The tension in the room was palpable. The CEO of the largest employer (and property tax payer) in town was sitting down with the head of the municipality’s Finance Department. The CEO was flanked by outside counsel and his COO. The Finance Department Director had the mayor’s assistant on one side of her and the city attorney on the other. About a year ago the town informed the company that a citywide property reassessment was underway, that the company’s many buildings and land holdings would be revalued, and their annual property tax bill was likely to increase substantially. Instead of calling to discuss the possibility of an appeal or some kind of exemption for part of the company’s land, the CEO went directly to the newspapers and indicated that the company would move—lock, stock and barrel—if it felt that the revaluation was unfair.
The city issued new tax bills four months ago. The company’s appeal for a reduction in its assessment and tax abatement were both turned down by the Appeals Board. The city assessed the company’s real estate holdings at more than $100 million, a jump of almost 30%, claiming that it had been almost 6 years since the city had undertaken a thorough reassessment of all property. The company’s new tax bill is $350,000—an increase of more than $100,000. The CEO is really angry that the city hasn’t gone out of its way to do everything possible to keep the company happy.
The company employs almost 300 people from all over the metropolitan area, and it would be a major blow to the local economy to lose it. The Governor has called the mayor to make sure that the town was doing everything possible to avoid driving the company out of the state. The Mayor has advised the Finance Department Director to do everything possible to keep the company in town, but understands that the new revaluation has been done “by the book” by one of the country’s leading computer-aided mass appraisal companies and that “special deals” are illegal.
The Finance Director is now thinking long and hard about how to handle this negotiation. What negotiation advice do you have for her? What sort of negotiation strategy (step by step) do you suggest?
Sample of Student Work
The following framing memo is included by permission:
Framing Memo on Scenario #1 by Joe Landis