Dallas’ relatively lax development environment has helped boost the city’s economy, but a recent blunder could cause developers pain.
A permitting fee error went unnoticed for almost a year and cost the city an estimated $5.5 million, which resulted in budget cuts. That mistake could be reversed with fee hikes, the Dallas Business Journal reported.
The proposed adjustments would double or triple fees for large-scale commercial remodel projects as early as July 1. The City Council is scheduled to vote on it April 23.
A 2023 fee study by MGT Consulting aimed to bring Dallas’ planning fees in line with inflation and cost recovery targets. When the city implemented a new fee structure last May, a staff error in the formula inadvertently lowered fees for high-value commercial remodels, one of the city’s most common permit types.
The impact has been substantial. For fiscal year 2025, the Planning and Development Department has collected just $2.9 million compared to an estimated $8.4 million under the consultant’s model. In response, the department imposed a hiring freeze, cut overtime and deferred fleet replacements to bridge the budget gap.
Under the proposed fix, the city would revert fees to their pre-May 2024 levels, adjusted for inflation. The updated fee for a $1 million project would rise from $5,865 to $12,428, while a $12 million project could jump from $47,370 to $137,928, per city documents.
Additional changes include raising the cap on expedited plan reviews through the Q-Team process, from $2,000 to $10,000 for projects under 10,000 square feet. The city also plans to consolidate or eliminate underutilized fees, including those for certificates of occupancy and address assignment.
Planning staff estimate Dallas will lose roughly $1.1 million per month if the corrections are delayed.
While the new fees would put Dallas more in line with peer cities, developers are likely to push back on the timing and scope of the increases — especially as construction costs remain volatile and interest rates stay high.
If passed, the new fee structure would go into effect July 1.
— Judah Duke
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