Preface

CHAPTER I – BARS AND CRIME

Section A – General Relationship between Bars and Crime

1. Introduction: The Research Question

2. Methodology

3. Analysis and Findings

4. Summary: General Relationship Between Bars and Crime

1. Introduction: The Research Question
2. Methodology

3. Analysis and Findings

4. Summary of Findings

Section C – Characteristics of "Nuisance" Bars

1. Introduction: The Research Question

2. Methodology

3. Analysis and Findings

4. Summary of Findings

CHAPTER II – ADULT ENTERTAINMENT ESTABLISHMENTS AND NEIGHBORHOOD DETERIORATION

Introduction

Section A – Policy Issues

Section B – The Research Design

1. Introduction: The Research Question

2. Variables and Data Sources

3. Level of Analysis

Section C – Analysis and Findings

1. Simple Relationships

2. Complex Relationships

3. Tests for Linearity

4. Causal Analysis

Section D – Summary and Conclusions

CHAPTER III – EMPIRICAL FINDINGS AND POLICY RECOMMENDATIONS

APPENDIX A – Supplementary Materials for Chapter I: Bars and Crime

APPENDIX B – Supplementary Materials for Chapter II: Adult Entertainment and Neighborhood Deterioration

This study examines two separate but related issues: 1) the relationship of bars to crime, and 2) the impact of adult entertainment establishments on neighborhood deterioration.

The first issue is specific in its focus and is limited to studying the impact of alcohol-serving establishments on crime in the immediate geographical area (a six-block radius) around the bar. This relationship between bars and crime is analyzed in three sections in the first chapter of this report. These analyses investigate:

The second issue is broader, and more complex to answer. The study looks at all adult entertainment establishments…saunas, rap parlors, adult theaters, etc., in addition to bars. It examines their relationship to neighborhood deterioration as measured by crime and housing value. For this part of the study, "neighborhoods" are defined as census tracts. Other factors affecting neighborhood deterioration are controlled for in order to measure the independent effects of adult entertainment establishments. The research questions involve establishing whether or not there is an association between adult entertainment and neighborhood deterioration at the census tract level, and then determining whether the evidence supports the hypothesis that adult entertainment precedes neighborhood deterioration.

The second chapter of the report presents the analysis of these issues in four sections:

This study was commissioned by the Minneapolis City Council in winter, 1980 to provide some empirical basis for policy decisions regarding the licensing and zoning of adult entertainment establishments. The research questions were derived through discussions with the members of the Council's Consumer Services Committee, and with members of the committee appointed to assist the research, including John Bergquist, manager of the Department of Licenses and Consumer Services, Roger Montgomery of the Police Inspection Unit, and Mary Wahlstrand of the City Attorney's office. Numerous other city employees were generous with their time and helpful in their suggestions.

The hypothesis investigated in this section is that bars are significantly associated with crime. This portion of the study examines the general association of bars to crime as well as the association of certain types of bars to crime, while controlling for neighborhood setting. The general hypothesis in this context can be reinterpreted as specific research questions:

The major independent variable is all licensed alcohol-serving (on-sale) establishments in Minneapolis. This variable is measured by identifying the location (address) of each bar. T he license categories established by the city -- beer, wine, or liquor bars, and Class A, B, or C entertainment -- are subdivisions of the independent variable and are considered separately in some analyses below. Bars are also classified into two categories according to the volume of food service business they do.

The data source for identifying bar locations was the records of the License Department of the City of Minneapolis. According to these records, there were 203 liquor licenses, 21 wine licenses, and 143 beer licenses issued in 1979. Each of these businesses is also licensed for a certain entertainment level. The data source for classifying bars according to volume of food business were the observations of members of the License Department and the Minneapolis Police Department. 215 of the 367 licensed establishments could be classified in this way. The remaining 152 bars are dropped from any analysis based on food categories.

The dependent variable is the density of crime in areas surrounding the bars. The crimes that are measured for the analysis are street robbery and assault. These crimes are reasonable in that we might expect to find a relation between alcohol consumption and these personal crimes. No theory connecting crime and drinking in public places exists, but we have sufficient experience with the effects of alcohol on aggressive behavior to make the connection. In addition, bars serve as gathering places where outbursts of aggression have handy targets. Finally, neither observed relationships (as in the adult entertainment portion of this study, which shows a low overall relationship between bars and residential burglary, for example) nor logic argue for the inclusion of other crimes. One important candidate may be vandalism, but reported vandalism rates are so unreliable by present measurement techniques that it could not be included.

Crime counts were made at the address level using the offense report data automated through the Minneapolis Police Department's Integrated Criminal Apprehension Program (IGAP). These counts were aggregated into frequencies for each crime and for each area surrounding a bar for a one-year period from May 1, 1979 to April 30, 1980. Assaults and street robberies were considered both separately and together in various analyses.

