Short-term rentals in Dallas: Zoning would have unintended consequences

The Dallas City Council will soon be making decisions on short-term rentals that will affect the city, its residents and its future. While the issue has been brewing for several years, involving several city task forces, it appears that only zoning short-term rentals out of residential neighborhoods is being touted as a solution. This may happen even though no regulations have been in place for city services to enforce, allowing the few problem operators to continue without repercussion.

Zoning would not solve the issue of nuisance short-term rentals. They would find another way to operate, be it switching platforms or renaming themselves.

What zoning would do is create a financial burden on Dallas taxpayers in the form of enforcement. An April 2023 presentation by Dallas city staff indicated the cost of enforcing a ban at $1.6 million plus $600,000 annually. As a side note, the cost of enforcement with regulations only and no ban moves to zero, if short-term rental registrants pay all costs.

What about all of the affordable housing that would become available without any short-term rentals? City staff analysis from May 2021 and November 2022 presentations state that short-term rentals are less than 1% of all available housing in Dallas, “it is hard to make an argument that such a minuscule portion of the housing stock is influencing the number of affordable housing units,” the analysis said. Perhaps there would be some short-term rentals going to long-term rentals, but with Dallas median monthly rental rates at $1,975, according to Zillow.com, is this practical for a retail or services industry worker? Further, with current interest rates high, a new home purchase is out of reach for most.

What zoning would do is allow far fewer economical options for transient workers, for those needing a temporary safe haven, for those needing home repairs, visiting relatives, or for those looking to buy in the Dallas area. “You have many people who come to a city for a short-term basis. … If you look at their options, they can either sign a one-year lease or they can take on a hotel, which is very expensive. Short-term rentals provide that interim balance at a much more affordable level,” said David Noguera, Dallas housing and neighborhood revitalization director.

Visit Dallas’ 2021 study by Tourism Economics says that “22.5 million visitors spent $4.4 billion across Dallas in 2021, generating a total economic impact of $7.2 billion. … This impact sustained more than 43,000 jobs and generated $421 million in state and local tax revenue.” Another study from Tourism Economics for Vacation Rental Management Association states: “For every $100 spent on short-term vacation rentals in the Texas metro region, guests spent $141 outside of their accommodations.”

What zoning would do is cut spending in neighborhood mom and pops that sorely need it to survive. Make no mistake, short-term rental guests are careful with their dollars and won’t “just go to a hotel.” They will go to a suburb where they can stay in a short-term rental at a more economical rate or simply not visit. What zoning would also do is eliminate some badly needed hotel occupancy tax funding for the arts. Taxpayers would end up footing this bill also or some of our cultural gems will go wanting.

Neighborhood character is important. A homeowner actively involved in the neighborhood is preferred, but not all neighbors are “good” neighbors. Long-term rental properties are on most streets, crime happens in all types of housing/neighborhoods and affordable housing is nearly non-existent in most neighborhoods. Zoning short-term rentals out of residential neighborhoods would not create better neighbors or neighborhoods.

If zoning would not work, what’s to be done? There are many ways to regulate short-term rentals without zoning. The National League of Cities’ 2022 Short-Term Rental Regulations: A Guide for Local Governments suggests targeted caps, density/spacing requirements and dedicated additional taxes. None of these potential solutions have been discussed.

Start by simply passing a regulatory ordinance so that enforcement can be ramped up quickly. Amend the existing registration system with 24/7 contact person, three strikes and platform cooperation, and revisit yearly.

No one wants to live next to a party house, short-term owners/operators included. On this, we all agree. Let us also agree that zoning would not work.

Vernon E. Lewis is a short-term rental owner and operator in Dallas. He wrote this column for The Dallas Morning News.

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