on the protection of children and families from the harmful effect of illegal pornogra- phy by assisting in law enforce- ment and law improvement, de scribes the typical situation: “If neighboring small cities don’t have ordinances, these business do pop up in strip malls, . . . And the prob- lem with strip malls is there’s usu- ally a residential area right behind the parking lot.” 134 Everything You Always Wanted to Know . . . has been particularly effective at persuading local governments to allow it to install video-viewing booths as accessory uses to sexually oriented bookstores. As our discussion here illustrates, video-viewing booths are a high-impact form of on-premise entertainment and thus of an entirely different character than a retail bookstore; if video-viewing booths are allowed, they should be allowed in a zone suitable for on-premise enter- tainment, not in one that just happens to allow sexually oriented retail media outlets. Conditions for Mainstream Media Outlets Mainstream video stores, bookstores, and newsstands that carry some sexually oriented media should be expressly protected and not made subject to the zoning and separation requirements applicable to sexually oriented media outlets, even if they carry some material that may be con- sidered hard-core pornography. We recommend that the treatment of a store with more than 10 percent sexually oriented material but less than 40 percent (unless the community chooses a different higher benchmark) should be the same for zoning purposes as any other media outlet, subject to the following conditions: Adult media in a shop to which this section is applicable shall be kept in a separate room or section of the shop, which room or sec- tion shall: a) not be open to any person under the age of 18; b) be physically and visually separated from the rest of the store by an opaque wall of durable material, reaching at least eight feet high or to the ceiling, whichever is less; c) be located so that the entrance to it is as far as reasonably prac- ticable from media or other inventory in the store likely to be of particular interest to children; d) have access controlled by electronic or other means to provide assurance that persons under age 18 will easily not gain admis sion and that the general public will not accidentally enter such room or section or provide continuous video or window surveil- lance of the room by store personnel; and e) provide signage at the entrance stipulating that persons under 18 are not permitted inside. IN WHAT ZONING DISTRICTS ARE THESE USES APPROPRIATE? Several operators of sexually oriented businesses—particularly sex shops— have told us that their preferred location is in a highway-oriented commer- cial area. To the business operators, such locations offer an ideal combination of good visibility to passersby and reasonable anonymity, with most people passing by too quickly to recognize the cars, read the license plates, or see the faces of patrons who may be parked there or walking in or out of the business. Sexually oriented cabarets also thrive in such locations, although they also do well in convention-oriented downtowns. From a community perspective, these locations can also work well. Often, a highway-oriented or intensive commercial area is well separated from residential and other protected land uses, and the surrounding car dealers, truck stops, convenience stores, and overnight accommodations are auto-oriented uses unlikely to attract wandering youths or pedestri- ans likely to stumble accidentally into one of the adult businesses. A com- munity concerned about location of such businesses along a major Mainstream media outlets that carry, for example, x-rated videos should be considered mainstream businesses rather than a sex business as long as access to sexually oriented materials is restricted physically and visually and signs clearly indicating limited access are appropriately sited Eric Damian Kelly Chapter 7. How to Prepare Zoning Regulations 135 entrance corridor can allow the businesses in the appropriate zone but ban them along certain sections of certain streets. Most communities we surveyed allowed sexually oriented businesses in one or more of their commercial zones and within their industrial zones. Today’s light industrial and business park zones can sometimes provide an appropriate environment for auto-oriented uses, as most sexually oriented businesses are. It is rarely appropriate, however, to encourage retail and entertainment activity in heavy industrial areas or along roads characterized primarily by heavy truck traffic. Although an industrial zone may be one appropriate choice in which to allow sexually oriented businesses, in most communities they are more appropriately located in commercial zoning districts, in accordance with the following guidelines. • Mainstream media outlets with less than 40 percent sexually oriented material should be allowed in all zones that allow other media outlets, subject to the “back room” conditions outlined in the previous subsec- tion. • Sexually oriented media outlets should be allowed in all zones that allow other media outlets, subject to separation conditions from pro- tected uses. • Sex shops should be limited to intensive commercial zones (shopping center, highway commercial), subject to separation conditions from protected uses. • Sexually oriented motion picture theaters should be allowed in the same zones that allow motion picture theaters, subject to separation conditions from protected uses. • Sexually oriented cabarets should be allowed only in the zones that allow high-impact live entertainment, subject to separation conditions from protected uses. • None of these businesses, other than the mainstream media outlets, with conditions, should be allowed in neighborhood business districts or residential/office transitional districts. • Massage studios for certified or licensed massage therapists or persons working under medical supervision should be permitted in any district where professional or personal services are permitted. The zoning ordinance should clearly differentiate them from sexually oriented massage studios, which we recommend prohibiting unless the com- munity provides a compelling reason to allow them. • Touching and encounter businesses should be allowed only with cau- tion and then only in zones designed to deal with high-impact uses. • Video-viewing booths, if allowed, should be allowed only in zones designed to deal with high-impact uses with on-premise entertainment. SHOULD SEXUALLY ORIENTED BUSINESSES BE CLUSTERED? Combat zones do not work. Placing multiple sexually oriented businesses in one area creates much greater impacts on the community than separat- ing the businesses. As a matter of fact, there is a good deal of evidence that impacts on the crime rate and on property values are minimal for a single, well-managed sexually oriented business, separated from other such businesses. Disaggregation standards limit or prohibit the co-location of multiple sex businesses and require the separation of establishments that include sex businesses. 136 Everything You Always Wanted to Know . . . Co-location of multiple sex businesses is common in the industry. We have seen all of the following combinations: • Sex shops with video-viewing booths • Sexually oriented media outlets with video-viewing booths • Sexually oriented motion picture theater with sexually oriented video rentals • Sexually oriented cabaret with motion picture theater, video-viewing booths, and rentals of sexually oriented videos • Sexually oriented cabaret with related touching and encounter busi- nesses, including booth dancing, and table dancing Because such co-location is so common in the industry and because there is some reason to try to satisfy market demand while reasonably limiting the proliferation of businesses, we have concluded that there is a reasonable basis for allowing the co-location of sexually oriented retail business with an on-premise entertainment business, but only in a district that permits on- premise entertainment businesses. We would not recommend more than one type of on-premise entertainment, such as a sexually oriented video arcade, be allowed, whether as a principal or an accessory use. Likewise, we do not recommend that video arcades be permitted as an accessory use to a retail store in a zone that does not permit on-premise entertainment. If a community so chooses, there is certainly ample evidence to justify a prohi- bition on co-location of multiple sex businesses. (See Chapter 3.) SHOULD THESE BUSINESSES BE SEPARATED FROM OTHER USES? One of the most common provisions in local zoning for sexually oriented businesses is a requirement that a sexually oriented business be separated from certain protected uses. There is ample legal precedent for such sepa- ration requirements and substantial factual evidence from studies to sup- port the imposition of such standards. (See Chapter 3.) Which Uses Should Be Protected? The object of the separation standards is to protect uses that attract sub- stantial numbers of impressionable youth or that attract people who go to that use with a reasonable expectation that they will not accidentally encounter a sex business. Thus, religious institutions and schools serving children in the K-12 grades are at the top of any list of uses that should be protected. A list of some uses commonly protected through separation requirements for sexually oriented businesses, with a brief discussion of each, follows. Religious institutions. There is a solid philosophical and legal basis for protecting religious uses from sexually oriented businesses. It should go without saying that the protection should apply to “religious institutions” or “houses of worship,” not “churches,” as many ordinances still provide. K-12 educational institutions. There is similarly a solid basis for pro- tecting K-12 schools from sexually oriented businesses. Parks and playgrounds. Because parks and playgrounds also attract youths, there is a good basis for protecting the parks—but the size and shape of such parks may turn out to eliminate so many sites from consid- eration that it becomes necessary either to remove parks from the list of protected uses or to reduce the separation requirement from parks. Separation from linear parks such as greenways or parkways, in some communities, will drastically limit the number of suitable sites. We would not recommend more than one type of on- premise entertainment, such as a sexually oriented video arcade, be allowed, whether as a principal or an accessory use. Likewise, we do not recommend that video arcades be permitted as an accessory use to a retail store in a zone that does not permit on-premise entertainment. Placing many businesses in one area has greater impacts on the community. Times Square in New York City gained an infamous international reputation because of such clustering. Corbis Chapter 7. How to Prepare Zoning Regulations 137 Libraries. Some local ordinances treat libraries as protected uses, although many libraries include a good deal of material that would be placed in the “adult” section at a media store. Because libraries attract youths, there is a solid basis for imposing such a separation require- ment. Colleges and universities. Far more than 90 percent of college and uni- versity students are legally adults (if the local legal age is 18) and entitled to make their own decisions about what they read and what movies they see. There is no practical or legal basis for imposing a separation require- ment from a typical college or university. A small theological seminary might be treated as a religious institution and protected. While there is an argument for similarly protecting a college with a religious affiliation, the size and shape of the campus may make it impractical to protect it after taking into consideration the impact on the availability of sites. Day-care centers. If the day-care centers serve school-age youth, there is a solid basis for including them on the list. If they serve pre-schoolers, the children should be under constant supervision and there is little basis for imposing anything more than a very minimal (not next door or on the same block) separation requirement. Government buildings. Although we have seen “government build- ings” included on lists of protected facilities, we are not aware of any facts or findings that support including government buildings, such as city hall, the planning office, or the water department, on a list of protected uses. Gateways. There is certainly good reason to consider banning or limit- ing sexually oriented businesses along major gateway corridors. A num- ber of the surveyed jurisdictions require separation distances from entry- ways. Where a community has a corridor ordinance that requires extra landscaping or otherwise provides special protection for a corridor or entryway, there is certainly a strong argument in favor of limitations on sexually oriented businesses as potentially detracting from the gateway image. Pool or billiard halls. Some communities require separation of sex businesses from pool or billiard halls. The purpose of such a separation requirement is not to protect the pool hall or its patrons from the impacts of the sex business, but to prevent the concentration of different types of adult businesses. See discussion of the concentration issue in Chapter 3. How Much Separation Should There Be? How far should such establishments be separated from protected uses? A separation requirement of 1,000 to perhaps 1,500 feet is defensible if it leaves a reasonable number of sites available in the community. At a minimum, a community should discourage multiple sex businesses on the same block and within 500 feet of one another. The following discus- sion provides additional insight into specific separation standards. The surveys of appraisers in Indianapolis and Rochester, as well as the neighborhood surveys in Kansas City, (see Chapter 3) provide support for the following separation standards. • Where practicable, the regulated, sexually oriented business should not be located on a block if any part of that block is zoned and used for exclusive residential uses. • A sexually oriented business located on the same street as a protected use will have more impact on the protected use than a sexually ori- ented business located the same distance from the protected use but on a different street. How far should such establishments be separated? A separation requirement of 1,000 to perhaps 1,500 feet is defensible if it leaves a reasonable number of sites available in the community. At a minimum, a community should discourage multiple sex businesses on the same block and within 500 feet of one another. 