It seems to me that cities, by and large just have it all wrong when they are doing development deals - or at leas the city I live in has it all wrong. If you are selling something you have one of then you are usually looking to maximize your gain in a one shot deal which means pick the highest price you can while ensuring there is still a least on customer. But if you are buying something then you are usually looking to minimize your outlay which means paying the lowest amount possible. How do you do that? Well by ensuring there are multiple sellers with product and let them compete.

But it seems to me that my City, and possibly others, always treat their real-estate like they are selling something (land) instead of buying something (development investment within their City walls). As such they are too often happy to enter into deals where there is only one developer involved. When others drop out because the cost is too high to make the deal that seems to be favorable. In the end they are left dealing with just one developer who can screw them over any number of ways because they are the only one at the table.

If they instead approach it as buying something they will have a vested interest in getting as many sellers out there and have them all compete to produce the best project for the least cost. This would also seem to indicate that development projects should have City investment involved - it is not a bad thing - and that community should have strong buy in to evaluate the best development proposal and what it brings the City. A developer who says "I don't need your investment" is saying "just give me the damn land already" and "I don't need your investment to help me figure out how to make the most money from your land". I.e. City's should find developers who will be partners in developing a city and have a vested interest in its improvement and the happiness of its people.

Furthermore I think that if a development project only gets one bid, or qualified bid, then it probably means the project was badly defined, or that the economic conditions are not suitable for pursuing that development. If either of those is the case then you probably shouldn't proceed - just wait. When there are multiple developers lining up to bid for your land and grants then that is when you'll get the highest and finest developments, and that is when you'll be able to extract the maximum leverage for improvements in the interests of we the people and not corporate profit making.

Remember that monocultures are almost always bad so a City that can only do a deal with a single developer is doing itself and its people a grave disservice. Free markets only work when there is an actual "market" - if there is only one seller then caveat emptor!

Labels: development, politics