Dallas Short-Term Rental Alliance Sues City to Continue Operating in Neighborhoods
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The Dallas Short-Term Rental Alliance announced Monday the hire of “top litigation firm” Lynn Pinker Hurst Schwegmann to sue the City of Dallas, seeking an injunction allowing short-term rentals to continue operating throughout the city limits.
The Dallas City Council banned short-term rentals from residential neighborhoods in June and vowed to begin enforcing the new initiative in mid-December.
DSTRA board member Lisa Sievers told CandysDirt.com on Monday that the vast majority of Dallas short-term rental operators are good actors who bring value to their neighborhoods.
“While we support a fair and sensible registration ordinance, we do not support a ban that punishes nearly all STR owners/operators in an effort to root out the few bad apples,” Sievers said. “We are fighting to preserve our right to continue to operate well-managed STRs and provide a necessary and beneficial neighborhood service.”
Olive Talley, an outspoken “Homes Not Hotels” advocate of the “Keep It Simple Solution” approved by the Dallas City Council earlier this year, said she’s not worried about a lawsuit.
“We are not surprised by the threats of litigation from the STR industry,” Talley told CandysDirt.com shortly after the City Council approved the residential ban. “It’s what STR operators do when they don’t get their way. Litigation is expected and we’re comfortable that the city is in a strong position when litigation comes.”
Dallas Executive Assistant City Attorney Casey Burgess and Director of Communications Catherine Cuellar did not immediately reply to a request for comment Monday.
City of Dallas Code Compliance
Prior to the lawsuit announcement, some STR operators said they had unanswered questions about whether they should continue paying hotel occupancy taxes and how enforcement is going to work.
CandysDirt.com reached out to the City Attorney’s Office and City Controller’s Office, which is responsible for collecting hotel occupancy taxes, and received the following response from the Communications Department several days later.
“Dallas City Code Article V relating to Hotel Occupancy Tax (HOT) was not affected by Ordinance Numbers 32473 and 32482,” the response states. “All STRs operating legally or illegally are subject to collecting, reporting, and paying HOT; however, a STR may be subject to a citation or other consequence for operating illegally.”
Conversations about the new ordinance and its enforcement are taking place daily at the City of Dallas Code Compliance office, Assistant Director of Code Compliance Jeremy Reed told CandysDirt.com prior to the lawsuit announcement.
“We’re working toward the plan,” he said. “Our official response is basically the same as it has been, to the timeline and the process. It’s all on our FAQ page. We cannot enforce before Dec. 14. Every STR that ends up being legal will need to register with Code Compliance and get a certificate of occupancy with Development Services.”
Reed said enforcement would not be entirely complaint-driven.
“We’re in the process of procuring software that gives us booking information all across the city in real-time and in the future, like future bookings,” he said. “If the software points us in the direction of a property that is unregistered, we will take the step to issue a notice of violation to let them know that they’re operating out of compliance. We’ll give them a period to come into compliance by getting a registration and certificate of occupancy. If they choose to not do that or stop operating, and the data shows that they continue to operate past that compliance date, then we will issue citations.”
Short-Term Rentals And Hotel Occupancy Taxes
The city’s statistics show that the ordinances passed in June will put 94 percent of existing STRs out of business, the Dallas STR Alliance maintains.
“It does so even though the city’s statistics also show that over 80 percent of STRs have zero 311 or 911 calls,” board members said in a press release. “Over the last three years, the DSTRA worked with the City on several city-initiated task forces to try and craft sensible regulations about the handful of nuisance STR properties. Many of these sensible suggestions were rolled into the new Registration Ordinance also passed by the Council on June 14. But the City Council’s passage of the ban means that fair and sensible solutions have been left behind.”
Increased Communication And STR Budget
The City Council’s Government Performance and Finance Management Committee reviewed the results of an audit last month that found no major issues with the process used by the City Controller’s Office to collect HOT from hotels and short-term rentals.
Manager of Public Information Jennifer Brown said the City Controller’s Office worked with the Code Compliance Department to prepare a letter with information and resources related to Ordinances 32473 and 32482.
“The letter was sent to all STRs currently registered with the CCO to report and pay hotel occupancy taxes,” Brown said. “The CCO will continue to periodically send out these letters to help STR operators prepare for the upcoming enforcement.”
City officials have sent emails and letters to registered STR operators and “suspected operators” at about 3,000 addresses, Reed said.
“We plan to increase the messaging at a higher frequency rate between now and December to drive the point home that if you’re in X, Y, and Z zones, it’s already not legal for you to continue,” he said.
