Gili Melnitzki ,Adi Cohen, themarker.com

Urban renewal Moti Hillerød

The momentum of urban renewal in Israel, especially in projects Pinoi-binoi, helping many residents improve their living standards and upgrading its entire neighborhoods in cities - but the transition to new buildings also embodied particularly high maintenance costs. Those who suffer from it are mostly older residents in lower socioeconomic strata, who cannot afford the heavy monthly expenditure.

The transition of old buildings and new residential buildings are lower and higher, where intelligent maintenance systems and many common areas - causes a jump ongoing maintenance expense. Thus, the old building family paid NIS 50-100 per month in the committees, will have to pay 350-700 shekels a month with the transition to the new apartment building. However, in addition to property tax payments would be higher due to the increased area of ​​the apartment.

These expenses, which may reach thousands of dollars a year, are inconsistent with the economic capacities of many households within the boundaries of urban renewal in cities, neighborhoods are often characterized by a weakened population.

In the absence of a mechanism established will ensure the proper maintenance of the new buildings in the long term, the rage of urban renewal and building high-rise may lead to the exclusion of indigenous population of the neighborhoods renewable - or, alternatively, lead to neglect of maintenance of new buildings and creating death traps made of concrete, which will be the slums of the 21st century.

This issue has been a long time, the Ministries of Justice and Housing and Urban Renewal Authority government, trying to create a mechanism that will exempt the oldest tenants in projects Pinoi-binoi paying to house the first years after receiving the new apartment.

The model tested and promoted urban renewal authority is maintenance of capital fund, established by the entrepreneurs plan for returning tenants, bear the cost of major maintenance and set aside a certain amount Wondered "maintenance of advanced systems in the building. According to the proposed model, the costs imposed on the developers will be included in the calculation to establish the economic foundation of the project in exchange for the developers additional building rights. However, it appears that efforts to promote long-term series in the area fell victim to legal barriers and proprietary, internal politics and drag the feet.

While the state has delayed - it seems that the field has been consolidating independent solutions to the problem. Marker Testing revealed many cases where local authorities, urban renewal administrations, lawyers and even the developers themselves using a solution of a capital fund for building maintenance projects Finoi-binoi standard - and sometimes even set it as a necessary condition to realize Hmizm.al Capital Management beliefs in charge of asset management companies or a lawyer who runs a trust account for up to the building.

Attorney Jesse Ickowicz, head of the office real estate deals Agmon & Co. "Today, more voluntary projects chosen by way of a capital fund that is perceived easier to manage than holding property for the benefit of tenants, which raises questions about how and managing. But even in this path are questions about how the actual exercise of declarations signed on contracts: Who will manage the fund? which channels will be invested funds? Who will oversee the cases in which apartments are sold or rented over the years? what do we do with the sums accumulated over the years the fund when the number of homeowner’s eligible management fees diminishing - and whether it will be required guarantees undertook to ensure sum? "

"Hong Kong's buildings with maintenance of Gaza"

"People do not realize what happens here another 20-30 years," warns Yoram Edison, dealing with the past decade tenants association and representation of urban renewal projects. "There will be an urban jungle: towers like Hong Kong, with maintenance as Gaza. In my view, the tenants and the authorities should require maintenance fund assets from developers as part of TPS - but in the absence of appropriate mechanisms it is delayed more and more, and nobody gives it the knowledge current agreements. It will blow up in our faces. "

Yoseftal Street, Bat Yam Tomer Appelbaum

According to Edison, "prevailing view is that anyone who goes to his apartment Pinoi-binoi won the lottery, but for many it is kicked out of their childhood neighborhood. The fact that they get a new apartment and more expensive does not make them richer, but those who have to deal with heavier expenses".

Tel Aviv municipality gift more than a year the approval of plans Pinoi-binoi contractual liability of entrepreneurs to establish a maintenance fund capital. Fund formation practice constitutes a condition for the approval of occupancy projects, even if it is not possible to order that a maintenance fund as a necessary condition Masterplan.

"The city recognizes regarding capital maintenance fund part of the cost calculation-based developer removal projects and construction in the city - and against the developer will receive building rights to cover this cost," says Rooney Kinsbronr, director of economic planning official municipality of Tel Aviv-Jaffa. "The objective of the fund is to cover the difference between the cost to house the old building and maintenance costs are expected in the future, for a period of 10 years at least - for all the existing apartment owners return to live in the project. Roughly speaking, the developer is required to pay about 25 thousand shekels per apartment" .

