The Corps conducted new inspections on the city's Trinity River levees, rating them against an 800-year flood.
The U.S. Army Corps of Engineers told Dallas on Tuesday that the levees are unacceptable and must be repaired.
The Corps is using new standards set in the wake of Hurricane Katrina to evaluate every levee system in the country.
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"Let me be very clear on one thing," Dallas Mayor Tom Leppert said. "If something is confirmed to be unacceptable, we are committed to fixing it."
The Corps identified 34 flaws in the city’s levee system. The list will not be released until the end of the month.
"At its core, the Trinity Project was created to improve the level of flood protection in Dallas, and we are not and will not step down from that commitment," Leppert said.
The failing grade is raising concerns about citizens safety and the future of the Trinity River project.
"I think the mayor wants to whitewash this, and we need to take this to heart and figure out what we can do to improve our levee system," Councilwoman Angela Hunt said.
City officials said it's too early to tell what impact the findings will have on construction of a toll road along the Dallas floodways.
"It is irresponsible for this mayor to continue to pursue the toll road project when it is delaying our city's safety," Hunt said.
Dallas is far from alone when it comes to the unsatisfactory rating. More than 100 other levees throughout the country have failed inspections within the past two years.