Tag: sexually oriented businesses

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News The Fly-By

Sex and Real Estate

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Urban Land Institute trend-watcher Chuck DiRocco says everything comes down to real estate.

“If an adjustable-rate mortgage resets from $600 a month to $900 a month, that’s $300 in disposable income that people are not spending elsewhere,” DiRocco said. “It’s going to affect commercial real estate down the line.”

As one of the authors of the land institute’s Emerging Trends in Real Estate, DiRocco was in Memphis last week to present the study’s findings and to discuss which markets are the “ones to watch.”

And, frankly, Memphis wasn’t one of them.

In terms of commercial and multi-family development potential, the study ranked Memphis 38th out of 45 metropolitan areas. Topping the list were Seattle, New York, Washington, D.C., Los Angeles, San Francisco, and Boston.

“The top markets to watch fall on the coast,” DiRocco said. “It all comes down to global pathways.”

That and what the study calls “24-hour cities.”

“For years, Emerging Trends has extolled the handful of America’s 24-hour cities — multifaceted markets with desirable, walkable residential neighborhoods near commercial cores: New York [City], Washington, D.C., San Francisco, Boston, and Chicago. These markets — along with Southern California’s suburban agglomeration and more recently Seattle — have gained further status as the preeminent U.S. global gateways,” read the report.

With the economy on a downswing, investors want to be safe, not sorry. But DiRocco noted that logistics experts are beginning to look inland for global gateways. And that is where local panelists think Memphis could succeed.

“Though we’re not a port city,” said local panelist Jim Mercer of CB Richard Ellis, “I think we’re probably the next best thing.”

With FedEx’s hub and the busiest cargo airport in the nation, Memphis is uniquely situated to become what experts call an “aerotropolis,” a city built around a bustling airport and aviation-intensive businesses.

But, as DiRocco says, everything depends on real estate.

Which might explain why, later that same day at a public hearing, representatives from airport area businesses and the Memphis medical community spoke against the city’s proposed sexually oriented business ordinance.

The area around the airport includes an unlikely combination of Smith & Nephew, Medtronic, Elvis Presley Enterprises, FedEx, and various adult businesses.

If enacted, the city ordinance would replace a new county ordinance that outlaws topless dancing and prohibits alcohol in the clubs. The city ordinance would allow beer sales and topless dancing.

If the City Council decides to do nothing, the county ordinance will go into effect countywide January 1st.

“We would prefer to adopt stricter guidelines,” said Bill Griffin, a senior vice president with Smith & Nephew. “We want to make the area around the airport a nice place to do business.”

John Lawrence, head of the Airport Area Development Corporation, said member businesses were concerned about the secondary effects of sexually oriented businesses, such as crime and falling property values.

“Today, it’s an area where industry is bringing in prospect after prospect. They’re bringing in doctors, researchers. Do we value these businesses?” Lawrence asked.

It seems strippers are standing (or dancing) in the way of Memphis’ potential in the global economy. But that’s not quite fair. As a representative for the sexually oriented businesses, attorney Edward Bearman pointed out that nothing in the new ordinance makes sexually oriented businesses safer or reduces crime.

“The reason the clubs are located near the airport is because that’s where the zoning will allow them,” he said. “They have money invested in this town, just the same as other businesses.”

I’m not going to get into whether clubs should close at 3 a.m. or midnight or whether they should allow beer sales or brown-bagging, nude dancing or semi-nude dancing.

But if the city’s goal is to encourage global pathways through Memphis, then the airport area is a precious commodity. Elvis Presley Enterprises, for instance, has a $250 million plan to transform the area around Graceland much like Disney did in Anaheim, California.

If the city doesn’t enact an ordinance, the county ordinance might regulate the strip clubs right out of business. I’m not sure that’s right, but lap dances and back rooms don’t seem to fit with a global commercial hub and an international tourist destination.

Adult businesses may offer something to see, but they won’t make Memphis a market to watch.