138 Everything You Always Wanted to Know . . . • Sexually oriented businesses are very likely to have at least some impacts on protected uses located within 500 feet. • Sexually oriented businesses may have measurable impact on pro- tected uses located more than 500 feet away and up to 1,000 feet away. • There is some evidence to indicate that there may be some impacts at distances of as much as 1,500 feet, but there is no evidence of impacts past that distance. One question is how the distances should be measured. Most commu- nities measure as a straight line, without regard to intervening structures (meaning “as the crow flies”), from property line to property line, or from the property line of the sexually oriented business to the protected resi- dential district boundary line. The Oklahoma statute dealing with “adult novelty shops” requires that they be separated from protected uses by a distance “measured from the nearest property line of such church or school to the nearest public entrance door of the premises of the adult novelty shop along the street right-of-way line providing the nearest direct route usually traveled by pedestrians between such points” (11 Oklahoma Statutes Annotated, Title 22-109.1). There is a good deal of logic in using a measurement that approximates pedestrian routes by fol- lowing property lines as they adjoin public rights-of-way. Using the walking-distance measurement serves several useful purposes. • It recognizes the fact that a use encountered while walking along the same street will have a greater impact than one located on a different street. • It is easier to defend the relationship between the measurement and the impacts, whether to public officials or a judge. • It addresses the problem of linear commercial zones with protected residential areas located on adjacent blocks to the rear because it can still allow for some sites in such areas, particularly in the middle of the major street side of an all-commercial block. • It allows public officials to adopt a higher separation distance, which may please some constituent groups, without unduly restricting the availability of sites. In establishing methods of measurement, it is important to recognize the difference between multitenant properties and single-tenant ones. If a sexually oriented business moves into a shopping center, the measure- ment should run from the walls of the sexually oriented leased premises, not from the parking lot or from the other buildings within the shopping center. Local ordinances commonly use measurements from the property lines of protected uses. The courts have been willing to accept such measurements, but there are logical reasons for using other forms of measurement. If the initial testing of a proposed separation require- ment indicates that there will be few or no available sites and it is thus necessary to make adjustments, consider adjusting the methods of mea- surement rather than the distances. It might be worthwhile to measure the separation distances from the entrance of the sexually oriented use to the entrance of the protected use or boundary line of the protected district. For example, it may make sense to measure distances from religious institutions from the buildings or even from useable entrances If the initial testing of a proposed separation requirement indicates that there will be few or no available sites and it is thus necessary to make adjustments, consider adjusting the methods of measurement rather than the distances. When a sex business is part of a multitenant property (as Exotic Video is in this commercial strip, where it is, ironically, located next to Skip’s Meat Market), separation distances to protected uses need to be measured from the walls of the sex business, not from the parking lot or other businesses. Connie Cooper Chapter 7. How to Prepare Zoning Regulations 139 rather than from the edge of the property. While it would not be desir- able to have a sexually oriented business located right next to the park- ing lot of a house of worship, an ordinance might impose a minimum separation of 100 or 200 feet from any part of the property and a separa- tion of at least 500 feet from the principal entrance to the house of wor- ship. Such an approach may make sense especially in a situation where one or two large institutional properties have the effect of eliminating multiple potential sites from consideration. What if a Protected Use Moves in Later? Basic principles of fairness and equity suggest that the separation standards should be enforced against the sexually oriented business only for uses that exist when the sexually oriented business first opens at a location. The doc- trine of vested rights will have the same effect in many states. There are also practical reasons for taking that position. First, it would be relatively easy in some locations for an anti-pornography group to obtain a short-term lease on a storefront and open up a small-scale house of worship or day-care center; to the extent that such a technique were used to defeat the right of a sexually oriented business to operate, it would amount to the local government’s endorsement of a form of third- party censorship. Second, if the use that moves in does so in good faith, it, like any other land buyer or lessee, must be presumed to have done so with knowledge of the conditions surrounding it—in other words, if a particular day-care operator or religious group decides that it can peace- fully co-exist with an established sexually oriented business, there is no reason for the community to intervene. WHAT IS THE EFFECT OF THE PROPOSED RESTRICTIONS? It is essential to do a reality check on proposed zoning and separation requirements for sexually oriented businesses. If the practical effect of the new regulations will be to eliminate most or all possible future sites for sexually oriented businesses, the courts are likely to strike the ordinance down. (See the discussion in Chapter 5.) Although we have suggested that a 500-foot separation requirement between sexually oriented businesses and protected uses is readily defensible, the effect of requiring that sexu- ally oriented businesses be separated by 500 feet from residential areas in a community with a lot of linear commercial zoning may be to eliminate most possible sites. There is no clear answer to the question of how many sites must be available, but there certainly must be some sites available without zon- ing changes, conditional use permits or other discretionary approvals. If there are several good sites (good access, good visibility) actually available (for lease, for sale, vacant, or grossly underused), a city can use that fact to demonstrate that demand is at least temporarily satis- fied and may be able to defend the availability of a smaller number of potential sites. If all of the potential sites have problems with access, visibility, or availability, the separation standards or permitted zoning districts should be reexamined to allow for more sites. If in doubt, pre- pare a preliminary analysis of available sites and show it to a couple of local real estate professionals—ask them if, based on this study, they would tell a prospective client that they could find a reasonable selec- tion of available sites for a sexually oriented business. Measure dis- tances for this purpose the same way the enforcement officers will measure them, which is likely to require hand measurements on a map or even field measurements, rather than Geographic Information System (GIS) calculations. There is no clear answer to the question of how many sites must be available, but there certainly must be some sites available without zoning changes, conditional use permits or other discretionary approvals. 140 Everything You Always Wanted to Know . . . Be sure to test the effect of the regulations for all types of sexually ori- ented businesses. As a land-use, movie theaters have the clearest Constitutional protection; yet, following our recommendations, a com- munity may apply greater separation requirements to movie theaters than to bookstores. The fact that there are sites available for bookstores will not excuse the lack of potential sites for theaters. If the initial testing of the proposed regulations shows that there would be no sites, very few sites, or only sites with major problems, adjust the proposed regulations. If one of the protected uses is blocking a large num- ber of sites, consider taking it off the list or changing the separation requirement from it; if the separation requirements are simply too large to work in your community, reduce them. By the time of the public hearing on proposed regulations, planners or other staff responsible for preparing the ordinances should be able to testify as to the availability of sites under the new ordinances. CAN SIGNAGE FOR SEX BUSINESSES BE LIMITED? Some communities impose specific limitations on signs for sex busi- nesses, often prohibiting sexually explicit messages or drawings. Although content-based restrictions on signs must always be approached carefully, there is no doubt that a community can ban sexually explicit matter on signs under state laws intended to protect minors from being exposed to such material. In addition, there is evidence from the New York City study (see Chapter 3) and some judicial support (see Chapter 5) for additional restrictions on the quantity and nature of signage allowed for sexually oriented businesses. Many communities prohibit window displays of adult products. (See definition of “display publicly” above.) In a pedestrian-oriented commer- cial area, a community may want to consider a combination of a ban on public display of explicit sexual material and a requirement that existing windows be maintained as visual “neutrals” in the store façade with non- explicit displays. OTHER ISSUES In our recommendations for a licensing ordinance in Chapter 8, we address some issues that relate to the physical space in which business is conducted; these issues might also be addressed through zoning, includ- ing the following. 1. Requirements for a stage for live entertainers, with specified physical and horizontal separation between performers and audience. The licensing ordi- nance controls the conduct, but the zoning ordinance could provide physical specifications for the stage. 2. Bans on showing videos or movies in small spaces. As with the stage for performers, our licensing ordinance is directed at the conduct, but the zoning ordinance could address the construction of the small spaces. 3. Bans on individual performances in small spaces. Again, zoning could address the construction of the spaces. These last three items are best addressed through licensing, where that is legally and politically possible. For a community that must rely entirely on zoning to regulate sexually oriented businesses, however, it may be possible to include these and some other physical limitations on the oper- ating space in the zoning ordinance. 