Millions Lost As Developers Await Fixes To Dallas’ Beleaguered Permitting System

Despite a targeted focus by staff and political hand-wringing by elected officials, delayed permitting in Dallas continues to cost developers and the city millions of dollars as intake exhausts resources.

“Between this past quarter and the quarter before it, there is an uptick of almost 290 more permits,” Assistant City Manager Majed Al-Ghafry told Dallas City Council during a May 2 briefing. “As we are inundated with permits, it keeps adding up.”

The city’s development services department has been flooded with residential and commercial permit requests as construction activity reaches record highs. The most recent city data indicates it takes six weeks on average to issue a residential building permit and double the amount of time for commercial projects. 

Phil Crone, executive director of the Dallas Builders Association, said he believes those numbers are conservative.

“This costs [builders] $250 to $300 per home per day,” Crone said. “And while the city says it takes six to eight weeks to get your permit, I’m seeing a lot of cases where it’s 10-12 or more.”

Delays are costly not just for the private sector but the public realm as well. More than $31M of tax revenue is lost for every three months of permitting delays, including $9M in revenue for the city of Dallas, Linda McMahon, president and CEO of The Real Estate Council, told city council during a Feb. 3 hearing.

“That’s a big number,” City Council Member Paula Blackmon told Bisnow. “That money can go a long way in fixing our roads and providing city services. That’s why we as policymakers sitting around that horseshoe think it’s important that we get it fixed and get it fixed now.”

Members of the development community have come out in droves to voice their gripes with the city’s system. Concerns include difficulties tracking a permit’s status, varying interpretations by staff, an overly complicated zoning ordinance and poor customer service. But perhaps the most pressing issue is the city’s slapdash implementation of ProjectDox, an online permitting system introduced in 2019.

“We are trying to build the plane while it’s flying,” Crone said of ProjectDox. “We had a chance to build it while it was still on the ground using rivets, but instead they used duct tape and baling wire.”

The city's development services department is well aware of issues with ProjectDox, Al-Ghafry told the committee. Last year, the department brought on Will Mundinger, founding partner and senior managing director of Crow Holdings Industrial, as executive in residence to address the software’s shortcomings. Mundinger and staff are working to make ProjectDox more user-friendly, but Al-Ghafry said in the short term, employees need more training. The development community also needs guidance, Crone said.

“I keep hearing that the quality of applications isn’t what it needs to be; well, that’s because people are driving in the dark without any headlights,” he said. “They educate themselves through the school of hard knocks and by being told how it’s wrong instead of how it’s right.”

Dallas is not the only city where developers complain of delays caused by varying interpretations of applications by staff. Randy Heady, owner of development company Heady Investments, said he has dealt with similar headaches in Frisco and Allen.

“The architect tells me that every time he submits the plans, they kick them back,” Heady said of his project in Allen. “Cities are doing more and more of that, just comparatively speaking — telling you what you're supposed to do, you do exactly that, and then they don’t approve what you did.”

External factors driving up the price of construction make communication issues even more costly for developers, said Artemio De La Vega, founder and CEO of De La Vega Development. He said other cities use a coordinator to deal with miscommunications between departments, which makes the process more seamless for developers.

“With the construction increases right now and interest rates going up, that kind of stuff is a real problem,” he said. “We’ve got some really good people at the city, but there’s always that one person you have to watch out for.”

Staffing shortages heightened by the pandemic are also slowing things down in Dallas and beyond. As of early May, there were 15 unfilled permitting positions in the city of Dallas, Blackmon said.

“If you don’t have staff and you don’t have the technology, those two things can compound on each other, and then you add the complicated zoning issues that we have …,” she trailed off. “The systems and processes we have in place don’t work.”

Developers — especially those actively trying to navigate broken systems — are reluctant to speculate on the root of these problems. But Crone said in Dallas, much of the delay can be attributed to the city’s convoluted zoning ordinance. The code has not been updated for more than 40 years, and with more than 1,000 special districts and zoning overlays, zoning reviews have become increasingly complicated.

“That process being so difficult can be disheartening on both sides of the counter,” he said. “Zoning is something that the city needs to look at … the unfortunate setup we have now needs to be a priority going forward.”

Rewriting the city’s development code — a process Al-Ghafry said the city intends to begin this year — could take between 18 and 24 months. In the meantime, only certain employees are qualified to handle complex zoning cases, which has created a severe bottleneck.

“[The development code] has not been updated since 1980,” he said. “Rezoning is triggered for basically every single property. When you go through the permitting stage, the customization of parcel-to-parcel zoning takes forever for staff to review.” 

While the city tackles more systemic issues, there are several low-hanging fruit solutions that could be implemented in the short term. Al-Ghafry said the city is exploring a self-certification program, which allows registered professionals in the private sector to certify projects based on their knowledge of building codes and standards. Other cities, such as Phoenix and Chicago, have successfully implemented such programs. Another quick fix would be increased transparency on the city’s website, Crone said.

“Being able to set expectations right off the bat, whether it’s good news, bad news or indifferent, I think will improve things quite a bit,” he said. “If you have a timeline that is published on your website that isn’t realistic, you’re going to have a lot of frustration because a lot of investment was made both by the builder but ultimately the homeowner.”

Crone said he frequently hears from builders who are leaving Dallas in favor of cities with faster permitting. Having a reputation for being slow, Crone said, impacts Dallas’ ability to attract business, particularly small businesses that are disproportionately impacted by delays.

“A lot of other builders building in Dallas right now say it will be their last project here until things improve,” Crone said. “They can go to Plano, they can go to Frisco, where maybe there are more stringent standards, but their processes are administered evenly, very predictably, and they can budget for that because they know what they are up against.”

The city of Plano’s permitting system may be faster than Dallas’, but there is still room for improvement. Chief Building Official Selso Mata recently briefed Plano City Council on tweaks to the system that could streamline the process and minimize delays. Like many cities, Plano is also struggling to keep up with high levels of construction activity, Mata told Bisnow. 

“We have some openings in our department, and we are actively looking for people,” he said, noting that in the past year Plano has seen a 28% increase in commercial permits. “We’ve got a lot of work, which it seems like all cities in our area are experiencing.”

Proposed solutions included establishing a standardized process for submitting permit applications, creating educational videos that help the public navigate software and providing a completeness checklist for more efficient intake. All of these things, Mata said, are in the works, but cooperation from the development community is key as well. 

“Sometimes they respond very quickly, but other times, they’re not responding as fast as maybe they could,” he said. “The clock ticks both ways.”

Outside of allowing ample time to procure permitting materials, there isn't much developers can do to proactively address delays, Crone said. The best thing builders can do is be honest with their clients about how long projects might take and to lean on organizations like the Dallas Builders Association to assist in getting a permit moved along.

“I feel like I'm a glorified permit expediter these days,” he said. “But like I tell my staff, it's good to be needed. And I guess we are and will be for quite a while in the city of Dallas.”