To the joy of local merchants and to the chagrin, perhaps, of some students, New Haven’s Chapel St. will not, in fact, be playing host to a troupe of strippers.

Shop owners’ fears that Chapel Street would be overrun with topless dancers — touched off by a liquor license application posted near Cafe Bottega that referenced “exotic dancers” — proved unfounded after rumors flew around the district for the past week. Backroom at Bottega, a music lounge and restaurant, is renewing its liquor license because ownership may be changing hands, and an existing weekly program featuring fully clothed dancers will remain the same. But the knee-jerk condemnatory reaction of downtown merchants may show just how determined local retailers are to keep New Haven from reverting to its seedier former self.

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The misunderstanding resulted from the wording of the liquor license application, said new permittee Brian Hersh, who is in negotiations to buy Backroom at Bottega, located at 956 Chapel St.

Hersh said that on Wednesday nights, the lounge features professional dancers who perform salsa, bellydancing, or capoeira, a Brazilian martial arts-based dance — fully clothed, of course. This was defined as “exotic dancing” on the permit application, which neighboring business owners assumed meant that topless dancers would be frequenting the Chapel St. lounge, leading to what Hersh described as a slightly humorous uproar.

“There’s nothing that involves any nudity at all,” Hersh said. “People got confused by the term [exotic dancing].”

In an area that recently shed the last vestiges of its racier past, that term proved a touchy subject. The Town Green Special Services District fielded numerous calls and e-mails from local businesses and adjacent property owners asking the organization to step in and make sure the proposal was not for topless dancing, Town Green executive director Scott Healy ’96 said.

In this case, topless dancing was not a possibility — under New Haven law, adult entertainment may not take place in buildings that serve alcohol, City Plan Department Executive Director Karyn Gilvarg ARCH ’75 said.

But the many people who called Gilvarg to inquire about the sign apparently were not aware of the regulation.

When Claire’s Corner Copia owner Claire Criscuolo heard from the mailman that an exotic dancing establishment might be moving in down the street, she was so upset that she called up City Hall to share her concerns, she said.

“I wouldn’t just sit back and have that happen here in New Haven,” she said. “I’ve seen so many positive changes over the past 30 years, which is why I think I’m so overly protective.”

Criscuolo said when she first opened the store 31 years ago, the area was ridden with crime. But there has been a tangible turnaround in recent years, she said, and she wanted to be sure that the downtown area was not going in the opposite direction.

The number of buildings existing for “adult use” as defined by the New Haven zoning ordinances has decreased over the past decade or two, Gilvarg said, offering the example of an adult theater on Crown Street that closed between 15 and 20 years ago.

And in February, downtown New Haven’s last pornography store, Nu Haven Book & Video, closed its doors when Olympia Properties bought the building. The real estate firm is now leasing the 754 Chapel St. building to the U.S. Postal Service, Olympia Properties co-owner Todd Nicotra said.

“It’s a complete change of tenant,” Nicotra said. “We’ve gone from a porn store to the federal government.”

But Healy said it is important not to mythologize the downtown New Haven of the past. Though many people imagine downtown to have been desolate and full of illicit activity, he said, the area was never truly seedy. Because downtown developers are swamped with attractive offers — 100 new businesses have opened within a three-year period — there is no need to resort to leasing property adult entertainment stores, he said.

“When you see places with strip clubs, it’s an indicator of the economy not doing well,” he said. “But the economy here is doing quite well … there’s no trend afoot to bring in strip clubs.”