143 CHAPTER 8 How to Prepare a Licensing Ordinance for Sexually Oriented Businesses It is important to focus separately on the operating issues that can be addressed through licensing. T here are many potentiaL seCondary effeCts and Commu- nity ConCerns reLated to aduLt Businesses. Most involve the operation of these businesses, particularly the manage- ment of the businesses and the behavior of the customers. It is, however, appropriate and necessary to continue to address cer- tain land-use issues related to such businesses through the zon- ing ordinance. It is however, also important to focus separately on the operating issues that can be addressed through licensing. We have provided a series of checklists for those who are draft- ing or amending their licensing provisions for sexually oriented businesses. The lists below address the issues of license admin- istration, application content and review criteria, standards for physical design, basic operating standards, categories for license violations, and, finally, procedures for licensing suspension and revocation. WHY, WHEN, WHAT, AND WHO TO LICENSE Use licensing to address operational issues at all establish- ments that offer entertainment on the premises. One of the major goals of licensing is to encourage establishments to manage their customers. Such management and operational control are par- ticularly critical in entertainment establishments because of the amount of time that customers spend on the premises. A cus- tomer in a book or video store may spend 10 or 15 minutes mak- ing a selection, but a customer at a movie theater or nude bar is likely to stay for an hour or more. Likewise, the existence of video-viewing booths clearly attracts loitering, which extends the length of visits. Do not use licensing to control shops that deal only in media. We have found no evidence that the sale or rental of books, maga- zines, newspapers, or videos results in the kinds of operational problems that licensing is intended to control. Because these are forms of communication that generally enjoy the highest level of 144 Everything You Always Wanted to Know . . . First Amendment protection, courts will subject regulations affecting them to “strict scrutiny,” and the lack of evidence of operational problems with such stores means that the licensing regulation is likely to fail such scrutiny. We do, however, recommend that your zoning ordinance spe- cifically define media stores that include more than 10 percent hard-core sex materials and specify how access to these materials will be con- trolled. Consider licensing sex shops. Sex shops are retail operations that sell sex (see the glossary for definition). Although some of the best business operations we have seen in our fieldwork have been sex shops, the perception that they sell sex affects customers and neighbors, and sell- ing sex can result in operational problems that concern both neighbors and public agencies. Licensing should impose a minimal burden on sex shops because the operational issues in them are much less significant than in establishments with on-premise entertainment. We believe that a licensing ordinance for sex shops will withstand even a “strict scru- tiny” test. Since we do not recommend licensing stores that carry only sexually oriented books and videos (protected media), operators would continue to be allowed to sell the protected media without a license simply by giving up such unprotected products as sex toys, lingerie, and leather goods. License managers. Adult businesses operate for long hours, and the owner or store manager will not be there during all of those hours. It is very much in the public’s interest to have someone on the premises at all times who feels directly responsible for compliance with the law and for respond- ing to inquiries from law officers or other public officials. Although it is unrealistic to think that the owner or principal manager will always be on the premises, through licensing a community can require that there be a designated licensed management representative on the premises at all times. By requiring that a licensed business have a licensed manager on the prem- ises at all times, the local government increases the probability of continu- ous, voluntary compliance with the ordinance. License entertainers. Performance in adult cabarets can come from many backgrounds. There are college students, housewives, moonlight- ing secretaries, and mechanics who perform in adult cabarets and other sex businesses. There are also, without doubt, some prostitutes. The best way to separate those who have a history of engaging in illegal acts from those who do not is to license them, using background checks in the licensing process—and to revoke the licenses of those who breach the public trust by engaging in prohibited activity while holding a license. Establish “affirmative duties.” Some of the operational problems that we have observed in sex businesses include burned-out light bulbs in dark hallways—providing a convenient venue for pickups—tissues and other debris on the floor of viewing booths, two persons in viewing booths, and individuals seeking pick-ups or some sort of anonymous human connection. By establishing “affirmative duties,” a government places the responsibility of compliance squarely on the shoulders of man- agement. For example, most licensing laws include expectations for their holders; liquor establishments are expected to be diligent in controlling who is on the premises and where they buy their supplies, and taxi driv- ers have a responsibility to charge the fare shown on the meter. Through “affirmative duties” in licensing ordinances, a local government can turn operational expectations for sex businesses into requirements that, if not met, result in penalties for businesses that do not attend to those duties and can lead to the closing of the business. Licensing should impose a minimal burden on sex shops because the operational issues in them are much less significant than in establishments with on-premise entertainment. We believe that a licensing ordinance for sex shops will withstand even a “strict scrutiny” test. By establishing “affirmative duties,” a government places the responsibility of compliance squarely on the shoulders of management. Chapter 8. How to Prepare a Licensing Ordinance 145 Consider a point system. Most states use point systems to assess driv- ers for infractions that may lead to the suspension or revocation of a license. We recommend the same system for licenses of establishments and individuals engaged in adult businesses. • A point system provides a convenient way to deal with cumulative violations and to distinguish among minor violations (inadequate lighting, poor maintenance) and more serious ones (prostitution or drug dealings on the premises). It would be difficult to justify suspending a license because of a single instance of multiple persons being found in one video booth if the management had no knowledge of it; on the other hand, if there are several of these occur- rences over a period of months, either management must know about it or management is too oblivious to its surroundings to hold a license. States take the same position with regard to a speeding ticket for five miles per hour over the speed limit—anybody could get one such ticket, but most drivers know that receiving three or four for even minor infrac- tions in a short period of time can affect one’s license. • Assessing points for violation of “affirmative duties” does not require proof of intent. Unlike criminal convictions that generally require proof of criminal intent, licensing ordinances establish “affirmative duties” of management to abide by certain operating rules and penalizes them for failing to do so—regardless of intention. In some cases, police obtain solid evidence showing that an employee engaged in illegal conduct but not clearly showing a role of management in the activity. Under the licensing ordinance, the police can prosecute the employee and the licensing officer can assess points against the establishment, based on the same evidence. • The point system is much easier to administer than a criminal prosecution. Our recommendation is that violations of licensing standards be han- dled like a traffic ticket, with an automatic assessment of points, sub- ject to a request by the violator for a hearing. Even where there is a hearing, there is a much lower burden of proof on the government in the licensing matter—usually a “substantial evidence” or “preponder- ance of the evidence” test, compared to the “beyond a reasonable doubt” test that applies to criminal prosecutions. Keep the criminal or municipal penalties, in addition to penalties imposed by the point system. The purpose of the licensing ordinance is to improve operations, in part by making management attentive to matters that go far beyond what a community can regulate through criminal or similar laws. Local governments should retain their criminal laws dealing with prostitution, indecent exposure, sale of drugs and drug parapherna- lia, and other criminal activities. Where the police or prosecutor have sufficient evidence, those crimes should be prosecuted. Licensing fees should be designed to help defray the substantial expenses incurred in processing applications for licenses and permits issued. License fees should not be—and in most states cannot be—used as a sort of tax on engaging in a particular business. On the other hand, background checks and inspections of establishments are expensive, and it is perfectly legitimate for a local government to expect that such a pro- gram will be self-supporting. Licensing standards must be clear. See Chapter 5. Any licensing ordi- nance giving the licensing official discretion is vulnerable to successful Constitutional challenge. “LICENSING DECISIONS SHOULD BE CLEAR AND EASY TO APPEAL” A case from Cincinnati illustrates the consequences of not follow- ing the principle we recommend in the text of this report. A Cincinnati bookstore owner was accused by the city of operating a sexually ori- ented business without a license. The business sued the city and won. The reason—too much discretion given to a local official and an illegal appeal process. According to an article in the Cincinnati Enquirer Metro Section, “Sex Shop Restric- tions Tossed” (October 18, 2000), the judge deciding the case did not find in favor of the business because of First Amendment concerns. Rather, “the judge focused on the technical issue of how the city handles appli- cations for licenses. Under the law, store owners apply for a license with the city treasurer. The treasurer then reviews the case and either accepts or rejects the application. If the application is rejected, the store owner’s only option is to ask the treasurer to reconsider. [The judge] said that’s not good enough. He said the constitution requires a ‘prompt judicial review’ of the trea- surer’s original decision.” 146 Everything You Always Wanted to Know . . . Licensing review processes must be clear and of limited duration. An applicant who files a complete application should receive a prompt, written decision on that application. The courts have generally held that the ordi- nance itself must set a time limit for approving or denying a license applica- tion. Note that the courts have been particularly critical of delays in the process to allow other public agencies to complete site inspections or back- ground checks—all of those must be completed within the time limit. Licensing decisions should be clear and easy to appeal. Penalties related to violations of the terms of a license as well as the denial, suspension, or revocation of a license must be eligible for appeal, and the appeal process should offer prompt access to the courts. In an ordinance we recently helped draft, we recommended to a client that the ordinance give the appealing party a choice of going to a local hearing officer and then to court, or going directly to court. If there is an interim appeals step at the local level, it should be a quasi-judicial appeal and not a political one—and, like the licensing process itself, it should have a defined schedule. APPLICATION CONTENT AND REVIEW CRITERIA Require a complete application. Once a local government accepts an application for a license for a sexually oriented business, it must complete the processing of that application promptly, in accordance with an estab- lished schedule. It is impractical and sometimes impossible to meet a review deadline if the application is incomplete. Thus, a local government should simply refuse to accept an incomplete application. Although it may be impractical to review the application for completeness at the pre- cise time that it is delivered, such a review should occur within two or three days of the physical arrival of the application at a public office—a rejection of an application as incomplete should be made in writing, mailed to the applicant, and specify exactly what is missing. Require information sufficient to run basic background checks on appli- cants; provide for the denial of a license to persons based on specific back- ground deficiencies. One of the goals of a licensing ordinance is to deny licenses to those who have a history that indicates that they are not likely to uphold the operating standards imposed on licensees. Relatively recent con- victions of related crimes or revocations or suspensions of similar licenses (say, within the past five years) are indications that an applicant may not be someone who should hold a license. Note that the courts have been sympa- thetic to the denial of licenses based on relevant background deficiencies only—for example, while a community can clearly justify denying a sex business license to someone who has recently been convicted of prostitution, rape, or even indecent exposure, it probably cannot justify such a denial based on a conviction for burglary or check fraud. The ordinance should be very specific about what types of criminal convictions will disqualify an applicant; a simple way to do that is to refer to specific sections of the state criminal code dealing with sex and related crimes. Require information on shareholders, partners, and officers. A corpora- tion or a partnership is an artificial person created by the law. Because such an entity is easily created, a corporation or partnership named as a license applicant may have no relevant background. Thus, in the case of such an application, it is important to obtain background information on the people who control the entity that is listed as the applicant. Look at state or local licensing laws for establishments that sell alcoholic bever- ages and model the application requirements for “interested parties” or “control persons” on that. The same background qualifications should apply to such interested persons or control persons as would apply to an The ordinance should be very specific about what types of criminal convictions will disqualify an applicant; a simple way to do that is to refer to specific sections of the state criminal code dealing with sex and related crimes. Chapter 8. How to Prepare a Licensing Ordinance 147 individual applicant. Please note that this requirement cannot be used in Georgia, Alabama, or Florida (see discussion in Chapter 5). Impose age