Finally, the analysis takes into account the type of neighborhood as a control variable. "Neighborhood" is here defined as a census tract, and it is measured by the percent of owner-occupied homes by tract. It was necessary to use the census tract as the unit of measurement for this variable because the address level data necessary to construct the exact distance decay areas was not available at an affordable price. Percent owner-occupied, taken from the 1970 census, is known to be highly related to other indicators of socio-economic status such as income, and in addition it is believed to indicate in some degree the important properties of stability and salience of neighborhood identity on the part of residents. The actual measure used is a Z-score, dividing the variable into three categories (low = -.5 standard deviations or less, medium = -.5 to .5, high = .5 or greater).

The units of analysis are the areas around each bar, and the sub-divisions of that area. These units of analysis are not existing civil divisions, like census tracts, but rather are created by specialized processing software which uses the address-level crime data provided by ICAP to first aggregate the data into uniform areas around each bar and then perform standard analyses on the densities of crimes found in these areas for each bar or group of bars. This technique is known as distance decay analysis.

Distance decay analysis determines the degree to which crime is uniformly distributed geographically about a particular site. Where crime is not uniformly distributed around a site but displays a pattern of being densely distributed near the site and gradually becoming less dense as distance from the site increases, then it may be the case that the site is associated with crime. There are three tests to determine whether a site is statistically associated with crime:

Only if all three tests are positive do we consider a site associated with crime. Thus, this study uses a conservative test in order to be confident that the relationship between crime and bars actually exists.

The sub-areas constructed around each bar by the distance decay software are six approximately concentric rings of 1/10 mile in width each, for a total area with a 6/10 mile radius. The technique compares the proportion of the total crimes in each ring to the proportion of land area within each ring to get a measure of the density in crime in each concentric ring. These measures (six for each distance decay) are then tested by the three tests outlined above to see if the density of crime is non-random and if it is concentrated at the middle of the area (the "node") where the bar is.

This analysis looks at the general association between bars and selected types of crime. Separate distance decay analyses were performed on the 367 bars and a summary analysis was prepared for all bars. This was done for each of the crimes separately and for the two crimes combined.

The summary analysis of bars and assaults in Figure 1.1 demonstrates a classic distance decay curve. As can be seen in Figure I.1, as distance from the bar increases the density of assaults decreases. Both the chi-square and the signs test are significant. As a group, bars in Minneapolis are significantly associated with assaults. This, of course, does not mean that every bar is associated with assault.

The association of Minneapolis bars and street robbery is demonstrated in Figure I.2. Once again, there is a fairly strong distance decay curve which indicates a concentration of street robbery around bars that decreases as distance from the bar increases. Both the chi-square and the signs are significant. In general, bars in Minneapolis are significantly associated with street robbery.

Because bars are associated with both assaults and street robberies separately, we may expect that they will be associated with the two crimes combined. This is the case as presented in Figure I.3. Again, the chi-square and signs test are both significant. It is the case that bars are associated with the crimes of assault and street robbery both separately and combined.

Despite the relationship between bars and crime in general, it is quite possible that this relationship does not exist for some categories of bars but does hold for others.

Bars are licensed according to the type of alcohol allowed to be served. The city has three categories: liquor, beer (3.2), and wine. The level of entertainment allowed in a licensed establishment also is licensed by the city and is used to categorize bars. There are three classes of entertainment defines by license categories: "C" (juke boxes, machines, T.V.); "B" (single performer plus those permitted under "C"), and "A" (live bands, shows, dancing, plus those permitted under "B" and "C").

In addition, the city staff expressed interest in the effect of volume of food business on crime. The assumption to be tested is that bars with lower food volume have lower associations with crime than bars with greater food volume. The two categories of food volume are: high = greater than 50 percent food; low = less than 50 percent food volume. This section looks at bars and their association with crime in each of these three categorizations: alcohol, entertainment, and food.

Because many other studies on crime have found that the type of neighborhood has a great influence on crime, it was decided to add neighborhood type as a control variable. Therefore, the study analyzes the relationship of all bars with the selected crimes while controlling for the environment in which a bar exists.

Figure I.4

What is the general relationship between bars and crime? Does the relationship hold when other variables associated with crime are controlled?

Liquor patrol limits have had a long and controversial history in Minneapolis. Initially established in 1887, the patrol limits restricted liquor licenses to be located within certain boundaries. The original liquor patrol boundaries were drawn closely around the central city so that Minneapolis Police Department foot patrolmen could reach the ends of the limits. (An indication that the presumed relationship between bars and crime is indeed an old idea.) There were several unsuccessful attempts during the 1950's to extend the patrol limit boundaries, with the issue ultimately bound up with the larger issue of the economic and physical redevelopment of the downtown area. City voters finally approved a charter amendment to extend the patrol limit boundaries in 1959.

The liquor patrol limits continued to be a political issue throughout the 1960's. In 1974, voters approved a charter amendment abolishing the liquor patrol limits altogether. The restriction that on-sale liquor establishments can be located only in seven-acre commercial zones remained in effect, however. As a result of Minneapolis' liquor licensing restrictions, major portions of the city remained without liquor bars until 1974 (with the exception of several "distressed" licenses issued outside of the limits).

