CALL TO ORDER:

The Regular Meeting of the Beaverton City Council was called to order by Mayor Rob Drake in the Mayor’s Conference Room, Third Floor, City Hall, 4755 SW Griffith Drive, Beaverton, Oregon, on Monday, September 15, 2003, at 6:10 p.m. Present were Mayor Drake, Couns. Betty Bode, Dennis Doyle, Fred Ruby, Forrest Soth and Cathy Stanton. Also present were Chief of Staff Linda Adlard, City Attorney Alan Rappleyea, Assist. City Attorney Bill Scheiderich, Community Development Director Joe Grillo, Police Chief David Bishop, City Recorder Sue Nelson, Valley Times Reporter Christina Lent, and The Oregonian Reporter Ryan Frank.

Coun. Soth MOVED, SECONDED by Coun. Doyle, that Council move into executive session in accordance with ORS 192.660(1)(f) to consider records that are exempt by law from public inspection and in accordance with ORS 192.660(1)(h) to discuss the legal rights and duties of the governing body with regard to litigation or litigation likely to be filed. Couns. Bode, Doyle, Ruby, Soth and Stanton voting AYE, the MOTION CARRIED unanimously. (5:0)

The executive session convened at 6:10 p.m.

The executive session adjourned at 6:45 p.m.

The Regular Meeting of the Beaverton City Council resumed at 7:00 p.m. in the Forrest C. Soth Council Chambers, 4755 SW Griffith Drive, Beaverton, Oregon.

ROLL CALL:

Present were Mayor Drake, Couns. Betty Bode, Dennis Doyle, Fred Ruby, Forrest Soth and Cathy Stanton. Also present were Chief of Staff Linda Adlard, City Attorney Alan Rappleyea, Finance Director Patrick O'Claire, Community Development Director Joe Grillo, Development Services Manager Steven Sparks, Senior Planner John Osterberg, Engineering Director Tom Ramisch, Utilities Engineer David Winship, Traffic Engineer Randy Wooley, Operations/Maintenance Director Gary Brentano, Library Director Ed House, Police Chief David Bishop, City Recorder Sue Nelson and Deputy City Recorder Catherine Jansen.

CITIZEN COMMUNICATIONS:

There were none.

COUNCIL ITEMS:

Coun. Stanton noted corrections/additions to the minutes of August 18, 2003 and September 8, 2003. She gave the corrections to the City Recorder.

Coun. Ruby abstained from voting on the September 8, 2003, minutes for he was not present at the meeting.

STAFF ITEMS:

There were none.

CONSENT AGENDA:

Coun. Soth MOVED, SECONDED by Coun. Doyle, that the Consent Agenda be approved as follows:

Minutes of Regular Meetings of August 18, 2003, and September 8, 2003

03206 - Traffic Commission Issues No. TC 526-528

03207 - Revise Adopted Priorities for Consideration of New Traffic Signals

03208 - Revise Traffic Enhancement Program Funding Related to Traffic Signal Conversions to Protected/Permissive Operation

03209 - ZMA 2003-0015 – Canyon West Lexus Dealership Zoning Map Amendment

Contract Review Board:

03210 - Bid Award – Lombard Avenue Waterline, Farmington Road to Broadway; and Scholls Ferry Road/Jamieson Road Waterline Repair

Question called on the motion. Couns. Bode, Doyle, Soth, Ruby and Stanton voting AYE, the MOTION CARRIED unanimously. (5:0) Coun. Ruby abstained from voting on the minutes of September 8, 2003.

PUBLIC HEARING:

03211 - APP 2003-0008 Fantasy Video 24-Hour Operation; Appeal

Community Development Director Joe Grillo read a prepared statement defining the process that needed to be followed for this hearing, including the various required disclosure statements (in record).

Grillo asked if any Councilor had a potential or actual conflict of interest to declare.

There were none.

Grillo asked if any Councilor had an ex parte contact to declare.
There were none.

Grillo asked if any Councilor wished to declare any site visits.

Coun. Bode reported she visited the Fantasy Video parking lot on Sunday afternoon; she drove through the parking lot but did not get out of her car.

Grillo asked if any member of the audience wished to challenge the right of any of the Councilor’s to participate in this hearing, or wished to request a continuance of the hearing to a later date.

Bradley J. Woodworth, Bradley J. Woodworth & Associates, Portland, attorney for Oregon Entertainment Corporation (applicant), reported that prior to the convening of the meeting, his associate, Mr. Perriquey, overheard what appeared to him to be an ex parte contact between Coun. Stanton and an interested witness. He asked Perriguey to summarize the conversation. He requested that Coun. Stanton recluse herself from participation.

Lake Perriguey, Attorney, Bradley J. Woodworth & Associates, Portland, said he overheard Coun. Stanton speaking with a gentleman about a difficult decision she made in a previous matter and then counseling him to focus on the criteria related to the decision being made today, specifically the livability criteria. He said he thought it was odd that a councilor would be counseling a witness. He added this was after she asked him on which side he would testify.

Mayor Drake replied that he would consult the City Attorney.

City Attorney Alan Rappleyea explained ex parte contacts were contacts outside the hearing process which, if there was a contact, allowed people to respond. He said he could easily see Coun. Stanton being unaware this was an ex parte contact, as it was at the Council meeting. He said he did not perceive advising a citizen to attend to the criteria to be detrimental or outside the scope of the hearing. He asked if Coun. Stanton would elaborate on what transpired and then the applicant could be allowed additional questions if he wished to further his objection to that contact.

Coun. Stanton stated that she often spoke with citizens in the Council Chambers prior to a Council meeting and she did not have ex parte contact with anyone before this meeting. She apologized to everyone and said she did not include this contact in her review of conversations prior to the hearing. She explained that Councilors can always talk about process. She said while she was talking with Mr. Haas (who is a friend) she asked why he was there. He told her he was there on this issue and asked her about the process. She said she told him if he chose to testify, he needed to speak to the criteria in the Code because that was the only thing they could use to make a decision. She advised him there was a staff report on the back table where he could check the criteria and she thought Criterion 5, which referred to compatibility issues, was a good one to review since he had said he was in favor of the appeal. She said she was comfortable this was not an ex parte contact about a decision, but about the process.

Rappleyea asked the Council to decide if Coun. Stanton could participate in the hearing.

Mayor Drake said his determination was as Chair; Coun. Stanton had been an elected official in this community for a long time. He said he had not heard anything in what Woodworth’s associate or Coun. Stanton reported, that would bias her either way. He said he thought she was trying to get people to address criteria rather than non-related issues. He noted hearings can tend to drift and not stick to the issue, and one of issues was criteria. He said he thought Coun. Stanton said she was not sure which side of the issue Mr. Haas was on. He said as Chair, he determined she was not biased, and while it was a less-than-cautious comment, it showed nothing in terms of bias.

Coun. Soth stated based on what they heard from Woodworth and his associate, as well as Coun. Stanton’s response, he agreed with Mayor Drake.

Mayor Drake asked if any of the Council disagreed with that opinion.

Couns. Doyle, Bode, Soth, and Ruby acknowledged that they agreed with Mayor Drake.

Mayor Drake thanked Woodworth for his comment and noted since there was no disagreement, he would reject that challenge.

There were no other challenges to the right of any of the Councilors to participate in the hearing.

Grillo described the order of the public hearing process.

Mayor Drake asked for the staff report.

Development Services Manager Steve Sparks introduced Senior Planner John Osterberg, the Project Planner for the Conditional Use application and subsequent appeal. Sparks explained this was an appeal of the Planning Commission’s decision granting 24-hour operation of a permitted use in the Community Service Commercial Zoning District (CS). He said in the CS Zone a Conditional Use Permit was required to operate between the hours of 10:00 p.m. and 7:00 a.m. He explained this same CUP request was denied by the City in 1999. He said the Planning Commission considered this fact, as well as the new materials, in rendering its decision.

Sparks said first it was important to note the conditions in 2003 were not the same as in 1999; specifically, the City had a new Development Code with different Conditional Use approval criteria. He noted current approval criteria were on Page 10 of the report; the 1999 approval criteria were on Page 11. Second, he noted there was a new Comprehensive Plan, which was different from 1999. He said the list of applicable Comprehensive Plan policies were on Pages 308 through 324. Third, he said the applicant presented an operational record of the store for the past 4 ½ years. He said when the Planning Commission and Council considered this in 1999, the store had only been open for six months and did not have the record it had today. He said one of the primary concerns of appeal and denial in 1999 was the issue of public safety. He said part of the information submitted by the applicant was in response to those findings. He said these were the three main differences.

Sparks concluded that staff’s recommendation was to open the public hearing and take testimony from interested parties, weigh the testimony against the approval criteria and render a decision tonight on whether or not to approve the appeal.

Senior Planner John Osterberg noted two letters were received today for the record: 1) A letter from Larry and Barbara Stewart, dated 9/11/03; and 2) A letter from Marie Flagg, dated 9/11/03.

Mayor Drake noted the City received three small packets from Mr. Kane at 4:59 p.m. which were entered into the record but not copied because the Code required that material be at City Hall by 4:30 p.m. to be copied by the City. He asked the City Attorney to comment on the general nature of that material.

Rappleyea replied the material concerned rebutting testimony and arguments from Woodworth, including the expert testimony supplied by the applicant, and testimony from people opposed to the application.

