Nude-dance club receives 9-year property tax break
Sunday, July 31, 2011 6:12 PM
A nude-dance club here will pay no property taxes for nine years as part of its settlement of a lawsuit against the city.
Gloucester City also must pay $35,000 to the operator of Cheerleaders Gentlemen's Club, a Route 130 club that sued successfully after municipal officials tried to close it down last year.
The tax breaks and the one-time payment -- with a total value estimated at more than $180,000 -- are being provided because a federal judge in August ruled that the city had violated the club's constitutional rights. As a result, the club could require the city to pay its legal fees of some $157,000, said Jeffrey Baron, a Voorhees attorney who helped argue the case for the business.
"But the town could never have paid that amount of money (in a lump sum)," said Baron, part of a legal team for two related firms -- MAG Entertainment, which runs Cheerleaders, and MAG Realty, the club's landlord.
Much like consumers with a credit card, the city is paying more to settle its debt over an extended period, said John Kearney, the municipal solicitor.
MAG has to write a check and pay their lawyers (now). They're not going to be getting that back until over the course of nine years," said Kearney, who noted the agreement also requires Cheerleaders to upgrade its property.
The two sides submitted their settlement agreement in June to U.S. District Judge Robert Kugler in Camden. The city last week dropped its appeal of Kugler's ruling on the Cheerleaders Too suit, essentially ending the case.
Under the settlement, property taxes will be waived for the club's site from 2011 through 2015 and from 2017 through 2020. "It's a full abatement of (property) taxes," said Baron.
He said the gap between 2015 and 2017 is required because the law limits such abatements to five-year periods.
According to tax records, the club has an annual property tax bill of about $16,400 -- for nine-year savings of about $147,600.
The legal fight began after a setback for Cheerleaders in February 2010. That's when MAG Entertainment gave up its liquor license after a long fight with New Jersey's Division of Alcoholic Beverage Control.
The state agency sought to seize the license after a drunken patron, who had been ejected from Cheerleaders, killed two people while driving the wrong way on Route 130.
Shortly before it relinquished its license, court papers say, MAG Entertainment requested "clarification" from Gloucester City's planning/zoning board that it could continue to offer "go-go dancing entertainment" as a BYOB establishment. At that time, the firm noted its Route 130 site -- formerly home to the Red Oak Tavern, the Dollhouse and the Harem -- had hosted dancers for more than 30 years.
But the municipal board rebuffed the company, saying the loss of the license represented a "substantial change in the use of the property." The ruling, delivered seven days after the club had given up its license, said Cheerleaders could no longer present dancers because the club had lost its "pre-existing, non-conforming use status" under local zoning rules.
When the case went to court, Kugler rejected the board's action and derided the city's land-use rules as "Byzantine." The judge accepted MAG's argument that Gloucester City's zoning rules identified no site where a business could offer "constitutionally protected" nude dancing.
The city must identify such a site as part of the settlement agreement. Baron said no action's been taken at this time, but that he expects Cheerleaders' property eventually will become the one area zoned for adult entertainment.
Cheerleaders also is to upgrade its site, adding a deck and exterior improvements. The club also has agreed to erect a fence as a buffer between its site and nearby homes. Cheerleaders abuts the former Chatham Square apartment complex, which city officials now are seeking to redevelop as a townhome community.
The Gloucester City dispute is not related to a recent case in Mount Ephraim, where the operator of a nude-dance club sued to block a borough ordinance that banned BYOBs. That suit, filed in federal court in May, was voluntarily dismissed this month by an attorney for Jersey Girls Gentlemen's Cabaret on the Black Horse Pike.
The operator of Jersey Girls, Gregorio Russo, agreed in June to pay combined fines of $12,000 for six violations of the borough's BYOB ordinance.
The Mount Ephraim dispute did not involve the right to show unclad dancers. A previous owner of the club, once known as the Fantasy Show Bar, won that battle in the 1980s with a case that eventually went to the U.S. Supreme Court.
Gloucester City also must pay $35,000 to the operator of Cheerleaders Gentlemen's Club, a Route 130 club that sued successfully after municipal officials tried to close it down last year.
The tax breaks and the one-time payment -- with a total value estimated at more than $180,000 -- are being provided because a federal judge in August ruled that the city had violated the club's constitutional rights. As a result, the club could require the city to pay its legal fees of some $157,000, said Jeffrey Baron, a Voorhees attorney who helped argue the case for the business.
"But the town could never have paid that amount of money (in a lump sum)," said Baron, part of a legal team for two related firms -- MAG Entertainment, which runs Cheerleaders, and MAG Realty, the club's landlord.
Much like consumers with a credit card, the city is paying more to settle its debt over an extended period, said John Kearney, the municipal solicitor.
MAG has to write a check and pay their lawyers (now). They're not going to be getting that back until over the course of nine years," said Kearney, who noted the agreement also requires Cheerleaders to upgrade its property.
The two sides submitted their settlement agreement in June to U.S. District Judge Robert Kugler in Camden. The city last week dropped its appeal of Kugler's ruling on the Cheerleaders Too suit, essentially ending the case.
Under the settlement, property taxes will be waived for the club's site from 2011 through 2015 and from 2017 through 2020. "It's a full abatement of (property) taxes," said Baron.
He said the gap between 2015 and 2017 is required because the law limits such abatements to five-year periods.
According to tax records, the club has an annual property tax bill of about $16,400 -- for nine-year savings of about $147,600.
The legal fight began after a setback for Cheerleaders in February 2010. That's when MAG Entertainment gave up its liquor license after a long fight with New Jersey's Division of Alcoholic Beverage Control.
The state agency sought to seize the license after a drunken patron, who had been ejected from Cheerleaders, killed two people while driving the wrong way on Route 130.
Shortly before it relinquished its license, court papers say, MAG Entertainment requested "clarification" from Gloucester City's planning/zoning board that it could continue to offer "go-go dancing entertainment" as a BYOB establishment. At that time, the firm noted its Route 130 site -- formerly home to the Red Oak Tavern, the Dollhouse and the Harem -- had hosted dancers for more than 30 years.
But the municipal board rebuffed the company, saying the loss of the license represented a "substantial change in the use of the property." The ruling, delivered seven days after the club had given up its license, said Cheerleaders could no longer present dancers because the club had lost its "pre-existing, non-conforming use status" under local zoning rules.
When the case went to court, Kugler rejected the board's action and derided the city's land-use rules as "Byzantine." The judge accepted MAG's argument that Gloucester City's zoning rules identified no site where a business could offer "constitutionally protected" nude dancing.
The city must identify such a site as part of the settlement agreement. Baron said no action's been taken at this time, but that he expects Cheerleaders' property eventually will become the one area zoned for adult entertainment.
Cheerleaders also is to upgrade its site, adding a deck and exterior improvements. The club also has agreed to erect a fence as a buffer between its site and nearby homes. Cheerleaders abuts the former Chatham Square apartment complex, which city officials now are seeking to redevelop as a townhome community.
The Gloucester City dispute is not related to a recent case in Mount Ephraim, where the operator of a nude-dance club sued to block a borough ordinance that banned BYOBs. That suit, filed in federal court in May, was voluntarily dismissed this month by an attorney for Jersey Girls Gentlemen's Cabaret on the Black Horse Pike.
The operator of Jersey Girls, Gregorio Russo, agreed in June to pay combined fines of $12,000 for six violations of the borough's BYOB ordinance.
The Mount Ephraim dispute did not involve the right to show unclad dancers. A previous owner of the club, once known as the Fantasy Show Bar, won that battle in the 1980s with a case that eventually went to the U.S. Supreme Court.
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