Lewisville staff outlines short-term rental permitting, density options; council delays decision

Lewisville — City staff told the Lewisville City Council on April 14 that public surveys and an open house show residents want some limits on the density and placement of short-term rentals, and staff presented several regulatory options including linear-distance buffers, block-face limits and multifamily percentage caps.

Chris McGinn, Lewisville’s director of neighborhood and inspection services, told the council the city currently has a ceiling of 130 active short-term rental permits and that the number of permitted units has grown from 77 at the time of the council retreat to 94 permitted units, with about 16 additional permit applications in progress. “We’ve had identified that there were short term rentals that wanted a permit during the interim prohibition…those have now gone through the permitting process,” McGinn said. He estimated the city was looking at roughly 110 combined applications and permits once in-process applications are completed.

McGinn said about one-third of permitted short-term rentals are remitting or reporting hotel-occupancy taxes and that finance will send notification letters; code enforcement will follow if owners do not comply. He said the city is planning a host-compliance software upgrade that would allow staff to cross-check public postings and reviews across roughly 75 hosting platforms and “look a little bit closer at comments and…send formal notification notices.”

Why this matters: Short-term rentals affect on-street parking, neighborhood character, and collection of hotel-occupancy tax revenue. The council adopted an interim prohibition in January 2024 and established a 130-permit limit; staff said the new work will determine whether and how to convert that cap into place-based limits and whether multifamily units should be included in the total.

What staff presented and what residents said

Staff described outreach that included an open house attended by about 20 people and a follow-up online survey that produced 29 additional responses. McGinn said survey results showed mixed views: roughly two-thirds of respondents wanted minimum-distance requirements, and 71% of respondents supported some limitation on short-term rentals in apartment buildings. On whether multifamily short-term rentals should count toward the citywide 130-permit cap, McGinn reported 61% of respondents said they should.

To illustrate regulatory approaches, staff cited other Texas cities’ practices: Denton’s 100-foot linear buffer was highlighted as one clear example, and McGinn said sample multifamily limits in other jurisdictions cited in the presentation ranged from about 3% to as high as 12.5% in some places. Using Lewisville property data and various buffer distances, staff gave a rough order-of-magnitude: a 1,000-foot linear spacing could result in under 300 possible short-term rental units citywide (excluding homeowners-association-restricted areas), while a 500-foot spacing could yield roughly 1,200–1,300 if every eligible site were used. McGinn cautioned those are “linearly” calculated estimates that assume ideal spacing.

Enforcement and clarifications

McGinn said the finance department will notify permit holders about hotel-occupancy tax reporting requirements and that permits will not be renewed if owners are not current on reporting or remittance. He also said the city does not currently perform a formal, periodic audit of listings but expects the host-compliance platform to improve detection; staff additionally rely on guest reviews and reports to confirm whether a permitted unit actually operates as a short-term rental.

On multifamily properties, McGinn said property managers have generally refused to sign off on applications when they learn a unit is being used as a short-term rental; in those cases staff asks the operator to stop. He noted, however, that some homeowners associations (staff cited Castle Hills Master Association as an HOA that does not allow short-term rentals) still have at least one apparent short-term rental operating, which staff said illustrates limitations when private covenants are not enforced.

Draft ordinance changes discussed by staff included: adding density language to the Unified Development Code (UDC), removing interim-prohibition text in the UDC, clarifying maximum-occupancy language so that occupancy calculations do not inconsistently count non-bedroom spaces, and adding application and permit-denial clarifications.

Council direction

Council did not vote on an ordinance. After a brief question-and-answer period, council members agreed to pause the decision and asked staff to return with additional analysis at a later meeting. The mayor asked council members to capture slides and send comments to staff before the next discussion.

Ending

Staff said they will provide additional data requested by the council, including more precise estimates of how various buffer distances or block-face limits would translate into potential unit counts, and will return to a future meeting or workshop. No regulatory changes were adopted at the April 14 meeting.