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Politics Politics Feature

A Tiff Over TIFs

Shelby County commissioner Mike Ritz is a first-termer who, on issues ranging from outsourcing Head Start programs to combating sexually oriented businesses, has indicated a willingness to stick his neck out. He is about to do so again.

This week, Ritz threw down the gauntlet against funding a developmental proposal which the University of Memphis is pushing hard and which Ritz sees as an out-and-out rip-off of the taxpayers.

The projec, approved by a 7-2 vote in committee Wednesday and up before the full commission next week, t would require TIF (tax increment financing) outlays for a portion of the adjacent Highland Street strip as a “gateway” to the university. The premise of TIF projects is that they generate significant increases in the tax base over the long haul.

“These TIFs are supposed to be used for public projects,” Ritz says. These include such things, as he has pointed out in notes sent to the media, as housing developments, street and sewer improvements, lighting, and parks.

But the Poag McEwen Lifestyle Center project on Highland, as Ritz sees it, is little more than a “gift” to the developers, who propose building a retail center/apartment complex on the west side of Highland from Fox Channel 13 north to the site now occupied by Highland Church of Christ.

“The University of Memphis is running interference for something that shouldn’t get done,” says Ritz, who maintains that the developers would be using a total of $12 million from the city and county and would be under no obligation to pay any of it back.

“There has been no analysis done on this project, and it contains no performance requirements,” says Ritz, who argues in his distributed notes about the project that “retail centers move sales and jobs around, they do not grow local economy; [there is] no growth of jobs or tax base.” In a conversation this week, he added, “It’s like moving checkers around on checkerboards. There’s no lasting benefit.”

Ritz’s statement of concern comes on the heels of two new reports.

One report from county trustee Bob Patterson notes that 120 local companies have tax freezes under PILOT (payment-in-lieu-of-taxes) programs and that some $44 million worth of county property taxes and 372 parcels of land are involved in the programs.

Another report, from the Memphis and Shelby County Industrial Development Board’s performance and assessment committee, indicates the likelihood of default by several corporations on obligations relating to their tax breaks under PILOT programs. Under the circumstances, Ritz says, the Highland project amounts to an additional “giveaway” which the county simply can’t afford.

University of Memphis officials have been aggressively promoting the project as a way of shoring up the university’s “front door.” One who concurs is veteran U of M booster Harold Byrd, who has had his differences with university president Shirley Raines concerning her lack of enthusiasm for an on-campus football stadium, of which Byrd has been a strong proponent.

But Byrd says he’s on “the same page” with Raines about the Highland Street project. “It would shore up an area that, particularly south and west of campus, has begun to deteriorate.” Citing what he says is a prevalence of “cash-for-title businesses, pawnshops, and fortune tellers,” Byrd says, “It’s definitely a distressed commercial and retail area.” Moreover, he says, “the residential area south of the university is in strong decline.”

Both circumstances would respond positively to the proposed Poag McEwen Lifestyle Center, he said, and the “gateway” aspect of the project would benefit the entire community, not just the university area itself. (For more on this perspective, see In the Bluff, p. 10.)

On the first round on Wednesday, the Highland TIF project, which has the imprimatur of the Memphis and Shelby County Redevelopment Agency, got preliminary support on the County Commission, too. The 7-2 vote in favor (Wyatt Bunker joined Ritz in opposition) came despite a recusal from Commissioner Steve Mulroy, a University of Memphis law professor.

The commission is scheduled to take up — and approve — the measure on a formal vote next week.

• This coming week sees the formal completion of the 2007 Memphis election cycle, with four City Council runoffs being decided on Thursday, November 8. The contests are between Stephanie Gatewood and Bill Morrison in District 1; Bill Boyd and Brian Stephens in District 2; Harold Collins and Ike Griffith in District 3; and Edmund Ford Jr. and James O. Catchings in District 6. Pre-election updates,as well as full coverage of the results, will be posted on the Flyer Web site and in next week’s print issue.