Sparks explained the 2003 Code had six approval criteria; in 1999 there were three criteria. He noted Criteria 1, 2 and 6 were procedural in nature: 1) Application meets the threshold requirements for a Conditional Use application; 2) All City fees were paid; and 6) Applications and documents were submitted in the proper sequence. He said the substantive changes were in Criteria 3 and 5. In the 1999 Code Criteria 2 stated the proposed development would comply with the Comprehensive Plan. He noted in the current Code Criteria 3 said the proposal will comply with the applicable policies of the Comprehensive Plan. He said that was a significant distinction, in 1999 the proposal had to comply with the whole Comprehensive Plan; currently, the proposal has to comply with the applicable policies (Pages 308 through 324 of the record).

Sparks noted in 1999 Criteria 3 said the “location, size, design and functional characteristics of the proposed use are such that it can be made reasonably compatible with and have a minimum impact on the livability and appropriate development of other properties in the surrounding neighborhood.” He said in the current Code Criteria 5 read “The location, size and functional characteristics of the proposal are such that it can be made reasonably compatible with and have a minimal impact on the livability and appropriate development properties in the surrounding area of the subject site.” He noted in 1999 the Code spoke about proposed use (instead of proposal) and surrounding neighborhood (instead of surrounding area). He said Criteria 4 was new and read “The size, dimensions, configuration and topography of the site, and natural and man-made features on the site, can reasonably accommodate the proposal.”

Coun. Soth asked if the quotes from Pages 307 through 328 were direct quotes from the Development Code.

Sparks confirmed the criteria from the current Development Code and the references to Comprehensive Plan policies were direct quotes.

Coun. Soth asked on Page 327, in the small paragraph above Summary of Findings, the second line referenced a fast-food restaurant. He asked if that was a misprint.

Sparks replied it was; it should be for the retail establishment.
Coun. Stanton noted the July 16, 2003, staff report did not address all the policies. She asked if that precluded anyone testifying or Council from bringing up another policy that was not stated in the staff report.

Sparks replied that would not preclude anyone from stating additional policies might apply.

There were no further questions.

Mayor Drake opened the public hearing.

APPLICANT:

Bradley J. Woodworth, Bradley J. Woodworth & Associates, attorney for applicant, Oregon Entertainment Corp. (OEC), said he felt the amount of time given to the applicant to make their case, given the burden of persuasion and proof that they bear, was not consistent with their due process rights. He introduced Bruce McLaughlin; Kevin Burgee, Project Architect; Brian Prusse, MAI, appraiser who performed the property value impact analysis in the record; and Tracy Blakeslee, owner, Fantasy Video. He noted the applicant submitted statements of statutory and constitutional rights involved in this hearing, including: Article 1, Section 8 of the Oregon Constitution, involving free speech rights; Article 1, Section 20 of the Oregon Constitution, involving equal protection rights; the First, Fifth and Fourteenth Amendments of the US Constitution, regarding due process rights; the applicant’s request for the right to question witnesses; and their free speech rights under the Federal First Amendment. He stated all these arguments were renewed. He noted he submitted to the City Attorney a request that Council make preliminary rulings.
He asked for the Council’s ruling on the lack of controlling effect of the 1999 Land Use decision, as this was a new application.

Mayor Drake stated he believed Council was of the opinion this was a de novo hearing and they could give it the proper weight it would be afforded. He did not believe Council wished to exclude it from the hearing.

Woodworth asked that the Council rule on his request to cross-examine adverse witnesses.

Mayor Drake said he believed the Council would deny that request because there wasn’t any provision in the Code for that. In 1999 the court specifically rejected that, and this was not a court of law, it was a land use hearing.

Woodworth stated they were requesting that Mr. Anthony Bonforte’s testimony not be accepted as expert testimony. He added they submitted controlling legal authority establishing that there was no controlling effect of the 1999 decision. He noted Development Code Chapter 50 allowed a renewed application after a period of one year; this application was four years later and was well within this right.

Woodworth stated the applicant developed and submitted an application that met all applicable approval criteria. He stated the staff report was thorough and determined the application complied with all applicable criteria. He added the Police Department did an analysis of alleged crime concerns in light of Fantasy’s four years of operation, and found no significant crime impact from this operation.
Woodworth urged Council to be guided by the dictates of the Oregon Supreme Court in the Anderson vs. Peden case which stated “concerned neighbors’ testimony may be considered insofar as it bears on the objective factors important to the future of the area affected by the proposed used.” He stated Council must disregard expressions of opinion, fear and moral opposition, and that it only consider facts and objective evidence that bear on the applicable approval criteria.

R. Bruce McLaughlin, AICP, Indian Rocks Beach, Florida, reviewed his qualifications which were in the record. He noted the appellant, Mr. Kane, suggested McLaughlin had no expertise in adult entertainment uses because he did not talk about the Young and Renton cases. McLaughlin noted his report, (Page 42) discussed the myth created by Young and Page 59, set forth the written requirement for evidence. He addressed what he felt was the reprehensible nature of Mr. Kane’s comments. He stressed he had substantial experience in adult use issues and in traffic planning. He noted concern was expressed about traffic impact on 107th Avenue, a neighborhood route intended for some through traffic. He said the proposed extended hours would add 13 trips per day, a maximum of two per hour; the Level of Service would remain A and during the overnight peak hour of the store the intersection delay would increase by 1/10th of one second per vehicle. He stressed there was no traffic impact.

McLaughlin continued, stating under the new criteria an application can only be denied if there were significant adverse impacts and those impacts could not be mitigated. He stated there would not be any adverse effects. He said the 24-hour use of the store was consistent with the Comprehensive Plan and with the Zoning Code. He said this was a good site, well away from residential areas and typical of commercial locations in the other 49 states. He noted two objectors, Mr. and Mrs. Schaefer, were more than 1,000 feet from Fantasy and relatively few of the adult-use zoning ordinances outside of Oregon had segregation requirements greater than 1,000 feet. He said he did an empirical analysis, using relevant protocols (crime, property values, blight, vacancy rates and occupancy turnover) and other businesses. He said there weren’t any higher crime rates or calls for police service at adult video stores than at Hollywood Video and fast-food restaurants. He noted the Police Department didn’t have a problem with the application, finding only minor incidents after a four-year track record. He said the City checked with Portland and did not find evidence of harm or prostitution. He repeated there wasn’t any evidence of higher crime, calls for police, prostitution, vice or gangs.

McLaughlin stated the application complied with the Comprehensive Plan policies, as noted on Page 12 of the staff report. He stated property values around the adult book stores increased an average of 33.34%, and property values around the five control uses increased an average of 21.54%. He stated Prusse’s report reached similar results. He said there was no blight, a typical vacancy rate and no evidence of high tenant turnover. He said there was a myth about secondary effects which started with Detroit. He stated Mr. Kane was giving Council third and fourth-hand information. He referred to an exhibit titled A “Snapshot” of Local Government Adult Use Studies which he said explained how most local government adult use studies reached the same inaccurate results. He stated that studies compiled by New York City, New York, Evansville, Indiana, Fulton County, Georgia, and St. Paul, Minnesota were the correct studies. He said there was no evidence of secondary effects. He said the City’s analysis and his analysis had not found any evidence of harm. He noted the City had permitted fast-food restaurants to have extended hours.
McLaughlin noted the Phoenix government study was in the record and it found no harm with 24-hour operations for adult entertainment establishments. He said the extra hours of operation had the potential of creating a safe haven and the application met all the criteria and should be approved. He explained the Phoenix study was analyzed by someone trying to justify a more restrictive ordinance in Dallas, Texas. He quoted the results of the Phoenix study, from Page 71 of his report, “The findings showed that the adult businesses had no higher level of crime than the control areas and in some cases a lower incidence of crime. Interviews with businesses and residents within the areas showed little difference between the control and study areas. Interviews with police officers who regularly patrol the areas showed little difference in the problems encountered between sexually oriented businesses and other late night businesses.” He repeated the application met all the criteria and the opposition relied on shoddy data and reasoning and on the speculation/conjecture that there was harm but there wasn’t any evidence of harm. He noted the staff analysis and Police record indicated a four-year track record of no evidence of harm; studies of demand on police resources elsewhere show those resources were not heavily taxed at the hours at issue, so the application should be approved.

Coun. Soth noted in McLaughlin’s report on property values (Page 708 of the record), he concluded “Similar results were observed in Beaverton.” He asked how he arrived at this conclusion and if he checked the Washington County tax records.

Laughlin replied he did check the tax records and there were established protocols for this type of analysis. He said they created study areas around Mr. Peeps in Portland, Fantasy Video in Beaverton, two Hollywood Videos, a store called Beaverton Paperbacks (in the same area as one of the Hollywood Videos) and two Jack-in-the-Box restaurants. He said they obtained property value data from the County assessor's office for a period of several years and found that the property values around the two adult uses increased about 30% compared to 21% for the other uses.

Coun. Soth asked if that was the conclusion on Page 1137 of the record, which showed the tabulation of the market values from 1995 to 2003.

McLaughlin explained that was Prusse’s report; he and Prusse had different analyses and reached similar conclusions using two distinctly different methods.

Coun. Soth noted that according to that table, from 1995 to 2003, Fantasy increased from $565,000 to $853,000. He asked why the restaurants had a much greater value than the Park Plaza West property. He noted the Burger King property increased from $1.3 million in 1995 to $2,341,000 in 2003 (Page 1137 of record).

McLaughlin replied Burger King remained steady from 2000 to 2003, and Fantasy Video increased about $22,000 in that same period.

