Bradford Development Case Study
Executive Summary
Curry Corporation faces the problem in the negotiation regarding the determination of the lump sum amount that the organization should pay to the linkage fund in order to recompense for the impacts of its commercial property development. In fact, one of three alternatives can be adopted to solve the standoff between the municipal government and the Curry Corporation concerning the amount of linkage payment. The alternatives include the following: Curry Corporation agrees to share the linkage payment with the municipal government; Curry Corporation agrees to contribute the full amount to the linkage payment fund that is equal to the estimated impact of its new commercial development; sharing the linkage payment contribution with the developers, who have already build their commercial property. The key decision criteria for assessing the alternatives included the impact on the profitability of the company, the speed of implementing the proposed solution, the impact on future property developments undertaken by the company, and the impact on the competitive position of the company. Based on the analysis, it is recommended for the Curry Corporation to agree to contribute the full amount to the linkage payment fund that is equal to the estimated impact of its new commercial development in order to develop long-lasting relationship with the municipal government.
Problem (Issue) Statement
In this case, the problem is the lack of agreement between the Curry Corporation and the Bradford’s municipality regarding the establishment of a linkage policy. Under the administration of Mayor Fan Sutherland, the municipal government has established a voluntary linkage program, wherein the developers either make a contribution to a housing fund that is equal to their estimated impact that their development would have on the residential market or build a housing. In fact, the Curry Corporation is planning to develop the first major project under Sutherland’s administration – the Randolph Square Building. The problem is that the Curry Corporation does not agree to the voluntary linkage program established by the municipality. Several factors indicate why the lack of agreement between the municipality and the Curry Corporation represents a problem. Actually, other developers are siding with the Curry Corporation in order to maintain its stance regarding refusal to make the volunteer payments. At the same time, the Curry Corporation finds itself in a dilemma, when it takes a hardline stance. For instance, failing to make the linkage payments would mean that the neede permits might be delayed in the administrative appeals in the future. Moreover, the citizens are voicing their concerns regarding the negative impacts of the new developments on affordable housing. For instance, new commercial developments and the resultant employee influx are causing an inflation of the housing market and driving the long-term residents out of the market. Therefore, young people, who have finished college and are returning home, are expressing concerns about the fact that they cannot afford living in their home city. In addition, the waiting lists for the elderly subsidized housing have increased. The schools are also complaining about the fact that they are incapable of recruiting new teachers because of the price inflation of the housing market. The underlying issue represents the amount of the lump sum the Curry Corporation needs to contribute to the linkage fund at present.
The issue mentioned above should be addressed urgently due to the scale of its impacts. Moreover, given the fact that new commercial developers are thronging the Bradford city, it is essential for the disagreement between the municipality and the Curry Corporation to be resolved amicably, since it will serve as a blueprint for the future commercial developments in the city. Additionally, the urgency of the issue stems from the fact that there is an impending city council meeting; thus, the Mayor is under immense pressure to ensure that the issue is resolved in a timely manner. The Curry Corporation needs to address the issue urgently in order to ensure that the approval process is expected to start the project as soon as possible. Therefore, resolving the linkage payment standoff between the municipality and the Curry Corporation is not only an urgent but also an important issue. Actually, the failure to resolve the issue will affect both the municipality and the Curry Corporation. For Curry Corporation, the standoff means dwindling profitability and the lack of competitive advantage. For the municipality, failing to reach a solution translates into lost revenues and dissatisfied customers (in this case, the citizens of Bradford city).
Data Analysis
Numerous factors have caused the problem mentioned above. The first factor that has contributed to the problem is the public resistance towards new commercial developments because of the resultant negative impacts. In fact, the residents have raised concerns regarding the loss of community character and the congestion because of the increasing number of commercial development. In addition, the residents are concerned that that an increase in new commercial developments will fuel the inflation in the residential market because of the influx of employees. Essentially, people are concerned about the negative impacts of new commercial developments on the affordability of housing in the city. While the members of the public are arguing against the development of the novel commercial properties, the developers such as the Curry Corporation are seeing an opportunity to exploit the city regardless of the resultant consequences. The difference in perspectives has played a key role in highlighting the need to establish a formal linkage policy, which has become the root cause of the aforementioned problem. In an attempt to reconcile the two sides, the municipality has proposed the voluntary linkage program, where the developers should make a contribution to the housing fund in the form of an amount sufficient to recompense for the impacts of the development on the residential housing market. Alternatively, the commercial developers would elect to build residential housing. The problem is that the Curry Corporation does not consent to making linkage payments to the housing fund established for the specific purpose. Moreover, various developers support the decision of the Curry Corporation. Therefore, the municipality faces the challenge of reconciling the conflicting needs of the public and the commercial developers, who are keen on exploiting the opportunity offered by Bradford market.
In fact, the issue and potential solutions affect a great number of various stakeholders. Firstly, the identified problem affects the citizens of the Bradford city. The residents are affected in various ways such as experiencing the effects of price inflation in the residential housing market that affects the affordability of housing and facing the effects associated with an influx of employees into the city that causes traffic congestion and increased demand for utilities. The solution to the problem will affect the developers of new commercial properties. The nature of the solution will determine the extent of the additional costs they will incur in order to develop property in Bradford city. Additionally, the solution will determine the attractiveness of the new investments the developers plan to establish in Bradford city. Essentially, the additional burdens will imply lower attractiveness of the planned ventures and vice versa. Moreover, the municipal government is another important stakeholder involved in the problem. In particular, the nature of the decision will determine the level of revenue the government gains from the developers.