One of the purposes of this study is to examine the effect on crime of the 1974 rescission of the liquor patrol limits. If bars are associated with higher incidences of certain kinds of crimes, as has been hypothesized, then one would expect to find significant increases of crime around those liquor bars established outside the old patrol limits.

In order to answer the question about the effect on crime of the elimination of the liquor patrol limits, "before" and "after" analyses of the amount and distribution of the crime of assault were conducted. The logic of the design is illustrated below (Figure I.6).

As indicated, the design looks at crime in areas outside the patrol limits before new liquor licenses were established and then compares it with crime after those liquor licenses have been in existence for a period of time. An area with a radius of six blocks around each new bar site was selected for the unit of analysis. This is the same unit as was used to examine the general relationship between bars and crime. If those liquor licenses granted after 1974 have an effect upon crime, it would be expected that the amount or distribution of crime (or both) around those sites would change between the two time periods.

Bars located outside the old liquor patrol limits were identified by mapping the 1980 liquor licenses and identifying bars located outside the boundaries in effect in 1974. The City License staff then provided the dates on which licenses were granted for these locations. A total of twenty-three bars were identified that met the following criteria: 1) had been granted licenses at locations outside the patrol limits after the 1974 change, and 2) existed before the 1979 data collection period. A list of these bars can be found in Appendix A.

The crime variable used in this analysis was number of assaults reported to the Police Department. As suggested previously, the hypothesized relationship between bars and the crime of assault is supported on logical grounds. The data on assaults comes from two sources. For the "before" period, crime data for July 1, 1974 through June 30, 1975 was taken from the Crime in Minneapolis study in which address-level crime data was coded from police offense reports. The Minneapolis Police Department's ICAP (Integrated Criminal Apprehension Program) system provided data for the "after" time period of May 1, 1979 through April 30, 1980.

In order to test the hypothesis that on-sale liquor licenses granted outside the old patrol limits are associated with a disproportionate increase in crime, both the number of assaults and the distribution of assaults within the six-block radius area of each of the 23 new liquor license sites were analyzed for the two time periods. Distance decay analyses were performed to analyze the distribution of crimes in the areas around each of the sites. For a complete discussion of the distance decay technique, see Appendix A. If the distribution of crime around the sites changed significantly during the five-year period, one would expect to find a random distribution of assaults in 1974-75 (as indicated by the distance decay curve) and a non-random distribution (i.e., a significant chi-square and negative slope in the distance decay curve) for the 1979-80 data.

The results of the comparative analysis (1974-75 to 1979-80) of the number of assaults in the immediate vicinity of the 23 liquor licenses granted outside the old patrol limits dues not show an unexpected increase. That is, on the average, assaults in the areas surrounding these sites did not increase at a greater rate than for the city as a whole. These results are presented in Table I.1. In general it cannot be said that the introduction of bars into new areas of the city resulted in an increase in the amount of crime (assaults) in those neighborhoods, although this was true for some particular bars.

*Note that the crime counts in the cells for the 1974-75 and 1979-80 new liquor licenses are not actual crime counts for those areas, but reflect the aggregating procedure used by the distance decay technique. The percent change for the new licenses can be compared to the percent change for the city as a whole. The temporal change within a row is also a valid comparison, as the areas are the same at both times.

Comparative analysis of the distribution of assaults within the six-block radius area surrounding the 23 new liquor license sites suggests an apparent tendency toward a greater concentration of assaults in the immediate one-block area where the bars are located. As Table I.2 illustrates, in 1974-75 none of the sites had significant distance decay curves (defined in terms of a significant chi-square end a significant negative slope). In other words, the assaults did not cluster around the sites, but were more randomly distributed throughout the area. In 1979-80, however, six of these sites had significant distance decay curves, and an additional seven sites showed an increased concentration of assaults within the block of the bar although the increases were not sufficient to achieve significance.

*Significant chi-square at .05 level and significant negative slope.

Table I.3 provides additional confirmation of a greater concentration of assaults within the immediate block where new liquor licenses are located. As this Table suggests, while the increase in assaults for tile six-block areas where the 23 new licenses are located (12 percent) was less than the city-wide average (35 percent), the percent increase in assaults within one block of the bar sites was considerably higher (69 percent).

*Note that the crime counts in the cells for the 1974-75 and 1979-80 new liquor licenses are not actual crime counts for those areas, but reflect the aggregating procedure used by the distance decay technique. The percent change for the new licenses can be compared to the percent change for the city as a whole. The temporal changes within rows are valid as the areas are the same at both times.

Finally, a comparison of the summary distance decay curve for the 23 sites in 1974-75 to the summary curve for those same sites with liquor licenses in 1979-80 shows that the concentration of assaults within the first .1 mile band has increased significantly. The relative crime density for the first .1 mile band has increased from 1.86 in 1974-75 to 2.81 in 1979-80. This comparison is illustrated in Table I.4.