The background when explaining Kinsbronr that: "the projects Pinoi-binoi in Tel Aviv, accompanied by a sense of missed opportunity, when on the one hand we encourage urban renewal - and on the other hand, the populations that are part of the urban mosaic - leave".

Municipality Tel Aviv-Jaffa found its own method to deal with the problem, and formulated Appendix engagement between it and the developer. Thus, the agreement obtained by The Marker For example, when dealing with Pinoi-binoi way pilots in the city, said: "It is known entrepreneur and agreed upon the signing of an agreement to ensure the ongoing maintenance of the apartments in the project through pilots in Tel Aviv is a prerequisite for validation program and transferring full amount of money mutual fund capital account is a precondition for the approval of occupancy ".

Urban renewal Bat Yam 

Pilots road project, which will destroy 72 old housing apartments, and instead will be built 280 new housing units, the project developers promising funding of $ 1.7 million - will be used for the maintenance of apartments of 72 landlords evicted. According to the Company's liability, capital fund transfer to an escrow account to be accepted for form 4 (occupancy).

Urban Renewal Administration also Haifa, Jerusalem, Ashdod and Lod report that in recent years, demand for a maintenance fund capital has become a mandatory standard. Also, conversations with entrepreneurs and lawyers representing tenants in urban renewal projects shows that a similar requirement also common compounds Pinoi-binoi Bat Yam, Ramat Gan, Kiryat Ono entered.

For example, Ashdod implemented method similar to that of Tel Aviv, which is considered the principal component of capital maintenance requires economic calculations of such projects. Entrepreneurs are offered against extra costs of building rights or alternatively - Easily betterment levy to be collected for the issuance of project execution, depending on what permitted by law and existing programs. In addition, workers at Ashdod on creating a new standard maintenance consultant's role, which will be part of a team of professional design projects Pinoi-binoi, and will be required to confirm the component maintenance of the buildings and the proposed mechanism to preserve the tenants returning to the project.

Additional tools can be tested in Ashdod and also immediate implementation provisions CBP is reducing the common areas and adaptation projects design requirements for the population, as well as creating a hierarchy of projects and maintaining lower building structures which will return the oldest tenants.

Doron Hazan, Ashdod city engineer, said that the establishment of a capital fund for maintenance necessary "to prevent the marginalization of residents out of renewable residential neighborhoods, or deterioration of the residential buildings in which will harm the quality of life of residents."

Compromise on the size of the apartment in favor of the maintenance

"Entrepreneurs, we understand today if not we will offer a maintenance fund for tenants it will hurt our proposal and weaken us compared to other contractors as maintenance capital offer," says Itay Smadar, vice president of urban renewal in Rothstein Real Estate. Smadar indicates that the Municipality of Lod, for example, require maintenance funding entrepreneurs returning tenants for 10 years. Administration unique model of urban renewal in Lod - budgeted not only by the state, but also by the urban economic society, gives an impact on town planning processes and engaging content approval.

"Today we see tenants willing to give up a few square meters apartment in the future - in exchange for a few more years of maintenance funding. In such cases, we increase their property by 22 square meters instead of 25 square meters, and they receive funding for maintenance in two or three years. It is becoming a standard. "

According to Sebastian Wallerstein, director Hagar at Tel Aviv University, a research and development of social housing, "the problem gets worse as you move away from the areas of demand: We accompany project Pinoi-binoi Acre, or professional advisors acting on our behalf were not helping local people to demand their rights - the last thing they would think about this maintenance issue. the market has not yet settled the situation itself and therefore the state must do so. In the meantime, local authorities find their own solutions because they understand the need, but if the solution is not part of TPS or government decision - will remain entrepreneurs to awaken requirements " Wallerstein says.

"There is no reason to adopt the outline of the capital fund," said Edison. "What the tenants are supposed to do after five years? They get rich all of a sudden. State promotes Pinoi-binoi, but did not find that the management mechanism. I expect from the tax authorities to exempt the assets and income tax them."

