August 8, 2011
Dear City Manager:
You have the following question: Can the city apply the same zoning restrictions it can apply to tattoo parlors to other businesses such as body piercing, massage parlors, and pawnshops (and, I would add pain clinics)?
I pointed out in my memo of December 11, 2009, that the courts in the United States were in disagreement on the question of whether local governments could prohibit tattoo parlors. But I also pointed out several recent federal and state cases upholding their right to locate inside such local governments. I also pointed out that the State of Tennessee had resolved the question of whether local governments could prohibit them by adopting comprehensive regulations which prohibited their local regulation by such local governments, and allowed them to operate in Tennessee. However, I did conclude that municipalities still retained their right to zone tattoo parlors, even by allowing them to locate in certain zones as a conditional use, the conditional being conformity with the state licensing and regulatory requirements.
Here let me analyze the Tennessee law governing the land uses you mentioned above, including my addition of pain clinics:
Body piercing appears to be in nearly the same category as tattoos parlors. Indeed, Tennessee Code Annotated, Title 62, Chapter 38 is entitled Tattoos and Body Piercing. Part 1 of that chapter regulates tattoo parlors, and Part 2 regulates body piercing. Surprisingly, there is not the same prohibition on local government regulation as to body piercing as there is to tattooing. However, it appears to me that the result is the same: both sets of regulations are comprehensive ones that generally prohibit local government regulation, but not zoning regulation, as long as the local government does not attempt to “zone out” licensed body piercing establishments. Presumably, like tattoo parlors, they could be conditionally zoned, the condition being that the establishment is state-licensed.
Like both tattoo parlors and body piercing establishments, massage parlors are the subject of comprehensive state licensing and regulation requirements, found in the Massage Licensure Act of 1995, codified in Tennessee Code Annotated, § 68-13-101 et seq. However, it appears that massage establishments are a grade higher than tattoo parlors or body-piercing establishments, Tennessee Code Annotated, §68-18-113 declaring that “the act of a duly licensed massage therapist in performing a massage shall be deemed to be medically therapeutic in nature and shall not be subject to the collection of any form of state or local taxation regulations not also imposed on other medically therapeutic activities.” But at the same time, under Tennessee Code Annotated, § 63-18-114 massage therapists are not to be “referred to as a primary health care providers nor be permitted to use such designation.” The designation of massage therapy as a “medically therapeutic” activity is certainly a clue for local governments not to restrict them to highly unsuitable zones.
Tennessee Attorney General’s Opinion 96-028 opines that the Massage Parlor Act “specifically repeals the [earlier] Massage Registration Act, and thus any local ordinances created under the former act are no longer enforceable.” (However, the earlier Massage Registration Act applied only to counties.) The Massage Licensure Act of 1995 is very broad and appears to regulate the qualifications, licensing and subsequent conduct of massage parlors and their employees. TAG 96-28 opines that the Act does not entirely preempt local regulation of massage establishments, but it is difficult for me to see what local government regulations of such businesses are left open to local governments, except for zoning.
Pawnshops are also subject to a scheme of state regulation [Tennessee Code Annotated, § 45-6-201 et seq.] , which authorizes some municipal regulations, but expressly rejects some forms of regulation formerly upheld in state case law. [See Solof v. Chattanooga, 174 S.W.2d 471, 176 S.W.2d 816 (1943) (City ordinance set the hours of operation of pawnshops).]
As far as I can determine, most zoning ordinances in Tennessee, outside the larger cities, do not specifically mention pawnshops, but like the other heavily state-regulated businesses considered herein, I see no legal reason local governments cannot subject them to zoning regulations. But there has been little or no case law in Tennessee involving the zoning of pawnshops, although generally, pawnshops in the United States have historically been treated as near pariahs by the courts and local governments. That image undoubtedly has had—and apparently still has--an important impact on where pawnshops are allowed to operate in local governments in many states.
