Dallas losing millions after banning short-term rentals? One council member thinks so

Dallas could rake in millions in tourism taxes come 2026 when the FIFA World Cup comes to town. One elected official says the city could have been bringing in even more if the council hadn't pass a "heavy-handed" policy limiting short-term rentals in Dallas.

District 1 Council Member Chad West indicated he wanted to look into the ordinance passed last year that essentially banned short-term rentals (STR) across the city.

"I think we passed the most heavy-handed ordinance possible and it's clear that the courts agree," West said during Thursday's Government Performance and Financial Management Committee meeting. "We could continue waiting and while we're waiting we're missing out on tens of millions of potential HOT tax money."

Last year, after intense opposition and outrage from people living in most single-family neighborhood, the council approved the sweeping STR policy. Almost immediately a coalition of rental operators sued the city.

Now the ordinance is unenforceable while the courts decide what to do. But in the meantime, STRs continue to operate across Dallas.

City officials said during the meeting there are around 2,000 known STRs operating in Dallas. And the city has collected over $4 million Hotel Occupancy Taxes (HOT) — fees hotels charge visiting guests — on those active properties from June 2023 through August 2024, according to a briefing presented at the meeting.

Those taxes are mostly spent by the city to fund the convention center. Another percentage goes to arts and tourism funding. Come 2026, city tourism officials say the HOT totals could be over $40 million.

But there are around 1,500 "potential" STRs also operating — not registered with the city. City staff said while the number of STRs is increasing — the HOT revenue is down around 25% for the current fiscal year.

Staff from the City Attorneys Office told the committee it would need to vote on a recommendation to send to the full council opening a public hearing to change the ordinance. West seemed poised to make that happen — and asked if they committee could take the vote during the meeting. They could not.

But West's colleagues had other ideas.

"We've debated this ad nauseum, we've had so much community engagement," District 12 Council Member Cara Mendelsohn said. "I can't believe you're wanting to do this again and I feel like you're hijacking this committee to do it."

Mendelsohn said she could "see the dollar signs" when it came to STRs. But she said the city has more to lose than to gain by allowing them.

"Its not lost of me to talk about the revenue that is possible to be generated by short-term rentals," District 12 Council Member Cara Mendelsohn said. "The reality is if we open up our city to short-term rentals people will chose not to live here long term because they don't want to have that kind of intrusion in their neighborhoods."

District 9 Council Member Paula Blackmon said she was leaning toward Mendelsohn's reaction to the move.

"If we want to have this conversation again, I don't think its going to change," Blackmon said. "I think we need to bring it back in thoughtfulness...I just don't feel there is a clear reason to look at it again."

Blackmon said residents, city staff and the entire council and mayor had litigated the issue back when the original ordinance was passed. Now, she said, it was up to the courts to decide — and suggested the issue be brought to full council for an "executive briefing."

Mendelsohn said she thought it was fair if West wanted to get the item back on the agenda. But she said when it came up — she wouldn't be at the meeting.

"And I hope you don't get [a] quorum," Mendelsohn added.

West said it wasn't just fans coming to party and watch their favorite sports team.

"There's also the families that are traveling with the players and the teams, the doctors, the trainers," West said. "Your entourage that's here to to train and prepare and not necessarily party it up."

Dallas will host nine mates during the 2026 FIFA World Cup. City staff told the committee that in addition, both the men's and women's NCAA Final Four basketball tournaments will be held in the Dallas area. And the city is a candidate to host both the men's and women's World Rugby World Cup in 2031 and 2033.