ATLANTIC CITY – from www.pressofatlanticcity.com – The line of young men outside a strip club stretched halfway down a Pacific Avenue block on a recent Saturday night. Across the street, prostitutes strode purposefully in high heels and high hemlines, some to the music on their iPods. Lights blinked outside adult-bookstore windows about a quarter-mile away.

For more than a century, Atlantic City has sold sex with varying degrees of legality, refinement and subtlety. But that could change if a segregated adult entertainment district becomes part of development plans for the section of the city controlled by the New Jersey Casino Reinvestment Development Authority.

Officials will consider establishing a zone for sexually oriented businesses in Atlantic City’s South Inlet section as an alternative to the municipality’s present strategy, which leaves their locations up to market forces. Cities tend to avoid grouping sexually oriented businesses together because it tends to increase crime in the area. Dictating where such businesses can operate also risks provoking court challenges that raise First Amendment issues that typically do not favor the government.

But other local stakeholders think it could provide an opportunity to develop an attraction for adult tourists.

“I don’t know if the best option is the red-light district,” CRDA interim Executive Director Susan Ney Thompson [pictured] said. But, she said, “existing facilities can’t remain as they are. Right now, they are detriments to the neighborhoods where they are.”

By strict definition, red-light districts include prostitution. The concept envisioned for Atlantic City would not.

CRDA officials have not yet met with business owners, nor have they considered whether they would employ eminent domain, tax incentives or a combination of tactics to achieve whatever setup they decide works best, Thompson said.

Coby Frier, owner of AC Dolls at 2600 Pacific Ave., said he would consider participating in something like that, if it would help boost business in Atlantic City. But he said he does not want CRDA officials to “single out” his and other sexually oriented businesses – it’s not only unfair, he said, but doing so diverts leaders from what he thinks should be their focus.

“The focus on Atlantic City has to be to clean up the drugs, prostitution and crime on the streets – on Pacific Avenue and the Boardwalk – to bring tourists back,” said Frier, a resident of the resort’s Chelsea section. “Leaders need to focus on bringing people to Atlantic City, period. We have these beautiful beaches, the Boardwalk, world-class restaurants, hotels. So many people live within a day’s drive of us. Yet they hop on a plane and fly to Las Vegas.”

Gov. Chris Christie did not specifically mention the city’s sex shops and strip clubs before he signed legislation Feb. 1 establishing the city’s Tourism District and the CRDA’s oversight. But he stressed his desire for more family-oriented attractions in the district, which includes the beach, Boardwalk, casinos, convention center, and key retail and business centers.

The district also includes Gardner’s Basin, Bader Field and the Marina District – each long-valued for their development potential. In addition to taking on planning, zoning, law enforcement and public works functions formerly handled by the city, CRDA officials must come up with a master plan for the zone by February.

Thompson said related analysis will include examining the resort’s strip clubs, adult bookstores and other sexually oriented businesses. Nearly all of them operate within the Tourism District – and, technically, are in violation of the state law requiring a 1,000-foot buffer between each, or between such a business and a park, school, playground, church or other entity that the operation could reasonably disrupt.

“If we want the South Inlet as a red-light district, everybody will be up in arms, but where are you going to put it?” city Director of Planning and Development Keith Mills said. “(The South Inlet) is an open canvas. It’s held by investors, but you could designate that and you might not upset as many people as you would if you tried to do it somewhere else in town. I don’t even have another suggestion.”

With the primary goal of insulating children from pornography, sex-toy shops and strip joints, state legislators passed the 1,000-foot law in 1996 with the caveat that municipalities could adopt less-restrictive zoning policies.

At that time, Atlantic City officials analyzed their 8.4-square-mile municipality and found almost no place for sexually oriented businesses to operate that was in compliance with the statute. They never adopted local zoning codes establishing their right to do so – somewhat surprising, given “this is a city built on vice – gambling, adult entertainment,” Frier said.

