OK, there’s been way more heat than light around this subject.  Here is the resolution and supporting info (pdf).

Those in support: are filled with righteous indignation that the Council would take action against the new shop.  The truth is that all we have done is asked for a review opinion from a third-party to confirm what our attorney has said.  Existing businesses are not subject to the vast bulk of the program the Council is pursuing.  As I understand it, if the Council implemented licensing provisions for the operators of such business, the existing operators would have to obtain a license.  The license requirements, as PWC found out in federal court, are not allowed to be onerous and must be applicable to that which you are regulating.

For those against: We have kicked off a program to develop the necessary background and research to enable us to regulate future sexually oriented businesses (SOB).  It will take some time to do the proper research.  Can we just copy someone else’s?  Yes, although the Federal Courts have not generally supported ordinances that are not tailored to your particular situation.  I don’t want to go to Federal Court again but if we do I want to know that we’ve proceeded by the numbers.  We went to federal court last time and our work was not done by the numbers.  It was an expensive, messy process.  We didn’t even really litigate all that much and our costs were around $400,000 (not counting settlement money paid by insurance company).  I’m not spending City money like that if I can help it.  Nothing is a guarantee but we must be prudent.  We have already initiated this process.

This process will explore the outright ban of some kinds of SOB’s (those without First Amendment protection) and the regulation of others (those with).  Is it cheap?  no.  You can’t have it both ways though – in situations that have constitutional implications we need to proceed by the numbers.  To do otherwise would be irresponsible.

AFTER that process is complete the Land Use Committee (LUC) will look at the regulation of other kinds of business that have deliterious impacts on surrounding.  This list will look a lot like the lists that other cities use: payday lenders, etc, etc, etc.  This will be looked at City-wide.  This work will begin when the first project is complete.

This has served as a wake-up call and the Council needs to take the necessary steps to regulate this so as to prevent future problems.