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provided that no two topless dance clubs could operate within 1,000
feet of each other and that topless dance clubs were required by
April 4, 1986, to apply to the City of Houston for a permit to
conduct a sexually oriented business (SB).
The Club had applied timely for an SB permit, but on April 25,
1986, because the Club was located within 1,000 feet of Texas
Cowgirls (another topless dance club that purportedly had been in
existence longer than the Club), its application for an SB permit was
denied. Under the denial order, the Club was to be permitted to
remain in operation until March 31, 1990, so that the owners could
recoup their capital investments in 2618 Inc and in the Club.
In 1986, petitioner initiated litigation on behalf of 2618 Inc
against the City of Houston, Texas Cowgirls, and its successor, the
Body Shoppe, involving the denial of the SB permit. The primary
underlying issue in the litigation concerned whether the Club or
Texas Cowgirls had been in operation longer.
Litigation over the SB permit negatively affected the value of
2618 Inc and of the Club, and without an SB permit continued
operation of the Club was in doubt.
On November 27, 1989, during a hearing before the District Court
of Harris County, Texas, with regard to the SB permit, Helmle
testified that the market value of the Club with an SB permit would
be at least $2 million. Helmle also submitted a report at the
hearing in which he represented that since 1980 the Club had made an
average of over $2 million in gross alcoholic beverage sales per year
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