Houston- During the 10 years the city has fought in court for tougher rules regulating Houston's strip clubs, it has also accepted at least $6 million of their money.
That's the city's cut from nearly half a billion dollars in beer, wine and liquor sales inside the dozens of topless clubs that have operated since 1997, according to state tax records examined by the Houston Chronicle.
That was the year the City Council adopted a strict new ordinance regulating the clubs and other places defined as sexually oriented businesses. Among many new rules, the law prohibits them from operating near schools, churches, parks and one another.
A federal judge recently gave the city permission to enforce the ordinance, which has been fought in federal and state courts for a decade. A looming crackdown could force the clubs to close, move or change their operations to comply with the law.
The legal fight hasn't stopped the city and Harris County, which gets an equal portion, from collecting the industry's tax money.
From one perspective, the sales figures and resulting tax revenue show a thriving industry popular among some residents, tourists and conventioneers.
"The numbers reveal the degree to which this is something that people patronize," said John Weston, a Los Angeles-based attorney leading the preparation of a federal appeal on behalf of Houston's cabarets. "There's a huge infusion of capital that the city jeopardizes by trying to close these cabarets."
The opposing view is that the money reflects a tiny fraction of the city's overall operating funds — a $600,000-per-year slice of money the city can afford to sacrifice to limit sex businesses.
"I always have concern when the government is collecting revenues from businesses that aren't in the best interests of the constituents," said City Councilman M.J. Khan, who likened the cabaret proceeds to lottery revenue.
"I can honestly tell you that the city would not lose any services if these revenues were eliminated," he said.
The divergent views on the tax revenues are just the latest disagreement between the city and the industry, which police say also includes adult bookstores, modeling studios and other businesses that offer sexually explicit material or nude entertainment. Many of those businesses, too, are facing a crackdown.
The city has set aside at least $1.3 million to defend the ordinance. In the decade since it was enacted, the industry has lost battles over the constitutionality of several provisions, including restrictions on how close dancers can perform to patrons, and whether clubs can have private "VIP" rooms.
Earlier this year, U.S. District Judge Nancy Atlas of Houston upheld the location restrictions, which also prevent the businesses from operating near largely residential areas. Atlas found in her decision that there were enough alternative sites for the clubs to relocate and comply with the ordinance.
Weston and other lawyers have asked the 5th U.S. Circuit Court of Appeals in New Orleans to stop the city's pending enforcement so they can prepare an appeal of Atlas' decision.
At least 16 cabaret clubs also recently filed challenges in Harris County district courts, seeking more time to recoup their investments before the Houston Police Department's vice unit moves in.
And last week, a Houston bookstore went to federal court seeking a stay of enforcement on the grounds that its "primary purpose" isn't oriented to sex, officials say.
Pat Zummo, a private lawyer hired by the city to handle the litigation, expects to hear that argument often as the city begins enforcement.
"From the side of the bookstores, the video stores and arcades, they are all talking about, 'What can we do to make sure less than half of our inventory is sexually oriented?' " he said.
The police don't consider stores with "incidental" sex merchandise, such as a few magazines, sexually oriented businesses. Rather, they say they are focused on those where customers' primary reason for entering is to buy adults-only products.
Houston police Capt. Steve Jett, who heads the vice unit, said some places are using non-sex items as cover.
"Those places are not selling more copies of Lassie Come Home than they are Debbie Does Dallas," he said.
As the city defends the ordinance on these fronts, the topless clubs' tax revenues continue flowing.
To calculate the totals paid to the city and Harris County, the Chronicle examined a decade of "mixed-beverage" tax data released under the Texas Public Information Act by the state comptroller's office.
The examination linked that data with lists of topless clubs provided by Houston police and a roster of current mixed-beverage permit holders on file with the Texas Alcoholic Beverage Commission.
Numerous clubs over the 10-year period switched names or owners, changing their permit numbers, but many remained in the same location. The Chronicle included the tax figures of former establishments known to have operated as topless clubs at those locations.
Clubs with totally nude performers, which don't pay mixed-beverage taxes because they aren't allowed liquor permits, weren't included in the analysis. Neither were the businesses' sales taxes, which are private, or their property taxes, which might apply regardless of how the property was used.
The topless clubs pay 14 percent of their gross mixed-beverage sales to the state. The city and Harris County each get a 10.7 percent cut of the state's take, state and local officials say.
County officials could not be reached for comment on the possible loss of revenue from topless clubs within the city.
The $6 million from topless clubs represents only about 8 percent of the total mixed-beverage revenue collected by the city from all restaurants and bars since 1997, the records show.
Much of that $6 million was concentrated in the larger, popular and more expensive clubs. The county and city each received $870,000 from Treasures and $450,000 from The Men's Club during the 10-year period.
Asked whether he was concerned about the potential loss of mixed-beverage revenue should these clubs close, Mayor Bill White said, "People can find a place where they can have a drink that doesn't need to degrade women."
Councilwoman Ada Edwards contends that the city would save money spent on vice enforcement by closing the clubs.