From these results we may conclude that although there was some change in the amount and distribution of crime around some of the bar sites, in general the introduction of bars in areas outside the liquor patrol limits has not had the effect of increasing the amount of crime in the neighborhoods around these sites. However, there was a fairly uniform effect of increasing the concentration of assaults within one block of the bar sites. This indicates that bars may have an affect on crime, but the area is geographically limited to the immediate surrounding area. It may be that groupings of bars (concentrations) have a wider range effect on distribution of crime, but we were unable to test this hypothesis given the limited number of such concentrations among the new licenses issued.

What is the effect on crime of the 1974 rescission of the liquor patrol limits?

a. Twenty-three liquor licenses were granted outside the old liquor patrol limits between 1974 and 1979. An analysis of the numbers of assaults in the areas surrounding these sites shows that, on the average, assaults did not increase at a greater rate than for the city as a whole.

b. In general, there was an increased concentration of assaults within one block of the bar sites where liquor licenses were granted outside the patrol limits.

There are a number of bars in Minneapolis that generate "nuisances" and crime-related problems for the citizens of the city. These nuisances are in the form of relatively minor crimes such as vandalism, noise, litter, and discomfort of local residence. Yet, nuisance situations often are more obvious to citizens and cause them more concern and worry than serious crimes, such as assault and robbery. Although this was not part of the contract, several city officials expressed interest in knowing whether bars which generate nuisance situations differ systematically from bars which do not generate nuisances. If there are systematic differences between nuisance bars and non-nuisance bars, are these differences controllable through licensing restrictions? A third purpose of this portion of the study was added: to conduct some preliminary and exploratory analyses of the characteristics of nuisance-generating bars.

Members of the City staff and the City Council suggested a number of factors that could be important in explaining why some bars generate nuisance situations and others do not. The factors suggested included: 1) the volume of food business, 2) proximity to a primarily residential area, 3) the type and availability of parking, 4) the type of entertainment, 5) the type of liquor license, 6) the type of clientele, and 7) bar management practices. The data on the first six of these characteristics was collected through on-site observational visits to a sample of 40 Minneapolis bars.

The research design is based on comparing two samples of bars, 20 bars identified as generating nuisances and 20 non-nuisance bars, on the six characteristics identified above. Although nuisances often result in calls-for-service to the police, at present the Minneapolis Police Department does not have an automated record keeping system for these calls that provides easy access to this data. Because the city has tens of thousands of calls each year, a study of all bars and their relationship to nuisances was outside the scope of this study. Instead a sample of bars believed to generate nuisances and a sample of bars that do not were selected for the comparative analysis.

A chi-square statistic was used to determine if there was a statistically significant difference between the two samples of bars on the characteristics.

Members of the Minneapolis City Council were asked to identify bars in their wards which generate complaints to their offices as well as to identify "exemplary" bars. Members of the Police License Inspection Unit were asked to identify bars in these two categories as well. From these nominations, 20 bars from each type of bar (nuisance and non-nuisance) were selected from their nominations. A list of the 40 bars included in the two samples can be found in Appendix A. On-site observations using a structured data collection instrument were made at the 40 bars by MCPC, Inc. staff. A copy of the data collection instrument used is also included in Appendix A.

The data on the relationship between volume of food and type of bar (nuisance or non-nuisance) is presented in Table I.5.

x² = 15.172 1df

sig. .001

As this Table indicates, none of the bars with over 50 percent food business were nuisance bars, while the majority of the bars with low food volume tended to be nuisance bars. This difference is statistically significant. It suggests that if a bar does a large volume of food business it is less likely to generate nuisances than if it does a small volume of food business.

Table I.6 shows the results of the analysis for the relationship between proximity to residential neighborhood and type of bar.

x² = 3.844 2df

sig. .15

The results are more ambiguous than was the case for volume of food. Although there is a tendency for bars closer to residential areas to be nuisance bars, this result is not statistically significant at a level which justifies reaching general conclusions.

The results of the analysis of the relationship between the type of parking available and type of bar are shown in Table I.7.

x² = 6.424 3df

sig. .10

These results are ambiguous, but the tendency exists for nuisance bars to rely on street parking, while non-nuisance bars tend to have their own lots. These results are significant at the .10 level.

To carry the analysis further, a comparison was made between bars that have their own lot available and those that do not (i.e., they rely on all other types of parking). This involved combining the first three categories. The results of this comparison are clearer and statistically significant. Table I.8 indicates that bars without their own lots are much more likely to be nuisance bars, while bars with their own parking lots are less likely to be associated with nuisances.

x² = 5.013 1df

sig. .05

Using the first definition of this variable, type of entertainment license issued by the City, the results in Table I.9 are obtained.

x² = .386 2df

no sig.

As this table indicates, there is not a significant relationship between the type of entertainment license a bar has and whether or not it is a nuisance bar.

