A dozen rooms for rent on the second floor of The Palace nightclub on Union Avenue qualify both as an adult motel and as a rooming house — and must be inspected by the fire department before they can be occupied legally, according to a ruling and information presented Wednesday at a meeting of the city Zoning Hearing Board.

Until recently, the city was unaware that The Palace owner Thomas Rhodes for years has been renting those rooms upstairs from his night club, which is licensed by the city as a “sexually oriented business,” officials said.

During a recent inspection of the nightclub, the Altoona Fire Department discovered the rooms on the second floor were being rented, and code officials found that they’d never been licensed for occupancy, said Rebecca Brown, director of the Department of Codes & Inspections.

Rhodes had been unaware that those

second-floor rooms were a problem, based on his having received a sexually oriented business license from the city in the late 1990s, coupled with his having had a hotel liquor license from the Pennsylvania Liquor Control Board, according to his testimony Wednesday.

The city began to require that all residential rentals be registered and routinely inspected with the passage of its residential rental program in 2003, Brown pointed out.

But while that program uses officers in the Codes Department for inspections, different city programs call for fire department inspectors — including those that will apply to the rooms above The Palace.

Officials at the hearing struggled to categorize those upstairs rooms before fixing on the adult motel and rooming house categories, due to Rhodes renting them out on a nightly, weekly and monthly basis — depending on the situation, according to Rhodes and his son, also named Thomas.

Renting by the day indicates that the rooms fit the adult motel model, while renting by the month indicates that it fits the rooming house model, said solicitor Bill Stokan.

The fire department safety inspection protocol is the same for both categories, according to fire inspector Justin Smitmyer, who attended the hearing with Fire Chief Adam Free.

Inspections need to occur every couple of years, they said.

The tenants above the nightclub tend to be poor individuals in need, according to Rhodes and his son.

As an adult motel, The Palace didn’t need a variance from the Zoning Board to operate, because those are legal by right in the light industrial zone where The Palace is located, Stokan said.

As a rooming house, it needs a variance, because rooming houses are not permitted in light industrial zones — even though by traditional zoning logic they should be, as they are permitted in neighborhood business zones, which are generally less permissive, Stokan said.

The structure has operated for many years as a hotel, according to the elder Rhodes.

He took over in 1984, he said.

For a time, another owner operated it as Club Coconuts, even though Rhodes continued to own the building, he said.

Mirror Staff Writer William Kibler is at 814-949-7038.