With Airbnbs Unchecked, The City of Dallas Stands to Lose Millions in Tax Revenue From Short-Term Rentals

“We’ve called the police at least two dozen times,” said Dave Norman. “I have a file as thick as my forehead.”

Norman lived across the alley from a short-term rental (STR)  “party house” off Meadow Road, and his 12-year-old daughter was continually subjected to loud (and lewd) rap music through her bedroom walls, which bordered the alley.

“The city has done nothing to help the neighbors,” Norman said.

Norman’s complaints echo those of scores of Dallas homeowners who question how businesses such as STRs can be located in residential neighborhoods.

Eventually, the Normans moved. Dave Norman’s neighbor, Shannon Steele, and her family had to stay put.

“Our property taxes are really high,” she said. “The city council doesn’t care. Money talks.” 

Anyone who’s been watching the first three meetings of the Short Term Rental Task Force of the Dallas City Council might reach the same conclusion. The committee has several short-term rental advocates while property rights supporters who oppose STRs are outnumbered.  

“The fact of the matter is,” District 7 Dallas City Council member Adam Bazaldua said in an interview, “we’re not getting rid of STRs. What we have to do is come up with sensible regulation.”

Bazaldua formed the task force in November with a letter, outlining who could be on it. Members would be appointed by the city council’s Quality of Life Committee and had to be residents of the City of Dallas. 

Why did Bazaldua appoint an out-of-town lobbyist to his STR task force?

Bazaldua chose to name Luis Briones, an Austin resident who is a full-time lobbyist for Airbnb, to the task force. How could an out-of-town lobbyist for a multi-billion dollar entity be appointed to a citizen committee?

Bazaldua said the committee needed someone to represent the interests of the short-term rental platforms and there wasn’t such a person in Dallas. So he chose Briones.

“A lot of the things we’re going to be doing (such as collecting taxes) are going to need compliance from the platforms,” Bazaldua said. 

Airbnb has been lobbying the Dallas City Council for years. The most recent lobbying report for the city shows Airbnb paid Briones $22,500 last quarter to meet with four city council members, including Bazaldua. Bazaldua said he did not discuss STRs with Briones before appointing him to the task force. 

Briones did not respond to a request for an interview.

Briones’ employer has been the butt of complaints of neighborhoods like Dave Norman’s for years. Why would a neighborhood want a short-term rental in it?

“I don’t think it’s a neighborhood’s call,” Bazaldua said.

“Can they prohibit someone to sell baked goods that they cook out of their home? Can they tell a neighbor they can’t detail cars on the weekend?” he added. “People cut hair in their home, so it’s the equivalent of someone making business in their residential property.”

However, most STR owners do not cut hair, detail cars, or sell baked goods on their properties. In fact, they don’t even live in them. And the city has little idea of who they are. 

As of October, 930 STRs were registered with the city. A city study determined more than twice that number may be doing business here. Many STRs do not register with the city because doing so means paying a hotel tax. But AirDNA, an STR analytics firm, says there are 4,172 short-term rentals here. The firm provides real-time information for Airbnb and VRBO investors across the country, providing spot market prices for rental properties in various neighborhoods nationwide. Absentee owners now buy entire houses and rent them out.

Bazaldua says AirDNA’s numbers are “anecdotal.”

Task force member Shelby Fletcher tailors her business, Perfect Tenant, to absentee landlords. Her website says “We service the Dallas area providing A-Z management for owners ready to earn truly passive income with higher rental rates than traditional year-long leases.”

Get ready for your new neighbor, an Airbnb.

The business of buying, managing, and maintaining short-term rentals is huge — and growing.

ReAlpha, a Dublin, Ohio-based real estate hedge fund, says it wants to invest $1.5 billion in Airbnb and vacation properties. The hook for investors, outlined on ReAlpha’s website: “Airbnb Ownership Without the Hassle. Never touch a paintbrush, clean a toilet, or talk to a guest.”

District 1 Dallas City Council member and task force co-chair Chad West owned three Airbnbs until last year. All were located in entertainment districts. Going forward, the question is whether new STRs could be sited in single-family neighborhoods, where businesses are prohibited. Bazaldua said the task force agreed to carte blanche registration of STRs in single-family neighborhoods in its last meeting.  It’s true the task force voted on a procedure for registration, but not where they could be located. 

In an interview, West said there should be a path to legalizing STRs in non-single-family neighborhoods.  In single-family neighborhoods, he said, “it should be a lot more complicated.”

“I like the idea of limiting the number,” he said. “It’s not just a yes or no answer. We need not throw the baby out with the bathwater.”

The question is, whose baby is being thrown out? 

Neighborhoods zoned single-family say their rights are being violated by the STRs doing business there. This is the position favored by task force members Norma Minnis and District 14 Dallas City Council member Paul Ridley. STRs, represented on the task force by Lisa Sievers, an Airbnb owner; Shelby Fletcher, an Airbnb manager; and Briones, the Airbnb lobbyist; maintain the position that STRs already established in single-family neighborhoods should be allowed to continue to operate in conflict with zoning regulations.       

Better STR regulation would allow the city to capture unpaid hotel taxes, known as the HOT tax. Most of that money goes to support the Dallas Convention and Visitors Bureau, increase tourism, and presumably bring more business to STRs. 

While unregulated STR owners in the city are evading taxes, homeowners in single-family neighborhoods are locked into paying theirs. 

But back on Meadow Road, Shannon Steele found a way to throw the city a curve. After enduring the noisy party house in her neighborhood for months, she went to the Dallas County Appraisal Review Board a couple of years ago.  She asked the board to lower her taxes because of the party house next door that the city wouldn’t regulate.

She won. She got her taxes reduced.

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Byron Harris is one of the most decorated reporters in the United States. Among his national honors are six DuPont Columbia Awards, including the only Dupont Gold Baton (joint) ever given to a local television station, two Peabody awards, four Edward R. Murrows, and four Gerald Loeb Awards for business and financial reporting. He is an Army veteran, an Eagle Scout and a volunteer for Dallas Habitat for Humanity.