The Dallas City Council adopted a budget on Sept. 20 for Fiscal Year 2024-25 that includes nine new code enforcement positions and a $1.4 million allocation for the new short-term rental registration and inspection program.
The controller’s office will continue to monitor the collection of hotel occupancy taxes, city officials said.
It was unclear late Monday how the lawsuit will affect the planned Dec. 14 enforcement date.
David Coale, an attorney with Lynn Pinker Hurst Schwegmann, said the ban on residential STRs violates constitutional rights.
“Legally, the City’s zoning ordinance swats a fly with a sledgehammer,” he said. “It imposes a drastic ban that is totally out of proportion to any harm identified by City staff. In so doing, the City has violated fundamental rights of STR owners protected by the Texas Constitution of 1876.”
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There is nothing “un-Constitutional” about banning STRs in single family zoning districts. If the underlying zoning (which defines an owner’s property rights) does not allow STRs, which is a commercial operation, then the property owner must follow the underlying zoning of his deeded property. Single Family zoned dIstricts in Dallas, Texas do not permit commercial uses.
Also, the 5th Circuit Court of Appeals, under which Dallas falls, ruled in a New Orleans case that no jurisdiction may discriminate between owner operated STRs and out of state or non-stakeholder owned STR properties in its STR Codes. Thus, there cannot be one Code for ‘Good Operators’ and another for “Absentee Operators.” The 5th Circuit decision left Dallas with only one option, either continuing not allowing STRs in single family districts as the zoning codes provided or open up all single family neighborhoods to commercial STR enterprises. with no restrictions.
This lawsuit has no merit, as no property rights were violated or limited. STRs have not been banned in Dallas; they may operate in Mixed-Use and Commercial zoned districts.
You go, Claire!! And I want the long-term renters living down the street to be banned too! People shouldn’t be allowed to run commercial operations in single-family neighborhoods and renting is commercial, doesn’t matter if it’s for one day, 30 days or a year. And it doesn’t matter if it is a ‘Good’ landlord who lives next door or an ‘Absentee Landlord’ based out of state – renting is commercial! Apartments and townhomes are allowed to operate in Mixed-Use and Commercial zoned districts so it wouldn’t even be a ban!
Long term rentals (more than 30 days) are allowed in Single Family districts and are based on contractual lease agreements between an owner and the lessee. These are not ‘transient’ arrangements where different people are moving in and out of the neighborhood property for overnight or weekend stays. STRs are not based on “lease contracts” nor considered “renting” – -STRs are considered “lodging” under Zoning Codes where there is no contractual leasing agreement between the parties — like a Hotel. STRs are providing lodging, not leasing., to anyone who can pay their rates.
So neither of you commenting here seek an Airbnb when traveling? Of course you do, and you don’t seek them in commercial hotel districts, you seek them in a location near where you are visiting. Years ago I invested my savings and created a rental in my guesthouse near White Rock Lake. I am a single female 69 years and if rentals are banned in Dallas neighborhood I will be forced into losing my home, you see the income I make gets my housing bills paid, and without it I have no alternatives…no one is going to bail me out! In the state of Texas when a private property owner decides to lease out a home, a room, it is (was) legal. Many many people are using their rentals to provide income, and what was once legal, cannot just out of the blue vote by council that they are no longer legal.
It does not matter the time frame of a lease, or lodging, what we do with our own property is a matter of property rights. This is not the fair solution to anyone who violates a city ordinance such as noice, parking violations, unlawful behavior,etc. Those are the solutions, not an outright ban. Dallas also has a chance to allow those already in existence to continue and that was voted down.
I host grandparents visiting their Families in the neighborhood, guests attending a wedding at the Dallas Arboretum, I live here too and never have I allowed any violations in my rental guesthouse. I provide a service – I am an ambassador of Dallas and I have shown many people the beauty of moving here and buying or renting in one of our lovely neighborhoods. Can guests get this service when staying in a hotel in the Hotel district? Those are not at all near where people who are visiting want to be and spend time in. Hotels in the price range of a typical Airbnb are much more of a cost and are often dirty, noisy too because a Hotel does allow events, parties, and all kinds of bad behavior! Again I ask you, where do you stay when traveling?
HOMES NOT HOTELS!!!!! YES!
No, litigation is not what str owners do when they don’t get their way, its what citizens do when there has been an injustice. It’s very sad and manipulative the way the term is used as if they are second class citizens to be looked down upon and scorned. It’s unethical.