standard and require proof. Most communities will require that owners, managers, and entertainers be at least 18. Some may follow the pattern of the liquor laws and require that these persons be 21. We express no opinion on that choice, but whatever minimum age the local government selects should be set out in the ordinance and not assumed. Impose standards based on license history. If suspension or revocation of a prior license will be considered in deciding whether to issue a new license (and we believe those factors should be considered), the licensing ordinance should make that clear. A license revocation within the previ- ous two or three years should typically be grounds for denial. An older revocation or violations not leading to revocation might be the basis for issuance of a provisional license. Be site specific and require control of the premises. A license for a sexually oriented business should be site specific. Such a license should be issued only to an applicant that controls the premises through ownership or a valid lease. Specify that the license is not transferable. This license is issued to licensee only and that any successor operator or owner will be required to go through the application process. Condition issuance of license on payment of fees. No license should be issued unless the license fee has been paid. Address relationship of license to other licenses. If local policy makers want to prevent the issuance of such licenses to establishments that sell alcohol or that have gambling, those criteria should be specified in the ordinance. Some local governments may limit the number of licenses that can be issued for a single premises or to a particular operator; again, those issues should be addressed in the ordinance. Require tax compliance. A license is by definition a privilege, not a right. A local government need not issue a license to an individual or entity deficient in payment of tax obligations to the local government. It is less clear whether a local government can deny a license based on defi- ciencies in other tax obligations. Note that a licensing standard based on tax compliance is a curable condition—a license that is denied only on that basis should be issued once taxes are brought current. Require code compliance for the premises. At a minimum, the licensing ordinance should require that the proposed premises meets the zoning standards—including separation requirements—for such a business. It is reasonable to require compliance with other codes to the extent that those codes are consistently enforced against other businesses moving into similar buildings. In other words, if a mainstream cinema moving into a particular building would be required to add one or more fire exits, it is reasonable to ask that a sexually oriented movie theater do the same. On the other hand, communities that have attempted to use overly rigorous code compliance requirements to discourage sexually oriented businesses have lost their cases in court. As indicated above, any public inspections of the premises to ensure compliance must be accomplished promptly and within a general time limit imposed on the licensing decision. Require design compliance. If the zoning or licensing ordinance con- tains particular standards that affect the design or layout of the premises, either the existing premises or plans submitted with the application should show that the premises will comply with those standards. Examples of the types of standards that would affect the premises would A license is by definition a privilege, not a right. A local government need not issue a license to an individual or entity deficient in payment of tax obligations to the local government. Communities that have attempted to use overly rigorous code compliance requirements to discourage sexually oriented businesses have lost their cases in court. 148 Everything You Always Wanted to Know . . . be: standards requiring that someone working at the manager’s station have a clear view of all parts of the premises; requirements that live per- formers be on a raised stage with a bar or wall providing horizontal sepa- ration from customers; requirements that live performances occur in a room of a minimum size; prohibition on performances or showing of videos in enclosed booths. Where a license is approved based on plans, the actual license should not be issued until the construction is complete and a certificate of occupancy issued. Specify operating hours. Some communities limit the operating hours of some or all adult businesses. If a community decides to establish limited oper- ating hours, those hours should be specified in the licensing ordinance. Establish the license period and expiration date, and put the renewal burden on the applicant. The period of the license will usually be one year. Some licensing officials recommend cycled expiration dates (end of calen- dar month falling one year after original application filed or something similar) to eliminate peak work periods on licenses; others prefer to coor- dinate with sales tax filings or business privilege licenses that often occur on a single, specified date. The applicant should be the one who initiates any request for renewal and that should be made clear in the original application process. STANDARDS FOR PHYSICAL DESIGN OF THE PREMISES General Standards Require design to ensure that manager has visual control of the prem- ises. Where the cashier’s or manager’s station will not have a clear view of the entire premises, require the use of wide-angle mirrors or video sys- tems to provide continuous monitoring of blind spots or remote parts of the premises. Require design to ensure access control. The cashier’s or manager’s sta- tion should be located so that someone working there can quickly move to halt physically any attempted or accidental entry by a minor. Address window issues. It is desirable to prevent the display of sexually explicit material to the general public. Many adult businesses, however, address that issue by painting over or other means of obscuring windows, resulting in an entirely blank storefront that may detract from an other- wise pleasant commercial strip. If the community would prefer non-sex- ual displays in “unblocked” windows, it should specify that in the licens- ing ordinance. Address signage issues. It is better to address the matter of sexually explicit messages on signs through the sex business licensing ordinance than through a sign ordinance; through the licensing ordinance, the restriction is clearly a limitation on a privilege, reducing the First Amendment concerns involved in any restriction on sign messages. Address separation standards for sexually oriented inventory. Some licensed businesses may carry products of interest to the general public and even children. There is no reason for a local government to prevent a sex business from carrying other merchandise, but it may want to require in the licensing ordinance that any youth-oriented merchandise be kept physically separate from the sexually oriented goods. Alternatively, licensed establishments may be required to exclude persons under 18 years of age (or 21 years of age). Establish restroom standards. The lack of restrooms at licensed busi- nesses where customers may spend an hour or more can result in custom- ers finding ways to relieve themselves in the neighborhood—a fairly Mirrors like the one prominently displayed here help management keep visual control of a premises. This is particularly advisable for booth areas, which are often poorly lit and the least public places, making it possible for activities that can lead to the loss of a license for an establishment. In other words, such visual control is also in the best interest of the business. Connie Cooper Chapter 8. How to Prepare a Licensing Ordinance 149 common complaint around some sexually oriented businesses. On the other hand, a restroom can provide a place for sexual activity. A reason- able compromise may be to provide locked restrooms for customer use, requiring that the customer request a key from the manager. There is no easy answer to this issue, but public officials with a preference about how to handle it should address that preference in the licensing ordinance. Design Standards for Particular Types of Business For a business with live entertainment, consider requiring a stage. To minimize the risk of physical contact between customers and entertainers, the specifications for the stage should require that it be elevated 24 to 36 inches above floor level and that there be a railing in one of two loca- tions—on the floor in a place that keeps customers at least 36 inches away from the stage; or on the stage to keep performers at least 36 inches away from the edge. Consider establishing a minimum size space for live performances. The goal of such a standard is to eliminate what we call the “dancer in a box.” Although some ordinances require the live entertainment occur in a space of at least 1,000 square feet (or 40 feet by 25 feet), even a requirement for a space of 500 or 600 square feet (20 feet by 25 feet or 20 feet by 30 feet) essentially requires that performances take place before an audience much larger than one—and in full visibility of lots of people, including any visiting enforcement officials. Consider establishing a minimum size space for showing movies or vid- eos. The effect of a minimum size of 500 or 600 square feet or more is to eliminate video-viewing booths, which is something we recommend doing. If a local government rejects this recommendation or determines that opera- tors may have vested rights to keep existing booths, the community should consider including the following provisions in the licensing ordinance. • Require doors off the booths and monitoring of area. By removing doors from the booths and requiring monitoring of the booth area, it is pos- sible to gain substantial visual control over activity in the booths. • Require firewalls between booths. “Glory holes,” which may permit anony mous viewing or even anonymous sexual activity between booths, have been a significant concern in some communities. Managers have reported that some booth users even bring battery-powered drills to create such holes. The best way to ensure that there are no glory holes is to have a firewall or some sort of metal or other durable barrier in the wall. • Require porous, easily cleaned surfaces in the booths. Despite all other efforts, there is likely to be some sexual activity—at least masturbation—in the booths and basic principles of public health dictate that the surfaces that receive the resulting bodily fluids should be easily cleaned. • Require adequate lighting. Establish specific lighting requirements for the hallway or lobby providing access to booths. We encountered loiterers, suggestive looks, and direct pick-up attempts in those hallways; obvi- ously better lighting limits the likelihood of such encounters and increases the security of patrons. • Require adequate hallways. Video booths are essentially small rooms and should have adequate access and egress. Wider hallways to the rooms also facilitate monitoring of booth activity and, if well lit, discourage loitering. Odd corners in hallways can create ideal places for loiterers to lurk, often unseen by casual monitoring. Licensing standards should require the removal of doors from booths. These booths, although in a clean and orderly hallway, allow patrons to hide from management and create private spaces that allow unsavory and even illegal activities. Connie Cooper 150 Everything You Always Wanted to Know . . . BASIC OPERATING STANDARDS General Operating Standards for All Licensed Businesses Require posting of the license. Provide that the failure to post the license is prima facie evidence that there is no license and that the lack of a posted license puts licensed managers and entertainers on notice that the premises may be unlicensed. Require that a licensed manager or licensed designee be on duty when the premises is open to the public. Such a requirement should be explicit. Require posting of the name of the manager on duty and the manager’s license. Another option should be to post the licenses of all eligible man- agers and use a changeable nameplate (like those seen at many hotel front desks) to designate “manager on duty.” Require that entertainers’ licenses be available on premises for inspec- tion by law officers but not that they be posted. Many entertainers at adult establishments perform under assumed names and want to main- tain their privacy and personal security; protecting those private interests also serves the public by reducing the risk of off-the-premises contact between performers and customers. The manager on duty should have ready access to a file containing the licenses of current performers and should offer that file for inspection on request of law enforcement or other designated enforcement officials. Require posting and enforcement of a “no loitering” policy. Our only really nervous moments in our visits to sexually oriented businesses involved encounters with people who were clearly loitering on the prem- ises—typically in the halls leading to video-viewing booths. Most appeared to be seeking an encounter of some sort. Clearly an adult business can serve as a pick-up place for casual sexual encounters, but it need not. Such sexual encounters are among the undesirable side effects that most communities strive to avoid when they pass an ordinance dealing with sexually oriented businesses. One way to limit the number of such encounters is to motivate management to eliminate loitering on the premises. Require cooperation with enforcement officials