Nerves of Steel: The stress of doing business with the city got so bad that Carr’s doctor ordered brain scans to make sure he wasn’t at risk of stroke. Elizabeth Lavin

Local Government

Dallas Council Gets an Update on How the City Plans to Fix Its Broken Permitting Process

The city failed its business community during the pandemic, risking the future of businesses like Community Beer Co. (Spoiler: It’s back in business, but barely.)

The city of Dallas is still trying to fix its broken permitting process, but City Hall’s economic chief briefed a council committee this week on what’s planned. Much of it is remarkably simple, like ensuring regular training (which wasn’t happening), instituting accountability metrics (which hadn’t been done before), and upgrading and tweaking technology that failed during the pandemic (which wasn’t tested before it had to be used).

This problem—the city being unable to approve both commercial and residential building in a reasonable and predictable amount of time—had very real consequences: houses weren’t built, businesses were stuck in purgatory, millions of dollars were not added to the tax rolls.

During the pandemic, the backlog of permits awaiting review ballooned to more than 900. It took more than a year for the city to clear them, but many developers say it is still taking months longer than it should for them to get their permits.

Into this mess walked Kevin Carr. He’s the founder and CEO of Community Beer Co., which was one of the city’s first independent brewers. Going into the pandemic, he was the state’s third-largest, producing Mosaic IPA and Texas Lager and a slew of seasonal options from a 14,000-square-foot warehouse in the Design District. He had plans to expand into a larger space a little farther north, along Interstate 35, adding a biergarten, a distilling operation, a two-story taproom, an event space, offices, and more. He started filing for permits in September 2020, and it took more than a year for him to get permission to start brewing again. For much of that time, he had to keep $4 million worth of brewing equipment in a parking lot because he didn’t have permission to move it in—or epoxy the brewery floor.

Carr is the focus of a story I wrote for the October issue of D Magazine on the city’s permitting mess, which went online yesterday. Permitting is a very dry but essential process of a city’s operations—and it can ruin a business if left to rot.

I’m spoiling the end here, but Carr got permission to begin brewing beer just before his money ran out, almost exactly a year after he’d first filed for permits. The story went to press early last month, and things were pretty touch and go. Hence that ending.

“We were a company that was hitting on all cylinders and growing and was going to employ a bunch more people, but now we feel like we’re in startup mode again,” Carr told me Thursday morning. “Initially, startup mode was exciting, but when you’re forced back into that due to permit issues, it’s pretty frustrating.”

So check out what I wrote about Carr for the October issue. What follows is new information we’ve learned since I filed that story, about six weeks ago.

In the time since, we’ve heard more about the city’s plans to fix the department. Dr. Eric Johnson, Dallas’ chief of economic development and housing, briefed a City Council committee this week after 90 days of an analysis of the process that he described as “an autopsy.”

“We’re looking at this thing from top to bottom,” he said. “It’s like we’re trying to build a new engine in this car while we’re driving it.”

Johnson wants to amend the chapter of the city code that governs permitting. He told the council that incomplete or incorrect permits were at least helping fuel that backlog; he’d like to amend the code and allow the application to expire after 45 days if the city hasn’t heard from the applicant. The city will also notify applicants if they need to amend their applications, giving them 10 days to do so. Mayor Pro Tem Chad West asked that the city refund applicants when the city fails to do its job after 45 days. Johnson said he’d look into it.

One of the frustrations during the pandemic sprang from the city’s failure to communicate permit edits to applicants, a problem created by the inadequate software that staff was using. That software, ProjectDox, is getting an overhaul, too, with the help of the city’s IT department. Johnson also said funding was being allocated to modernize the technology that’s actually running that software.

Meantime, the city plans to hire two full-time trainers and three volunteer staff for a “talent support program.” The zoning is difficult here; Dallas has more than 1,000 planned development districts, each of which have different code quirks that allow for certain things that others don’t. Johnson said staff aren’t familiar enough with how these operate and aren’t getting support from the city to help navigate them.

“This is what happens: you come into the department, we give you a book, you follow somebody around a couple days, good luck,” he said. “There’s 1,000 PDs out there. That’s really what we’re dealing with.”

Currently, there are three private providers on call that the city is using to go through the plan review process for permitting. The builders and West would like to see that expanded, saying that “council members have received countless calls and inquiries from frustrated applicants” whose applications are stuck in plan review. The Dallas Builders Association also would like the city to allow engineers and architects to self-certify their own work, putting their licenses at risk and freeing up city resources. As it stands, staff has to review and sign off on the work.

“We must decouple the cumbersome and understaffed plan review process from exclusive city control while also maintaining important checks and balances,” wrote Dallas Builders Association CEO Phil Crone in a memo to council.

This is an enormous problem for a city that needs to do everything it can to motivate new housing. Crone ran the numbers for building permits: the Dallas-Fort Worth metro area issued 27 percent more permits between March 2020 and June 2021. Dallas alone decreased by 14 percent.

“Shame on us if we continue to not enable our builders to build (housing) by making the most efficient permit office in the country,” West said during this week’s meeting.

It’s also losing out on tax revenue. As I reported in that column:

According to an analysis by The Real Estate Council, the taxable value of new single-family construction in 2019 totaled $632 million; multifamily and commercial totaled $3.9 billion. A three-month permitting delay in commercial permits, like the one we saw last fall, represents $31 million in lost tax revenue.

Johnson expects to present the full report to Council in early 2022, which isn’t much solace to business owners like Carr. See, Community’s original plan got cut up into phases. When the permit delays began, he and his consultants decided to pursue the permits piecemeal: start producing first, then begin filing to get permission on the public-facing things like the taproom and restaurant.

He said an inspector didn’t like that mix of permits and made him file an amended one to perform all the construction at once. He’s back producing beer, but the other things will take even more time. He anticipates it could be early or mid-2022 before the new location is completed.

He’s had to work to get his beer back onto taps in restaurants and bars, which replaced Community’s kegs with others when his stock dried up. Luckily, he says about 80 percent of his prior customers have restocked his beer. He has also been proactive in explaining to retailers his quagmire; he’s hoping they’ll keep ordering now that the operation is up and running.

“As an entrepreneur, your destiny is in your hands, and it’s up to you to make good decisions or bad decisions and grow the business or harm the business,” Carr says. “This is a situation for almost a year now that our fate has been decided by others who we don’t even know who they are. They’re just faceless people who almost sunk our company.”

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