The city said Tuesday it would revoke Occupy Dallas' permit unless the group addresses several violations by Saturday.
In a letter to Occupy Dallas' attorney, city officials said the protest group has committed "numerous, ongoing and material breaches" of its agreement with the city.
"We're giving them the right to stay there," Mayor Mike Rawlings said. "If they don't want to obey the agreement, that's their choice. They'll be removed."
Jonathan Winocour, an attorney for Occupy Dallas, said he was "disappointed it has come to this but not surprised."
“The city put down some fair stringent parameters -- guidelines -- they need to adhere to," he said. "They understood this. Those guidelines were made clear to them, and there have been some lapses."
The group said on its Facebook page earlier Tuesday that it has "abided by the agreement with the city" and planned to continue to do so.
Occupy Dallas has a permit that allows them to camp in City Hall Park until Dec. 14.
The city said the violations include semi-permanent structures and signs at the park, the use of City Hall restrooms, trash collection and the tearing down of temporary fencing around trees.
The city said protesters have put generators within the temporary fencing and space heaters near combustible materials. The city also said the group does not collect trash from the park daily, and that feces and moldy food have been found on the ground at the park.
The letter to Occupy Dallas also cited concerns about "a pattern of criminal activity," including the arrests of protesters at demonstrations, public urination and parking violations, as well as the alleged sexual assault of a 14-year-old at the camp and the removal of an infant by Child Protective Services.
Winocour read the two-page letter from First Assistant City Attorney Chris Bowers aloud to demonstrators at the campsite Tuesday night and advised them to comply with the city's rules.
The city said the demonstrators have until 5 p.m. Saturday to fix all of the issues and get its participants to obey the law.
The city said it could terminate its agreement with Occupy Dallas and enforce all laws on City Hall Park if the group's members "continue to violate" the agreement, "disobey the law" or do not treat park property properly.
NBC 5's Amanda Guerra contributed to this report.