and the availability of the premises for full inspection at any time during business hours. Holding a license is a privilege on which the local government may impose conditions—one condition ought to be that it is not necessary to obtain a search warrant to determine whether a licensee is complying with the ordinance. Require posting of age-specific restrictions. Whether the age limit is 18 or 21—or some other locally defensible age—should be clear, and it should be clear whether that age limit applies to the entire premises or only specified portions of it. Establish “duty of the operator” to ensure that minimum lighting stan- dards are maintained. Where enforcement staff has the equipment and training to measure lumens or footcandles, the ordinance should use such a performance measure; otherwise, the ordinance should specify the number of fixtures per square foot of floor space, the fixture height, and the minimum wattage of bulb. Establish “duty of the operator” to ensure that no sexual or other illicit activity occurs on premises. One of the great concerns of public officials and neighbors is that there will be prostitution or other sexual acts associ- ated with an adult business. Acts of prostitution may be arranged between customers and entertainers or other employees without knowledge of management, virtually eliminating any chance of showing criminal guilt Our only really nervous moments in our visits to sexually oriented businesses involved encounters with people who were clearly loitering on the premises— typically in the halls leading to video-viewing booths. Most appeared to be seeking an encounter of some sort. Chapter 8. How to Prepare a Licensing Ordinance 151 on the part of the operator—even if the employee is convicted. Thus, it is essential to require that management act diligently to prevent such acts from occurring on the premises. Establish “duty of the operator” to ensure all the standards and obliga- tions of the license are maintained. It is always useful to have a catch-all clause, although it is also desirable to be specific about as many types of violations as possible. Operating Standards for Establishments with Live Entertainment Require that performances take place on a raised stage. See the related design specification standard above. Require that the performers remain on the stage, at least during the performance; some ordinances—and some operators, of their own volition—prohibit entertainers from mingling with customers on the night of a performance. Establish touching limits between performers and customers. If per- formers are required to perform on stage and not allowed to mingle with customers, this provision may be unnecessary. On the other hand, many adult entertainers work primarily for tips and may want to collect those tips in person. A local ordinance can allow touching but prohibit contact between the body parts of one person and the genitals or breasts of another person. An ordinance could even limit touching only to contact between human hands. In a community with a history of “lap dancing” or “friction dancing,” local policy makers may want to ban those acts with express language in the ordinance. Where presence of a customer and a model or entertainer together in a booth is permitted (which we do not recommend), require that activity be visible to an employee who is not a model. If an entertainer or model and a customer are in a closed room together, there is significant risk that some prohibited sexual activity will occur. Requiring visibility of activity in the booth provides a degree of security to the employee and to the customer, and the visibility makes for easier enforcement of operating standards. Specify clothing or body coverage requirements. See Chapter 5 regarding the somewhat confused status of the law of nude dancing. At this time, local governments in many states can require that performers in adult establishments cover at least some body parts; if that is a con- cern in a particular community, it should be addressed in the ordinance. We believe that maintaining physical separation between patrons and entertainers is far more important than regulating the clothing of enter- tainers, but we recognize that policy makers in some communities may disagree. Operating Standards for Establishments with Video-Viewing Booths Establish “duty of the operator” to ensure that not more than one per- son is present in a viewing room at any time. One of the major concerns with viewing booths is that there will be sexual activity in them—obvi- ously the risk of such activity increases with the presence of more than one person in a booth. Establish “duty of the operator” to ensure that no openings of any kind exist between adult video-viewing rooms. Customers sometimes create their own “glory holes” between booths. The design criterion requiring fire walls or other durable material between booths is a starting point, but the operator should have a duty to ensure that the wall remains solid and opaque. Establish “duty of the operator” to clean booths regularly and to pre- clude the presence of bodily fluids on the floors, walls, or other surfaces. This is a obvious health issue. We believe that maintaining physical separation between patrons and entertainers is far more important than regulating the clothing of entertainers, but we recognize that policy makers in some communities may disagree. A local ordinance can allow touching but prohibit contact between the body parts of one person and the genitals or breasts of another person. An ordinance could even limit touching only to contact between human hands. 152 Everything You Always Wanted to Know . . . Require that operator maintain lighting for hallway or lobby providing access to booths. We have encountered loiterers, suggestive looks, and direct pick-up attempts in those hallways; obviously better lighting limits the likelihood of such encounters and increases the security of patrons. We have observed missing bulbs in fixtures in such hallways, so merely requiring that the fixtures be installed does not fully address the issue. There may even be reason to specify that the bulbs in these fixtures be protected in some way from tampering. CATEGORIZING LICENSE VIOLATIONS Whether using a point system or some other method, a community must specify a relationship between violations of the ordinance and the poten- tial for suspension or revocation of the license. We suggest consideration of these groupings. Serious Violations Forming Basis for Immediate Suspension or Revocation • Conviction of the license holder of a crime that is also a license viola- tion—typically, prostitution or dealing in controlled substances • Revocation or suspension of a similar license held by the same person at another location • For an individual, conviction of a crime that would preclude the issu- ance of a license • For a partnership or corporation, conviction of a control person of a crime that would preclude the issuance of a license • Operating without a license or with a suspended license Other Serious Violations • Interfering with inspections or enforcement • For an establishment, conviction of a manager on duty for a crime that is also a license violation • Hiring an unlicensed entertainer or manager • For an establishment, the occurrence on the premises of prostitution or sale of a controlled substance, with or without the knowledge or par- ticipation of management Moderately Serious Violations • Allowing a minor on the premises • Allowing more than one person in a viewing booth • Allowing performance in a prohibited area—off the stage or in a private booth • Allowing prohibited touching between customer and entertainer • Failing to maintain required visibility of activity in booths, or of activity in modeling or other rooms • Allowing the display of full nudity or sexually explicit material in an area visible to the general public • Allowing performance without required clothing. • For an establishment, failing to have a licensed manager on duty We have encountered loiterers, suggestive looks, and direct pick-up attempts in hallways; obviously better lighting limits the likelihood of such encounters and increases the security of patrons. Chapter 8. How to Prepare a Licensing Ordinance 153 Less Serious Violations (Of Concern Primarily if Repeated or Cumulative) • Failure to post a license • Failure to post a no-loitering policy • Allowing loitering on the premises • Failure to maintain required lighting • Failure to maintain required standards of cleanliness • Conviction of a customer for criminal activity (including a municipal infraction) while on the premises where there is no evidence of partici- pation by the establishment or its management PROCEDURES FOR LICENSE SUSPENSION AND REVOCATION 1. Specify the grounds for suspension or revocation. Most enforcement systems are progressive, and a suspension should usually precede a revocation, except in case of a very serious violation. 2. If using a point system or other cumulative assessment not leading to a license suspension or revocation hearing, allow the licensee to protest the point or other assessment and to have a hearing. The system can work like the one for minor traffic offenses in many communities: 1) the licensee receives a “ticket,” which is notice of a violation and of the related financial and point penalties; 2) the licensee then has the choice either to accept the penalty or to request a hearing and challenge it. This approach provides the basic ele- ments of due process without burdening the local government with a hearing for every assessment of points. 3. Provide for notice and a hearing before any suspension or revocation. Note that due process also requires that such a hearing should be before an “impartial tribunal,” which may suggest the use of a hearing officer. The rules of evidence and witnesses should be made clear to the affected party, either in the notice or in a document to which it refers. [Note: This is a quasi-judicial hearing, not a “public hearing” at which the opinions of citizens should be heard. Such a hearing will be open to the public under the laws of most states, but that means that citizens have the right to observe, not to participate.] 4. Provide for a prompt review and specify the license status during the review. From a Constitutional perspective, the safe course of action is to allow the business to continue to operate until the hearing process is complete. However, if this is a hearing to protest the assessment of points, operational infractions that led to the assessment should not be allowed to continue. 5. Provide for judicial review. An aggrieved licensee should have imme- diate recourse to the courts. 6. Specify the relationship between suspension and revocation. If the grounds for suspension recur within a specified period (for example, one year) after a previous suspension, the ordinance may provide for mandatory revocation. In general, review state or local standards and procedures for sus- pending or revoking an alcoholic beverage license—state and local licensing agencies now have decades of experience in enforcing licens- ing standards in that field and we can learn from their experience. 143 Recommendations Recognize that sexually oriented uses have a place in a community. in the preCeding Chapters, we have taken you through 500 years of history. We have gone from censorship by religious leaders to twentieth century controversies over films such as Deep Throat and Behind the Green Door and onto the availability of x-rated home videos. We have shared with you the magnitude of the sex business as Big Business and introduced you to sex business ven- ues including mainstream retail, adult media stores, sex shops, video-viewing booths, movie theaters, and exotic dancing estab- lishments. We have delved into surveys and studies completed by jurisdictions across the U.S. to ferret out salient findings about the secondary impacts and the non-impacts of sexually oriented busi- nesses. We have reviewed the variety of regulatory measures these jurisdictions have implemented to address potential impacts and the courts’ response in light of the Constitution’s First Amendment protection for freedom of speech and expression. Finally, we have provided you with several “how to” chapters for guidance in undertaking adult-use studies and crafting zoning and licensing ordinances. This final chapter wraps it all up with a summary of the recom- mendations we have provided throughout the report. GENERAL RECOMMENDATIONS Recognize that sexually oriented uses have a place in a commu- nity. Appropriately sited, well-operated, sexually oriented uses are a reasonable land-use activity within a community. Do not think the First Amendment gives unlimited protection to all sexually oriented activities. The courts have recognized rea- sonable restrictions on commercial speech (sexually oriented busi- ness media and performances are deemed as a form of commercial “speech”). As Chapter 5 indicates, the Supreme Court in Central Hudson Gas & Electric Corp v. Public Service Commission, 447 U.S. 557 (1980), established a four-part test involving the regulation of com- mercial speech. First, the First Amendment protects commercial speech only if that speech concerns lawful activity and is not mis- leading; second, third and fourth, a restriction on otherwise 156 Everything You Always Wanted to Know . . . protected commercial speech is valid only if it (2) seeks to implement a substantial governmental interest, (3) directly advances that interest, and (4) reaches no further than necessary to accomplish the given objec- tive. Do not assume there is a relationship between criminal activity and