Development stakeholders are concerned about the negative impact of a planned increase to Dallas’ building permit fees on local housing prices, particularly with the entry-level market and multifamily units.
The Dallas Builders Association (DBA) has urged local officials to postpone any action regarding a proposal by the Dallas Development Services Department (DSD) to raise its building permit fees, according to David Lehde, DBA’s government affairs director.
As reported by The Dallas Express, DSD takes in roughly $28 million from service fees but has approximately $50 million in operational user costs based on its 2023/2024 fiscal budget. This has resulted in local taxpayers subsidizing nearly half (45%) of all services performed by DSD, the latest fee study shows.
“You don’t base your city’s fees on what other cities do. You base your city’s fees based on your city and the services you provide,” Lehde told The Dallas Express.
It’s a balance between “providing the products that you need to keep your enterprise successful” and “performing the service itself,” he said.
The general permits needed for multifamily projects in Dallas can already drive up an apartment’s per-unit cost “significantly.” If the costs become too great, the project will either fail, or the financial burden will be levied onto the tenants in the form of higher rent prices, Lehde explained.
For instance, for a new multifamily development project of 350,000 square feet with 150 dwellings and a valuation of $33 million, DSD’s proposal would increase the permitting fees by 200%. This means the $37,950 in fees that DSD would collect based on its current rates would jump to $113,850 if Dallas council members approved the proposed increase.
“It’s always better to base it on your own city and not worry about a comparison to others,” Lehde told DX. “If they’re looking at keeping the city affordable, that’s good, but there are parts of South Dallas that cannot absorb the fees that Frisco can absorb.”
A city-to-city comparison won’t be as effective as other methods because different municipalities have “different building requirements, different sets of ordinances, and everything else,” Lehde added.
For example, Lehde explained, South Oak Cliff is not going to be able to absorb an increase in housing prices to the same level that Highland Park, Plano, or Frisco could — that’s why you have to base it on your area.
According to Lehde, the DBA is concerned about some of the assumptions DSD has made in the study.
“Our biggest question is, [has DSD] calculated how any inefficiencies in the department are leading to additional costs?”
“Obviously, if I’ve submitted an application for a permit and there’s an error or an inefficiency — then I’ve got to resubmit it, or [DSD] call[s] for review or correction on something that’s already following their city’s ordinance — then that’s time staff must spend re-reviewing that permit application, Lehde said, adding “that’s a cost to the city.”
“Are they counting those added times? Are they studying the effect that permit delays have on the city? Are they looking at the inefficiencies? Are they looking about how those delays came about?” Lehde asked.
A representative from DSD was not immediately available for comment.