Woodworth explained this page from Prusse’s report was County data. He noted there was a separate section where he looked at sales.

McLaughlin noted there was a typo on Page 1137; Column 1, the $9,010,030 value was Park Plaza West. He said from 2000, after Fantasy Video opened, it increased in value $1.5 million.
Coun. Soth noted on Page 365 of the record, the last paragraph, third line states “will provide a well-lit” area. He asked if that included all of the Fantasy Video property.

Woodworth said that was the application prepared by his office and it referred to the lighting in the Fantasy parking lot area and in the building entryway area. He said the nature of the lighting was discussed in the staff report. He said they also submitted a diagram of the lighting, with the foot candles, and the camera surveillance plan. Ninety-nine plus per cent of the Fantasy parking lot was covered with surveillance cameras which were recording. He said some of that surveillance spilled over to the adjoining properties of Village Inn and Park Plaza.

McLaughlin explained the design was undertaken under the principle of “Crime Prevention through Environmental Design” (CPTED), which laid out the guidelines for such things as lighting.

Coun. Soth noted there was testimony in the record about a traffic conflict on coming out of the Fantasy parking lot into the common driveway. He asked if any steps were taken to address that intersection.

McLaughlin noted there were two driveways from the Fantasy property, one close to Beaverton-Hillsdale Highway and one further south. He said they would be more than prepared to put a white line and white stop sign there to ensure traffic stops. He said they were even prepared to close that driveway and use only the southern driveway, except the owner of Park Plaza had created a median there that traffic could not get over. He said the traffic would have to make a huge U-Turn on the Park Plaza property to use the southern driveway. He said his client was prepared to do anything it took to enhance traffic safety and that detail could be imposed as a condition of approval.

Coun. Doyle asked that he expand on the vehicle trips by hour and the impact of traffic during the expanded hours.

McLaughlin noted the current data, from the Brown Report, began on Page 428 of the record and covered Taboo Video (an all-night video in Portland). He said it showed the peak hour for this use would be twelve trips between 6:00 a.m. and 7:00 a.m., and 27 trips between 10:00 p.m. and 11:00 p.m. He noted Page 429 of the record showed that 80% of that traffic would travel on Beaverton-Hillsdale Highway and 21% onto SW 107th Avenue. He said in the p.m. peak, the total was 27 trips maximum, during the extended hours.

Coun. Stanton asked on Page 429 of the record, Table VI, if the “Trip Distribution as a Percent of All Trips” was over the 24-hour period, rather than over a specific time frame.

McLaughlin replied the percentages were over the 24-hours; there might be a slight deviation in the late night/early morning hours but he thought it would be essentially the same. He noted the late hours were on Page 430 of the record.

Coun. Stanton asked what 21% of the total was, since the concern was traffic impact.

McLaughlin noted Page 432, Table VIII, Traffic Volumes with Late Night Operations, showed the average was two cars per hour.
Coun. Stanton asked McLaughlin what the percentages were for, in the prepared statement.

McLaughlin explained they were increases in property value in the subject and control areas.

Coun. Stanton asked what he meant in reference to historic Beaverton Paperbacks.

McLaughlin said he did not mean to use the term “historic” in relation to Beaverton Paperback. He said Beaverton Paperback, on Canyon, was selected as a separate control use and then they merged it with one of the Hollywood Videos because they were very close in the study area.

Coun. Stanton questioned its location in relation to Hollywood Video.

McLaughlin replied that if she looked at Page 1087 of the record, Beaverton Paperbacks was within one of the other control areas and they merged the two because of the proximity; the map was on Page 1093. He noted he would straighten this out during the rest of the testimony and answer her question during rebuttal.

There were no further questions from Council.

RECESS:

Mayor Drake called for a brief recess at 8:20 p.m.

RECONVENED:

Mayor Drake reconvened the meeting at 8:30 p.m.

APPELLANT:

Henry Kane, Beaverton, appellant, said he lived in Beaverton for 30 years and he worked to make Beaverton better. He said he was working to prevent Beaverton from becoming an area of high crime, declining property values and declining livability. He stated that every part of the Comprehensive Plan had to be obeyed; one could not pick and choose. He noted this case began four years ago, it went to LUBA and the Oregon Court of Appeals and the Council’s decision was affirmed at both levels. He stated Council could hear old evidence; in addition, LUBA and the Court of Appeals interpreted the Comprehensive Plan and the Code. He said that interpretation became part of the meaning of the Comprehensive Plan and the statute. He stated the people had won, and to be told “it does not govern” by a layperson was an insult. He said he was present at the July 23, 2003, Planning Commission meeting when a layperson mentioned the myths of secondary effects; he added it was also said again tonight and that he knew about Renton. Kane read from Mrs. Frank’s statement, “The record in this case reveals that Renton relied heavily on the experience of and studies produced by the City of Seattle. In Seattle, the adult theater zoning ordinance was aimed at preventing the secondary effects.” Kane said secondary effects were real and every public body that looked at the matter found that if adult businesses were brought in, there was higher crime. He said that because crime did not occur on the premises, did not mean it did not occur.

Kane noted testimony from a woman who was accosted by a customer coming out of Fantasy Video. He also noted testimony about Everett banning downtown mini-casinos and adult facilities because they did not fit in with a livable community. He said that no one from the City of Beaverton supported this. He said this was wanted by someone he thought did not live here and it was not wanted by the victims. He noted a few months ago a young man died in a Fantasy Video on Burnside (in the record) and a few years ago a man died in the one in Tigard. He said the Fantasy Video manual said to “not let a police officer inside the booths.”

Kane continued by stating Criteria 3 (from 1999) was Criteria 5 today. He said LUBA and the Court of Appeals ruled that the City’s interpretation was correct. He said they would receive more testimony from the prospective victims. He said as a former tenant of Park Plaza West, he told the Planning Commission he would not reopen an office there because clients would assume he was not making much money and was in the low rent district because there was a sex store. He said he would not want to work there, especially late at night, with people walking out who were stoned, dangerous, drug addicts, prostitutes, etc. He noted there was testimony in the record that women employees at Plaza West were scared to come in early or leave late. He stated the Code was not hypotechnical. He said he brought into the record facts that were not in the staff report including the zoning map. He said the map showed hundreds of single-family homes in the area from 107th to 103rd Avenues, from Kennedy to Laurel. He said he talked to those people and they know what will happen. He noted there was a bus stop there and asked if people would want to wait for the bus if Fantasy Video had extended hours. He noted Coun. Soth had shown there was a loss in property values. He noted in the record there was a woman who lived by D. K. Wilds and because her property was in an undesirable location, the assessor had reduced the valuation more than $14,000. He said he hired experts on economics and a PhD, and he cited two US Supreme Court cases on the qualifications of an expert. He stated McLaughlin was not an expert; he might know land use planning but land use planning was not being discussed here. He said they were talking about the effects of after-hour operations of sex stores.

Kane questioned how the Police Department could not predict what would happen in the extended hours when there was the experience of D. K. Wilds. He talked about the studies on no-loss values. He asked if the appraiser looked at the assessed values of properties next door to the use; that would have given them actual figures rather than glittering generalities. He said many people called to express their concerns and he told them to read the Comprehensive Plan and the staff report. He said some of them did and did not like what they read. Kane said he was present when Osterberg ordered the Planning Commissioners to approve it. He said McLaughlin said they had to approve it because it was constitutional. He said the Commission was misled by spin doctors.

Coun. Soth asked Kane if he recognized the changes that occurred in the Code since 1999; since he referred to what the criteria was in 1999 for this application. He asked how his testimony fit the current Code.

Kane responded he spent hours trying to figure out the substantive changes. He said Criterion 3 became Criterion 5, but it had no change in terms of purpose, intent and effect. He said he did not feel he misunderstood the Code. He stated the statutes say the cities and counties will protect property rights, and that tonight they were dealing with that and the protection of public safety and livability.
Coun. Soth asked Kane if he believed the 1999 decisions and appeal affirmations, governed what was done today. He noted the Code provided for a new application after one year; he asked how the 1999 decision governed what happened today since this was a new application and four years had passed since the 1999 decision.

Kane replied there was no statute of limitations concerning evidence. He said what was important was that LUBA and the Court of Appeals said this was what the Comprehensive Plan and criteria meant and that meant they did not have to worry about it being vague; it said “protect.” He said the only way this second application could be granted would be by making a finding supported by the evidence that there would be no harm to speak of; less than a smidgeon. He said there were people ready to testify that it would be more than a smidgeon. He said they relied on the harm caused at Park Plaza West, and LUBA and the Court of Appeals accepted that as true. He said they would get new evidence on Park Plaza West that they could rely on and they had the benefit of what LUBA and the Court of Appeals said.

Coun. Soth noted Kane had testified to the condition of people who left Fantasy Video. He asked if he had any documented evidence, such as police reports, to substantiate what he said.

Kane replied yes and noted in the 2003 reports, the Police reported 41 police incidents at D. K. Wilds (a 24-hour operation) and Chief Bishop said 75% of those arrests took place after 2:00 p.m.

Coun. Soth said he was trying to determine if that was for this issue now; he asked Kane if those arrests took place in 1999. He said he was interested in hearing what had happened now.

