Dallas permitting debacle is par for the course

My phone started jumping as the news broke about the City of Dallas Development Service Department not being able to use the 7800 N. Stemmons Freeway office facility that the city had purchased and refurbished for $21 million. The staff’s been locked out by Dallas Fire-Rescue.

You can’t make this up. But given it’s the city of Dallas building inspection group it’s believable.

Local real estate professionals tell me they cannot believe how badly this has been bungled. Lee Kleinman, a Masterplan colleague and former four-term Dallas council member, remarked: “This is past being a wake-up call for the City Council. If Dallas can’t even get its own projects permitted, how can the private sector expect otherwise?”

It’s not hard to make a good deal on office buildings right now. The city had all the market advantages because this is a buyer’s market.

How can the referees on which architects, engineers and developers rely to determine appropriate and safe standards for buildings not do it for themselves? It’s absurd.

Municipal government is about delivering basic city services at reasonable prices while keeping people safe. Somehow the city spent $21 million without fully considering safety in a building it owns.

The message to the development community appears to be, “Do as we say. Not as we do.” It’s an arrogant and indifferent approach, but not one that surprises me.

One council member, Cara Mendelsohn has called a meeting of the Ad Hoc Committee on General Investigation and Ethics to understand a timeline of events associated with the Stemmons property. Another council member, Jesse Moreno, has already requested information.

Council members received an email update from Assistant City Manager Majed Al-Ghafry, a member of the outgoing City Manager T.C. Broadnax’s senior team, who soft-sold the crisis. That’s typical. After all, it’s only $21 million.

The email said staff will return to the “Oak Cliff Municipal Center effective immediately” where work can continue “uninterrupted.” There are so many things that are funny about this announcement.

There’s absolutely no chance that there will not be significant delays. How could there not be when you’ve got to move the office, again?

This one fact demonstrates how unbelievably messed up building inspection is: Both Dallas Fire-Rescue and Dallas Water Utilities have hired my company, Masterplan, to help them obtain permits from the city of Dallas. Departments at the city hire our third-party firm to navigate the system because it’s so broken.

We are happy for the business, but you’d think building inspection might prioritize its own departments that deal with safety and clean water. It doesn’t. All Dallas departments fight with one another. Long gone is the era when the employees served the residents and management insisted on it.

The email also contends, “The move is the result of additional facility improvements recently identified at their current location that necessitates moving existing staff back.” That’s Friday evening city memo jargon for, “We really screwed this up, and if this wasn’t civil service, we’d get fired.”

This is not how private industry would work. It would have hired a swarm of experts focused on the potential pitfalls of the investment that would carefully examine the elevators, HVAC, safety and every other system in the building. Private industry would spend significant money on discovery and testing of systems.

The message to the council noted, “We will continue to collaborate with IT, Building Services, the Bond Office, and Development Services to conduct a comprehensive assessment of required facility updates required along with available and potential funding gaps for the immediate needs.” Let me unpack some of this inside-baseball messaging.

Why in the world is the bond office coordinating this? It does not have experience buying buildings and doing remodels. Dallas has property management and real estate professionals as well as building services staff members. The bond office has not even been able to spend all the money from the previous bond package back when interest rates were lower. The comprehensive assessment should have happened first. In essence, the city is going to look for the iceberg after hitting it. Not a great way to sail a ship or run a city.

The last part about “funding gaps” is a sure sign that this is going to cost Joe Q Taxpayer. The city, however, has the taxpayer to bail it out when it makes a mistake. Maybe that helps to explain why the city of Dallas tax rate is nearly the highest in the metroplex.

There may be hidden costs too. Now that businesses are locked out, I’m going to bet that the non-city tenants in the building have the right to terminate their leases.

The memo concludes: “Our goal is to finish the work expeditiously and to move staff back once the building is complete. An exact timeline is not available as of today, but we will update you as soon as we learn additional information. Kim has been briefed on the matter.”

That’s a reference to interim City Manager Kim Tolbert. If I were the boss and my team may have squandered $21 million, I’d be involved in this — not just briefed on it. When something in your house prevents you from occupying it, you get involved. This is now her house.

While all this is happening, the Development Services Department in charge of building inspections plans to raise permitting fees significantly. Typically, I don’t find restaurants with poor reviews and slow service times deciding to raise their menu prices. The homebuilding and development community didn’t ask the city to buy a large, expensive building and move. Further, it didn’t ask the city to outsource much of the review to expensive third-party firms. The city’s solution is just to raise prices. I hope this debacle gets the council to consider asking the city for results first and higher prices second.

The delays at City Hall and building inspection are hurting the reputation of Dallas and its ability to compete in North Texas. “The economic impact to Dallas is severe as investors take their money elsewhere,” Kleinman warned.

As a columnist, I’m grateful City Hall has given me so much to write about. If I were a resident of Dallas, I’d be asking how much more the city is going to cost me and when it will end.

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