Dallas Admits $21 Million Real Estate Failure, Plans to Sell Problematic Building

DALLAS—The City of Dallas acknowledged significant missteps on April 18, 2025, regarding its $21 million purchase of the Stemmons building, originally intended as a “one-stop shop” for permitting services. City officials, including City Manager Kim Tolbert, stated that inadequate assessments led to this costly decision, with issues such as faulty plumbing, electrical, and HVAC systems overlooked during the initial evaluation.

The controversy around the Stemmons building began when it was purchased based on a review that failed to identify major deficiencies. According to Tolbert, city staff conducted only a surface-level inspection before proceeding with the acquisition. “This failure to properly evaluate the condition of the building prior to purchase put the city at risk and resulted in wasted taxpayer dollars,” she explained in a memo released to the city council.

Initial reports indicated the building would accommodate 1,400 parking spaces, a claim that turned out to be overstated as only half that number could be provided. The City Council launched its investigation when the building was found to not meet the standards required under the city’s permitting regulations.

As a consequence of these revelations, Tolbert announced plans to halt any further real estate acquisitions unless they receive voter or council approval. The city is also seeking to hire a contractor to help develop a master plan for managing its extensive portfolio of over 5,800 properties.

Reflecting on the purchase, Tolbert noted, “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.” She emphasized the necessity of establishing proper procedures for managing substantial investments.

In light of the assessment failures, the city plans to sell the Stemmons building. To modernize its permitting process, Dallas will implement new online land management software, called DallasNow, set to go live on May 5. This platform is expected to streamline permit submissions and eliminate the need for a centralized physical location for such services.

Tolbert indicated that the original vision for a one-stop permitting center was conceived during a time when paper submissions dominated city operations. “Fortunately, those conditions no longer reflect our current reality,” she stated.

The city’s expenditure on acquiring and maintaining Stemmons has reached nearly $29 million, increasing at a rate of $73,000 per month. City officials have assessed that bringing the building to a functional state would demand “many millions” more in repairs.

Criticism of the acquisition process has not only come from city management but also from former officials. Majed Al-Ghafry, the former assistant city manager and current DeSoto city manager, has expressed skepticism about the decision to sell, arguing, “There was absolutely nothing wrong with the building other than one elevator that was not working.” He maintained that parking limitations were exaggerated and criticized the characterization of the building’s state as overly dire.

Meanwhile, the political fallout from this debacle is expected to linger, with council members describing it as an embarrassment for the city. The situation underscores the importance of thorough due diligence in municipal real estate transactions, a lesson that city officials outlined as a guiding principle going forward.