The Video Store is open 24 hours a day but the proposed ordinance would prohibit adult businesses from being open between 1 and 6 a.m.
The business has 12 viewing rooms, where people pay to watch adult videos in closed rooms.
The ordinance would prohibit such viewing rooms.
"We are trying to put some restrictions on them. We are not trying to put them out of business. We are just trying to regulate what they do," Mayor William M. Breichner said Monday.
The manager of the Video Store, who refused to give his name, said he had no comment on the issue.
The restrictions were suggested by the city's Community Revitalization Committee, which has been analyzing downtown to see what types of businesses could be potential problems, City Administrator Bruce Zimmerman said Friday.
"We wanted to ensure we have legislation in place to promote the health of our downtown. We thought about the potential impact of adult businesses on downtown and the impact they have had on their communities," Zimmerman said.
"In general, there is a concern they can lead to activities that are antisocial or criminal in nature," Zimmerman said.
Police Chief Arthur Smith said police receive complaints from neighbors concerned about the crowd the Video Store attracts. The proposed changes are a good idea, he said.
This is not the first time the issue of regulating adult businesses has arisen in the city.
In 1988, the city amended its zoning ordinance to restrict where adult bookstores and theaters can operate. The law banned adult bookstores downtown.
The Video Store was one of two adult bookstores downtown when the law was passed. The other has since gone out of business.
The law allows adult businesses in other parts of the city as long as they are not within 1,000 feet of a church, school, hospital, nursing home, park or housing for senior citizens.
That law, which sparked a legal battle, remains on the books but it does not apply to the Video Store because the business was operating at the time the law was passed, Everhart said.