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Commercial Real Estate

Dallas Has a Huge Backlog of Residential Permits, and Contractors Are Fed Up

A process that once took one to three days is now taking upwards of eight weeks. The city plans to spend $1 million to identify inefficiencies.

Editor’s Note: To read an update on this ongoing issue with building permit backlogs at the city of Dallas, click here.

A mounting backlog of unprocessed building permits is disproportionately impacting small residential contractors who are frustrated with a system they say is riddled with inefficiencies and favoritism.

Dallas Council member Chad West is championing solutions that could include a $1 million efficiency study (backed by a franchise fee) of the building permit office at the Oak Cliff Municipal Center; funding to attract and retain engineers; additional staff to speed up the permitting process for mixed-income development projects; and possibly outsourcing the process, an idea that other municipalities have successfully implemented.

As of September 8, nearly 900 permit applications were waiting to be processed, with about half (445) being residential, according to numbers provided by the city’s Sustainable Development and Construction office. While there was also a backlog of commercial real estate permits, city staff says they have been able to shrink it to about 97 permits, with a queue time of 11 days—otherwise, within acceptable standards.

What this means for Dallas’ residential builders is that a process that once took one to three days is now taking upwards of eight weeks—not acceptable.

Although the problem has been exacerbated by an unexpected need to move the entire process online after COVID-19 closures, Dallas Builders Association Executive Director Phil Crone said the city seems to be uniquely challenged. He says other municipalities he works with have made the shift online without a problem.

Problems with the city’s online permit portal are nothing new, Crone says. Pre-pandemic, builders would line up around the Oak Cliff Municipal Center at 3 a.m. to get a permit because online wasn’t a viable option, sources told D CEO. Fixing the problem was put on the back burner over the years and the city was ill-prepared when forced to go entirely online.

“The pandemic made a tough situation worse, but all these issues were foreseeable,” said Crone. “I think it is all in the execution. Project Docs is a pretty commonly used program with commonly used processes, but what is uncommon is a lot of the issues causing permits to be denied, like a document being rejected because it is scanned in landscape mode instead of portrait mode. It’s just little things like that. It is a litany of issues like that that do not get to the heart of the project being unsafe.”

‘A Leadership Problem’

Keen Homes owner Kelly Reynolds said the issue goes far beyond builders not uploading documents correctly. Many of the builders experiencing delays are part of the city’s Gold Card program, meaning they have gone through training on how to fill out and submit paperwork correctly.

“I don’t blame the software itself,” Reynolds said. “It is a leadership problem.”

Before the pandemic, Reynolds said, it would often take a week or longer to process a permit using the online portal, “which is really disappointing. Once upon a time, you can get it within a day, sometimes an hour. It is robbing the city of a lot of revenue they need.”

Crone said neither he nor members of the Dallas Builders Association want to micromanage city staff: “I think there are good people in the city and staff that realize the problem and can carry out the solutions.” What they would like is to see what is taking eight to 10 weeks to get cut down to two or three.

“Get a surge team to come in and clear the decks of the backup of permits that are in. Some permits are complex, and some are simple, separate the easy ones from the hard ones, because there are a whole lot of easy ones that were once done in five minutes in person,” he adds.

The extended wait time to process permits, Crone says, is also causing a financial burden for builders who have construction loans on their projects—many of whom are small business owners.

“I think it is going to take a really deep dive to figure out how to unwind the tangled web with the city to see what the inefficiencies are,” Crone said.

Differing Opinions on Solutions

As of late, some of West’s proposed solutions have moved forward. The $1 million enterprise fee-funded efficiency study of the Oak Cliff Municipal Center is expected to be approved with the passing of the city’s budget, and City Council members (except the mayor, who was not present) unanimously supported adding two positions for the city’s concierge program to help process permits for mixed-income projects.

Five council members have added their support to a memo requesting that recruitment bonuses be implemented for engineer positions and that salaries be increased to market value. According to a recent city memo, a compensation study that collected data for all civilian jobs within the city shows that engineering positions are 11 percent below the market.

West, who represents North Oak Cliff and chairs the city’s Housing and Homelessness Solutions committee, says retaining engineers has been a problem for the city. On average, those who fill the roles typically leave after 10 or 11 months because they are not paid enough, West said. He’s received some pushback from city staff about a recent directive to add additional staff to pull permits. “We’re going back and forth right now,” he said.

In a recent city memo, Assistant City Manager Majed Al-Ghafry said it is not necessary to designate positions for ministerial permits, such as trade validation and fences. He also doesn’t want to designate a surge team to rapidly process permits when applications exceed staff capacity or double the number of reviewers working on residential projects.

According to city staff, the current backlog of permits is primarily in the “pre-screen” function that ensures the application is complete, the plans are formatted correctly, and all required documentation is uploaded. Four additional staff members from Sustainable Development and Construction were allocated to the pre-screen function on Sept. 8 to work through the backlog. Resources from an existing contract with Dal-Tech, primarily used for engineering, are also being brought in to augment existing staff.

“These are the fastest ways to address the current backlog,” Kris Sweckard, director of the city’s Sustainable Development and Construction department, said in an email.

West disagrees. Basically, “[The City Manager] is saying that we do not need the extra positions because it is not as bad as the development community is making it seem,” West said. “Then why are [builders] asking for it?”

Although West and members of the Dallas Builders Association believe the ultimate answer to the problem is privatizing the process—something they have seen work well in other cities—discussion on such a solution has yet to proceed. “We have to advocate outsourcing several processes that take place on Jefferson Boulevard,” Reynolds said, even if that means that the cost of permits goes up.

“We have seen that in other municipalities where they outsource permit reviews and inspections, and it really seems to go quicker,” he said. “If you don’t know how long it is going to take to get permitted, it is going to kill some big deals.”

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