When the alternative entertainment classification scheme (observed type of entertainment) is used, the results are slightly different. These results appear in Table I.10.

x² = 4.111 2df

sig. .112

This data shows some tendency for the bars with higher levels of entertainment to be associated with nuisance bars, but this is not a statistically significant finding.

e. Type of Liquor License

Table I.11 contains the data on this variable and its association with whether or not a bar is nuisance-generating.

x² = .784 1df

no sig.

According to these results from the sample of bars, the type of liquor license a bar has is not related to whether or not it generates nuisances. Bars with one type of alcohol license are not more likely to be nuisance bars than bars with another type of license.

Table I.12 shows that the relationship between game rooms and type of bar is significant. Bars with game rooms are more likely to generate nuisances than bars that do not have game rooms.

x² = 8.640 1df

sig. .01

Are there any systematic, significant differences in the characteristics of bars which generate crime-related nuisances when compared to bars that do not generate nuisance complaints?

the general purpose of this section is to examine the impact of adult entertainment establishments on neighborhood quality. The study is empirical, and uses statistical techniques to examine the relationships between concentrations of adult entertainment establishments and measures of neighborhood quality. On the basis of this analysis of data, inferences about whether adult entertainment establishments are associated with neighborhood decline and whether the establishments follow or precede neighborhood decline can be made.

The concerns represented here are neither unique to Minneapolis nor new to the city. There is widespread recognition of the importance of the use of city policy to encourage healthy, viable neighborhoods, and there is a suspicion that adult entertainment businesses -- bars, saunas, adult bookstores, and the like -- may be undesirable in such neighborhoods.

Two fairly common measures of neighborhood quality are used in this report: the crime rate, and a measure of housing value. While neither of these measures is perfect, each of them embodies real concerns of residents of the city. These measures consistently reflect our intuitive ideas of a "good" neighborhood; that is, relatively high quality housing (as reflected in housing value) and low crime rates are better than low quality housing and high crime.

In this study "Adult entertainment establishments" include all types of alcohol serving establishments, plus businesses which commercialize sex -- saunas, "adult" theaters and bookstores, rap parlors, and arcades. The various combinations of these establishments will be considered for their impact on the measures of neighborhood quality. They are considered the independent variables.

The entire analysis in this report is conducted at the level of the census tract. All of the measures used here were available at that level or could be easily aggregated to that level. The census tract is not necessarily the best level of analysis for all the purposes of this study, but the others are either impractical due to cost or availability. For example, block-level analysis is possible given available data, but the cost of acquiring that data and running analyses on about six thousand cases was prohibitive in this study. Though there are problems with the census tract level of analysis, it is a common and useful way to measure phenomena that are of interest at a geographical area larger than the site.

The remainder of this chapter is divided into four sections. Section A summarizes the policy issues that motivate the study. Section B then gives the empirical research questions to be examined here that follow from these policy issues. This second section briefly reports the research design followed in answering the research questions. Section C provides the results of the study in written and tabular form. Section D is a summary of the study results in light of the policy issues identified in Section A. Appendix B describes and justifies the methods used in this portion of the study.

The central issue is whether the city can and should use its zoning and licensing powers to regulate the concentration and combinations of adult entertainment establishments. It has been well established in law that zoning is a valid use of the state's police power to protect the "health, safety, morals and general welfare" of a community. Likewise, the licensing function is an established way to regulate the existence and condition of a business. The more narrow question is whether these powers can be exercised to regulate adult entertainment without infringing on other guaranteed rights of proprietors and customers, such as the First Amendment right to free speech.

In Young v. American Mini Theaters, Inc., the Supreme Court held that a Detroit ordinance that caused the dispersal of adult theaters from certain other "regulated" land uses, including adult bookstores and theaters, and on-sale liquor establishments, was constitutional. It was held that, in principle, the ordinance did not deprive proprietors and customers of the right to distribute or consume certain ideas, specifically those with explicit sexual content. Further, the particular limits placed on adult businesses by the law were seen as justified by a "compelling state interest" to preserve the city's neighborhoods. The ordinance represented a rational response to the problem of neighborhood decline based on the testimony and evidence of expert witnesses.

The conditions laid down in Young v. American Mini Theaters are narrow, and the legal issues are complex. It is not the intention of this report to enter the legal thicket in search of optimum solutions. The relevant point raised by the Detroit decision is that one of the conditions that must be satisfied to sustain the use of zoning powers to regulate adult entertainment businesses is that there must be a demonstrable public interest to be served by such regulation. Among the considerations raised by the Young case are the concerns that a concentration of adult entertainment businesses in a neighborhood may have an adverse effect on property values, result in an increase in crime, or undermine the stability of businesses and residents in the area. These are among the concerns that are empirically examined in this study, as indicated by the primary measures of relative neighborhood deterioration, housing values and crime rates.

This study looks at the effects of both sexually-oriented and alcohol serving adult entertainment establishments on neighborhoods in Minneapolis. Alcohol-serving establishments and movie theaters are subject to both licensing and zoning restrictions, while many sexually-oriented businesses are subject only to zoning restrictions (as of July 1, 1980).

