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Meanwhile petitioner had its architects draw up plans for
remodeling. In or around January 1990, petitioner submitted
these plans to the Building and Safety Department for approval.
In March 1990 county officials notified petitioner that the
proposed remodeling, by increasing seating capacity in the
complex, would also increase the required minimum parking
capacity for the complex from 36 to 55 spaces. At the time,
available parking was limited to 39 spaces. For the next year
and a half the remodeling plans were suspended while petitioner’s
management attempted to rent or purchase additional parking
space. After numerous inquiries, Krontz successfully negotiated
for the purchase of a nearby parcel. The sale agreement was duly
submitted to the county for approval, but the county refused, on
the ground that petitioner’s use of the land for additional
parking would contravene a preexisting ordinance imposing a
moratorium on the expansion of adult entertainment businesses.
Accordingly, Krontz arranged for an affiliate named MIC, Ltd.
(MIC), to purchase the land and rent it to petitioner. Under the
final terms of the deal, MIC acquired the land for $490,000,
financed in part by a loan of approximately $150,000 from
petitioner, and MIC leased the land to petitioner at a rental
rate of $8,000 per month. The record does not disclose the dates
of the sequence of events leading to the conclusion of the lease
agreement.
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