Running Head: Public Administration and Organizational Interactions
The public administration at the city level comes up with policies to govern the municipality. They are also responsible for implementing the policies distinct to the city/town and those set by the higher bodies of the government (Poister and Streib, 1999). Therefore, it is within their mandate to determine the business activities to take place in the city. They are referred to as the municipal government and responsible for granting permission to any private corporation wishing to venture its business in the city. However, many private corporations demand a reward for operating in the city. This is because the municipal government is the long-term beneficiaries of their operations. Some corporations may demand a tax-cut, improvement of the areas’ infrastructure or cash payments. The question as to whether the municipal governments should concede to the demands of the corporations, and if the long-term benefits are worth the compromise arises.
Several corporations have received concessions from the municipality they operate in which has ranged from tax-breaks to Tax Increment Financing. They have in turn operated on lower costs than they would have if they financed the operations fully.
Despite the threat of going bankrupt, General Motors has demanded that the government through the New York City governance should finance its projects. Under normal circumstances, a corporate body cannot receive funding or a loan when going bankrupt. However, general motors forced the government to concede to their demands of funding that was availed to them (Vlasic and Bunkley, 2009). In the same period, they put pressure on the United Auto Workers to purchase their stock of a substantial amount. Vlasic and Bunkley, (2009) stated that, “… is pressing the U.A.W to accept stock for as much as 50 percent of fits next contribution to the trust …”. These demands were met in order to secure their operations and prevent it from going bankrupt. The government gave in to the concessions with the hope of having the long-term benefit.
Similarly, Chicago cautioned its city union to give in to concessions to allow the development of the region. O’Neil, (2010) stated that, “Just remind him that malls are planned and built by mall developers… they need to be fair.” They were pressured to allow the developers to build in Chicago at fair subsidies so that they could provide services and increase revenue inform of taxes as a long-term benefit. The city government was required to use the Tax Increment Financing to help the developers with the hope that they would cover-up the expenses in future, as they enjoy the benefits. They also enhanced the public transport sector since it is very important to lifting the region (O’Neil, 2010). These were demands made by the potential businesspeople and received overwhelming back up from the city residents.
According to Farrington, (2010), “a win-win negotiation can only be achieved if both parties are prepared to concede some of their ‘would like to have’ in favor of preserving their ‘must haves.” For development to be effective, the parties demanding concessions must also be able to concede to some of the demands made by the other party. This is to ensure the contract favors all the parties. Failure to concede will benefit one party at the expense of the other. Where all the parties are in agreement with the proposed concessions, it becomes an appropriate course of action. For instance, a company intending to develop a place cannot demand that the city government waive their taxes, improve the roads and give them cash rewards at the same time. This will be too tasking on one side, thus inappropriate. The corporation and the city government should also consider the needs of the residents of the city when making the concessions. For instance, a company that demands the evacuation of citizens from their place of residence is not justifiable. This is however an appropriate course of action where the residents are evacuated in order to save the environment from further harm.
The repercussions of a city government giving or denying the developers concessions are evident. Chicago’s failure to give in to the city developers demands resulted in an under-developed state. They lagged behind for fear that the municipal would not recover the expenses. There was also so much pressure from the residents to give in to the demands (O’Neil, 2010). On the other hand, the city of New York benefited from conceding to some of the demands by the General motors. This is because they attracted many investors and revenue, thus, increased taxes for the city in future. However, in both cases, the cities had to forego financial benefit for presumed long-term benefits. The failure to concede led to Chicago suffering future financial strains.
Concessions are positive since they encourage companies to invest in particular regions. They also boost the private sector, which may not easily access direct funding from the city government. However, the potential businesses must obtain authorization from the city government before setting up and commencing operations. This is because the cities/towns are controlled by the government through the municipal administration. However, the demands made by the investors may be extreme. They may require the city government to vacate residents of a particular area for them to operate on. This becomes tricky since the government is supposed to protect its people. They should evaluate the intended benefits to the city in future and the cost of granting the investors the concessions. Under all circumstances, the costs should not outweigh the benefits.
Bunkley, N, & Vlasic, B. (2009). Union Talks Seen as Key as G.M. Makes Case for Funds. New York Times. Retrieved from www.nytimes.com.
Farrington, J., (2010). Negotiation – The Importance of Trading Concessions. Communications – Negotiating. Retrieved from www.salesopedia.com/…/1187-
O’Neil, K., (2010). Chicago Chambers: Union Should Give Concessions to Restore Service. Add Jobs. Retrieved From www.chicagonow.com/