Rishon Lezion: Ramat Eliyahu neighborhood Eyal Toueg

"Not enough to build a lobby and gym for tenants'

1. One of the proposals for financing the maintenance costs of the projects is the allocation unit Pinoi-binoi commercial or office complex for the benefit of tenants in rental income will be used for a long-term source of revenue, operating systems will enable the expensive treatment of the building. The main difficulty in this proposal is the regulation of property issues and how to manage this unit and insurance - subject to antagonize handling bodies headed by Einat Gannon, senior vice president of Urban Renewal Authority.

Einat etiquette Emil Salman

Amos Daboosh, vice president of marketing and business development of H. Damari, said: "not enough to build tenants elegant lobby and a fitness center as long as there is a structured process and requires that ensures regular maintenance. Clearly maintenance fund assets create a long-term solution, but there is the question of responsibility. What happens if there is a fire? In whose name the property is registered in common. These data have millions of shekels decision to home - without any mechanism to monitor that. "

"In general, we recommend that you prioritize maintenance capital funds than rental properties," says Einat Ganon, vice president of Governmental Authority for urban renewal. "Economically speaking, there is no difference in returns - but the income property might create proprietary issues, like the issue of registration of the property or income from taxation. Even if we can solve all these legislation - asset financing can be a focus of fights and disagreements between tenants.

"Capital fund should not be consumed if you invest it in safe channels and is constructed to serve as tenants well over 5-10 years, the agreement with the developer. We are working with the banks and the Capital Market Authority to create investment channels dedicated to the same capital reserves - will be tax exempt," added Gannon.

The Justice Ministry said in response: "The issue is relevant not only to the issue of the costs and funding of maintaining high buildings but touches on other matters relating to condominiums tall buildings. Proper treatment of the subject demand’s attention as a model of management and decision-making buildings, setting standards of management and maintenance of proper and question Supervision management and maintenance companies. The Ministry of Justice aims to complete resolution and holistic, thereby correcting the land Law, other solutions are familiar to us are incomplete and legally restricted.

"Legal Advice and Legislation Department at the Ministry of Justice (cluster of real estate), the last year working intensively to promote the issue in question. Regulation of the subject in general involves a comprehensive examination of legal models and alternatives, including an examination type arrangement will be offered, as well as coordination with many other factors. Subsequently, Legal Advice and Legislation Department conducts public participation process and the Table extensive round. After the extraction process of this professional examination and formulating the outline follow - promoted legislative regulation necessary, and that after the new justice minister took office, and in accordance with his instructions. "

Urban Renewal Authority government did not respond. Planning Administration did not respond.

Is emerging: the maintenance costs of developers - part of the calculation-based project

As part of the huge reform in recent months that the leader of the Justice Department in calculating the economic viability of the projects Pinoi-binoi (Standard 21) - maintenance expenses component will first be assimilated economic calculation. This move will allow developers to get additional building rights against the finance maintenance costs, reach new government for approval in the coming months, an amendment to the land.

Carmit Yulis Eyal Toueg

"In recent years, the issue of funding for maintenance has become a widespread requirement and should therefore take her into account as part of the calculation-based developer absorbs costs - to reflect the real economic evaluation of projects," says Chief Government Appraiser, sympathetic eyes. "Depending on the level of maintenance expenditure absorbs the developer, have to worry about higher revenue - whether to increase the building rights or creating more balance economic planning".

Carmit Yulis, Head of Real Estate Ministry of Justice, explains that "the trend of high-rise construction, derived from the policy of increased densities and land resources shortfall, presents new constitutional issues regarding the maintenance and management of buildings. As part of the legislative amendment, we examine the registration form joint houses, the most effective way for them to management and the aspect of maintenance expenses and routine handling them. "

Yulis added that the device update and implementation of its component maintenance expenses necessary to implement the model of maintenance funds - whether in the form of a capital fund if the fund assets. If the proposed amendments are approved - models that impose responsibility for the maintenance of the buildings on the developers are expected to be included in the planning stage, as part of TPS.

So far, only the regular state property tax costs and tax implications. State property tax issue facing local authorities formulated an outline that guarantees discounts for tenant’s veterans upon their return to the new apartment, for five years. Taxation, the tax authority issued a decision in July 2018 that the establishment of capital maintenance fund by the developer to be recognized as payment for returning tenants expenses, will be considered part of the consideration recognized for tax purposes and will exempt from the Fund.