Kane said they did not know what happened because they did not have a complete report from the Police Department files. He said they were told the Police Department would not consider what happened at Fantasy Video between 10:00 p.m. and 7:00 a.m. excessive; in effect, they said there will be higher crime, but it wouldn’t be excessive. He said that was a slippery term. He said the material about national crime rates by hours was available and for the Police Department to give sound advice, more was needed than what was provided. He said that may be significant to an eighty-year-old widow living in the Sandberg subdivision (400 feet from Fantasy Video), where people could come wandering into the subdivision.

Soth said he took exception to Mr. Kane’s remark that Mr. Osterberg ordered the Planning Commission to approve the Conditional Use. He said Mr. Osterberg was a staff person and did not order the Planning Commission to do one thing or another; Mr. Osterberg advised the Planning Commission if requested to do so.

Kane said he had a copy of the audio tape and it came across to him as an order; he could recognize an order when he heard one. He said the Planning Commission said “they had to do it” because they were told by Mr. McLaughlin that Fantasy had a “constitutional right” to the conditional use permit. He said if he lost here he had made a record and the citizens would win a second time at LUBA. He said after the Council heard the evidence of people who were not sophisticated but knew when something was being done to them, the Council would see this was a serious matter.
Mayor Drake advised Mr. Kane his argument was over and he had gone beyond answering Coun. Soth’s question.

Coun. Ruby said he would like to follow up concerning the criminal activity at the Fantasy Video location and the other adult video store in Beaverton, D. K. Wilds (24-hour operation). He asked about the 41 police calls at D. K. Wilds; he said it was important for the criminal history covering the last four years to be explored. He referred to a memorandum from the Beaverton Police (July 11, 2003) to John Osterberg; the memorandum was an analysis of the criminal reports at those locations since 1999. He said the memorandum stated that “because of its unique position, being one of only two adult merchandise stores in the City, we felt it was prudent to do a brief analysis comparison of calls generated at both sites since 1999.” He said the report (D. K. Wilds address) generated 41 reports since 1999. He said of those 41, 12 reports were pulled and their significance to the type of business was evaluated; of those 12, only four were significant, each was a trespass where a customer refused to leave and had to be arrested, three had been drinking and one fell asleep in a viewing booth and would not come out. He asked if Kane knew why the 12 reports were pulled for analysis.

Kane said he tried to get the reports, but was told by the Police the reports would cost him $410.00.

Coun. Ruby asked if the Police Chief could explain if the reports were significant.

Chief Bishop said they pulled a random sample of reports to determine the type of calls. He said most of the calls were self-initiated by the Police Department; some pertained to sting operations or the prostitution decoy program, some were traffic incidents and some pertained directly to the business.

Coun. Ruby said he was not on the Council in 1999, but he read the information and decision process, and the reason the Council denied 24-hour operation in 1999 for Fantasy Video was its concern that extended hours would contribute to increased serious crimes (prostitution, drugs, illicit behavior, etc.). He asked the Police Chief if his memorandum was stating that in the last four years they had not seen that type of activity at the D. K. Wilds location.

Bishop replied that was correct and the calls for service weren’t any different than any other 24-hour operation in town.

Coun. Ruby noted that the Chief’s memorandum also stated that in the last four years Fantasy Video generated five police reports during its current hours of operation, none of which were statistically significant.

Bishop stated that was true. He noted that in the last three months there were three calls in that area, but they were not directly tied to the adult business.

Coun. Stanton asked Chief Bishop if based on his opinion of the application, was he comfortable with the steps that had been taken, if the Council upheld the Planning Commission decision.

Bishop responded they were comfortable, but the Police Department would continue to monitor the business.

Coun. Doyle read from Page 351 of the record “both the police chief and public information officer testified of the extensive number of arrests that occurred in the vicinity of this establishment after 10:00 p.m. during a particular sting operation, indeed more than they could reasonably process.” He noted they were talking about D. K. Wilds and asked the Chief if he felt the statement was true.

Bishop responded they would continue to perform sting operations; they had done them at Fantasy as well as the other adult establishments in Beaverton. He said at the beginning of the operations, the activity was high, based on the fact that it was new and had not been conducted in Beaverton (pro-active enforcement). He said today the number was going down somewhat because it was known the Police would not tolerate that type of activity.

Coun. Bode asked Chief Bishop if the Police Department had ever done a sting operation at a 24-hour food service business or at a Starbuck’s.

Bishop replied yes, they had, at Starbuck’s for curfew sweeps and late-night activities by young people. He noted citizen complaints generated the sweeps and there were arrests.

Mayor Drake commented to Mr. Kane that he had the opportunity to work with Mr. Osterberg for more than a decade and his style was not demanding or commanding; he was a mild-mannered and gentle man. He noted the Planning Commission was a seasoned Commission; whether the Commission made the right decision on Fantasy Video was somewhat irrelevant, as it was very independent. He said the Council usually concurred with the Planning Commission decisions, but on occasion acted otherwise. He noted the Commission was independent and respectful, and Mr. Osterberg could not command the Commission, nor would the commissioners follow if he did so. He said Mr. Kane was entitled to his opinion but he hated to leave the citizens with the impression that a staff member was a bully or the Planning Commission was blindly led.

Kane said Osterberg had not said the Planning Commission had the right to deny it.

There were no other Council questions.

Mayor Drake asked if there was anyone present to testify for an authorized group, such as a Neighborhood Association Committee or government agency.

There was no one who wished to testify for a group.

TESTIMONY IN SUPPORT OF APPLICATION

J. A. Atwood, Portland, said he was Mr. Blakeslee’s (applicant) landlord for this store and his Burnside store. He stated Blakeslee operated a first-class retail operation; the stores were well-lit, well-stocked, meticulously maintained and had excellent security systems. He stated this was a legal business and extending the operation to 24-hours would enhance the area because it would provide additional activity, lighting and the presence of people in the area at late night hours which would have a positive effect.

Atwood noted the Planning Commission voted 7-0 in favor of granting the extra hours of operation. He said the Commissioners basically did not agree with the business, but they had to follow the City Code and the criteria, and the application met all the objective criteria for the extended operation. He said in reference to Mr. Kane, that it was easy to criticize, but he did not see Mr. Kane putting forth any evidence of any problems associated with the Fantasy Video Store. He added the Park Plaza West was in the same zone as Fantasy Video. These zones prohibited business from 10:00 p.m. to 7:00 a.m. He commented he was not able to find a Conditional Use Permit that Mr. Kane had, or presently has, to do business after 10 p.m. He noted the other businesses were closed during the extended hours and he did not think there would be any adverse impact from the 24-hour operation.

Coun. Soth asked if he was the owner of the Village Inn and noted on Page 301 of the staff report he was identified as the owner of that property.

Atwood replied that was incorrect; he wrote a letter to the Planning Commission early in the process regarding vehicles being towed from the Village Inn by the owner of Park Plaza West, but he did not claim to be the owner of the Village Inn property.

Richard Burke said he was representing the Libertarian Party. He said he had no interest in the Fantasy store and he was a conservative person. He said this appeal was being driven by the desire of some well-intentioned people to use government to advance a social agenda. He said in the guise of land use, appeal opponents were trying to practice censorship. He spoke about the First Amendment of Oregon’s Constitution and noted its provisions were stronger than the Federal Constitution. He stated these cases tested the concepts of free expression. He said he visited Fantasy Video and it was clean, well-run and mindful of security. He noted they paid taxes, provided jobs and appeared to be good corporate citizens and he felt they should be able to operate any hours they choose provided they maintained those standards. He said he hoped the Council would respect the rights of a legitimate business and choose to treat the citizens as adults, by letting them choose whether or not to patronize adult businesses.

Coun. Stanton confirmed Burke was representing the Libertarian party and asked if this issue was voted on by the party members.

Burke explained the Libertarian Party had a platform and they had State committee meetings where the Party would take positions on issues. He said this issue had come up before and his statements tonight were consistent with the Party platform. He said the Party felt issues like this were best settled by the communities themselves, not government. He said they always opposed the use of government force to achieve a social goal.

Tom Cox, Hillsboro, Chair of Libertarian Party of Oregon, said the purpose of land use zoning was to protect all property owners, tenants and neighbors. He noted there were people present who wished the appeal to succeed because they do not like the content of the store. He said if the motive was to silence lawful speech he had no sympathy. He said if there were property owners who were worried about the effect on property values or quality of life, then he sympathized and noted the law was not the only recourse citizens had.

Cox continued by explaining he was working with an organization called The Oregon Association of Club Executives (ACE). He said it was a trade association that sought to create a partnership and dialogue between adult-oriented businesses and the public, including neighbors. He invited all interested parties to contact ACE; he said they were committed to ensuring that neighbors were not harmed by the operation of adult businesses.

Coun. Soth explained the Council was considering a Conditional Use Permit for a retail establishment that had no bearing on the type of business.

Cox said he was gratified to hear that and agreed that was correct.

Coun. Bode asked for clarification on the statement about less government and more citizen.

Burke said what they were after was the least corrosive way to solve a problem. He said going to government to pass an ordinance was more corrosive than handling it through a civil system.

Coun. Bode responded that all the Councilors were citizens of Beaverton and they took an oath to represent the wishes of the citizens of Beaverton.

Dan Chang, Beaverton, owner of Village Inn Restaurant, said he lived in Beaverton and owned/operated the Village Inn for the last 17½ years. He said when Fantasy Video came in four years ago, he was apprehensive because he thought they would have an adverse effect on his business. He said they were a very good neighbor and they took care of the property. He said he felt they would continue to be a good neighbor during the extended hours.

