Church St isn't zoned for clubs (I don't think). You can cheat your way around it (as Byz and Crews does) by not declaring it a dance club. If people start to dance it's not the establishment's fault, nor is it against the law if someone stands up and starts dancing. It all has to do with how many square metres there are and things like that (I'm not an expert).
This was a big thing a few years ago. Kyle Rae (a tool, at best) said that if we (gays) wanted to go clubbing we could go to the Entertainment District (!) I couldn't believe he said that. Uh-huh, straight boys are already killing and beating the crap out of each other down there on a given Friday or Saturday night, why not add some gays to the mix! What a jerk.