Since then, local officials’ attempts to regulate such businesses have prompted lawsuits that the city has either lost or settled.

The most recent involved Sporty’s, a club bordering the Boardwalk on South Carolina Avenue. City police and mercantile inspectors shut down the establishment in August 2009 because the business, which described itself as a sports cafe on city documents, was actually a strip club operating within 1,000 feet of two churches.

Lawyers for the club’s management argued that other, similar businesses also were violating the zoning code and failed to accurately describe their uses on mercantile applications. City documents show the all-nude establishment Allure, for example, describes itself as a “dinner theater,” despite not having a kitchen. It is on the outskirts of the city on Albany Avenue and occupies a rare site that is compliant with the buffer law. Allure’s owner did not return a call seeking comment.

Lawyers for Sporty’s – who ignored repeated calls for comment – said in court documents that their client could not relocate without hurting business.

But before the issue went to trial, the club and city settled the matter in March by allowing the business to reopen. One factor that contributed to settling rather than going to trial was the potential for the CRDA’s imminent takeover of local planning and zoning to change things yet again, said Phil Magen, the Philadelphia-based attorney who handled the case for the city.

Sporty’s is back in business as the nude bar Stiletto, although one sign remains from Lace, the club that formerly operated there.

“I believe there are some good design ideas that can be applied to Atlantic City to make sure we are meeting the needs of an adult-entertainment resort while not offending any family travelers,” said Thompson, who did not provide an example of an alternate planning strategy.

Thompson, who has worked at the CRDA for 27 years, said the agency’s attention to the adult-entertainment industry stems mainly from the city’s “failure to administer the legal requirements (pertaining) to those businesses.”

Their existence suggests the continued demand for the adult entertainment Atlantic City has been known for since its inception as a resort in the mid-1800s, said Larry Belfer, who owns multiple nightlife spots in the city.

“If they’re making money, then there’s apparently a demand for it,” Belfer said.

“We’ve kind of tipped scales in that direction: titillating acts, nightlife, clubbing, having fun,” Mills said.

Resorts Casino Hotel has provided the most high-profile recent examples: a controversial billboard of a woman’s buttocks in a thong, flapper-inspired cocktail server attire and, most recently, Cirque Risque – the Naked Circus – which is exactly what it sounds like, a first for the city and unique on the East Coast.

Dennis Gomes, who took over the property this winter, sees his offerings as classier and distinctly different from adult entertainment. And, in the case of the circus, temporary.

“I’m not interested in selling sex – maybe sensuality is the best way to put it,” Gomes said. “It’s a different kind of concept. We’re not talking about a strip tease, but the Cirque Risque intrigued me. I thought it was interesting and different enough and (a way to) offer something for everyone.”

Much of the same is true of Diving Horse Cabaret and Steakhouse, which opened this summer in part of the 55,000-square-foot compound at Atlantic Avenue and Dr. Martin Luther King Jr. Boulevard formerly home to Club Tru.

Diving Horse ultimately will feature the after-hours club Luxx, reopen the gay bar the Brass Rail and launch the city’s only couples retreat featuring themed suites such as those offered at places such as the Inn of the Dove, founder Tom Sherwood said.

Sherwood, 66, of Philadelphia, estimated he has invested “a couple million, easy” into the property to create the type of upscale adult entertainment club he says does not exist in Atlantic City.

He said he has worked on the concept – a throwback to his boyhood spent shining shoes at the 500 Club and Club Harlem – for years. Not yet complete, the club features nods to the history of that era and the famous diving horse attraction that drew spectators to the Steel Pier, such as the metallic horse sculpture hanging over the venue’s main stage. Sherwood rescued that from an auction of decor from the Sands Casino Hotel prior to its demolition in 2007.

