The city of Destin has always striven to remain a family-friendly town. But maintaining that image has sometimes come at a price.

Ten years ago, the city was involved in a federal lawsuit after a Georgia-based strip club owner sued the city for not allowing him to have topless dancing at his Mountain Drive club.

The Oasis of Destin, now Lucky’s Rotten Apple, was originally a pool hall owned by Phil and Norma Calhoun. When they attempted to acquire a liquor license for the establishment in 2008, they were rejected due to an old city ordinance that prevented liquor from being sold within a certain distance of a cemetery.

Shortly after being denied, Calhoun warned the city he was going to sell to an adult entertainment business, but still nothing changed.

“Unfortunately the law had evolved quite a lot and we had not changed our ordinance to keep up,” former city councilman Dewey Destin recalled. “We should have been going the moment he said (he would sell to a strip joint) to change the ordinances to bring them up to par with the recent federal court rulings, but hindsight is 20/20.”

The 1986 ordinance prohibited nudity in bars, nightclubs and any business “which sells alcoholic beverages for consumption on the premises.” But according to the Supreme Court, nude dancing — when performed before an audience with the purpose of conveying feelings of eroticism to spectators — qualifies as a form of expressive conduct and is protected by the First Amendment to some degree.

In November 2008, the new owners of The Oasis and its partner, Trident Operations, filed a federal lawsuit against the city saying the city’s ordinance was unconstitutional.

At that point, the city hired an attorney from the Orlando area who had expertise in adult entertainment and entered into a five-year long struggle with the strip club.

By March 2009, the city had updated its 1986 anti-nudity ordinance with new rules such as no alcohol on the premises, a buffer zone between the dancers and patrons and only allowing operation between the hours of 10 a.m. and 1 a.m.

“The law allows us to regulate the sale of alcohol; it does not allow us to regulate free speech,” Destin said.

The city told Oasis owner Terry Stephenson that he was free to open a strip club in Destin as long as it was in one of the industrial zoning areas, like Airport Road.

In June 2009, the court ordered the two sides into mediation to see if the suit could be settled outside of court. For months, the city and Stephenson went back and forth.

“We argued about tiny, tiny pieces of fabric for months in mediation; how much fabric they needed to cover certain parts of the female,” former city manager Greg Kisela said. “It was nitty gritty.”

A settlement was finally reached in February 2010.

The City Council voted 5-2 to approve the settlement that would allow Stephenson to open a strip club and sell alcohol on properly zoned land on Airport Road if he dropped his First Amendment lawsuit. Stephenson also agreed to limit advertising, including billboards in Santa Rosa, Walton and Okaloosa counties.

Destin and former city councilman Jim Bagby voted against the settlement.

“I was willing to go to the court and go through the trial and see what the judge said,” Destin said. “I said ‘If there’s gonna be a strip joint in Destin, it’s gonna be because a federal judge ordered it.’”

Stephenson closed The Oasis in August 2010 in anticipation of opening a new club on Airport Road but his plans came to a standstill after he was shot and killed outside of his strip club in DeKalb, Georgia, in September that same year.

Nothing happened for a few years, until some of Stephenson’s associated submitted development plans for a 5,550-square foot “adult caberet” called The Runway on Airport Road in 2013.

After months of public opposition and project review, the city of Destin decided to pay the proposed developers $1.75 million and purchase the Airport Road property for $400,000 in an effort to keep the strip club out of the city.

“The city bought two very tangible things,” Kisela said “One was the piece of property the club would be on, and the other was the right to operate with alcohol and nudity.”

Looking back, Kisela believes the city did the right thing.

“People could disagree but we got a lot of restrictions in that settlement that we would not have gotten if the courts had ruled against us,” he said.

Both Kisela and Destin believe the previous debacle will prevent a similar instance from occurring in the future.

“We’ve banned the sale of alcohol (when nudity is present) and without being able to sell alcohol, that business model doesn’t work,” Destin said.

"Although the City of Destin permits adult entertainment in the Industrial zoning district, the City does not allow businesses that sell or allow onsite consumption of alcohol within the district," said Destin Public Information Manager Catherine Card. "For this reason, adult entertainment businesses historically have chosen not to locate in Destin.”