Dallas City Council Approves Building Permit Fee Hikes to Start May 1

For the first time in almost a decade, Dallas Development Services raised its building permit fees to close the gap between operating costs and revenues. 

The matter has been postponed twice by the Dallas City Council as staff was directed to gather more feedback from stakeholders.

The higher building permit fees have been criticized by officials with the Dallas Builders Association and The Real Estate Council. Local builders and developers have become accustomed to Dallas having some of the lowest fees in the region, but they also have to deal with delays and inefficiencies, builders have said. 

Dallas Building Permit Fee Hikes Postponed Again to March 27 

Dallas Builders Association Director of Government Affairs provided the following statement after Wednesday’s meeting when the new fee schedule was adopted.

It is important to understand that these increases in building costs will ultimately be paid for by the home buyer. We are especially concerned about the significant increase in multifamily permit fees. Anytime there is an increase in fees, it is a challenge for the multifamily sector, as they have more items to factor in for costs, including any need or requirement for affordable units to be part of the development.

It is important to note that these fee increases come on the tail end of a recent increase in sewer tap fees. The city is also discussing other development related amendments that could add even further costs if not addressed wisely.

Moving forward, there should be a focus on addressing inefficiencies in the department. These related operations are funded through an enterprise fund. Not only does that fund pull directly from builder fees, but that fund also has a history of running a surplus. If department costs have increased so significantly in such a short time, it raises the question of why?

We appreciate that City Council members did voice many of the same concerns we have had and that the Development Services Department shared our same concerns with the exorbitant increases that were listed in the original study and worked with stakeholders to at least get some of that lowered. However, there are still fees in the schedule that are higher than what we see elsewhere in the region for the same work.

Dallas BA would have preferred that any new fees and increases be phased in over an extended period to help relieve the economic impact.

David Lehde, Dallas Builders Association

Operating in The Red

The new building permit fee schedule is complicated. A 41-page ordinance adopted Wednesday outlines numerous changes to the current fee schedule and several strike-throughs that were revised prior to the council vote. The new fee structure goes into effect May 1. 

CandysDirt.com requested a simplified chart to show the fee increases. Development Services Communications and Outreach Manager Robyn Gerard said she’s working on it and should have a graphic illustration by the end of next week.

Builder Permit Fee Increases Delayed as Stakeholders Push Back on Development Services Department Inefficiencies

“I’m having to manually go through the ordinance and pull out the fees,” she said.

Here’s what we know. One fee will increase more than 2,400 percent on certain projects while many other fees are set to double or triple in price for builders — a cost that ultimately will be passed on to homeowners and renters, the Dallas Morning News reported Wednesday.

A March 22 memorandum from Assistant City Manager Majed Al-Ghafry responds to frequently asked questions about the building permit fee increase from the development community. Fees will be reconsidered at least every three years, officials said. 

“I think the reason that we and the development community are having heartburn about this is that we didn’t do this [sooner],” said District 12 Councilwoman Cara Mendelsohn. “I think there are good reasons that we didn’t do it, but we need to learn this lesson because it’s always going to catch up to us. We think we’re doing something to help people at the time but we’re really hurting them down the road.” 

The Dallas Development Services Department collects about $28 million in revenue each year, but has an operating cost of about $50 million, according to Development Services Director Andrew Espinoza. The goal of the new fee structure is 100 percent cost recovery, Espinoza said Wednesday. 

The department isn’t in the red yet but they will be by 2025 if they don’t make a change, the director has said. 

Mayor Pro Tem Tennell Atkins made the motion for approval with changes to the building permit fee schedule based on input from a consultant and stakeholders. 

“We’re losing $1.8 million each month that we defer this,” Atkins said. 

Building Permit Fee Increases

District 1 Councilman Chad West said he’d received emails from industry representatives with concerns about the building permit fee increase. 

“Are costs always going to keep going up or are we going to actually build in some savings for the future so we can reduce these costs?” West asked.

As costs go up, builders are passing on those fees to renters and homebuyers, West added. 

Espinoza said he’s identifying workflow delays and bottlenecks.

“I think what we’ve done is establish a good plan to roll out updated technology, make sure it aligns with our current technology, recruiting … and also establishing clear performance metrics so the next time we roll out a fee study we’ll be able to realize those cost savings by our efficiencies,” Espinoza said.

The department director added that he wanted to be accountable and hoped to report cost-saving measures in the future.

Espinoza said videos would be released in multiple languages and the Development Services Department will post streamlined information on its website and social media channels. 

“Our goal is also to compile all these fees and put them in a very simple user-friendly format like other cities do, as opposed to [the public] reading the ordinance and trying to figure out what that means,” Espinoza said. “Our goal is to continue to communicate and advertise and work with our community. Obviously, we won’t charge these fees until they actually go into effect, so anyone who submits prior to that won’t experience the increased fee.”