RESOLVED, that the proper city officials are authorized to settle the claim by Norshor Experience, Inc., and execute all documents required to implement such settlement, arising out of an action filed in the United States District Court-District of Minnesota and entitled Northshor Experience, Inc. a Minnesota Corporation, et al. v The City of Duluth, et al., File No. 06cv2998, subject to the following terms and conditions:

    (a)   Norshor Experience, Inc., shall execute a dismissal of its claims against the city of Duluth said dismissal shall be with prejudice;

    (b)   City shall recognize Norshor Experience. Inc., as a legal nonconforming use at its current location at the Norshor Theater located at 322 East Superior Street, Duluth. The stage located in the mezzanine level shall not be considered an expansion of the nonconforming use. The mezzanine stage shall not be used until such time as the building is brought into compliance with the city building and fire code. Such compliance shall be certified by the city building official;

     (c)   Each party shall be responsible for its own costs, disbursements and attorney fees.

STATEMENT OF PURPOSE:  This matter involves a challenge to Ordinance 9781, passed on July 10, 2006 and subsequently enacted 30 days after publication or on August 21, 2006. This ordinance was enacted pursuant to the authority granted to local governments by Minnesota Statutes Section 617.242. The state statute was enacted on May 27, 2006, and regulated the location and hour of operations of adult entertainment establishments. The statute also allowed political subdivisions to enact local ordinances opting out of the statute in whole or in part.

The Norshor Experience, Inc., began operation shortly before passage of the state statute. It then closed for remodeling. In its complaint Norshor Experience challenged the constitutionality of the state statute and Ordinance 9781. In addition it challenged the manner in which the ordinance was enacted claiming that it was a zoning ordinance that required submission to the planning commission for its recommendation to city council. Norshor Experience sought a preliminary injunction enjoining enforcement of the state statute and city ordinance. The state attorney general did not intervene to defend the challenge to the state statute. On August 2, 2006, the district court held that Ordinance 9781 was a zoning ordinance requiring planning commission action; therefore, it concluded that the ordinance was not validly enacted and issued its preliminary injunction prohibiting enforcement of the ordinance. Norshor Experience has been operating at the Norshor Theater since issuance of the injunction.