Discussions with Council members and City staff produced several specific policy questions that can be pursued in this research:

1. Do different types of alcohol-serving establishments have different impacts on neighborhoods?

This is a complex question since City Council and License Staff members have raised numerous ways to classify bars. The legal definitions embodied in licensing requirements are included in the classification scheme, used here, e.g., liquor, wine, or beer, class A, B, or C entertainment. A further consideration raised is the extent to which a business is based on serving food and how this may alter the effects of the establishment on the neighborhood.

2. Do particular combinations or concentrations of adult entertainment establishments have particular impacts on neighborhoods?

This question asks whether the location of adult entertainment establishments in clusters will have different or greater impacts on neighborhoods than will similar establishments separated by a significant amount of distance. As of July 1981, the zoning code will regulate sexually-oriented businesses to 500 foot intervals between them and with 500 foot intervals between the businesses and other priority uses like residences or churches. One assumption in the regulation is that concentration of these establishments will exacerbate their negative impacts on neighborhoods. This assumption requires empirical support.

3. Does the location of a bar or sexually-oriented business in an area precede the decline of a neighborhood or does it follow it?

There is some evidence that adult entertainment businesses locate in areas that are already in decline, or perhaps are undergoing rapid change in character with relatively few stable residents or businesses. The problem then is to determine if adult businesses further or contribute to the cycle of decline that is already in existence.

Given the severe limitations in the quality and availability of data on neighborhoods for most years, some of these policy questions are very difficult to answer, however, they can be translated into research questions that can be investigated empirically. There can be no absolute certainty in answering questions of this sort, but information can be produced that will place policy decisions on firmer grounds.

The policy concerns expressed in the previous section must be translated into research questions amenable to appropriate statistical techniques. This section discusses the research questions identified above and provides an outline of the techniques used in answering them.

a. Are the location and number of adult entertainment establishments and the various sub-types within this general category associated with measures of neighborhood decline?

This portion of the research utilizes simple correlation analysis to establish whether or not adult entertainment establishments of various types are empirically associated with measures of neighborhood deterioration at the census tract level.

b. Do these relationships between adult businesses and deterioration change after controlling for the impacts of other variables known to be associated with deterioration?

If the simple relationships described in a. are established, it is reasonable to ask if they remain after the effects of other variables that may be associated with neighborhood decline are controlled. Two related statistical techniques are used in this portion of the analysis. First, the simple correlations are re-analyzed while "holding constant" some other variables thought to be related to the measures of neighborhood quality. Second, multiple regression analysis is performed to determine if any or all combinations of the adult entertainment establishments are associated with measures of neighborhood quality when considered together with other control variables. The regression equations permit some estimate of the impacts of adult entertainment establishments on neighborhoods in comparison with other variables, using the regression coefficients.

c. Does a concentration of these establishments have a disproportionate impact on neighborhood decline? That is, are the observed relationships non-linear?

The relationship established in a. and b. may reveal that changes in neighborhood deterioration increase at a greater or lesser rate than increases in the concentration of adult entertainment establishments. If this is the case, the relationships are non-linear, and it may be possible to identify the point at which further increases in the concentration of adult uses will have disproportionately great impacts on surrounding areas. The simple relationships are tested using one-way (bivariate) analysis of variance techniques to identify significant departure from linearity. The multi-variate regression analyses are tested through examination of residuals.

d. Do the relationships observed in the data, either over time or cross-sectionally, permit the inference that adult entertainment establishments precede or accelerate neighborhood decline?

For policy concerns, it is important to determine whether adult entertainment establishments precede or follow neighborhood deterioration. This will be impossible to prove empirically. However, circumstantial evidence can be developed which is consistent with our suspicions about neighborhood decline. In the present case, the statistical technique of path analysis is used to determine whether adult businesses precede or follow signs of deterioration. We hypothesize that deterioration does follow the location of such businesses, (in the sense that adult businesses contribute to the existing cycle of decline in the neighborhood), even though it may be the case that adult businesses are attracted to areas already in the process of decline (the businesses follow decline).

It is also possible to examine hypotheses about causal relationships using longitudinal data. Observations of actual changes in variables over time were made, comparing 1979 to 1970 measurements, but these observations were unsatisfactory due to measurement error and lack of sufficient data points. Therefore, these cross-time measurements and the analyses of them are not reported in this document.

Numerous data sources were used to obtain measures of the many variables used in this study. Measurements were taken at two points in time for as many variables as possible. Generally, the years for which measurements are available are 1970 and 1979, although some variables were measured for different years if data was not available for one of these years. These can best be discussed as independent, dependent, and control variables.

The independent variables are all on-sale liquor serving establishments of all types and classes, plus sexually-oriented businesses.

*"Wine" was not a license category in 1970.

*License records are available beginning with 1973.

