In 1997, the City of Houston passed an ordinance putting new restrictions on sexually oriented businesses.
The ordinance sought to limit where adult clubs could operate, what they look like from the outside and what kind of activity could take place inside.
Sixteen clubs sued the city and they've been in litigation ever since.
Houston Mayor Annise Parker says the club owners have now agreed to follow certain policies and restrictions as part of the settlement agreement.
"All private rooms and areas must be eliminated. A club may not knowingly employ, hire or contract for the services of an entertainer or dancer who is accompanied by another person who speaks for her, holds her identification, collects her pay for safe keeping. A club may not knowingly employ, hire or contract for the services of a person for whom a background check reveals a conviction within 60 months for a prostitution or drug offense."
In exchange for following those policies, the clubs will be grandfathered in to the pre-1997 rules. That means they can remain in their current locations, put up new signs and bring back fully topless entertainment.
They will also collectively contribute $1 million a year to establish a Human Trafficking Abatement Fund.
Houston Police Chief Charles McClelland says the money will create a dedicated police unit to combat human trafficking.
"We will fund additional staff in Vice, one lieutenant, one sergeant and about seven new officers, starting January 1st, to solely concentrate on human trafficking."
City Attorney David Feldman says there are as many as 100 illegal clubs operating at any time in Houston.
"There are a lot of clubs that proliferate in Houston, unpermitted clubs, what we refer to as road clubs. These are clubs that fly under the radar, that are the real hub of the criminal activity and we believe the trafficking. What this agreement will do, it will give HPD the opportunity to focus on those road clubs."
The 16 authorized clubs include well-known businesses like Rick's Cabaret, Treasures, Gold Cup and The Men's Club.
Mayor Parker acknowledged that not everyone will agree with her decision to settle with these companies.
"And I understand and respect that. But in terms of the future of the City of Houston, this is a good step forward. It ends decades of litigation, it gives us tools to tackle what we think is a more significant problem."
Human trafficking often goes hand in hand with sexually-oriented businesses, extending beyond adult clubs to massage parlors, 24-hour spas and cantinas.
Houston is considered a major hub for human trafficking.