Dallas has suspended all upcoming real estate transactions following a series of expensive mistakes.. The latest error was the failed acquisition of an office tower on North Stemmons Freeway near the 1600 block. City officials purchased the 11-story, 228,000-square-foot building at 7800 N. Stemmons in 2022 for $14.1 million. The building is intended to serve as a central permitting hub. Despite investing millions in renovations and relocating some staff by the 2023 fiscal year, City Manager Kimberly Bizor Tolbert revealed that the move did not comply with Dallas’ permitting procedures.
Tolbert, interim city manager as of May 2024, had already taken action before her official appointment. She instructed the staff to leave the premises and head back to the Oak Cliff Municipal Center. This was outlined as a top priority in her 100-day transition plan. The Dallas Economic Development Corporation will conduct a comprehensive building assessment, and the city auditor will initiate an audit.
A memo from Tolbert to the mayor and city council explicitly stated that all real estate acquisitions are suspended unless previously approved by voters or the city council. Dallas will engage local real estate firm CBRE to assess surplus properties and assist with asset monetization projects. CBRE will also help the city develop new policies, evaluate staffing and infrastructure needs, and recommend technology improvements.
With the launch of Dallas Now, a new online permitting system on May 5, the concept of a centralized permitting center is no longer viable. Instead, Dallas plans to sell the Stemmons Freeway property for redevelopment rather than invest further in renovations.
Tolbert expressed that the city performed only minimal due diligence during the process of acquiring the building. There were no disclosures from the seller, and JLL, the broker hired for inspection, provided an insufficient assessment. Their report identified $1.2 million in immediate repairs and $1.4 million in long-term fixes but overlooked significant issues with HVAC, electrical, plumbing, ADA compliance, and parking—500 spaces short of the required 1,400.
Describing the purchase as “unwise and poorly considered,” Tolbert noted there was no established process or clear project leadership. By August 2024, she plans to establish a new department dedicated to overseeing the city’s real estate and facilities. Dallas has invested around $29 million in the Stemmons Freeway building so far, which includes the cost of purchasing the property. Additional funds will be needed to bring the property up to code. The city is shelling out approximately $73,000 each month to keep the vacant site up and running, ensuring both maintenance and security are covered.
Tolbert acknowledged the lack of due diligence: “That facility turned out to be much worse than we realized, and we are essentially left with a property that should have undergone thorough due diligence. The most responsible course is to sell this site and focus on recovery.”
Earlier this year, Dallas invested $6.5 million in the former University General Hospital near Kiest Park, aiming to turn it into housing for the homeless. Months later, the property is still sitting unused, adding to the city’s ongoing real estate troubles in the Metroplex.
Officials are now considering selling it.
In February 2022, Dallas allocated $5 million for a motel located at 2929 S. Hampton Road with plans to transform it into a homeless shelter. However, the site was never developed for this purpose, and the city is now exploring options to either convert it into a fire station or put it up for sale.
Council Member Cara Mendelsohn recently voiced her dissatisfaction, highlighting the errors in real estate acquisitions made by the council. Council Member Cara Mendelsohn said, “Until these issues are resolved, I cannot support buying any new property”
Council Member Paula Blackmon emphasized the zoning complexities tied to redeveloping these sites. Meanwhile, Assistant City Manager Donzell Gipson conceded that fresh directives are needed and will be managed by external consultants.
Council Member Chad West commented: “We should reconsider the city’s involvement in new real estate acquisitions.” He emphasized the need for best practices and professional expertise to ensure accountability moving forward.
Despite ongoing challenges, West is hopeful that new leadership will address these issues. “These examples demonstrate what has not worked and why we must avoid repeating these mistakes.”
City Manager Tolbert plans to enlist external consultants to develop a comprehensive real estate strategy, underscoring the city’s commitment to improving its real estate policies. By incorporating expert insights and tailored solutions, city leaders are focused on fostering economic stability and ensuring sustainable growth.