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An appeals court in Manhattan yesterday reacted skeptically to New York City’s arguments that a law regulating topless bars and adult bookstores in the city was valid under the state Constitution.

The law would restrict businesses that sell any amount of adult entertainment or books from operating in residential areas or within 500 feet of churches and schools.

The City Council enacted it in 2001 as an amendment to 1995 zoning regulations know as the “60/40 rule.”

Under 60/40, businesses selling adult entertainment or books could operate anywhere in the city as long as they did not devote more than 40 percent of their floor space to adult content.

The Court of Appeals has approved the constitutionality of the rule, which was based on a study that claimed adult businesses reduce the value of surrounding property and contribute to an increase in crime.

Though numerous adult businesses closed their doors after the law passed, many changed to comply. The city, under former Mayor Rudolph W. Giuliani, said the businesses were in sham compliance and pushed for an amendment that would apply to businesses selling any amount of adult entertainment, however small.

When the City Council amended the law in 2001, it did not offer another study to support a claim that despite the 60/40 law, adult businesses were still detrimental to communities.

Owners of several establishments sued, arguing that the law would relegate their businesses to a few areas zoned only for commercial use.

Last year, they won summary judgment from state Supreme Court Justice Louis York. He said the new law unconstitutionally regulated speech without showing a rational basis for doing so. The case was Tens Cabaret Inc. v. City of New York, NYLJ (Sept. 16, 2003, p. 18).

The city argued yesterday to the Appellate Division, First Department, that the law was not an attempt to eliminate adult entertainment and that no further studies were necessary.

“This law regulates adult establishments away from residential areas,” said Assistant Corporation Counsel Elizabeth S. Natrella.

Herald Price Fahringer, one of the attorneys representing the adult businesses, said, “I think the specter here is that this is a campaign to get rid of them.”

Justices Eugene L. Nardelli, Richard T. Andrias, David Friedman and Betty Weinberg Ellerin heard the argument, with Justice Andrias asking the most questions of either side.

From the moment Ms. Natrella began her argument, Justice Andrias suggested that the city was simply unhappy with the way the 60/40 rule had turned out.

“Now you want to revisit it in a micro-managing way,” he said. “That’s really all you’ve done here.”

Ms. Natrella said the Court of Appeals had invited the City Council to return to the law and change it if it chose. Justice Andrias replied: “I can’t see that. That’s your twist on it.”

Ms. Natrella argued that the city should not have to start from scratch each time adult businesses refashioned themselves, when previous studies showing the businesses’ negative aspects were still valid.

She conceded under questioning from Justice Ellerin that the 60/40 clubs had not been studied but said the new businesses were reasonably similar to the old ones.

Mr. Fahringer, who represents For the People Theatres, a book and movie store, argued that the previous studies dealt with different businesses and had no bearing on those in compliance with the 60/40 rule.

“These studies were done with places that were all-adult,” he said.

Justice Andrias wondered whether Mr. Fahringer’s reliance on the lack of a new study, rather than a larger constitutional issue, might be “a bad argument” in the long run, implying that the city could eventually conduct another study.

But Mr. Fahringer and another attorney, Mark J. Alonso, suggested there was nothing to study, because 60/40 businesses did not harm the surrounding communities.

‘Different Places’

“There has been a change,” Mr. Fahringer said. “These are different places now.” He said adult book and movie stores now sell popular books and movies, often at cheaper prices than competitors.

Mr. Alonso, who represents the club Ten’s Cabaret, said that police reports, obtained through Freedom of Information requests and submitted to Justice York, showed that today’s 60/40 adult clubs did not hurt residential neighborhoods or increase crime.

“They come in below elementary schools in causing adverse secondary effects,” he said.

Martin P. Mehler, who represents the Pussycat Lounge, also briefly argued on behalf of the adult businesses.

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