Dallas Judge Blocks Enforcement of the City's Short-Term Rental Ordinances

On 6 December 2023, a Dallas County district court barred the City of Dallas from enforcing the two short-term rental ordinances its council had passed in June. The temporary injunction order was signed at 9:00 a.m. in the 95th Judicial District Court, days before the city planned to start enforcing a zoning rule that removed short-term rentals from areas zoned for single-family homes.

The order went to the Dallas Short-Term Rental Alliance and four of its members, Sammy Aflalo, Vera Elkins, Danielle Lindsey and Denise Lowry, the plaintiffs named in the court's order. D Magazine and other Dallas outlets named the judge as Monica Purdy. The court found the operators likely to win at trial, set that trial for 3 June 2024, and stopped enforcement until then.

What the order did

The operative sentence read: “The Court hereby ENJOINS the City of Dallas from any enforcement of the Zoning Ordinance and Registration Ordinance.” The injunction was to stay in effect through trial unless the court ordered otherwise.

• It was to take effect when the plaintiffs filed a bond. On the signed copy the typed amount of $1,000 was struck through and $3,500 was written above it by hand.
• It did not stop the city enforcing the registration, taxation and general anti-nuisance laws that predated the two ordinances.

The court heard the application on 1 December 2023 and found the plaintiffs had shown a probable right of recovery.

The signed copy kept a typed footer that read proposed temporary injunction order and carried initialed changes in handwriting. Where the typed text said the plaintiffs had presented evidence that the city's June 2023 study was unreliable, the words not conclusive were written in. Where it said there was no evidence that short-term rentals caused excessive traffic, noise or density, the signed copy said not sufficient evidence.

The rules the city had passed

The council enacted both ordinances on 14 June 2023. The zoning ordinance created a land use called short-term rental lodging and barred it from single-family residential zones. FOX 4 reported that the vote to define the rentals as a lodging use passed 12-3, and that the council voted 8-7 against exempting rentals that were already operating. Councilman Paul Ridley said the city attorney's office had told the council it had a legal right to make the change, FOX 4 reported.

Under the new rules, the order recorded, short-term rentals were allowed only where other lodging was: in areas zoned for multi-family housing, hotels or commercial property. There, FOX 4 reported, owners had to register with the city every year and pay hotel-style taxes and fees, and occupancy was capped at 12 people. The station put the number of short-term rentals then registered in single-family areas at about 1,000.

Enforcement was held back until December so that owners could phase out rentals in single-family neighborhoods, FOX 4 reported. The order gave 13 December 2023 as the day the city intended to start enforcing the zoning ordinance. The city's own statement gave 14 December.

The rules answered years of complaints. FOX 4 reported that homeowners had tied some of the rentals to trash, gun violence and other quality of life problems.

Why the court sided with the operators

The order listed six claims, lettered a to f, on which it found the plaintiffs likely to prevail: due course of law, a regulatory taking, unconstitutional retroactivity, equal protection, the state's Zoning Enabling Act, and preemption under HB 2127, a 2023 state law that, as D Magazine described it, stops local governments adopting ordinances at odds with state law. The court concluded that sections of the Texas Property Code showed that the Legislature meant to occupy the field of short-term rental regulation itself.

One premise appeared in five of the six findings. “The right to conduct STR activity is a vested right in Texas that is a component of home ownership.” From there the court said the city probably could not show a rational link between the ordinances and deterring nuisances, and that the nuisance rules Dallas already had in its city code could be used against any violation.

The order also recorded the operators' evidence about the city's own conduct: that Dallas began collecting hotel occupancy taxes from short-term rentals at least as early as October 2019, set up an online portal for owners to register, and had collected over $3.4 million from them in 2023 and nearly $10 million since 2019. Their evidence was also that the zoning ordinance would ban approximately 95 percent of the short-term rentals within city limits. Those were the plaintiffs' figures as the court recorded them.

On harm, the order said that without an injunction the plaintiffs, and with them the vast majority of the city's other short-term rental owners, would at once be unable to rent their property for stays shorter than 30 days. The court said there was no adequate remedy at law, because the plaintiffs' near decade of investment could not be quantified.

What the city, the neighbors and the operators said

The city had argued against the injunction. D Magazine quoted City Attorney Tammy Palomino's argument that the operators were “seeking to promote their own financial interests over the legitimate interests of all other stakeholders.” She also argued, in D Magazine's account, that the operators themselves acknowledged running businesses in neighborhoods zoned for homes.

After the ruling, the city told FOX 4 it was weighing an appeal and would go on enforcing the ordinances it already had on minimum property standards, disturbing noises and private nuisances.

A Dallas resident whom the Dallas Observer described as a vocal opponent of short-term rentals in residential neighborhoods told the paper she disagreed with the ruling. She said a large council majority had backed the ordinances, and that the vote followed more than three years of study and residents' testimony. She pointed to Arlington, whose restrictions the courts had upheld.

A host with two rental properties, whom The Dallas Morning News described as an Alliance board member, told the Observer the operators were happy they could all keep operating.

The Dallas Morning News reported that the city's notice of appeal to the Court of Appeals for the Fifth District of Texas was dated 26 December 2023, and that appeals court records showed it was filed the next day. The order's trial date, 3 June 2024, was more than five months off.

What it meant for hosts

For a host in a single-family part of Dallas, the order changed one thing and left the rest alone. Under the order signed on 6 December 2023, which was to take effect when the plaintiffs filed their bond, the city could not enforce the zoning ordinance or the registration ordinance, so stays of less than 30 days could go on past the mid-December start date. The order's wording covered any enforcement and was not limited to the five plaintiffs.

The older rules stayed. The order did not block the registration, taxation and general anti-nuisance laws that predated the two ordinances, and the city said it would go on enforcing its rules on property standards, noise and nuisances. A host could still be cited for a loud or neglected property.

The protection was temporary by its own terms. It ran through a trial set for 3 June 2024, it could be changed by a further order of the court, and by the end of the month the city had given notice of an appeal. A host taking bookings for the spring and summer of 2024 was relying on a court order that the city was asking a higher court to reverse.

Sources

1. 95th Judicial District Court, Dallas County, Texas (signed copy on DocumentCloud), Temporary Injunction Order, Cause No. DC-23-16845, Dallas Short-Term Rental Alliance et al. v. City of Dallas (6 December 2023).
2. FOX 4 News Dallas-Fort Worth, Dallas ordinance that would ban more than 90 percent of short-term rentals temporarily blocked (6 December 2023).
3. D Magazine, Judge Blocks Dallas From Enforcing Its Short-Term Rental Ordinance, For Now (6 December 2023).
4. Dallas Observer, Judge Halts Dallas Ban on Airbnb and VRBO Rental Properties (8 December 2023).
5. FOX 4 News Dallas-Fort Worth, Dallas City Council bans short-term rentals from single-family areas (15 June 2023).
6. The Dallas Morning News (excerpt carried by Quorum Report), Dallas appeals judge's order that blocks new short-term rental rules (3 January 2024).
7. Lakewood/East Dallas Advocate, AirBnb or no? City files appeal to reverse judge's injunction blocking short term rental ban (10 January 2024).