I had thought the image of pawnshops, at least in the eyes of the courts, had improved somewhat in recent years. That belief may not be accurate. In Oeltjen, Jarret C., Florida: Pawnbroking: An Industry in Transition, FLORIDA STATE UNIVERSITY LAW REVIEW, 1996, it is said that, “Pawnbroking is a profession frequently misunderstood. While the majority of today’s pawnshops are clean, attractively maintained establishments, the industry has difficulty shaking the ‘pawnbroker image.’” That is true, continues the article, notwithstanding extensive public relations efforts by various pawnbroker publications and trade journals. In spite of those efforts, continues the article:
The negative portrait lingers; pawnshops continue to be cast as “nuisance businesses,” in the company of tattoo shops and massage parlors, and somewhere in rank between liquor stores and houses of prostitution. A recent eleventh Circuit case reported that “pawnshops do facilitate the disposition of stolen property ….” An Aurora, Colorado City Council bill relating to the location and licensing of pawnbrokers present this summation: pawnshops “‘have deleterious or blighting effects which pose a danger to the public health, safety and welfare…..’ “
The most recent pawnshop case to attract great attention mirrors that image of pawnshops. In the March, 2011, unreported Beck v. City of Raleigh, 711 S.E.2d 208 (Table), the North Carolina Court of Appeals upheld the action of the city in significantly reducing the number and kinds of districts in which pawnshops could be, from Business, Thoroughfare, Industrial-1. Industrial- 2, Buffer Commercial, Neighborhood Business, and Shopping Center, to Business, Industrial -1, and Industrial-2. The Court observed that the city had spent over 2-1/2 years discussing and studying the issue, and had come to a number of conclusions about the impact of pawn shops on the city:
(1) pawnshops in Raleigh have tended to locate in “fragile” or high risk” areas close to residential neighborhoods and in shipping centers, (2) having numerous pawnshops in one area can decrease the charter of a residential neighborhood and discourage people from buying houses that are located close to a pawnshop; (3) adjacent property values can be affected by pawnshops; (4 pawnshops draw in a criminal element since they are often utilized by thieves to obtain cash for stolen good.; (5) The location of pawnshops can affect location decisions by other businesses; (6) restricting pawnshops to zoning districts that are further away from neighborhoods will help address concerns about the image of pawnshops on neighborhoods; and (7) other jurisdictions have passed similar zoning laws to remedy the same concerns. [At 3]
Much of the reporting on this case ignores the Court’s grounds for upholding the city’s zoning decision, but the case itself is clear on that point. The plaintiff pawnshop challenged the quality of the city’s evidence supporting its decision, but the Court reasoned that zoning decisions were legislative rather than judicial decisions that were not required by North Carolina law to be supported by “substantial evidence”: “Here, the evidence before the City Council set forth a plausible basis [my emphasis] for enacting TC 17-08—that the public health and safety is negatively affected by the location of pawnshops in certain zones in the city of Raleigh. Thus, the City Council’s decision was reasonable and not arbitrary and capricious.”
In Tennessee zoning decisions are also generally legislative. However, one can debate whether the “plausible basis” supporting zoning decisions applied in Beck, above, is equivalent to the one used by the Tennessee Courts to support zoning decisions, if by a different name. [See Far Tower Sites, L.L.C. v. Knox County, 126 S.W.3d 52 (Tenn. Ct. App. 2003) Custom Land Development, Inc. v. Town of Coopertown, 168 S.W.3d 764 (Tenn. Ct. App. 204): ( “rational or justifiable basis.”) My reason for citing Beck was to point to the prospect that pawnshops have not been “redeemed” and that they are still being treated quite roughly by the court. The same thing can be found in the also recent Minnesota Supreme Court case of Pawn America Minnesota, LLC v. City of St. Louis Park, 787 N.W.2d 565 (Minn. 2010), in which that Court upheld an interim ordnance adopting a moratorium on the issuance of pawnshop licenses while the city studied the impact of pawnshops on the city. That study ultimately led to a permanent ordinance, which:
Among other things suggested by the study, the permanent ordinance amended the zoning code to make pawnshops conditional uses, and includes a distance separation requirement between pawnshops, gun shops, liquor stores, and certain other businesses, prohibits pawnshops from being located within 350 feet of residentially zoned property, and prohibits firearms transactions. Because the property at issue abuts a single family residential neighborhood, a pawnshop is not permitted there under the permanent ordinance. [At 569]
Both Beck and Pawn America Minnesota, LCC seem to support the proposition that cities can consider the secondary effects of pawnshops in zoning them (which has long been the practice, supported by the courts, of local governments with respect to adult businesses).
In spite of the low esteem in which pawnshops are held, it does not appear to me that most cities that specifically zone pawnshops relegate them solely to industrial districts of the city. For example, the 2010 City of Gatlinburg Zoning Ordinance contains six kinds of commercial districts (but no industrial districts). The C-2 General Business District allows tattoo parlors/studios (located a minimum of 1,000 feet from any public school and 200 feet from any church with an active congregation that meets on a regular basis), pawnshops, and body-piercing establishments (located a minimum of 1,000 feet from any public school, 200 feet from any church with an active congregation that meets on a regular basis, and 250 feet from any residence. The city also has a C-2 Tourist Commercial District, in which is permitted “stores and shops conducting retail business,” but expressly “excluding tattoo parlors/studios,
pawnshops, body piercing establishments and flea markets.” Gatlinburg “elevates” pawnshops a notch or two above tattoo parlors and body piercing establishments by allowing them in C-2 districts without any distance regulations from schools, churches or residential areas.
In 2011, pain clinics joined other Tennessee businesses subject to heavy state regulation. Public Acts 340 required the Commissioner of Health, in consultation with the various medical boards of the state, to issue state rules and regulations governing the operation of such clinics. The clinics are to be subject to the inspection by the particular medical board that “utilizes the services of a practitioner licensed by that board.” Pain management clinics must also “have a medical director who is a physician that practices in this state under an unrestricted and unencumbered license issued pursuant to § 63-6-201 or 63-9-104.” Nothing in that statute appears to restrict local government zoning of pain management clinics, but presumably, they should be zoned for districts in which medical facilities are allowed.
Body piercing and massage establishments, pawnshops and pain clinics are all quite heavily state-regulated businesses, which regulation is undoubtedly the product of peculiar problems those businesses produce, including secondary effects. But all of these businesses are still subject to local government zoning regulations. However, I do not think it legally advisable to relegate them to highly undesirable zones that are not generally suited to most retail or other commercial businesses. That is true even of pawnshops, which, in two recent cases from other jurisdictions, received surprisingly rough treatment by the courts.
Sidney D. Hemsley
Senior Legal Consultant