Categories
Opinion Viewpoint

A Clean-Up, Not a Burial

In an 11-0 vote, the Shelby County Commission recently passed an ordinance regulating “sexually oriented businesses” (the aptly named S.O.B.s). While most will say it’s about time, civil libertarians might worry about a New Puritanism. Fear not: This is not some Moral Majority crusade to Disney-fy Memphis but a relatively moderate regulation to weed the industry of a few bad apples.

Secondary effects: Throughout the County Commission’s discussion of this ordinance, I stressed that it is not our place to shut down all adult businesses based on our moral disapproval. Instead, we must regulate such businesses to narrowly target what the courts call their “secondary effects” — increasing crime and decreasing property values in surrounding areas.

We know such secondary effects are here in Memphis, as evidenced by the studies prepared and compiled by the national experts we hired.

Background checks: The new ordinance is provided under state law as a model for counties to adopt. It says adult-business owners and employees must get an operating license. The license will involve a background check to ensure that within recent years they haven’t committed certain crimes associated with S.O.B.s — prostitution, public indecency, rape, exploitation of minors, etc. If an owner or employee commits such a crime, their license is revoked for five years.

County consultant Eric Kelly, an Austin, Texas-based national expert on these issues, has worked on similar ordinances throughout the country. He’s told us that in cities with such laws, most S.O.B.s continue to operate but in compliance with the law. Businesses that base their profits on prostitution and other illegal activities fall by the wayside. The intent here is not to ban all S.O.B.s but to make them behave themselves.

That’s not to say the ordinance is perfect. A few doubts nag.

Alcohol: First, the model ordinance bans alcohol at S.O.B.s. Not even “brown bagging” is allowed. Reasonable people can disagree about the wisdom of this provision, but my vote was influenced by some practical and legal realities.

All S.O.B.s in Shelby County are in the city of Memphis. Once the county adopted the state-supplied model S.O.B. ordinance, it applies, by default, inside Memphis, unless the city adopts its own new law. If the county removed the liquor ban or changed any other part of the model law, it could not apply inside Memphis, making our action almost meaningless.

At the same time, my consultations with City Council members made me think it likely the city would adopt its own ordinance, likely one without the liquor ban. In such a case, the county’s ordinance could serve as a useful “backstop” to the city’s. That is, S.O.B. operators mulling a court challenge to the city ordinance might think twice before doing so, since invalidating the city law would only result in the tougher county ordinance automatically becoming effective inside Memphis.

Kelly tells us the alcohol ban needn’t kill all adult businesses in Memphis. Instead, it will force S.O.B.s to change their business model so they don’t rely on liquor sales for their profits, as S.O.B.s in other cities have done. But if the City Council wishes, it can enact its own ordinance allowing alcohol.

Bookstores: The ordinance regulates all adult bookstores the same as strip clubs, even bookstores without private booths for viewing porn and engaging in sex acts. Since adult bookstores without the infamous booths have less of a connection to secondary effects and more of a First Amendment argument that they promote “speech” rather than “conduct,” I am sponsoring a resolution encouraging the sheriff to enforce this law only on those bookstores with “on-site viewing.”

Zoning: Finally, the ordinance fails to address the problem of long-established S.O.B.s operating in residential areas (rather than the industrial-zoned areas where they belong), simply because they were grandfathered in under our zoning laws. To address this problem, I am sponsoring land-use code changes which would remove such grandfather protections for businesses that violate the S.O.B. ordinance. Over the long term, we want adult businesses in industrial zones, not residential ones.

Our new ordinance comes not to bury adult businesses but to clean them up. It’s one that neither Jerry Falwell nor Larry Flynt would like, which is fine by me.

Shelby County commissioner Steve Mulroy is a professor of law at the University of Memphis, where he teaches constitutional law, including First Amendment issues.