Coun. Stanton asked if he leased the building.

Chang replied he leased the building from Senator Hartung.

There was no further testimony in support of the application.

RECESS:

Mayor Drake called for a brief recess at 9:30 p.m.

RECONVENED:

Mayor Drake reconvened the meeting at 9:35 p.m.

TESTIMONY IN SUPPORT OF THE APPEAL

Howard Dietrich, Portland, stated he owned, as partner or as sole owner, the properties known as Michaels, Mill End, Uwajimaya, Park Plaza West, and the Leonetti Building. He noted through the many years the Mill End Store had been in Beaverton, they worked with Mr. John Osterberg and had found him to be of the highest professional category.
Dietrich stated the value of Park Plaza West had declined significantly over the periods from 2000 to 2003 and continued to decline. He stressed he felt property values should be protected and the extension of Fantasy’s hours would not protect surrounding property rights and values would continue to decline. He said his property’s vacancy factors increased from a 10% vacancy in 2000 to 46% vacancy now. He reported a significant amount of cut- through traffic from Fantasy Video through his property to Fifth Avenue. He asked for a condition, if this was approved, that right turns would not be allowed out of any of the entrances onto the road, so that the traffic would be directed onto Beaverton Hillsdale Highway. He said Fantasy did not have an easement through Park Plaza’s property, but they could not stop cars going through Park Plaza property. He explained the office buildings had traditionally remained open beyond 10:00 p.m., especially for CPA’s during tax season and other parties. He concluded there was different criteria for office buildings versus commercial tenants; this was a pre-existing use on that property from the beginning.

Coun. Soth referred to Page 1137 of the record, which showed the compilation of property values from Washington County’s Taxation Division. He stated it indicated the Park Plaza property value in 2000 was $640,000 and in 2001 it was $746,000. He noted there was a decrease of less than $3,000 in 2002 to $743,000, and that was what it was today.

Dietrich stated when he purchased the property a year ago from Key Bank in a foreclosure, he had an appraisal which indicated the property value in 2000 at $16,500,000. He said he purchased it for approximately $9,000,000. He explained the assessed value numbers in the tax records have no relation to the valuation of the property. He said he had many properties in other parts of the City where the assessed value was significantly different than the fair market value of the property. He said in this particular property he knew the exact value better than any appraiser. He reported he owned many properties in Beaverton, Hillsboro, SE Portland and St. John’s. He said since the property tax limitation measure, the fair market value placed on the property did not have any relation to the amount owners were taxed. He said stressed Park Plaza had decreased in value significantly, vacancies continued to rise and others would testify as to tenants leaving and people being accosted. He said he was out of town when the Planning Commission hearing was held; he hired a representative to go to the hearing, but due to an emergency the representative did not attend, so the Commission did not have the opportunity to hear their testimony on the valuation issues.

Mark Haas, State Representative, said he was speaking as a parent and neighbor. He said the proposed all-night activity was incompatible with the vibrant restaurant and retail activity along Beaverton-Hillsdale Highway. He strongly urged the Council to reject this proposal to allow this business to stay open all night. He asked Council to listen to the neighbors and respect their opinions about what kind of City they wanted to build and what livability standards they wanted to set. He said allowing a 24-hour pornography operation in Beaverton would tell the pornography industry the community was open for business and would support them. He said citizens did not want pornography shops, or for adult business industry to call Beaverton home. He said this operation and the proposed extended hours were incompatible with the needs and the goals of this community. He noted the Council met in annual retreats to set goals and visions for the future of the City and he had never seen in any vision statements the goal of expanding adult businesses. He said livability goals may be difficult to quantify but he submitted they were important legal considerations in this appeal. He said this was not about free speech; this was about livability and goals.

Haas continued by stating as a champion for economic development in this state, this was not the kind of business to expand; it did not strengthen the community, it weakened it. He said these businesses lowered the quality of life which was a critical component to economic development; and that was reflected by falling property values and rising vacancies. He referred to the assertion that there was not much criminal activity here and therefore little evidence this proposal to extend hours would increase crime. He said he would not agree with the standard that if it cannot be proven crime would go up, a business would be allowed. He said the fact that the pornography industry was linked to drugs and prostitution on all levels, was well documented in this country, and the fact that the pornography industry exploited and shattered lives was also well documented. He urged the Council to listen to the neighbors who paid their taxes, sent their children to local schools and had their roots in Beaverton. He concluded the neighbors were on one side of the issue and the pornography industry on the other. He asked the Council to choose the side that would make a stronger community.

Jennifer Frank, Aloha, said she was a career councilor and had worked at the Park Plaza West office building from 1990 to the present. She said she sometimes worked late at the office and she feared for her personal safety if the Council affirmed the Commission’s order. She said she provided a written testimony that detailed the objections to the 24-hour operation. She stated she supported the appeal because she felt this would increase crime in the neighborhood, reduce the livability, reduce property values and violate the Beaverton Comprehensive Plan and Development Code. She noted Exhibit A attached to her testimony was a 24-page summary of crime-impact studies of sexually-oriented businesses. She said she believed this provided overwhelming evidence of the harmful secondary effects. She reported since 1999 she saw many tenants leave Park Plaza West because of Fantasy Video. She reported during the week of August 15, 2003, there were three separate burglaries at Park Plaza West complex. She noted in the past 12 months there were two other break-ins and an indecent exposure during business hours. She said the most recent incident of August 15 took place between 7:00 p.m. and 6:00 a.m. She added the concerns for her safety and others grow exponentially with the fact that there were now five sexually-oriented businesses within this small area.

Anthony Bonforte, Beaverton, displayed an aerial photograph of the area which showed Fantasy Video and surrounding businesses. He reported there weren’t any other businesses in the area that were open 24 hours other than the AM-PM Arco Store. He said it was the character of the neighborhood to close at 10:00 p.m. and to propose a 24-hour business that was inconsistent with this neighborhood would alter and detract from the operation of businesses in the area. He said the concern was that they were introducing people into a neighborhood that had gone home for the night. He said having a 24-hour business created cover for people to operate and would expose the vulnerability to other businesses. He said people invested in the area on the basis of the City Code which limited the hours of operation. He said they were all asking that the City retain that protection and respect their rights and their investments. He noted the applicant had installed video cameras and had hourly patrols on their premises for their protection. He said his clients would need to add more lights, cameras and 24-hour security services if the 24-hour operation was approved. He said as a realtor there was an item called a non-structural defect which was called a stigma. He said his interpretation of this regulation was if he was represented a tenant or buyer he would advise them of the video store and would consider it a stigma; injuring the value of the property.

Coun. Soth asked if he was a certified real estate appraiser.

Bonforte replied that he was a licensed realtor and a real estate development consultant which does not require a license. He said he had been a developer for over 40 years and in Beaverton for 15 years.

Grillo asked if Bonforte wished to submit his photograph into the record.

Mayor Drake clarified that it would be part of the record since he used it in his testimony.

Carol Sterns, Beaverton, said she was an owner of a CPA firm at Park Plaza West and had been there almost 25 years. She said she had two concerns on the effect of this business. She said her first concern was attracting and retaining good employees. She said her employees had safety concerns. She stressed that crime or no crime, perceptions affected her business; whether they were fact or not, it did not matter when people thought something could happen. She said her second concern was the vacancy rate in the building. She said she perceived this as a direct result from the Fantasy Video location. She said with vacancy near 50%, they had concerns about staying in a building that was so under populated, which was another safety issue. She concluded if the 24 hours was granted she would seriously consider moving when her lease expired. She said three years ago she signed the lease, after the 1999 decision, feeling secure that she was protected. She added she relied on the court results when she signed her lease and now it was again being challenged. She asked that Council consider Goals 1, 5 and 6 in this decision.

Coun. Soth asked if she had an idea if the vacancy rates were connected to the downturn in the economy or to the video store.

Sterns said she talked to a leasing agent last week and he was shocked at the high vacancy rate in Park Plaza.

Milt Wear, Beaverton, described his neighborhood and said his residence was located close to the Dolphin Gentleman’s Club. He said there was no measuring the impact of the sex industry’s growth except by the voiced complaints of residents and business owners. He noted not everyone formally complained; some older people in the subdivision feared reprisal. He said not all complaints were levied at Fantasy Video because of perceived daylight offenses. He said the bulk of registered complaints were from late-night abuses by the industry. He stated what could be documented was the length of time it took to sell a starter home in their neighborhood; it took many months for a home to sell even though Beaverton was an active market and these homes were under $150,000 which was a rarity. He said something was impacting the homes’ salability and they believed it was the dramatic change in the character of the whole area. He said they had the right to economic security and noted the City had continued to invest money to make the area vibrant, livable and safe. He explained they viewed the accommodative and invitational granting of a 24-hour permit to be at great odds with that effort. He said it sent a message to other suburbs of the City. He stressed the Council must say no because our Mayor, Council and circumstance were different.

Coun. Soth asked if he had assessor or appraisal reports to indicate a devaluation of property.
Wear explained his issue was the length of time it took to sell a house. He said they could document that the length of time it would take to sell a home in this neighborhood was excessively long.