Actually, the case presents implicit opportunities and constraints. A notable opportunity in the case is the fact Bradford provides the developers with access to air transportation and a high way. The case also presents an opportunity for the Bradford’s municipal government to gain an additional source of revenue. Despite the opportunities, the case also presents the constraints. In particular, the developers have to take into account the effects of their property developments on the residential markets. Therefore, they have to assess the impacts of their commercial developments prior to proceeding with their projects. Thus, the opportunity provided by Bradford city has limits that the developers must consider. As a result, the municipal government has established a linkage payment fund in order to address this issue, which is increasing the burden for the property developers such as the Curry Corporation, which is interested in investing in the city.
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Key Decision Criteria
When making the decision regarding the solution to the problem, several factors and key decision criteria will be considered. The first important criterion in assessing the alternatives relates to their effect on the profitability of the Curry Corporation. The main reason why the Curry Corporation has chosen to make inroads into the Bradford city is to take advantage of the opportunity in the Bradford’s commercial property market; therefore, this is an important consideration in the negotiation. Additionally, it is evident that the negotiations focus on determining the lump-sum amount the Curry Corporation can pay to the housing fund. Actually, the amount of the lump sum has a direct effect on the costs incurred by the company and its profitability. Thus, financial consideration is the key criterion in the case. The second important criterion that will be considered, when evaluating the alternatives, is the speed of implementing the solution to the issue. For the Curry Corporation, time is of the highest importance because of the need to expedite the project by acquiring the necessary approvals in a timely manner. Any delay in implementing the solution translates to losses in revenue. With respect to this fact, the alternative will be assessed in terms of the degree, to which they cause delays in the commencement of the commercial development project. Another criterion that will be used to assess the alternative propositions during the negotiations is the impact on future project undertakings by the Curry Corporation. The Company is concerned that getting the remaining permit approvals will be challenging without the blessing of the Mayor, which could jeopardize the ability of the Curry Corporation to develop the Randolph Square Building. The fourth criterion that will be used to evaluate the alternatives relates to their impact of the solution on the competitive advantage or disadvantage of the Curry Corporations relative to other property developers, who have already developed their property. In this respect, new commercial developers have expressed concerns regarding the fairness of putting an additional burden on new developers that results in a position of the competitive disadvantage. Briefly, the following are the key criteria for assessing the alternatives.
- The impact on the profitability of the company;
- The speed of implementing the proposed solution;
- The impact on future property developments undertaken by the company;
- The impact on the competitive position of the company.
Alternatives Analysis
One of three alternatives can be adopted in order to solve the standoff between the municipal government and the Curry Corporation concerning the amount of linkage payment. The first alternative entails the Curry Corporation agreeing to share the linkage payment with the municipal government. This is the case of an even-split, where the bargaining zone will be divided equally among the parties in a negotiation (Thompson 70). An even-split will mean that the Curry Corporation will incur a half of the costs, while the municipality will pay the other half of the sum. Actually, the upside of this approach is the fact that it will reduce the costs incurred by the Curry Corporation. However, the municipal government may not be willing to incur such costs since they are not directly involved in the development of the property. Moreover, it is likely that the citizens will not be satisfied with such an arrangement.
The second alternative solution in the case is the agreement of the Curry Corporation to contribute the full amount to the linkage payment fund that is equal to the estimated impacts of its new commercial development. This strategy is akin to building a long-lasting relationship and establishing trust, which is the key aspect of negotiation (Thompson 70). Such an act will also show that the Curry Corporation has a genuine interest in the concerns raised by the municipal government. The benefit of this solution is the development of a lasting relationship between the Curry Corporation and the municipal government, which would result in the mitigation of the administrative appeals for the remaining project permits. In addition, the citizens of Bradford city are less likely to resist this alternative. However, this solution will be costly to the Curry Corporation and will place an additional burden on the organization resulting in competitive disadvantage, when compared to the developers, who have already built their property.
The third alternative for the Curry Corporation is to share the linkage payment contribution with the developers, who have already built property. The negotiators of the Curry Corporation can initiate the fairness principle to argue for a need to share the costs with other existing developers. The negotiators can argue that, if the Curry Corporation contributes to the linkage payment alone, such a situation creates an undue competitive disadvantage relative to the existing developers. Thus, the proposal of the municipality is unfair. However, the alternative will create a level playing ground between the existing and new developers. Table 1 below shows the analysis of the alternatives against the key decision criteria.
|
Key decision criteria |
Alternative 1 |
Alternative 2 |
Alternative 3 |
|
The impact on the profitability of the company |
Not met |
Met |
Not met |
|
The speed of implementing the proposed solution |
Met |
Met |
Not met |
|
The impact on future property developments undertaken by the company |
Not met |
Met |
Not met |
|
The impact on the competitive position of the company |
Not met |
Not met |
Met |
Recommendations
Based on the analysis of the proposed alternatives presented in Table 1, the second alternative is recommended, which entails the agreement of the Curry Corporation to contribute the full amount to the linkage payment fund that is equal to the estimated impact of its new commercial development in order to develop a long-lasting relationship with the municipal government. Under this alternative, the future projects planned by the company are not jeopardized, since the emphasis is placed on building long-term relationships with the municipal government that will eliminate the administrative appeals for the permits for future projects.
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Action and Implementation Plan
During the negotiation, the Curry Corporation can agree to make a linkage payment that is equal to the estimated impact on the residential market. Such a decision will mean that the approval of the project commencement will be expedited. The actual implementation of the project can follow the solution. The administrative hurdles will also be eliminated, which means that the remaining permits will be issued with minimal problems.