sexually oriented businesses. Studies we have reviewed give conflicting evidence that there is a relationship between criminal activity and sexu- ally oriented uses. New York City’s very thorough study reached no clear conclusion regarding a relationship between sexually oriented businesses and criminal activity. Denver, Colorado, and Whittier, California, how- ever, which studied the issue, clearly had prostitution flourishing in some of their adult businesses. Recognize that sexually oriented uses do have negative secondary impacts. Studies completed in Kansas City, Missouri; Rochester, New York; New York City, and other communities substantiate the fact that sexually oriented uses can create secondary impacts such as lowering of property values, and, if not appropriately regulated, provide the opportu- nity for minors to be exposed to adult materials and performances. Regulate sex businesses based on their retail or entertainment charac- teristics. Classify businesses that involve sexually oriented materials or activities into two categories—retail and entertainment businesses and regulate the land-use impacts accordingly. Retail businesses include: • mainstream bookstores, newsstands, and video stores with sexually oriented materials; • adults-only or sexually oriented outlets, including adult media outlets and sex shops; and • percentage stores and retail stores with back rooms containing adults- only materials. On-site entertainment businesses include: • movie theaters; • video-viewing booths, mini-booths, and preview booths; • live entertainment on stage, “participatory” entertainment, and live entertainment in booths; and • touching and encounter businesses. Treat each sex business use as a separate land use. Include in the defini- tions and interpretation of adult uses that each type of adult uses is a separate land-use category. RETAIL BUSINESSES Quantify the terms “a preponderance,” “substantial,” or “significant.” The terms “a preponderance,” “substantial” or “significant” are open to interpretation. To use them in defining adult uses is to invite legal chal- lenge. What is “significant” to the citizens of one community and their lawmakers may be “insignificant” to others—most importantly, a court. The retail value of the materials in stock might be the best measure as to whether a business was really a sex business, but most local governments are not equipped to do full retail inventory audits. Therefore, we recom- mend a dual threshold for identification of sex businesses—inventory and floor area. In this report, we have used a measure of 40 percent of inven- tory items and 40 percent of floor area open to the general public; stores Classify businesses that involve sexually oriented materials or activities into two categories—retail and entertainment businesses and regulate the land-use impacts accordingly. The terms “a preponderance,” “substantial” or “significant” are open to interpretation. To use them in defining adult uses is to invite legal challenge. What is “significant” to the citizens of one community and their lawmakers may be “insignificant” to others— most importantly, a court. Chapter 9. Recommendations 157 Mixing lingerie, leather goods, and sexually oriented media or adding sex toys to the product mix of a retail outlet causes it to take on the image of selling sex, which makes it very different from a store that sells books or videos, some of which happen to be sexually oriented. We recommend these stores be referred to as “sex shops.” exceeding either of those thresholds as regards the presence of sexually oriented materials are treated as sex businesses. The exact percentage can vary and need not be the same percentage for floor area as for inventory. The important message is the use of the percentage and the use of two different measures, making it more difficult for a business that specializes in sex to be classified as a business that does not. Some local governments might effectively use 30 percent as the threshold. We think that using a threshold of less than 30 percent leaves the community open to the argument that the amount of area or inventory devoted to sexu- ally oriented materials is not “significant.” Likewise, we would not recom- mend the use of 50 percent because there is too much room for error on either side of that mark to make it perfectly clear whether a business is or is not a business dealing primarily in sexually oriented materials. Classify as a sex business any retail operation[s] that “self-designate” as a sexually oriented business. Another measure of whether a retail store is an adult use is what we refer to as self-designated sexually oriented retail uses. This works well for retail operations with inventories and floor space devoted to sexually oriented materials that appear to fall below the percentage that the jurisdiction establishes to define a sexually oriented use. Use the business’s own advertisement in sex business directories and other media geared to adults-only merchandise to show that they have designated themselves to be sexually oriented uses. Treat bookstores, video stores, and newsstands that have isolated backrooms with sexually oriented material like other retail operations. “Mainstream” bookstores, video stores, and newsstands with backrooms containing hard-core, adults-only material should be treated under zon- ing just like stores that do not carry such materials, subject to the condi- tion that the explicit material is kept in an access-controlled back room. We like to refer to these stores as “media stores” because they devote less than the suggested 40 percent of their floor area or inventory to adult media. If the percentage of floor area or inventory rises to the suggested 40 percent or greater, the store should be treated as an adult use. Classify bookstores, video stores, newsstands and other businesses that carry sexually oriented novelties as sex shops. We recommend that stores carrying only media-related merchandise (books, videos, maga- zines, newspapers) be treated as media stores unless their stock exceeds the prescribed threshold for meeting the definition of a sexually oriented use. If such a store, however, also sells sexually oriented novelties, it should be classified as an adult store even if the percentage of media items is below the threshold for an adult use. The inclusion of these other items suggests that the business is primarily in the business of selling sex. Provide for reasonable control of public display and access to sexually oriented media. Media stores or video stores carrying hard-core media should prevent the public display of adult media at or within the portions of the business open to the general public. Stores should be required to keep adult media in a separate room of the store not open to persons under the age of 18, and that space needs to be controlled by electronic or other means. Stores that carry a mix of sexually oriented merchandise should be designated as sexually oriented uses and be classified as “sex shops.” Mixing lingerie, leather goods, and sexually oriented media or adding sex toys to the product mix of a retail outlet causes it to take on the image of selling sex, which makes it very different from a store that sells books or videos, some of which happen to be sexually oriented. We recommend 158 Everything You Always Wanted to Know . . . these stores be referred to as “sex shops.” These stores should be treated more restrictively than adult media stores (adult media stores contain 40 percent or greater adult media). We do not believe that zoning for sex shops is essential to the protection of First Amendment values in the same way as zoning for adult theaters. (See our recommendation below.) Do not automatically permit video-viewing booths as accessory uses to bookstores or newstands. In many jurisdictions, video-viewing booths have been allowed to evolve as accessory uses to bookstores in locations that may be entirely appropriate for retail uses like bookstores but that are not appropriate for video-viewing booths. Video-viewing booths provide on-site entertainment; their presence creates different land-use impacts than those of retail operations that provide adult media. If a jurisdiction permits co-location of video-viewing booths with bookstores, it should site them in locations suitable for on-site adult entertainment activities. ON-SITE ENTERTAINMENT BUSINESSES Motion picture theaters specializing in sexually oriented movies enjoy considerable Constitutional protection. An adult movie theater is a building, a land use, and a physical entity that, under applicable decisions of the U.S. Supreme Court, is entitled to certain First Amendment protections. Provide stringent regulatory control for adult uses that offer on-site entertainment. The most significant impacts of sexually oriented busi- nesses on neighborhoods involve businesses with on-site entertainment, particularly those with direct interaction between patrons and entertain- ers. These businesses should be regulated through both zoning and licens- ing ordinances. Zoning should be used to control land-use impacts, and licensing should be used to address operational issues. The simplest way to limit sexual contact between dancers and customers is to keep the dancers on stage and the customers in the audience. The prob- lem with allowing any contact is that enforcing community standards to allow some types of contact but not other types is impractical—it would essentially require one or more full-time vice officers stationed in every such establishment. By using a raised stage and barriers to keep the patrons or the performers away from each other, a community can make any physical con- tact difficult and make the enforcement effort much easier—if the dancer is off the stage or the customer is on it, there is a violation. Nude dancing is at the outer edge of First Amendment protection. The Supreme Court has concluded that nude dancing has very limited Constitutional protection. (See Chapter 5.) But jurisdictions can regulate nudity in public places if done in a content-neutral manner; such prohibi- tion does not suppress expression. Except in states like Washington, Oregon, and New York, which have strong freedom of expression provi- sions in their state constitutions, communities can probably ban and can certainly limit nude dancing. Lap dancing is not a protected form of entertainment. It is our opinion that the lap dancing is not dancing. Whether it is inherently immoral or ought to be illegal is an issue for local determination. In our opinion, how- ever, this is much closer to prostitution (sexual services for a price) than to any other form of dancing that we have encountered; it should be treated accordingly under local law and policy. There is no reason for entertainment to take place in a closed booth or private room. Like lap dancing, entertainment in an enclosed booth or private room bears no resemblance at all to dancing and is not the type of The 25-cent mini-movies and private viewing booths are accessory uses to this adult bookstore. The booths provide on- site entertainment that changes the land-use impacts of the bookstore. If a jurisdiction opts to allow such accessory uses to bookstores, the bookstores should be sited in locations suitable to those for businesses with on-site entertainment. Eric Damian Kelly Except in states like Washington, Oregon, and New York, which have strong freedom of expression provisions in their state constitutions, communities can probably ban and can certainly limit nude dancing, which our society has clearly come to understand is meant by the expression“live girls.” Eric Damian Kelly Chapter 9. Recommendations 159 performance protected by the First Amendment. It is certainly something that a community can allow if it chooses to do so—but no community should do so under the delusion that it is entertainment protected by the First Amendment. There is no compelling reason to permit video-viewing booths within a jurisdiction. Video-viewing booths generate a lot of revenue but often have the undesirable impact of serving as “masturbation booths” and environments for prostitution. We can conceive of no compelling rea- son why any jurisdiction should facilitate the proliferation of this behavior in a quasi-public location. We can find no public benefits that offset the significant public health and safety concerns that we have identified in earlier chapters. Time and technology make a difference. Thirty years ago, when the current booth technology was first distrib- uted, the only medium through which sexually oriented moving pic- tures were available to many people in many cities was through peep- shows or video-viewing booths. The courts might reasonably have found that video-viewing booths were protected by the First Amendment because of the uniqueness of their content. Today, the facts have changed. Video cassette recorders first became generally available to consumers about 25 years ago. Today, they are almost as common as television sets. Furthermore, local governments have permitted the establishment and open operation of adult movie theaters offering the same material. Finally, the Internet is rapidly making available similar content to those with computers. In short, we believe there is substan- tial ground for banning new viewing booths; that is, of course, one of many matters that ought to be reviewed carefully with local counsel before making a public policy decision. Dealing with existing viewing booths is more difficult—that must occur in the context of state law regarding vested rights and nonconforming uses in general. A jurisdiction should strictly regulate or ban “touching and