Globes, Eric Mirowski, 10.02.2020

The Ministry of Justice opposes the Urban Renewal Authority's initiative to limit the proceeds received by tenants for evacuation construction projects to a 12-square-meter area only. A senior Justice Ministry spokesman with Globes said that limiting the consideration areas received by tenants participating in a construction evacuation project is improper action, Which could adversely affect the promotion of such projects and the tenants 'property rights, the senior official said, "thus putting certainty into the entrepreneurial world, at the expense of tenants' property rights."

The Ministry of Justice sees itself as a party to the matter, as those who are responsible for drafting and complying with state law, and for that matter - as those who accompany the issue from the face of proprietary rights.

The Municipal Renewal Authority's position on limiting compensation has recently been sent to a number of bodies, including municipal renewal planning and administration committees scattered throughout many cities in Israel.

Last week, "Globes" revealed a document, which states, among other things, that the appropriate consideration for apartment owners in construction evacuation projects is new apartments with a large area of ​​12 square meters (additional room / m2 area) of the original apartment space , except in cases These are small apartments. In the case of small apartments, the appropriate addition should reach 25 square meters.

The footnote that has become the standard in the market

In recent years, the market has ruled that the addition of 25 square meters to the apartment is a standard. How did this happen? In 2012, the Ministry of Justice of the Ministry of Justice issued a standard under the title "Standard 21". This is a standard designed to introduce uniformity in the appraisers who accompany construction projects. This includes, among other things, a decision to impose better levies on developers who can reach tens of millions of shekels in the project.

The standard is intended to help the district planning and building committees estimate, by uniform standards, the economic viability of urban renewal projects - and thus understand whether projects can be crowded, or vice versa - detracting from housing units.

In addition, the Standard sought to set permits for tenants. Page 9 of the Standard states that "as a general rule, the reasonable consideration for the owner of the apartment is a new apartment and covers all the costs involved in the evacuation. As a general rule, the new apartment will include an additional room, a room and a balcony as defined in the Planning and Building Regulations or a similar scope as well as parking according to the standard". The footnote to the same section states that "the usual is an area of ​​approximately 25 square meters which will be reflected in an additional room / room or similar area".

Indeed, construction evacuation projects line up based on the same footnote, in a way that was convenient for almost everyone: the district planning and construction committees, the local authorities, and entrepreneurs.

But the 25 sq. M was never a binding number. "The 25 sq. Meter leveled off because of the same footnote, but we don't accept that it's standard," a senior Justice Department official said. "We also do not accept the current position, that the addition to the apartment should be 12 square meters. This is something that must be accepted between the tenants and the developer, and it depends on the project.

There are projects that are more possible and there are fewer, and the entrepreneur needs to know what he can give. Recently, a draft was updated to update the appraiser standard, where the government appraiser wrote that the consideration should be between 12 and 25 square meters. Therefore, it is unacceptable for us to order a market that should drop to 12 square meters. We are not there. "

"Why not allow an additional 30 square meters?"

The same adds: "We understand that some of the difficulties of urban renewal projects are due to developers' uncertainty. The rules are not clear enough, the planning is unknown, and it is difficult for developers to secure tenants before a plan is approved and they sign project approvals. , Where they know better to say what they can give their tenants.

On the other hand, it is the rights of the tenants. And if the design approves 24 square meters or 30 square meters, and that the project will meet the required density - then why limit it to 12 square meters? "

According to him, the Justice Ministry is closely following the conduct of several local authorities, which in recent months have announced a similar policy of providing 12 sq.m. (under different conditions) for construction evacuation projects. This is Tel Aviv, Petah Tikva and Netanya.

"With all due respect, if you have projects that give you more rights, then why should the developer enjoy it and not the tenant? This is something of a legal situation. This creates a place where the certainty for the developer will be realized at the expense of the tenant's ability to exercise his rights," explains the source.

Government Response to Urban Renewal: "As clarified in the document passed, the purpose of disseminating the government's urban renewal position is to create a clear and uniform standard. This does not replace the relevant parties.

Moreover, entrepreneurs whose profitability will allow greater rewards are welcome to do so, since the government's desire is to bring more projects to fruition and create certainty in the field. "

Market Concerns: "Reducing Compensation for Tenants to Slow Projects"

Real estate market officials warn of the move to reduce the 12-square-foot proceeds. Eli Abyssror, CEO of Abyssror Moshe & Sons, who also serves as chairman of the Negev & WC Contractors Association and the president of the Israeli Builders Association, warns that a 12 sqm payout may prove to be unattractive. , Tedious and cumbersome, especially negotiations with tenants. Reducing the proceeds will significantly slow down the rate of transactions in construction evacuation plans. 12 sqm is not a tempting consideration, and the tenants will not agree to it. This will lower tenants' motivation and weaken the volume of transactions. "

Radco's Director of Urban Renewal from Raphaeli Group, Nana Chen, argues that the frequent policy changes in construction evacuation programs create shakiness, which creates uncertainty among tenants and entrepreneurs. "While the National Urban Renewal Authority's document is trying to create certainty, the projects that are already forgotten should not be forgotten. Signed, "says Chen." A transitional period must be produced that will not harm our obligations to the developers in front of the tenants. My recommendation for tenants is unequivocal - go ahead with signing contracts as quickly as possible, because beyond the decision of the Urban Renewal Authority, the authorities are already talking in the rooms about the next step: not allow permutations at all except for balconies. "

Attorney Elder Adato, a partner and head of the real estate department at Barnea Jaffe Land & Co., explains that standard 21 in its remake, which states 20% profit - is not always applicable. "The new policy document refers to Standard 21, which is already in its new format that sets a minimum threshold of 20% profit that is not relevant. A large majority of construction evacuation projects do not reach the minimum level of profitability. These projects, although not reaching the minimum profitability set in the standard, are approved for escrow. By the banks, and getting financing. "

He said reducing the payoffs was another decrease in entrepreneurial profit, which would jeopardize the promotion of projects in the field."Reducing the payoff indicates a clear direction, and is a zero-payer for future evacuation deals. Tenants in these projects must realize that what was previously non-existent today, and certainly not in the future. Today's deals should be promoted and not wait for future fantasies."

*** Full disclosure: Alona Bar On, co-owner and chairman of the "Globes" board of directors, also serves as chairman of "House and Roof", an entrepreneurial fund for urban renewal.