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Property Rights Trump Zoning In Colorado
By: Mark Kernes (Courtesy of avn.com)
Posted: 2/28/2006

DENVER – Veteran adult business defenders Art Schwartz and Michael Gross have just won a couple of major victories over Colorado zoning ordinances statewide, where local authorities have attempted to close an adult cabaret and a bookstore based on set-back violations but have been overruled by the state appeals court.

The cases are JAM Restaurant v. City of Longmont, and NADA Associates v. City of Longmont; the former being the owner of Bella’s Cabaret and the latter owning the Mile High Emporium bookstore. In each case, Longmont, which had no adult zoning ordinance until August, 2001, was inspired to pass one after Bella’s Restaurant lost its liquor license and decided to reinvent itself as a topless club. The ordinance contained a provision forcing adult businesses that were too close to "sensitive uses" – in this case, residential neighborhoods – to either move or close with a six-month amortization.

"Mile High Emporium has been prosecuted twice for obscenity and they got two not-guilty verdicts a few years ago," Gross recounted. "They’ve been there forever and never had a problem. Then Bella’s opened up, and apparently he ran a bar and they took away his liquor license and so he went all-nude. They didn’t have a zoning law back then, but he was pretty close to some residences, so they passed an ordinance with a six-month amortization. Bella’s started the whole thing going."  

Bella’s time ran out in early 2002, and the Schwartz firm filed suit at that time, challenging the ordinance and alleging various licensing irregularities, and the case was set for trial in November, 2003.  

Unfortunately for Longmont, the state legislature passed a property rights protection law, §38-1-101(3)(a), which became effective June 6, 2003. That law prohibits a local government from terminating or eliminating by amortization a nonconforming property use that was lawful at when that use first began – effectively preempting Longmont’s zoning amortization plan.

"The story behind that is, the original version of this law passed by our right-wing Republican legislature and signed by a right-wing Republican governor, had an exclusion for adult businesses," Gross explained, "and apparently a fairly liberal Democratic Senator took out the anti-adult provision, telling them [the other legislators] that it might well be unconstitutional, and they knew the Constitution well enough to take that out. But I guess his intention was, if they took out the adult exclusion, that that would poison the law enough that they wouldn’t pass it. But instead, they said, ‘Screw it; we’re going to pass it anyway.’ And they did, and the governor signed it."

Of course, this put Colorado at the crest of the wave that gained tremendous strength with the U.S. Supreme Court’s decision last year in Kelo v. City of New London, an eminent domain case brought under the U.S. Constitution’s Fifth Amendment prohibition of taking private property for public use without just compensation. Kelo granted sweeping powers to municipalities to condemn properties and turn them over to developers with the expectation that the redeveloped properties would create a higher tax base. The decision set off a firestorm of protest among conservatives, who mounted federal and state campaigns to create laws that would severely restrict the powers given to municipalities by Kelo.

"Our governor and our legislature should be proud that they’re protecting the property rights of small businesses, even if that small business happens to be an adult cabaret," said Gross wryly.

However, after the Colorado district court found for Bella’s under §38-1-101(3)(a), Longmont appealed on the basis that the court had applied the new law retroactively, since the JAM lawsuit had been filed before the new law took effect. JAM/Bella’s cross-appealed the trial court’s finding that the judicial review provisions of the city’s zoning ordinance violated the First and Fourteenth Amendments to the U.S. Constitution.  

"Longmont asserts zoning is a local matter," wrote Judge Kirschbaum, a retired Colorado Supreme Court Justice sitting by special appointment, "that there is no need for statewide uniformity, and that local flexibility is required when municipalities make amortization decisions. It also contends there is no statewide interest in zoning regulations that address amortization issues. We are not persuaded."  

"Section 38-1-101(3)(a) prohibits a local government from terminating or eliminating by amortization a nonconforming property use that was lawful at its inception," the opinion continued. "Longmont argues the trial court retroactively applied the statute to allow JAM’s nonconforming use more than one year after that use became illegal. Longmont also contends because JAM’s amortization period expired more than one year after the effective date of the statute, the trial court erred in concluding the statute barred Longmont’s claims regarding amortization. We are not persuaded… Section 38-1-101(3)(a) applies to injunctions sought after its effective date. Because Longmont did not seek to enforce the zoning provisions of the ordinance until after the statute became effective, no retroactive application of the statute occurred."  

In what had to be delicious irony, the appeals court, for its precedent as to the effects of the state statute’s anti-retroactivity provision, looked to Z.J. Gifts D-2, L.L.C. v. City of Aurora – a case that Gross had lost in the Tenth Circuit Court of Appeals the previous year, but which provided the ammunition that the appeals court could use to support his contentions in this case.  

"The trial occurred in 2003; the judge ruled in June of 2004," Gross said. "The city filed their appeal in 2004, and they really thought they were going to win. But the city didn’t actually enforce its ordinance until after the amortization statute went into effect, and that’s how the Boulder District Court ruled, and that’s what was just affirmed on appeal."

Though the ruling itself was as to Bella’s, a concurring opinion found for Mile High Emporium on the same grounds, referring directly to the JAM/Bella’s case.

"There’s a rumor that the city spent a tremendous amount of money on this case, but I can’t verify it, so I’m not going to throw out the numbers," Gross told AVN.com. The [Denver] Post just ran a story that called property rights ‘the civil rights issue of the 21st century.’ Some of these municipalities are all about persecuting small businesses, but fortunately, even if the First Amendment doesn’t save us, the Fifth Amendment may help."


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