The source for saunas and theaters are License Department records for the different years. Complete up-to-date counts of these businesses plus adult bookstores, rap parlors, and so forth, were also obtained from the Office of the Zoning Administrator. Bars with live sexually-oriented entertainment in 1979-1980 were identified by members of the Minneapolis Police Department and License Department staff.

The main dependent variables used in this study are mean housing value and an index of crime rate per 1,000 population, at the census tract level. These variables are generally recognized to be good indicators of neighborhood deterioration.

Certain third variables believed to have an impact on neighborhood quality were also measured for 1970 and 1979. These variables are used in the analysis to determine the extent to which the associations of adult entertainment establishments with neighborhood quality are actually due to the control variables rather than the independent variables themselves. It is possible that both the location of adult businesses and the level of housing value or crime rate are caused by some third variable. Control variables can be held constant with statistical techniques to see how the variables of major concern are related when the controls can no longer make a difference. Statistically speaking, these variables are used to identify spurious relationships or to help confirm the effects of an independent variable. Because a large number of these third variables are used, the data sources and variable definitions will be presented only in summarized fashion.

All variables have been measured at the census tract levels. This means that observations for a given variable have been aggregated within a tract for the appropriate time period, and a summary measure produced. For example, the measure of all alcohol serving businesses for 1979 is a count of all types and classes of on-sale licenses issued by the city for that year, by census tract.

Are the location and number of adult entertainment establishments and the various sub-types within this general category associated with measures of neighborhood decline?

Based on previous related research and discussions with interested persons, we expected to find that a high concentration of such businesses is associated with an increased crime rate and decreased housing values. The simple correlation coefficients confirm these expectations.

*Correlations are significant at the .05 level or better.

As Table II.3 shows, several categories of adult businesses have a statistically significant relationship with the measures of neighborhood deterioration. Concentrations of sexually-oriented businesses and beer bare show relatively strong relationships with both housing value and the crime rate in the expected directions. The relationship between the location of adult entertainment businesses and crime is generally stronger than that between these businesses and housing value. Most of the observed correlations are very weak.

The relationships in Table II.3 vary among the sub-types of adult establishments: some of the types are more closely related to the neighborhood variables than others. It is possible that these differences are due entirely to differences between the types of establishments, but that seems to be only a part of the issue. It is likely that other variables are affecting the relationship.

Included among these other variables, the effects of city policy, business decisions, and the general environment of the adult business are likely to make a difference in the way the business is related to housing value and crime. The classification of the businesses that is used here already reflects the licensing procedures of the city, but other policies, especially zoning regulations, may have an impact. Zoning regulations affect the size and type of commercial area within which different types of adult businesses may locate, with possible consequences for their impacts on neighborhoods. One business decision that Council members suggested might affect an establishment's relationship with crime and housing value is the proportion of the business that is devoted to food service. Businesses that are actually restaurants that happen to have alcohol licenses may be different than those that are primarily bars. The residential environment of the adult business may be characterized by many variables that could have an impact.

In this study, these concerns are measured and taken into account through the use of statistical controls. The zoning policy issue is summarized in a measure of the proportion of commercial units found in each tract. The restaurant vs. bar distinction is based on a measure of the proportion of a business that is food-related, with those that are greater than 50 percent food considered primarily restaurants. The residential environment is characterized by a measure of average household income in a census tract. Income is very highly related to other measures of residential area type.

The simple relations between these control variables and the types of adult entertainment establishments suggest that they might make a difference in the relationships between types of adult businesses and crime or housing value. The next section presents some analyses that explicitly use these control variables to examine the relationship between adult business and neighborhood deterioration more closely.

(1) Concentrations of beer licensed bars and sexually-oriented businesses are significantly related to lower housing values. Host types of adult businesses are negatively related to housing values, even if they are not significant.

(2) A summary measure of all adult businesses, sexually-oriented businesses, beer and Class B entertainment licensed alcohol-serving businesses are significantly related to high crime rates. All but one type of adult business are positively related to the crime rate.

(3) Overall, the relationship between adult business concentrations and neighborhood deterioration measures are weak.

Do the observed relationships change after controlling for the impacts of other variables known to be associated with neighborhood quality?

This section is in two parts. The first part presents first order partial correlations between concentrations of adult businesses and measures of neighborhood quality, controlling for the policy relevant variables of food percentage of business and commercial characteristics of bar locations, in addition to controlling for the effects of type of residential area on the relationships. In the second half of this section, even more stringent statistical tests are reported which permit an estimation of the amount of impact of various combinations and concentrations of adult businesses on neighborhood quality, while simultaneously controlling for tile effects of other variables.

Table 11.4 shows how the simple relationships between adult entertainment establishments and neighborhood quality measures change when the effects of other variables that measure important policy and environmental factors are controlled.

The partial correlations in the third and fourth columns of Table II.4 show the effects of controlling for food business on the relationships between adult entertainment business types and the neighborhood deterioration measures. Bars that are devoted primarily to serving alcohol are more strongly related to lower housing value and higher crime rates. With the effects of restaurant-type businesses removed, more of the relationships are significant, and nearly all of them are in the direction expected, i.e., concentrations of bars are associated with lower property values and higher overall crime rates. Liquor bars and Class C entertainment licensed bars, in particular, are significantly related to crime and/or housing value when food business is controlled.

