Development fees could skyrocket in Dallas

The development boom in Dallas could take a hit in light of additional development fees on the horizon.

Dallas City Council will soon consider a proposal to amend and add fees tied to permitting, engineering and inspections, which could take effect as soon as May 1, the Dallas Morning News reported. 

Slated for discussion on March 27, these added fees could mark a drastic increase, with some set to surge 2,400 percent on certain projects.

The proposed fee hikes, designed to fill a budget shortfall of more than $20 million in the city’s development services department, have sparked concerns among residential and commercial builders. Many fear that the increased costs will exacerbate the already soaring real estate prices in Dallas, making housing even more expensive.

While certain services will see fee reductions under the new system, the majority are set to skyrocket by double and triple-digit percentages. The department also plans to start charging for services that were previously provided for free.

The last adjustment to permitting fees occurred nearly a decade ago, in 2015, prompting officials to reevaluate the city’s fee structure.

“It’s a long time, and shame on us for not doing a better job of staying on top of that,” Andrew Espinoza, director and chief building official of the development services department, said. “There was a need to take a good, hard look at our model and see if it was sustainable.”

A fee study revealed that revenue stemming from the development services department only covers 55 percent of its $50 million annual costs, with the city subsidizing the remainder.

Potential implementation of the new fee schedule has garnered mixed reactions. Private sector stakeholders, including the Dallas Builders Association and The Real Estate Council, have expressed concerns over the suddenness and magnitude of the fee increases. However, the department emphasized the urgency of the situation, citing a loss of $1.8 million in revenue for every month of delay, the outlet reported.

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Two options are on the table for the city council: immediate implementation starting May 1, projected to generate $8.5 million in additional revenue this year, or a phased rollout with builders paying 50 percent of the new fees on May 1 and the full amount on July 1, yielding $6.8 million in extra revenue.

Despite the challenges posed by the fee hikes, stakeholders remain cautiously optimistic about city leaders’ efforts to address long-standing issues within the department. Initiatives such as transitioning to a fully online plan review submission process aim to streamline operations and improve efficiency.

—Quinn Donoghue