Scott Director, Beaverton, Scott Director’s Custom Furniture Company, said he and his wife owned this business, which was one-half mile east of Fantasy Video, and had been at that location for six years. He added he enjoyed being part of Beaverton and would like to remain in Beaverton. He said if Fantasy Video was allowed to operate on a 24-hour basis, there would be a negative impact on their business, and the business climate in the area, which would force them to look at other locations. He said if Fantasy Video was allowed to work on a 24-hour basis, a clear message would be sent to the general public and other sex-related businesses, that Beaverton wanted to accommodate these businesses. He said this message would attract other sex-related businesses to this specific area and, as a result, Beaverton-Hillsdale Highway would become populated with more adult video stores, strip clubs, etc. He said their existing and potential customers would not want to come to the store. He noted customers would see first hand what was happening to this neighborhood and this area would develop a reputation as one that catered to sex-related needs. He said customers would avoid this area and go to other neighborhoods, the business would suffer and they would look locate the store elsewhere. He said they would like to stay in their location and added they supported Beaverton and its schools, and Beaverton had supported them. He concluded if Fantasy Video was allowed to operate on a 24-hour basis, the negative impact would force them to relocate.

Barbara Stewart, Portland, stated Fantasy Video should not be granted a Conditional Use Permit for extended hours. She added she had been a business owner for 26 years and had never had a sting or a need for a police officer. She noted this may be because she preferred to maintain a nice clean business. She noted Nancy Stewart had to leave, but submitted a testimony card noting her support of the appeal.

Ira Frankel, Beaverton, said he was the closest resident to Fantasy Video and it could be seen from his property. He spoke on the residential and commercial nature of the area. He noted there were hundreds of residents in his neighborhood; only the Village Inn supported the applicant and they had an interest since they used the video store’s parking. He noted Page 6 of the Decision stated that Fantasy Video was not in close proximity to residential development and that was ludicrous. He reported one third of all people exiting Fantasy Video at approximately 9:00 p.m. came across 107th Street, which was his street. He said a Fantasy Video representative said this would add two cars to the traffic. He reported he saw 37 cars leaving Fantasy Video between 9:00 p.m. and 9:45 p.m., and 13 of them went up 107th Street. He said the claim on Page 4 that “the operation at the approved hours provided the best basis for estimating the potential problems of 24-hour operation” was also ludicrous. He said he thought the population cruising for porn at 9:00 p.m. was not the same population cruising for porn at 4:00 a.m. He said he spoke with his neighbors and no one wanted this, except Village Inn who said they were good neighbors.

Coun. Soth asked for clarification on the number of residents.

Frankel said there were several houses and a lot of people in these homes.

Coun. Soth asked if his house was the red house.

Frankel replied that was correct.

Linda Huddle, Beaverton, said she lived on 107th Street since 1976. She stated she supported the appeal and opposed the 24-hour operation of Fantasy Video. She spoke on concentration, advising that on 107th Street (one block north of Fantasy Video), on the block between Laurel Street and Kennedy Street and 107th and 103rd, there were 18 single family homes, six duplexes, two large apartment/condo complexes and one small apartment. She noted the next block up towards Canyon Road had more residents residing in a large apartment complex. She noted one report said Fantasy Video was well away from residential area; she disagreed and said it was near hundreds of families. She noted there were numerous businesses that were related to this industry within close proximity. She asked if this was the quality of life that the City of Beaverton was trying to build. She said she worked on 82nd Street and Powell, in Portland, and this area was struggling to recover from having numerous lingerie and video stores and porn-related stores. She asked if Beaverton was building another 82nd Street on Beaverton-Hillsdale Highway and she urged the Council not to do that.

Meerta Petschi, Portland, commercial property manager for Park Plaza West, explained the Park Plaza offices were open and available to tenants 24-hours a day, and had been since the building opened. She said allowing Fantasy Video 24-hour operation would have a direct ill-effect on the productivity and daily business operations of their tenants. She mentioned two of her tenants had expressed numerous concerns in regards to safety and ability to work effectively on this site. She said if the video store operated 24 hours a day there would inevitably be an increase in parking lot loitering and debris. She said they have found improper debris and alcohol containers left on their property; she noted she could only assume this was related to Fantasy Video. She said she responded to an after-hours incident in March of this year which made her very uncomfortable. She stated as she was leaving the property at 10:30 p.m. there were a couple of males who were verbally abusive, offensive and harassing in nature. She reported she was able to leave the property safely and quickly. She related Park Plaza’s owner had made several efforts and spent a significant amount of money to improve the interior and exterior of the property. She said if the 24-hour operation was allowed, lighting levels, security and surveillance would need to be increased. She said new tenants commented this was an unsightly landmark and they did not want their professional office blemished by this association. She commented tenants were not renewing for that reason. She concluded she believed this directly impacted the level of vacancy on this property.

Coun. Soth asked if she reported the incident to the police.

Petschi replied she did not phone the police.

Coun. Doyle asked if she managed other buildings and where they were.

Petschi replied she managed a number of properties in various areas.

Coun. Doyle asked what the vacancy rates were in other buildings.

Petschi said most of the properties she managed had less than a 10% vacancy. She added Park Plaza West was approaching approximately 50% vacancy.

Mayor Drake said it was his understanding that Dietrich purchased the building and somewhere in the material he read that the former owner had not allowed re-rentals, re-leases or new leases to happen. He asked if that might have contributed to the vacancy.

Petschi said she was not aware of this and she had managed the property close to a year.

Mayor Drake asked if anyone else recalled seeing this written.

Rappleyea referred to page 1146 of the record.

Mayor Drake confirmed it was a previous owner.

Debra Conrad, Portland, said she opposed approval of the application in 1999 and she remained opposed because she believed it would have a severe and lasting negative impact on both development and livability in the adjacent and surrounding community. She explained in development, business attracts “like-businesses.” She stated the surrounding area was heavily residential and those who lived there did not demand or desire development of 24-hour businesses. She said in terms of livability, written and oral testimony in 1999 provided evidence that similar 24-hour operations in other areas of Beaverton resulted in increased criminal activity and there was no new evidence to the contrary. She said this potential would deteriorate livability and would require additional police patrolling, straining resources that were needed elsewhere. She said the low crime comments addressed this evening were determined from the hours of 7:00 a.m. to 10:00 p.m. She added the type of crimes that they want to be protected from (prostitution and drug trafficking) were most likely to occur after 10:00 p.m., as were the sting operations the police conducted at these locations.

Conrad stressed the operating hours of 7:00 a.m. to 10:00 p.m. were established in the business zone for a reason and a conditional use permit to operate outside of these hours must meet specific criteria, which were in Section 40.15.15.4C of the Code. She related Criterion 3 said the proposal would comply with the applicable policies of the Comprehensive Plan and Goal 7 of the Comprehensive Plan directed the City to retain and enhance the character and quality of established areas. She said this application did not meet Goal 7, Criterion 3 or Criterion 5. She urged Council to protect the livability and future development of the community by denying this application and approving the appeal.

Mayor Drake noted Paul Kristof and Matt Cleary left testimony cards supporting the appeal.

Dave Ganz, Hillsboro, said he was a state-licensed engineer and he worked at Park Plaza West; his office faced the restaurant and Fantasy Video. He stated his concerns were the increase in traffic, the traffic patterns and the security issues. He submitted for the record photos of cars exiting the parking lot and the patterns that were made when crossing the new yellow barriers and not making a stop at the exit of the south parking lot. He added he had other photos of the number of cars at one location and of the blind spot when coming out of the south parking lot. He said with a blind spot at this location the drivers would need to look about 180 degrees. He noted at this location there were trees, signs, transformer, bushes and no stop sign. He said people would be arriving at Park Plaza West at 7:00 a.m. at the same time people would be exiting from Fantasy Video, dealing with the same traffic problems. He concluded the increased traffic was his major concern.

Thomas McDowell, Portland, stated he was a commercial real estate investment broker and was involved with the purchase of Park Plaza West by Mr. Dietrich. He said there had been active marketing for tenants for Park Plaza West the previous two years; he said it was in a severe decline. He stated this was a very depressed area because of Fantasy Video. He said in 2000 Park Plaza West went on the market with a national real estate firm for $16,000,000. He said they went through several million dollar price reductions. He said Key Bank, who had a $13,500,000 loan on the property, foreclosed because the owner was unable to make the payments. He noted at that time it went into a receivership. He explained Pinnacle Real Estate was managing the property when they took it to auction. He said they did not set a price on the property and Dietrich won the auction. He reported at the time he tied up the property the occupancy was 69%. He said in commercial real estate the value was directly related to the income. He said this was an income declining property. He said six months later at closing there were 10% fewer tenants and today it was at 53%. He said most of the professionals who had clients coming to Park Plaza West left because they did not want to be identified with the turn-in at Fantasy Video. He said there would be a continued decline if Fantasy Video was allowed 24-hour operation. He added there had been a steady decline in tenants since 2000.

Coun. Stanton asked the year the property was put on the market.

McDowell replied it was approximately 1999 or 2000.

Coun. Stanton asked if it sold for $9 million at that time.

McDowell replied it sold for less than $9 million in March of 2002.

Coun. Stanton asked if it was at a 69% vacancy rate or occupancy rate.

McDowell answered occupancy rate. He said when it closed it was 10% less. He said at this time it was 53% occupied. He said in his twelve years of commercial real estate, the value was not set by assessed or market value. He said it was set by income.

Mayor Drake asked if the building was around 25-30 years old.

McDowell said it was built in several stages in the early 1970’s.

Mayor Drake asked for the building’s square-foot lease rate today. He noted there were a number of vacant buildings in the Sunset corridor. He asked how Park Plaza compared per square foot with the buildings in that area and on Griffith Drive.