encounter businesses.” “Touching and encounter businesses” have little if any Constitutional protection (see Chapter 5) and come closest to constituting a form of legalized prostitution in a community. A community may choose to allow one or more of these businesses, but a local government should not provide for them in a zoning ordinance because of any misun- derstanding that they share the same Constitutional protection as movie theaters and stores dealing in sexually oriented books and videos. These businesses include: nude encounter studios; lingerie modeling studios; nude photography studios; adult motels; sex clubs; “bath houses”; mas- sage studios not operated by medical professionals or certified massage therapists; and body-painting studios. Require massage therapists to meet professional certification stan- dards. We recommend that jurisdictions adopt massage therapist licens- ing ordinances based on the certification program of the American Massage Therapy Association (www.amtamassage.org) or The National Certification Board for Therapeutic Massage and Body Work (www. ncbtmb.com). (See “certified massage therapist” in the definitions section of Chapter 7.) If a state provides for licensing of massage therapists, a community should require them to hold a state license. SEPARATION REQUIREMENTS Separation standards for adult uses are justifiable. Requiring the sepa- ration of adult uses from residential uses and certain institutional uses is justifiable based on findings from studies that have shown that secondary impacts, including negative impacts on property values and problems “Touching and encounter businesses” have little if any Constitutional protection . . . and come closest to constituting a form of legalized prostitution in a community. Playland Gifts offers video- viewing booths next to lots of other types of merchandise. There is no compelling reason to permit video-viewing booths within a jurisdiction. There are no public benefits that offset the significant public health and safety concerns related to behavior in and around video-viewing booths that the authors and city studies have identified. Connie Cooper 160 Everything You Always Wanted to Know . . . with land-use compatibility, exist. Specifically, there is evidence of an adverse effect on real estate values of residential properties and some businesses uses within the proximity of sex businesses. Religious, educa- tional, and other institutional uses commonly found in residential neigh- borhoods are generally afforded—and typically need—the same protec- tion from incompatible land uses, including sexually oriented businesses, that is offered for residential uses. Establish minimum separation distances between adult uses and fam- ily-oriented uses. A principal purpose of zoning is to separate incompat- ible uses, and there is a basic incompatibility between an entirely adult- oriented entertainment use and a use or activity that regularly includes youth. In addition, studies in Indianapolis and Rochester show that sex businesses are likely to have negative effects on the property values of residences and similar uses within 500 to 1,000 feet. Based on these find- ings, cities should consider separation distances between adult uses and “protected uses or districts,” which include: • exclusively residential uses or districts; • houses of worship; • public or licensed educational institutions that serve persons younger than 18; • day care centers; • a public park, recreation area, or playground; • libraries, museums, and other public buildings; • entranceways into the community; • historic districts; and • transit malls. Note that it may be necessary to adjust the separation requirements for some or all of these uses if the effect of application of the separation requirements is to eliminate most or all practical sites for sex businesses. Impact of adult uses vary based on distance. Real estate professionals believe that there is a significant negative impact of sexually oriented businesses on both residential and business properties within 500 feet. These impacts are less significant if the separation between the studied use and the other use is 500 to 1,000 feet. Beyond 1,000 feet, there may be some impact, but beyond 1,500 feet, there is no basis for believing that there will be any impact on property values. The greatest impacts on property values are on other properties on the same block. Communities should consider using pedestrian or driving distances in measuring the separation. Separation requirements should be measured from property line to property line, following the route of property lines along public rights-of-way (in order to approximate pedestrian distances). For leased spaces in multitenant properties, the measurements should be from the outer boundaries of the leased space (projected to ground level, if applicable); for leased space in single-tenant properties, the measure- ments should be from the property lines. If, once separation standards are set, it is found that the number of sites for sex businesses are nearly eliminated, separation might need to be measured differently. (See below for a discussion of site availability.) Separation between adult uses. To reduce the concentration of adult uses and thus their impact on non-adult-oriented uses, it is appropriate to A principal purpose of zoning is to separate incompatible uses, and there is a basic incompatibility between an entirely adult- oriented entertainment use and a use or activity that regularly includes youth. Chapter 9. Recommendations 161 require a reasonable separation between one adult use and another. Typical separation between uses ranges from 500 feet to 1,000 feet. Separation requirements are defensible, but they must be reasonable. If separation requirements have the effect of eliminating most practical sites for sex businesses, they are too stringent. Certainly, separation require- ments keeping sex businesses off residential blocks are reasonable and defensible. There must be actual sites available for uses protected by the First Amendment. The courts have been clear in requiring that there must be sites for sexually oriented businesses reasonably available on the open market; the courts are much less clear about how many sites is enough. As a practical matter, if a community can show that there are enough avail- able but unused sites to increase the number of local businesses by a rea- sonable percentage, the limits are probably defensible. It is difficult to give numerical guidelines. If a community has only one sex business, there should probably be sites available for several more, depending on the size of the community. If a community has 80 sex businesses and there are practical sites available for 20 more, with some of those sites actually vacant and available for sale or lease, the community should be able to demonstrate that it has allowed a reasonable number of sites. APPROPRIATE DISTRICTS FOR ADULT USES Adult uses are not appropriate for neighborhood-oriented business districts. Neighborhood commercial districts are designed to be family oriented and are therefore not suitable for adult uses. This should not be interpreted to exclude retail video and bookstores that offer adult material in back rooms that do not exceed the percentage set by the jurisdictions to define what constitutes an adult use. Intense commercial and some industrial districts are appropriate dis- tricts for adult uses. Relatively intensive commercial zones work well for adult media stores and adult entertainment venues if those districts cur- rently permit on-site entertainment. These uses would, of course, be subject to the separation standards established for adult uses from protected uses. Some communities have tried to limit adult businesses entirely to industrial zones. Some adult business owners have expressed interest in highway loca- tions that are located far away from residential areas, and some industrial zones may provide such sites. In general, intensive commercial districts, such as those found along major arterial roads in many communities, are often suitable for these uses. Mixed-use districts that permit residential uses are typically not appropriate for adult uses. “Adult cabarets” or nude danc- ing establishments often flourish in areas near conventions centers, but com- munity leaders sometimes prefer to discourage such uses near downtown centers. Uses protected by the First Amendment must be allowed by right some- where. Allowing sex businesses only as conditional uses violates the fun- damental legal principles discussed in Chapter 5. It may be Consti tu- tionally acceptable to allow such uses as conditional uses in some zones, subject to clear standards of review, so long as the uses are also allowed in other zones as uses by right. STUDIES Studies provide the findings upon which to base regulations. Findings from local studies are better than studies from other communities, but the Supreme Court has been willing to accept the use of studies from other communities. Neighborhood commercial districts are designed to be family oriented and are therefore not suitable for adult uses. If separation requirements have the effect of eliminating most practical sites for sex businesses, they are too stringent. 162 Everything You Always Wanted to Know . . . Local studies enhance credibility. Undertaking a local study of adult uses and businesses that carry adult materials enhances the jurisdiction’s credi- bility with the operators of these businesses as well as the public’s view of the seriousness with which the jurisdiction is approaching the issues. And, as noted above, the courts view specific, local findings to be most valid in judging the appropriateness of regulations for such businesses. ZONING AND LICENSING Zoning is an essential but inadequate tool to regulate sexually oriented busi- nesses. The communities with the most detailed operational controls use busi- ness licensing ordinances rather than zoning to implement those controls. Licensing offers a means of continuing control. The industry often chal- lenges local regulations on the basis that the regulations are written to control problems that will not occur. A local government can use licensing to allow those businesses that create no problems to continue to operate and to shut down those where problems occur repeatedly. Note that licensing is most relevant and most defensible in dealing with businesses that involve on-premises entertainment; it is much less relevant and less defensible in dealing with bookstores and other protected retail uses. Permitting systems (licensing and conditional use) should have stan- dards. Discretionary permitting systems (including conditional use zon- ing) run the risk of being found to be prior restraints on speech. Standards should be clear. Reasonable operating restrictions are acceptable. Standards on light- ing, monitoring of booths, control of age of customers, and even on oper- ating hours are generally acceptable. Operating hours are most likely to be troublesome where many other businesses are allowed to operate 24 hours per day but sexually oriented businesses are not. Where operating hours are applied generally to businesses, they are probably a safe approach for dealing with sexually oriented businesses. Permitting systems must have time limits on the decision. Simply requir- ing that the hearing be held within a specified time or that the decision be made within 30 days after completion of all inspections or some other open- ended process is inadequate; there must be a firm deadline within a reason- able period after the submission of a complete application. Holding to such a standard will help keep a community out of court on charges that it is deliberately foot-dragging as a means of prohibiting sexually oriented busi- nesses. Delays in processing applications may also serve to undermine the legitimacy of the community’s licensing program overall. Points system. We recommend using a point system for license suspen- sions and revocations for several reasons. Most people are familiar with penalty-point systems because most state driver licensing laws use them. A point system provides a measurable and reasonably objective way of tallying the effect of cumulative offenses, some of which may, if consid- ered alone, seem minor. If each assessment of points offers the license holder notice and the opportunity for a hearing, as it should, a final hear- ing on a license suspension or revocation will be much simpler and will simply focus on the fact that the licensee has accumulated the specified number of points, not on the details of each offense. The local ordinance should be worded so that the assessment of points stands, and the facts behind it are presumed to be true, unless the licensee requests a hearing within a specified time and successfully challenges the points at the hear- ing; this approach is also similar to state driving laws, most of which allow a traffic offender to pay a ticket and accept the automatic assess- ment of points or to go to trial and challenge both. Delays in processing applications may also serve to undermine the legitimacy of the community’s licensing program overall. The industry often challenges local regulations on the basis that the regulations are written to control problems that will not occur. A local government can use licensing to allow those businesses that create no problems to continue to operate and to shut down those where problems occur repeatedly. Chapter 9. Recommendations 163 EXISTING NONCONFORMING ESTABLISHMENTS Specify the validity of an existing nonconforming use and limit that validity to that specific use only. Where an