Builders are charged “significantly less” to develop projects in Dallas than in surrounding cities, and local officials are not happy about it.
Dallas’ Economic Development Committee (EDC) expressed dismay during a meeting earlier this month over the results of a Development Services Department (DSD) fee study that suggests taxpayers are subsidizing nearly half of all the services rendered by the department under City Manager T.C. Broadnax.
According to the results of the study, which was conducted in partnership with a consultant, the City of Dallas pays for 45% of services provided by DSD across four different divisions. The four divisions assessed in the fee study include “Inspection & Plan Review,” “Engineering,” “GIS,” and “Subdivision.”
The City of Dallas is spending $17,396,535 (42%) on Inspection & Plan Review, $3,554,818 (61%) on Engineering, $763,950 (97%) on GIS, and $602,466 (32%) on Subdivision work.
In total, Dallas is currently subsidizing 45% of the services provided by DSD, according to what DSD Director Andrew Espinoza called “a current snapshot now and moving forward.”
Mayor pro tem and District 8 council member Tennell Atkins said there was “$37 million” in the City’s “Enterprise Fund,” which DSD has access to.
“At the pace we’re going right now, we’re going to be in a big negative,” Atkins said.
Espinoza calculated that the fund will likely run out in the near future.
“I believe if my memory serves me well, it was in the next two fiscal years,” Espinoza told Atkins. “We want to make sure that everyone understands — that the current model we’re operating is just not sustainable.”
Part of the reason Dallas is subsidizing DSD’s permit process is because the department’s total costs outweigh the revenues it brings in through fees by a significant margin. The study shows that DSD’s total costs in the snapshot total $50,106,867, with revenue at $27,789,098.
“The biggest thing that I have noticed, aside from not performing the assessment and adjusting it based upon the recovery rate, is there are approximately 40 services that we do not provide or have the ability to charge a fee for,” said Espinoza.
“A lot of that is due to the fact that there are fees that are not currently assessed. In other words, if they’re not codified, we cannot charge for them,” he said.
Based on 3% and 5% assumptions, DSD’s consultant estimated that the department has forgone $10.6 million and $17.7 million, respectively, by not implementing fees in areas it purportedly could.
“So, we are under-charging for permits while the other cities are charging more — and they get more money, more property value, more permits out — and we’re doing a lesser job,” Atkins said.
“My job on this committee is to fix this, and we’re going to fix it right now,” the council member proclaimed.
DSD will update Dallas’ EDC on December 4 with the final findings of the fee study.
“When we come back in December, we need to find out how we get out of this hole,” said Atkins.
Despite the importance of having an efficient permitting process, City permitting under Broadnax has been prone to delays and long cycle times. While the problem of long delays has slightly improved over the past 24 months, the issue of excessive turnaround times is still a point of frustration for developers with large commercial projects, as previously reported by The Dallas Express.