Partial Control Partial Control

Simple Partial Control for Percent for Mean

Correlations for Food Commercial Income

*Significant at the .05 level or better.

The controls for commercial area (the fifth and sixth columns in Table II.4) and mean income (seventh and eighth columns) also change the simple relationship dramatically, and the two variables are fairly similar in their effects on the relationships of particular types of adult businesses to neighborhood deterioration.

When the percentage of all units in a census tract that are commercial is used as a control, the overall relationship between adult businesses and deterioration is reduced almost to zero. However, when the various sub-categories of adult businesses are investigated, some fairly strong relationships remain.

Sexually-oriented businesses continue to be related to higher crime rates, and beer bars continue to be related to lower property values, even when commercial business concentrations are controlled. Beer bars are likely to be nearer to residential areas than wine or liquor bars are, in part because of zoning requirements. The fact that sex businesses are significantly related to crime even after the commercial concentration is controlled possibly suggests that these businesses may have an impact on crime rates independent of other commercial businesses.

On the other hand, the control for commercial characteristics raises the relationships between liquor or Class A bars and crime from zero to almost significant levels. In the case of the liquor bars, this probably reflects the zoning restrictions which requires that they locate in "seven-acre" commercial zones. Wine licensed businesses' relationships to neighborhood deterioration change from insignificant to significant, but in the opposite directions expected, i.e., wine bars are associated with higher housing values and lower crime rates when commercial concentration is controlled. This finding is suspect because of the small number of establishments involved.

Controlling for income (columns 7 and 8) produces strong relationships between liquor, wine, and Class A entertainment bars and higher housing values, and between these types of adult businesses and lower crime rates. These relationships are opposite to what would be expected if all concentrations of bars were associated with neighborhood decline. They suggest that income -- or the social conditions in neighborhoods that income represents -- accounts for a large proportion of the simple relationship between these alcohol-serving businesses and neighborhood quality. One inference is that a bar may be an amenity if the neighborhood is already of higher socio-economic type as indicated by income. Generally, the observed relationships are similar to those observed when commercial land use was the control, only more pronounced. As with the commercial control variables, beer bars and sexually-oriented businesses continue to be related to the deterioration measures in the same direction, although not as strongly, when income is controlled. The effects of these establishments are relatively constant, or independent of changes in mean income in surrounding tracts.

One possibility that these partial correlations do not take into account is that the control variables themselves are related to each other and have effects on the relationships between adult businesses and neighborhood measures in combination. This possibility will be explored using multiple regression in the following section.

The objective of this section is to determine whether adult businesses have an impact on neighborhood quality when other factors – the control variables described above -- are considered simultaneously, and if these establishments do have an impact, how great is this relative to the other variables.

A set of multiple regressions using the crime index as the dependent variable are reported in Table II.5. The regression coefficients indicate how much change in the dependent crime variables is associated with a change of one unit of the independent variables. For example, in Regression #1, the regression coefficient, b, indicates that the crime rate per 1,000 population drops 28.20 crimes, on the average, for each tract in which all the bars serve 50 percent or more of their volume in food (since the measure of food volume is a proportion). Care must be taken when interpreting the regression coefficients because the units they are associated with are not always comparable. The b for the income variable is very small, but it is more significant than the food service variable. For the purposes of this report, the significance of the coefficients and the beta weights provide the key information. If a coefficient is significant (.05 or less), then the beta weight provides a way to compare the strengths of the relationships between the independent variables (type of adult business) and the measure of crime rate.

Consistent with the partial correlations discussed in the section above, only the sexually-oriented businesses have significant coefficients and are associated with a higher crime rate. Both liquor bars and Class A bars are associated with lower crime rates when other factors are taken into account. No other type of adult businesses are significantly related to the crime index when they are considered simultaneously with the control variables.

Table II.5

The first regression shows the relationships between the three control variables of food, commercial concentration, and mean income. All of them are significantly related to the crime index, although the beta weights suggest that mean income is associated with the greatest changes in neighborhood quality. Both mean income and the percent of bars predominantly in the food business (50 percent food service or greater) have negative signs which indicate that higher incomes and more bars that are primarily food businesses are in lower crime areas. Crime increases as the percent of an area that is commercial increases. These coefficients are about the same size and have the same signs in all the regressions in Table II.5 except for number 3, which includes downtown tracts. This indicates that the estimates for these control variables are fairly reliable, at least with respect to the adult businesses.

The sub-types of the adult businesses that do have significant relationships with crime -- liquor bars, Class A entertainment bars, and sexually-oriented businesses -- are shown in Table II.5.

The presence of sexually-oriented businesses in a census tract is not as strongly related to the crime rate in the tract as any of the control variables, as indicated by th