McDowell replied about a year and a half ago it was approximately $16.50 per square foot for Park Plaza West.

Mayor Drake asked what the rate was for the Sunset corridor.

McDowell answered the market today was rapidly declining. He said in the occupied buildings there had been concessions including months of free rent. He estimated a price in the low $20’s. He noted Griffith Park was higher than Park Plaza West.

Coun. Soth asked how much of Park Plaza’s decline was from the lack of maintenance and tenant improvements due to its financial history.

McDowell said his viewpoint was the previous owner, who was foreclosed, was unable financially to do anything to the building. He said it was in several years of decline during the good economic times. He said when the economy made a downturn, Dietrich planned to put money into the building, retain the tenants, build it up and offer incentives to lease. He said Dietrich had done that and he was still losing tenants. He added he felt there were other outside contributing influences.

Coun. Stanton mentioned she had been in the building and it had been updated and was not run down.

Doug Bartocci, Portland, said he was the leasing agent for Park Plaza West. He reported renewing tenants had been difficult and a lot of the tenants left because of Fantasy Video. He noted the occupancy rate on Griffith Park was 80% and the area near Director’s Furniture had an occupancy of just under 90%. He noted Park Plaza’s 54% occupancy was an anomaly. He said when searching for new tenants, people referred to Park Plaza West as the Fantasy Video building. He explained it had been a challenge to acquire new tenants. He stated as a leasing agent there was not a worse use located adjacent to an office building. He noted larger tenants had clients that came to their offices and many were concerned about that location. He explained Dietrich had put a substantial amount of money into the building and he received good feedback on the improvements. He concluded Dietrich improved the building and retained some tenants because of that, but it was a challenge to keep them with the issue with Fantasy Video.

Coun. Soth asked what would change with a 24-hour operation because it sounded like it was the present business that brought the negative response.

Bartocci answered the situation was already negative and this would increase it. He said perception meant a lot and if danger was perceived, it was hard to get tenants into the building and keep the ones that were there. He added that putting a 24-hour business like this around this sort of environment would cause problems.

Sheila Keller, Hillsboro, stated she was there in regard to the secondary effects of Fantasy Video. She said her brother died at a Fantasy Video. She said for whatever reasons her brother was in Fantasy Video, he had a right to be protected while he was there. She said he died at the Fantasy Video at 15th and Burnside at 1:30 a.m. and 911 was not called until 3:43 a.m. She said after looking at several police reports they realized that this type of thing was happening at Fantasy Videos; she said there was prostitution at these places and the police said at the 15th and Burnside location they were there nightly. She said they had video surveillance at the entrance but they did not have video surveillance in the booths. She said who was going in and out of the booths was important. She stressed that Fantasy Video should not be allowed 24-hour operation. She said this was a breeding ground for drugs and illegal operations. She suggested that the Council research the number of deaths and suicides that have occurred at Fantasy Videos.

Penny Douglas, Beaverton, related she was at one time with Oregon First Real Estate that was located at Park Plaza West. She said when Fantasy Video went in, it was a stigma and was uncomfortable having clients and customers and families coming in to talk about purchasing houses and passing this store. She said two years ago Oregon First decided to leave this building. She said Oregon First likes Beaverton and they were still in Beaverton, they were just no longer at Park Plaza West.

Mayor Drake noted Jason Yurgel submitted a testimony card in support of the appeal; also he accepted a letter from Marilyn Dougall, Portland, which stated she was in opposition to the application.

RECESS:

Mayor Drake called for a brief recess at 10:50 p.m.

RECONVENED:

Mayor Drake reconvened the meeting at 10:56 p.m.

Mayor Drake asked if there was anyone wished to testify who was neither in support or opposition of this application.

There was no one who wished to testify.

APPLICANT’S REBUTTAL

McLaughlin responded to Coun. Stanton’s previous question by explaining the S. E. corner of the Beaverton Paperbacks study area for property values coincided with the N. W. corner of the Hollywood Video on 77th Street; property values were merged in that area. McLaughlin stated Mr. Kane was wrong with respect to Mr. Osterberg’s role and with respect to his (McLaughlin’s) role as an expert. He said he had never been disqualified by a Federal or State court as an expert. He said Mr. Kane’s statement that every local government that studied the issue found problems was incorrect, and he directed Council to Pages 822, 829 and 888 of the record. He noted the documents the Council requested from Kane were not in the record because Kane said he did not want to spend $410 for the police documents, although Kane had spent $608 to file the appeal.

McLaughlin continued by noting Beaverton was a City of 80,000 people and there were less than 50 in opposition at this meeting and only about half testified. He said the Renton case was based on North End Cinema and a memo to a file in the City of Kent Washington refutes the findings of North End Cinema thus undermining the finding of Renton. He said the appraiser interviewed in this memorandum said that he had not observed an impact on property values around the theater areas during the years when the Ridgemount showed adult movies. He stated sales near the Ridgemount were no different per square foot per comparable properties several blocks away. He noted there was obviously a dispute on the vacancy rates; he said their numbers were in Prusse’s report and a different calculation showed a 30% vacancy rate. He pointed out that Mr. Dietrich had spent $9,000,000 to purchase property beside Fantasy Video. He noted there weren’t any police reports from Ms. Frank.

McLaughlin spoke regarding inconsistency with the neighborhood and showed a map exhibit of other businesses with extended hours in the area of Fantasy Video. He noted Krispy Kreme was recently approved for extended hours and this changed the nature of the neighborhood. He concluded there wasn’t any evidence presented that justified the over-turning of the Planning Commission’s decision.

Woodworth noted on a map exhibit of the area, that Dolphins II was open until 2:30 a.m., seven days a week and the Village Inn opened at 6:00 a.m.; this area was not a dead zone. He stressed the City Councilors were not free to vote their conscience, personal, moral or religious beliefs, nor were they free to vote as their constituents wished. He said they were sitting as a quasi-judicial land use decision making body; as such they were bound to make adjudications based on procedural fairness and substantive correctness as pointed out in the Anderson versus Peden Case. He said that case incorporated the Code of Judicial Conduct. From that Code he quoted Judicial Rule 2107 “You shall be faithful to the law and shall decide matters on the basis of facts and applicable law. You shall not be swayed by partisan interest, public clamor, or fear of criticism.” He said the majority of the testimony was in the nature of public clamor and fears rather than evidence on which to base a land use decision. He noted that in 1999 Coun. Doyle remarked “if it was two years from now they would be in a different position and we would have a better handle on statistical interpretation and the comments from the police were extremely important.” He said he believed the comments by the police were equally important and they didn’t find any significant problems. He urged the Council to do the right thing and apply the facts to the criteria of the Code and approve the application.

Mayor Drake asked the City Attorney if the Council could ask for clarification on any of the information as long as they did not request new information. He concluded if new information was generated that would give the applicant an opportunity for rebuttal.

Rappleyea said they could ask for clarification of information that had been presented. He added if it was in a new area of inquiry, that would require rebuttal. He said if this was just a clarification of an issue that had been discussed it would not require rebuttal.

Mayor Drake asked if there were any questions or clarifications from Council.

There were none.

Mayor Drake asked Council and City Attorney if they heard any new evidence in the rebuttal.

Rappleyea said he agreed that there wasn’t any new evidence; he explained the rebuttal merely responded to the testimony that was presented.

Mayor Drake asked if Council had any questions of staff.

Coun. Stanton noted that what was before the Council was based on the Planning Commission decision that the Conditional Use Permit granted shall not run with the land rather shall be limited to the applicant, Oregon Entertainment Corporation as the operator and occupant of the premises. She asked if this had changed.

Rappleyea replied it had not changed.
Mayor Drake noted people referred to fears about what citizens believed may or may not happen at this location. He said since Fantasy Video did not have the expanded hours, the City could only conjecture on what may or may not happen. He said there was some experience with police calls at D. K. Wilds in Beaverton and he believed some analysis of other Fantasy Videos was done around the Portland area. He asked Chief Bishop if the reports had been analyzed and if they were currently in the record.

Chief Bishop replied the total number of calls for all of the locations was 110, from 1999 to the present. He said if this was averaged out it would be a little higher than Beaverton’s rate. He added national studies indicated that more important than the crime, was the fear of the crime.

Mayor Drake noted to Community Development staff that in assessing people’s issues related to leasing or rental of adjoining buildings, while tenants and people in the area were expressing fears, it appeared by the rental or lease numbers that there was a higher vacancy rate than appeared to be normal in the general broader area.

Grillo agreed that was what they heard.

Mayor Drake asked if that fell under quality of life or how it would be evaluated.

Grillo replied first the Council would have to decide, from the variety of testimony, what were the root causes and on-going causes of the differences in the vacancy numbers. He said he agreed the vacancy rates were higher than what they should be at this time. He said the causes were not clear whether the vacancies were attributed to the economy or to this particular business. He said the Councilors needed to weigh the evidence as they heard it. He said second, once they understood what the evidence was, they needed to determine if the evidence showed a minimal impact. He said testimony was heard tonight about the need for no impact. He said the word minimal was in the Code and he felt the Council needed to weigh the evidence as to whether or not the vacancy rate had risen to the point where it was something other than minimal and was it attributable substantially to the issue of potentially granting an operation on a 24-hour basis. He concluded the evidence had to be weighed and then a determination made on whether it represented a minimal impact or was it something other than a minimal impact.

