Are you sure that you want to really get a lawyer involved? Can't you find a close city that is a little more haunt friendly?
If you go the legal route you may have battles all the way through the whole project. If you piss off the city they will make it very hard for you to open. They will not let you slide on anything. You will be made to follow all city, county, state and probably national rules and regulations.
Also, do you have enough money to go all the way with a lawyer? They will want a retainer, probably $2000-$5000 just to get started. Don't forget that the city has lawyers on staff with lot's of experience with these types of matters. If they really don't want you there than most likely they will find ways and reasons not to let you open no matter what.
It's up to you. If you have a location that is perfect and your problems with the city are not to huge than it may be worth it. You may be better off just trying to find a different location.
Just my opinion,
Howie "Slobber" Erlich
Deadly Intentions Haunted House