“Every time I’d have my clients in Atlantic City and try to take them to a gentlemen’s club, it just isn’t here. There are strip clubs,” he said. “In Vegas, I had no problem. I’d take clients there, spend thousands of dollars, and they’d enjoy themselves and buy my buildings and stuff like that. In Atlantic City, there was nowhere to go but the casino. So I said, ‘Some day, I’m going to build a gentlemen’s club in Atlantic City that was sort of like Vegas.'”

Diving Horse dancers are not topless, meaning any crackdown by the CRDA and other officials would not target or affect Sherwood and his business. In fact, the venue could serve as a template for the upscale adult district some stakeholders envision.

Kevin DeSanctis, CEO of Revel Entertainment Group, said he is open to a potential adult entertainment district, so long as it is an improvement on what currently exists citywide.

“If it’s just relocating the bookstores and some businesses I’ve seen, then I absolutely would not be for it,” DeSanctis said. “You can have a red-light district that’s appealing to guests if it’s done properly with the appropriate design elements and oversight. If it’s not done appropriately – if it’s done in a sleazy way – it can be a total disaster.”

Belfer doubts the concept will work. He suggested a less dramatic tactic, such as restricting signage so it is more subtle if the CRDA wants to attract families or expand medical and educational facilities – both in the works – in the area where several sexually oriented businesses exist.

“People who have already established their business – what are they going to do? Relocate? Is the CRDA going to pay us for our properties we’ve fought tooth and nail to hold on to, paid taxes for?” said Belfer, who started out in 1984 running a rolling chair rental company that he sold in 2003. He now owns the Westside Bar, 511 N. Arkansas Ave., and strip clubs Coconutz at 30 S. Florida Ave. and the Naked Truth – formerly erotic couples’ club Caligula’s Temple – at 12 S. Indiana Ave.

Sherwood, who says his real estate portfolio includes properties in 26 cities, expressed concerns about the failings and negative effects of adult entertainment districts elsewhere, citing Boston and Baltimore as examples.

Frier said he has been to “The Block” in Baltimore, where strip clubs and other sexually oriented businesses have been concentrated for decades. Media reports document the criminal activity associated with the stretch, which includes Larry Flynt’s Hustler Club, and that it struggled during the recession, along with virtually every other city and industry.

Frier had a different experience when he visited.

“They have the Inner Harbor area, the stadiums and “The Block” – their red-light district. They push tourism there also. It’s all gentlemen’s clubs, porno shops, video stores. And it’s packed. You’re shoulder-to-shoulder on the street, no cars are allowed on it. I think it would be great for Atlantic City,” Frier said.

Planning consultant Eric Kelly said concerns such as Sherwood’s exist for a reason – and that has more to do with the state of mind of the customers than how the businesses are run. Kelly, a professor at Ball State University in Muncie, Ind., spent 15 years studying red-light districts and other zoning and development issues linked to adult entertainment; he has written a book on the topic.

Kelly said that while drug and other illegal activities conducted within adult businesses can attract criminals, that rarely happens. Usually, patrons are drunk and therefore more likely to fall victim to, or fail to report, a crime – or they are embarrassed about where they are and ignore or otherwise respond differently to crimes than they would in another, less sexualized setting, such as a department store, he said.

“Party bars work the same way, not just sexually oriented bars,” he said. “The evidence shows concentrating these businesses – even if it’s two instead of one – increases the secondary effect on crime rates disproportionately, as in overall crime in a city increases, it’s not simply concentrated or contained.”

Most towns, therefore, focus on maintaining at least a couple blocks of separation between such businesses, Kelly said.

That was the intent more than a decade ago when New Jersey legislators enacted the 1,000-foot buffer. Although statewide laws are rare, that 1,000-foot separation is common because the Supreme Court has upheld it in the face of First Amendment-based challenges, Kelly said.

For now, the discussion in Atlantic City focuses less on those issues and more on maximizing appeal to visitors.

“We’re all adults,” DeSanctis said. “Clearly, it’s not for kids. But if it’s done right, it could be fun and a true adult tourist attraction.”