SURVEY OF TEXAS APPRAISERS SECONDARY EFFECTS OF SEXUALLY-ORIENTED BUSINESSES ON MARKET VALUES CONNIE B. COOPER, FAICP ERIC DAMIAN KELLY, PH.D., FAICP IN ASSOCIATION WITH DAVID C. KEUHL, PH.D. SHAWN WILSON, MAI CRIME-RELATED SECONDARY EFFECTS SECONDARY EFFECTS OF “OFF-SITE” SEXUALLY-ORIENTED BUSINESSES RICHARD MCCLEARY, PH.D. IN ASSOCIATION WITH ALEXI ALEXANDER, J.D. LARRY BUSH, M.A. MARK VASQUEZ, B.A. TEXAS CITY ATTORNEYS ASSOCIATION JUNE 2008 TABLE OF CONTENTS Foreword ................................................................................................................................iii The Challenge ........................................................................................................................................ iii The Study ............................................................................................................................................... v The Authors ........................................................................................................................................... vi Acknowledgements ............................................................................................................................... vii Part I: Survey of Texas Appraisers ....................................................................................... 1 Introduction .............................................................................................................................. 1 Overview ................................................................................................................................................ 1 Consultant Team .................................................................................................................................... 1 Regulating Sexually Oriented Businesses ............................................................................................. 2 Secondary Impact Studies ..................................................................................................................... 2 Results of Survey of Texas Appraisers .................................................................................... 5 Scope and Design of Texas Survey ....................................................................................................... 5 Effect Proximity Has on Market Value of Single-Family Residence ...................................................... 5 Effect Proximity Has on Market Value of Community Shopping Center ................................................ 8 Effect Concentration Has on Single Family Homes and Shopping Centers ........................................ 11 Other Questions ................................................................................................................................... 13 Who Responded .................................................................................................................................. 14 Response Rate and Margin of Error .................................................................................................... 15 Summary of Appraiser Survey Findings – Sexually Oriented Businesses .......................................... 16 Sexually-Oriented Businesses and the Courts ........................................................................17 First Amendment Effect on Local Regulation of Sex Businesses – Generally .................................... 17 The Law of Secondary Effects ............................................................................................................. 22 Regulating Signage and Lighting ......................................................................................................... 35 Texas Statutes ..................................................................................................................................... 38 Lessons Learned – When Adopting Sexually Oriented Regulations ................................................... 39 Treatment of Other Uses with Negative Secondary Effects .....................................................40 Overview .............................................................................................................................................. 40 Other Uses with Negative Secondary Impacts .................................................................................... 40 Part II: Crime-Related Secondary Effects............................................................................45 1. Introduction .....................................................................................................................45 2. Evolution of the Secondary Effects Doctrine....................................................................46 Table of Contents – Study of Secondary Effects – Texas City Attorneys Association – June 2008 Page i 2.1 Young v. American Mini-Theatres ............................................................................................ 46 2.2 City of Renton v. Playtime Theatres, Inc. ................................................................................. 47 2.3 City of Los Angeles v. Alameda Books, Inc. ............................................................................. 47 2.4 Post-Alameda Books Challenges ............................................................................................. 50 3. The Criminological Theory of Secondary Effects .............................................................52 3.1 The routine Activity Theory of “Hotspots” ................................................................................. 52 3.2 What Does Criminological Theory Say About Subclasses? ..................................................... 54 3.3 The Theoretical Role of Alcohol ............................................................................................... 55 3.4 The Criminological Theory of Mitigation Strategies .................................................................. 55 3.5 But Does the Theory Apply to the Off-site Subclass? .............................................................. 59 3.6 Concluding Remarks: Criminological Theory ........................................................................... 65 4. Off-Site Case Studies ......................................................................................................66 4.1 Sioux City, 2006 ....................................................................................................................... 67 4.2 Montrose, 2003 ......................................................................................................................... 70 4.3 Alameda Books Redux: Los Angeles, 2008 ............................................................................ 73 4.4 Concluding Remarks ................................................................................................................ 74 5. San Antonio ....................................................................................................................76 5.1 The Enriquez-Cancino-Varano Null Finding ............................................................................. 76 5.2 The Results of Our San Antonio Case Study ........................................................................... 78 5.3 The “Direct Doubt” Controversy ................................................................................................ 81 5.4 Concluding Remarks ................................................................................................................ 84 6. The Statistical Model .......................................................................................................85 6.1 The Poisson Density Function .................................................................................................. 86 6.2 Risk vs. Distance from the Point-Source .................................................................................. 87 6.3 The Poisson Regression Model ............................................................................................... 88 6.4 Analytic Results ........................................................................................................................ 89 6.5 Concluding Remarks: The San Antonio Results ...................................................................... 90 7. Summary and Conclusions .............................................................................................92 Appendices ...........................................................................................................................94 Appendix A: Table of Authorities – Survey of Appraisers Report ....................................................... 95 Appendix B: References – Crime Related Secondary Effects Report ................................................. 97 Appendix C: State Enabling Act Regulating Sexually Oriented Businesses ..................................... 102 Appendix D: Sexually Oriented Business Definitions ........................................................................ 105 Appendix E: Survey Instrument – Impact of Land Use on Market Value ........................................... 109 Table of Contents – Study of Secondary Effects – Texas City Attorneys Association – June 2008 Page ii FOREWORD The Texas City Attorneys Association (TCAA) Board of Directors commissioned this study to address the problem created by Encore Videos, Inc. v. City of San Antonio, 330 F.3d 288 (5th Cir. 2003), a court case involving