Dallas Council Remains at Odds over Short-Term Rental Ordinance, Matter Heads to Court This Week 

A fraction of Dallas’ 3,500 active short-term rentals are functioning as party houses in local neighborhoods, but Code Compliance staff reported again last week that their hands are tied in enforcing the law due to pending litigation.

A majority of the Dallas City Council agreed in June 2023 that STRs should not be allowed in single-family neighborhoods. A lawsuit from the Dallas Short Term Rental Alliance followed, and the City of Dallas appealed. A judge ruled in December that STRs can operate in Dallas neighborhoods while the matter is tied up in litigation but they must pay hotel occupancy taxes. No registration fees have been collected while the injunction is in place, and Code officers are responding to nuisance calls but are limited in what they can enforce, officials said last week. 

An appellate hearing is tentatively scheduled for 10 a.m. Wednesday, Nov. 13. 

Code Compliance Assistant Director Cedric Secoundiata said the initial startup cost for the City’s STR program was about $1.375 million. The City implemented new software, hired a nine-member team, and purchased vehicles and protective gear. Council members surmised that a lot of funds have been spent on a problem that hasn’t been solved.

Watch the Nov. 4 Economic Development Committee meeting here or view the slide presentation.

Following the Economic Development Committee meeting on STRs last week, the Council’s Government Performance and Financial Management Committee heard a similar briefing. The Quality of Life, Arts, and Culture Committee also has been briefed on the matter. City staff filed memos Friday in response to questions asked at each committee meeting.

https://candysdirt.com/2024/09/17/dallas-council-could-revisit-short-term-rental-ordinance-its-not-working/Councilman Chad West, who chairs the GPFM Committee, noted the revenue loss while the STR matter is under injunction. The councilman has expressed a strong interest in revisiting the STR ordinance and possibly repealing what was voted on last year.

“I think we passed the most heavy-handed ordinance possible and I think it’s clear that the courts agree that it does not pass legal muster,” said West, who voted against a residential STR ban last year. “We can continue waiting and while we’re waiting we’re missing out on tens of millions potentially in [Hotel Occupancy] tax money and we have an ordinance we can’t enforce. So I think we admit that we got it wrong, we move forward, and we actually pass an ordinance that gets it right.”

Party Houses 

Councilwoman Kathy Stewart, who represents Lake Highlands, said there are STRs in her district that are used for weddings and events. 

“They are party venues, and that’s how they’re marketed,” she said. “I have absolutely nothing against party venues and wedding venues except they are in single-family neighborhoods. There are people who are not expecting that kind of noise and parking on their street, just all of the things that come with a late-night party.”

Dallas Council Could Revisit Short-Term Rental Ordinance: ‘It’s Not Working’

Stewart confirmed that a Code Compliance team assesses complaints the day after a grievance is filed. They have a “night entertainment team” that does reconnaissance missions and can make contact with the property owner, but their hands are tied on enforcement while the injunction is in place, Secoundiata explained. 

“If the ordinance was intact, it gives us leverage and teeth to actually cite the property owner for any violations of the Dallas city code,” he said. “Much of the occurrences at some of these events generally should be referred to [Dallas Police Department]. With respect to off-street parking, that would be a parking matter, not overseen by Code.” 

Councilwoman Gay Donnell Willis said a problem exists because nuisances are occurring overnight on weekends while the police department is responding to “priority one” calls. 

“This is a crisis in neighborhoods, and we kind of throw up our hands and say, ‘We don’t really have a solution here,’ so what I’m asking for is a solution,” Willis said. “We have the equipment. We have these teams. It sounds like we need more of these teams and need to consider, while we’re in this state of flux, what we can do to document it and send that citation so that we’re not playing games here anymore … I feel like we have something that we might be able to do to start making it hurt their wallet a bit more to get their attention about who they’re renting to.” 

Chief Data Officer Brita Andercheck said 72% of Dallas STRs generate no complaint calls, but about 1% have generated 20 calls or more during a particular time frame. Visit Dallas President and CEO Craig Davis pointed to data that shows a significant economic loss to the city if STRs cannot operate when the FIFA World Cup soccer tournament is hosted locally in 2026.

Councilwoman Cara Mendelsohn said there’s no reason why temporary guests can’t stay in a hotel during the World Cup.

“If they’re staff and they’re going to rent something for 30 days, I’d say that’s wonderful,” she said. “Otherwise, I hope they find a hotel … If all our rooms are full, we’ve got a lot of other cities with a lot of hotels. We don’t have to be using our short-term rentals and disrupting our neighbors who are already going to have impacts from traffic and other things.”

Exploring Legal Options

Deputy Mayor Pro Tem Adam Bazaldua said last week’s presentation is “proof in the pudding” that the Council’s action last year solved “little to nothing.” 

“We have very [few] tools in our toolbox and we can’t provide any relief for the residents who are complaining unless we have a formal system of them being registered, where we have the ability to revoke,” Bazaldua said. “Not only is it missed hotel occupancy tax from us not addressing this in a more formal manner, the idea of prohibition — taking care of this problem — is just outrageous to me. We have done nothing … in our city to help short-term rentals. We have done nothing to help our code enforcement. We have done nothing to provide the necessary resources to actually get a hold of this issue.” 

If a property has multiple citations, the City can’t revoke a registration because many of the properties are not registered and that can’t be enforced due to the injunction, Secoundiata said. 

A ban is out of the question, Bazaldua said, adding that he would like an update from attorneys during an executive session on “what our options are” going forward. 

“We can talk about being gagged here at the horseshoe because there’s litigation but I think we also have the tools in our belt to keep the litigation from continuing,” he said. “I would love for us to hear some legal recommendations on what we can do as a city to move forward so we could actually put some teeth into what it is that we’re trying to accomplish for the residents. If not, all we are doing is providing lip service.” 

West and District 9 Councilwoman Paula Blackmon also expressed interest in hearing from attorneys in closed session about options going forward. This week’s hearing, if it even happens, is related to the appeal on the injunction and the legal battle could go on for years, West said.