Mayor Drake explained that often in land use issues, people who were opposed to an action expected or wanted the change in land use to have no affect on their area. He noted that was not possible as the City filled in. He said the hard issue was determining how much change was more than minimal. He noted from the testimony it appeared that Park Plaza West, which was purchased before Fantasy Video had 24-hour operation, had the most impact and that was reflected in the rental situation.

Rappleyea elaborated on Criterion 5 which defined the impact on compatibility and livability. He referred to the last decision on this by the Council. He said he felt it was relevant to consider that the Council in the 1999 Order found that the term included its factors as “the effects of neighboring uses, vacancies, potential of criminal activity, and the character of the area surrounding those uses.” He said this was still relevant, but he felt they heard conflicting evidence on the impacts and the Councilors would need to weigh the conflicting evidence and determine which one they found to be more credible.

Coun. Bode asked Chief Bishop if he tracked the type of calls received. She asked if the extension of hours to twenty four would increase some form of criminal activity.

Bishop replied it would create changes and that the calls for service would increase. He said to say that the calls would be criminal in nature would be unfair at this point until the police had the opportunity to monitor the area. He added it was important to see how they would deal with the problem. He noted it also depended on what was reported; not just from this business but all of the businesses.

Mayor Drake closed the public hearing at 11:14 p.m..

Coun. Soth MOVED, SECONDED by Coun. Ruby to DENY the appeal and grant the applicant a 24-hour operation.

Coun. Soth explained the issues before Council boiled down to Criterion 5 which had to do with the location, size and functional characteristics, as outlined by the Development Director, and what was reasonably compatible with minimal impact on livability. He said this was tough because no one could define livability; it lived in the eye of the beholder. He gave an example of his sister-in-law who could not stand the quietness of Ontario, California. He said she was born and raised New York City and the “sweetest sound this side of heaven was the noise of traffic.” He said they heard a lot of “what if’s” and “might be’s”, whether or not there was any factual evidence. He added he felt the fears mentioned were legitimate. He said the problem Council had was trying to define those in a factual manner. He repeated what they were looking at was whether or not this met the criteria; he felt that it did. He noted Mr. Kane made many references to Council’s 1999 decision, as well as the decisions of the Land Use Board of Appeals and the Court of Appeals and said those decisions governed what happened this evening. He said in his view this was a new proposal governed by the Code and it was a new proposal because it did not address some of the other issues that were valid in 1999, as well as the fact that the Code provided for a new application after a one-year period. He said this application fulfilled all the regulations and as they saw in all of the staff reports, the only one of the six criteria that was a problem was Criterion 5.

Soth continued by stating he felt in view of the fact that this retail operation had been in business for four years, the impacts that it has had or may have were all behind us because of the operation now. He said in terms of the effect upon the adjacent properties, once again whether or not the operation was 24 hours the effect or the impact probably would be the same. He said he felt the appellant had failed to provide the necessary factual information for granting the appeal and from the testimony, most of the information had been based upon perception. He said it appeared to him to deny the appeal and grant Fantasy Video the opportunity was valid. He asked the Council to consider one additional condition which had to do with marking the egress from Fantasy’s parking lot to steer Fantasy’s customers away from crossing traffic lines to avoid any impacts with traffic. He said they had heard testimony that some of the customers parked in other areas which were not assigned to this business. He concluded for those reasons he made the motion to deny the appeal.

Mayor Drake said if in the event this was the direction the Council wished to go, he thought he heard enough compelling evidence out of concern about police calls and public safety issues, to consider adding a provisional condition to monitor police and problem calls for one year. He recommended quarterly or six-month reports from Chief Bishop to address people’s fears and narrow the focus so that it was clearly understood both by the applicant and those who expressed opposition. He said the biggest fear for citizens was what happened between 10:00 p.m. and 7:00 a.m. He added respectfully he would not categorize Krispy Kreme as significant in comparison to this neighborhood. He said there was a much more significant distance between Krispy Kreme and any adjoining neighborhood and the compatibilities were very different. He said for that reason he recommended if this was the direction that the Council was going, that it address the major issue of public safety which he felt had some founded issues.

Coun. Soth stated he recognized that and since that did not require action on part of the applicant, he was going to use that as a second motion.

Mayor Drake said his concern with not putting that in the motion was that if the Council denied the appeal there would be an existing Conditional Use granted by the Planning Commission and there would be no binding action to bring this back to Council after a year’s review, to rehear it on this narrow point. He added that was why he would add that as a condition.

Coun. Soth responded he had no objection to making this an additional condition to the Conditional Use Permit.

Coun. Soth stated he wished to amend the motion to have the Police Department monitor the operation for the next year and return to Council with quarterly reports as to Police calls, responses and any other activities including self-initiated calls.

Mayor Drake asked the City Attorney if this mandated a limited hearing one year from now, with normal notice and process, on that one issue.

Rappleyea confirmed that would be a public hearing of limited scope, where people could comment on the limited issue of police response and criminal activity at the site, and to make sure the applicant was aware he could lose the around-the-clock operation and go back to the 7:00 a.m. to 10:00 p.m. he currently has, if that was a problem.

Coun. Ruby, SECONDER of the motion initiated by Coun. Soth, said he had no objection to the amendment.

Coun. Doyle said he would not support the motion. He said he felt the testimony showed the impact in the past four years had been negative. He said in terms of the operation at this time, he felt the problems with the business were minimal and he preferred to see it stay the same. He said if Criterion 5 had not been met, it would have to be proven to him.

Coun. Stanton read Code Section 40.15.05 on the purpose of the Conditional Use Application. She noted the City prevailed at LUBA and Court of Appeals in 1999 because of the Code and Comprehensive Plan at that time. She said in an effort to make the Code more flexible, language was changed, but Criterion 5 was not changed. She said she thought the approval criteria was legitimate and read the criteria “the location, size or functional characteristics of the proposal are such that they can be made reasonably compatible with and have a minimal impact on livability and appropriate development of properties in the surrounding area of the subject site” but she felt that going to a 24 hour operation would continue to have more than a minimal impact. She said she had to agree that the decreased occupancy rate at Park Plaza wouldn’t change with a 24-hour operation. She referred to Section 40.15.05 “the conditional use may cause significant adverse effects on the environment, overburden public services, change the character of an area, create or foster nuisances” and said she was quite concerned. She added she worked in the private sector for many years and always worked past 5:00 p.m. and was lucky to work in an area where she had someone to walk her out to her car. She said she believed both these Code sections referred to adverse effects and she would not support the motion because she believed the concern about causing significant adverse effects was legitimate.

Coun. Bode said she agreed wholeheartedly with Couns. Doyle and Stanton. She said impact concerning livability was her concern. She said the significant evidence was related by Chief Bishop; by taking the existing business and expanding the hours, there would be more police calls. She said she was not willing to put any one else at risk. She said she supported the appeal for the citizens and opposed the motion that was presently on floor.

Coun. Ruby said he supported the motion and agreed with Coun. Soth that they cannot deny the application because they do not like this business. He said there needed to be evidence of the detrimental effect in the community. He said the main issues according to the appropriate criteria which related to compatibility were about crime and market values. He said in respect to the issue of crime he felt the operational history of this business and the other adult video business with 24-hour operation, and showing the incidence of crime reports over the last four years had been low, was the most meaningful evidence. He said he did not hear Chief Bishop say that there would be an increased incidence of crime. He said he thought Bishop said because the business would operate longer hours, the Police would get more calls. He said he felt Chief Bishop was clear that reports of criminal behavior of a serious nature did not exist and that was in the staff report on page 0313. He said he understood there was evidence of national out-of-state studies that tended to show detrimental effects from this type of business. He said he felt the operational history of these businesses in Beaverton was much more meaningful.

Ruby continued that in terms of market values the evidence was inconclusive and inconsistent. He said during the testimony they referred to the boom years of the economy and how this particular commercial premises (Park Plaza) was neglected by the former owner and deteriorated even when market values and occupancy rates were strong. He added he agreed with Coun. Soth that if there had been some effect on tenant vacancy at Park Plaza West, because of people not liking Fantasy Video, there wasn’t any evidence that detrimental conduct or detrimental effect would be exacerbated by allowing a 24-hour operation.

Ruby concluded most of what they had heard this evening was that people did not like the pornography businesses, but they did not have the ability under the current state of the law in Oregon to zone pornography shops into certain areas. He said the only reason for this subject of appeal concerning the 24-hour operation of this business was because it was in a zone that makes 24-hour operation a conditional use and unfortunately this was a situation where the business has a right to exist. He concluded that what he heard from citizens was that they were upset that Fantasy was there in the first place.

Question called on the motion. Coun. Ruby and Soth voting AYE, Coun. Bode, Stanton and Doyle voting NAY, the MOTION FAILED. (2-3)

Coun. Stanton MOVED, SECONDED by Coun. Bode for approval of APP 2003-0008, Fantasy Video Request for 24-Hour Operation, to overturn the Planning Commission decision to allow 24-hour operation and direct staff to prepare findings in a final order that embodies the Council’s decision to deny the applicant and go with the appeal.

Coun. Soth said he would not support the motion based on comments made earlier.

Question called on the motion. Coun. Bode, Stanton and Doyle voting AYE, Coun. Ruby and Soth voting NAY, the MOTION CARRIED. (3-2)

ADJOURNMENT

There being no further business to come before the Council at this time, the meeting was adjourned 11:41 p.m.

APPROVAL:

Approved this 6th day of October, 2003.

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Rob Drake, Mayor