Dallas City Officials Admit Mistakes in $21 Million Building Purchase

Dallas officials owned their mistakes Friday and said the city failed to properly assess the troubled permitting building at 7800 N. Stemmons Freeway before spending $21 million to buy it for a “one-stop shop” for permitting.

The initial report the city relied on was a surface-level review that did not account for major issues in the building, including the plumbing, electrical and HVAC systems. Officials also planned to have 1,400 parking spots and found out later the build could only provide half the number.

Background of the Issue

All of that’s from a report released by City Manager Kimberly Bizor Tolbert Friday, which preempts the city auditor’s investigation expected to be released next week.

The Dallas Morning News revealed last year that the city quietly shuttered the building and asked employees to move back to the Oak Cliff Municipal Center at Jefferson Boulevard, where the permitting office has been based since the 1980s.

Investigation and Findings

The News later reported the building had multiple fire code violations and did not meet the requirements of the city’s permitting regulations. The City Council began investigating the issues. Tolbert prioritized figuring out a solution as part of her 100-day plan when she became the interim city manager.

“For such a large, impactful real estate acquisition, the City failed to be as thorough as it should have been, and did not designate a clear project leader,” Tolbert said in her report, adding that the city did not have a proper process in place to manage large-scale investments of the kind the Stemmons building was supposed to be.

Plans to Move Forward

The city plans to pause real estate acquisitions, unless approved by voters or the City Council. City leaders are going to hire a contractor to help them figure out a master plan to manage the 5,800 properties the city has in its portfolio, according to Tolbert.

Lastly, the city will sell the Stemmons building because it no longer needs it.

New online land management software, DallasNow, will be released on May 5, and all permits, plats, zoning requests and other land use applications will be managed online. The move ends the goal of a one-stop shop for permitting services.

Response to Criticisms

“The concept of a one-stop permitting center was developed during a time when the City’s permitting operations were in crisis and most permitting applications were still submitted on paper. Fortunately, those conditions no longer reflect our current reality,” Tolbert said in the report.

The report identified areas where the city made mistakes. In 2022, city staff did not get disclosures from the seller and engaged JLL, a real estate firm, to perform a surface-level review of the building.

JLL’s review identified nearly $2.6 million in repairs, but none of those needs included “significant deficiencies” in major building systems. Parts of the building were also not compliant with the Americans with Disabilities Act.

Accountability and Next Steps

“This failure to properly evaluate the condition of the building prior to purchase put the City at risk and resulted in wasted taxpayer dollars,” Tolbert said.

The News contacted two officials at JLL but did not immediately hear from them.

The report places blame squarely on former leadership. Former City Manager T.C. Broadnax, assistant city managers Majed Al-Ghafry and Robert Perez, and former building official Andrew Espinoza — who would’ve been in the know about the issues at the building — are no longer with the city.

Conclusion

Since taking the reins of City Hall, Tolbert has made significant changes in the permitting services offered by the city. Planning and building development were put under one roof. The department is also carrying out a major overhaul of old codes and processes that make owning and building real estate convoluted.

The changes have cut the time to process permits for new commercial constructions by 50%.

Frequently Asked Questions

Q: What was the purpose of the $21 million building purchase?

A: The purpose of the $21 million building purchase was to create a “one-stop shop” for permitting services.

Q: What were the major issues with the building?

A: The major issues with the building included plumbing, electrical, and HVAC system problems, as well as non-compliance with the Americans with Disabilities Act.

Q: What is the city planning to do with the building now?

A: The city plans to sell the Stemmons building because it no longer needs it.

Q: What changes has the city made to its permitting services?

A: The city has made significant changes to its permitting services, including putting planning and building development under one roof and overhauling old codes and processes.