adult use is considered a law- ful nonconforming use, the right to continue such nonconforming use should be limited to that specific use and should not be extended so as to allow another adult use in its place. Accommodate improvements while addressing undesirable operational issues. Allow and encourage exterior and interior maintenance and even aesthetic upgrades at those establishments that have the right to continue to operate as lawful nonconforming uses. Use licensing to deal with unde- sirable secondary effects of operations involving on-premises entertain- ment, such as video-viewing booths. Amortization. A few communities, most notably New York City, have successfully forced the closure of existing sexually oriented businesses. The law of amortizing established land uses varies significantly by state, and it is thus impractical to make a general recommendation on amortiza- tion. Note, however, that the licensing technique recommended in this report provides a community with the ability to impose new operating standards on an existing business; through licensing, it may be possible to do such things as moving performers onto a stage (and out of the audi- ence and their laps), removing doors from viewing booths, and requiring improved lighting and public health controls—all without confronting the complex legal issues often involved in amortization. Relocation or purchase. We recommend that jurisdictions seriously consider the use of negotiated purchase and/or eminent domain to acquire some of these businesses (in states where amortization laws are severely limiting). The cost may not be great, particularly if there are opportunities to relocate the businesses to sites that would preserve much or all of the income of the business—this might include some property trades. LEGAL CONTEXT General regulations are the most likely to withstand scrutiny. Banning all public nudity or the showing of any movies in enclosed booths is much safer than regulating a particular class of performance or movies. Content-neutral regulations are more likely to withstand scrutiny than those that are content oriented. This recommendation is similar in prin- ciple to the preceding one. Banning all video-viewing booths is a general regulation; banning all video-viewing booths in sexually oriented busi- nesses (regardless of what videos are actually available in them) is not general but is arguably content-neutral. Allowing sexually oriented businesses only as conditional uses is prob- ably unconstitutional, although the Supreme Court has not directly addressed the issue. Most conditional use review processes involve the sort of discretionary decisions that the Supreme Court has found to create unconstitutional prior restraints if employed to control the establishment of uses protected by the First Amendment. In states where it is possible to set up firm criteria for conditional use reviews—such as separation requirements specified in feet and other objective standards—it may be possible to use conditional use review. If protected businesses (e.g., movie theaters and media shops) are allowed by right in some areas, conditional use reviews in other areas may withstand Constitutional scrutiny. Conditional use reviews are entirely appropriate for uses that do not have First Amendment protection (e.g., sexually oriented massage parlors, other “touching” businesses, encounter businesses, and escort services). Through licensing, it may be possible to do such things as moving performers onto a stage (and out of the audience and their laps), removing doors from viewing booths, and requiring improved lighting and public health controls— all without confronting the complex legal issues often involved in amortization. 164 Everything You Always Wanted to Know . . . Obscenity and prostitution are not protected by the First Amendment. These concerns ought to be addressed directly through criminal ordi- nances rather than used as the basis for regulating legitimate adult businesses. Remember that the First Amendment protects the message and, indi- rectly, its medium, not the business. With a movie theater, the medium and the business are essentially the same. With books and videos, they are quite different. Stay focused on the message. SEX MYTHS The sex business is a marginal business operation. The sex business is a big business. Its volume is currently measured in the billions of dollars, meaning that the demand for its products is broad—cutting across a large part of society—and deep, involving many repeat customers. All sex businesses are seedy. Not all sexually oriented businesses are ugly deteriorating operations. The sex businesses that we have visited range from those as sleazy as our worst expectations to some that were, for lack of better terms, classy and glitzy. Sex business employees are mostly transient workers. We have found that many of the employees working in adult businesses are long-time employees. Often the owner is the primary employee. Only deviants frequent sexually oriented businesses. Each store has its own clientele. The grungy ones tend to attract grungy customers, but the best-maintained and best-merchandised stores clearly attract more upscale clientele and may be frequented by couples. Not all sexually oriented businesses are ugly deteriorating operations. The sex businesses that we have visited range from those as sleazy as our worst expectations to some that were, for lack of better terms, classy and glitzy. Appendix A . Bibliography Note to Bibliography. Local studies of sex businesses are cited separately in Chapter 3, in which several are also summarized. Bettner, Jill. 1984. “After the Centerfold.” Forbes, 26 March. Cook, James. 1978. “The X-Rated Economy.” Forbes, 18 September. Delany, Samuel R. 1999. Times Square Red/Times Square Blue. New York: New York University Press. Delany, a gay university professor, bemoans the loss from New York’s Times Square of many x-rated movie theaters where he once made friends and engaged in casual sex. He argues that the “clean up” of Times Square was more about creating develop- ment opportunities for Michael Eisner and others than about ridding the city of the adult industry. Final Report of the Attorney General’s Commission on Pornography. 1986. 2 volumes. Washington: Government Printing Office. Findlen, Paula. 1996. “Humanism, Politics, and Pornography in Renaissance Italy.” Chapter 1 in The Invention of Pornography: Obscenity and the Origins of Modernity, 1500-1800, edited by Lynn Hunt. New York: Zone Books. Gettleman, Jeffrey. 1999. “L.A. Economy’s Dirty Secret,” Los Angeles Times, 1 September, p. A-1. Grad, Shelby. 1995. “Perspective: How Pornography Helped Do In X-Rated Theaters.” Los Angeles Times, 18 December, Orange County Edition, Metro Section, p. B-3. Huettel, Steve. 2000. “Adult Web Site Opens Door for Owners.” St. Petersburg Times, 13 August, Tampa Edition, City and State Section, p. B-1. Hunt, Lynn, ed. 1996. The Invention of Pornography: Obscenity and the Origins of Modernity, 1500-1800. New York: Zone Books. A collection of essays tracing the concepts of obscenity and pornography in 300 years of Western culture. Kelly, Eric Damian, ed. 2000. Zoning and Land Use Controls. New York: Matthew Bender. This 10-volume legal treatise includes comprehensive treatment of legal issues affecting the regulation of the sex industry; Chapter 5 of this report is based on Chapter 11 of the set but represents only a small part of its content. Chapter 11 is available separately from the set at the publisher’s Web site, http://www.bender.com Kendrick, Walter. 1987. The Secret Museum: Pornography in Modern Culture. New York: Viking. Kendrick, an English professor, traces the history and the contemporary concept of pornography from the spread of modern printing techniques in the nineteenth century to the evolution of film and video in the last quarter of the twentieth century. This work is much cited by others. The book takes its title from a nineteenth century listing of pornographic books kept in a locked collection. Kipnis, Laura. 1996. Bound and Gagged: Pornography and the Politics of Fantasy in America. New York: Grove Press. Kipnis, a film maker and writer, defends fantasy—even perverse fantasy—and aggressively challenges the notion that pornography leads to hate crimes or gender discrimination. Klimko, Frank. 1998. “National City to Buy X-Rated Theater.” San Diego Union, 4 August, Local Section, p. B-8. 167 168 Everything You Always Wanted to Know . . . Kronhausen, Eberhard & Phyllis. 1959. Pornoraphy and the Law: The Psychology of Erotic Realism and “Hard Core” Pornography. New York: Ballantine Books. Using case studies of several obscenity prosecutions, these well-known psychoanalysts pro- vide a landmark, and now historical, perspective on the concepts of pornography and obscen- ity in modern society. Lane, Frederick S., III. 2000. Obscene Profits: the Entrepreneurs of Pornography in the Cyber Age. New York, London: Routledge. Despite the catchy title, this book provides a contemporary and objective look at the sex business today and traces some of its history. The author also identifies the role of the sex business in supporting the development of technology, such as the home Video Cassette Recorder (VCR) in VHS format and the ability of the Internet to handle complex graphics. The book is carefully researched and provides the most comprehensive look at the industry that we have found. Lewis, J. 2000. “Controlling Lap Dancing: Law, Morality and Sex Work.” In Sex for Sale, edited by R. Weitzer. New York, London: Routledge, 211. See the bibliographic entry for Weitzer, below. Mahtesian, Charles. 1999. “Escondido’s Secret.” Governing, July 1999, 14. A glimpse at Escondido’s dilemma of what to do with a lingerie modeling business that is, in essence, a “live peep show.” Massachusetts Chapter, American Planning Association. [1997]. “An Educational Manual on How to Regulate the Location of Adult Businesses through Zoning.” This report contains a “Summary of Land Use Studies” from 14 cities, obtained from the National Law Center for Children and Families. Those summaries are somewhat more detailed than the ones provided in this report and may provide a useful reference for those communities wishing to delve further into the issue of adult uses. Otherwise, the docu- ment is, as its name implies, largely a basic “how-to” manual for writing adult-use zoning ordinances. “Maxim Magazine’s Circulation Up 87 Percent.” 2000. New York Daily News, Business Section, p. 8, 20 August 20. Miller, Leslie, and Bruce Schwartz. 1999. “Law to Protect Kids On-line Gets Court Test.” USA Today, 29 January, “Newsbytes.” Miller, Phil. 1999. “Movie Buffs Defense: Utah Not Porn-Free.” The Salt Lake Tribune, 17 January, Utah Section, p. C-1. Muller, Eddie and Daniel Faris. 1996. Grindhouse: the Forbidden World of “Adults Only” Cinema. New York: St. Martin’s Griffin. A lively and well-illustrated (mostly with ads and posters) history of the XXX-rated film industry from the 1930s to the 1970s, when the emphasis of the industry began to move to video. Neel, K.C. 2000. “Adult PPV Boom,” Cable World 12, no. 30 (24 July): 45. Rembar, Charles. 1968. The End of Obscenity: the trials of Lady Chatterly, Tropic of Cancer and Fanny Hill. New York: Random House. Excerpts from testimony and arguments at these important trials that helped to define “obscenity” in the United States. Rivero, Enrico. 1997. “Porn Pays.” Los Angeles Daily News, 20 November, Valley Edition, Business Section, p. B-1. Starr, Kenneth. 1998. Referral from Independent Counsel Kenneth W. Starr in confor- mity with the requirements of Title 28, United States Code, section 595(c) : communi- cation from Kenneth W. Starr, independent counsel, transmitting a referral to the United States House of Representatives filed in conformity with the requirements of Title 28, United States Code, section 595(c). Washington: Government Printing Office. [Published commercially as The Starr Report: the Official Report of the Independent Counsel’s Investigation of the President. New York: Prima Publishing.] Appendix A. Bibliography 169 Strossen, Nadine. 1995. Defending Pornography: Free Speech, Sex and the Fight for Women’s Rights. New York: Scribner. A powerful work by a former president of the American Civil Liberties Union; it is largely a response to and attack on feminists who attempted to develop gender-based definitions of pornography, a concept which Strossen finds both demeaning to women and indefensible legally. Talerico, Teresa. 1998. “Curtains for an Era of Porn.” Seattle Post-Intelligencer, 1 August, Lifestyle Section, p. C-1. Weitzer, Ronald, ed. 2000. Sex for Sale: Prostitution, Pornography and the Sex Industry. New York, London: Routledge. An objective, scholarly treatment of the field, mostly from interviews and other data available from and about sex workers. Much of the experience is drawn from Canada, but that experi- ence is entirely consistent with the report authors’ observations of the industry in the United States. Williams, Linda. 1999. Hardcore: Power, Pleasure and the “Frenzy of the Visible.” Expanded Paperback Edition. Berkeley: University of California Press. Original copyright, 1989. A scholarly, objective, and highly readable look at the evolution of pornography in the film industry. Yancey, Kitty Bean. 2000. “Some Try to Get Films XXX-d Off the Bill.” USA Today, 4 February, Life Section, p. 4-D. RECENT PLANNING ADVISORY SERVICE REPORTS 469. Gambling, Economic Development, and Historic Preservation. Christopher Chadbourne, Philip Walker, and Mark Wolfe. March 1997. 56pp. $32; PAS subscribers $16. 470/471. 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