The Marker, Adi Cohen, 27.02.2020

One of the major barriers to implementing construction evacuation projects in recent years is the economic uncertainty regarding the improvement levies on these projects - but the state's first step on the issue is expected soon. The Urban Renewal Authority and the Justice Department are drafting a bill that will improve the levy on construction evacuation projects to a total of 25% of the improvement value, and will not need the approval of the Interior and Housing Ministers.

As part of the new move, a 25% surcharge will be set for all local authorities across the country.However, it will be determined that local authorities will have the option of fixing for some areas in the area a sweeping exemption from the levy levy on the one hand, or a full levy levy (50% of the levy value) on the other. In other words, a local authority may state that for projects in the north of the city, it wants to charge a higher rate of improvement - but in order to do so, it will have to present to the City Council a reasoned policy document that also takes into account the economic benefit of the entrepreneurs operating in its territory.

At present, local authorities are free to determine the improvement leviesfor each project individually, in the range between full exemption and collection of 50% of the improvement value, but this situation causes a great deal of uncertainty among the developers, which is why the collection question is only decided at the end of the planning stages, and fact This could thwart the execution of projects that have already invested a great deal of resources. Therefore, the purpose of the move is to reduce the discretion of the local authorities in determining the level of levies, so that they cannot collect different levies on individual projects - but only on a regional basis, and any such collection should be justified.

Shortening procedures

Haim Avitan, chairman of the governmental renewal authority, told TheMarker: "Today, the law allows local authorities to charge about 50% of project value improvement.However, the authorities can in principle give full exemption from the improvement levy, or alternatively - collect a partial levy of 25% - subject to the approval of the city council and the Minister of Construction and Housing. It is a complex and lengthy procedure, which results in a significant two or three years delay in projects, sometimes causing them to be thwarted. Changing the legislation will change this situation and state that, throughout the country, the authorities will collect 25% of the value of the improvement in municipal renewal projects - without the Minister's approval. For the developers, this can shorten the process by two years. "

Advocate Erez Kaminitz, Deputy Attorney General, first revealed the move in question at the social ranking for urban renewal of citysquare in Tel Aviv on Tuesday (proper disclosure: Haaretz Group is partnering in the venture). "Contrary to today's situation, where the improvement levy is given To the utmost discretion of the local authorities, we are advancing a move to fix the improvement levies on urban renewal projects at 25%. A local authority that wants to collect another amount will have to bind it in advance with a regulated policy, "Kaminitz said.

TheMarker learned that among the government bodies involved - including the Government Renewal Authority, the Ministry of Justice, the Ministry of the Interior, the Ministry of Construction and Housing and the Ministry of Finance - consensus was reached on the proposed legislative amendment, which will be approved by the Minister of Construction and Housing upon the establishment of the next government. In addition, the reform of the legislative framework joins another Justice Department legal process, which is in advanced stages. According to this initiative, the demand for payment of the improvement levy will be known to the project developer as early as the planning process, and not in its later stages as it is currently taking place.The move was agreed by all the government ministries involved.

However, while government ministries are celebrating the process that is shaping up as a solution to the lack of planning certainty in urban renewal projects, the construction industry and local government, they are in no hurry to welcome the move."Construction evacuation projects have problems and complexities that require flexibility - whether it is the level of the improvement levy or the consideration for tenants," says real estate appraiser Arya Camille of Camille Tarshansky Raphael's office."Each project has its own characteristics, and the local authority should be allowed the freedom to make its decisions, otherwise the same definitions can bring projects to a halt and make them uneconomical.

"This was the case, for example, in the Neve Sharet neighborhood of Tel Aviv - the only neighborhood to date to evacuate construction in the city. The municipality came and demanded that the congestion be reduced, and to allow it, she waived the improvement levy. If she did not have the opportunity to grant this specific exemption, The economic viability and feasibility of implementing the project did not exist. "

"A move to stall projects"

Eitan Atia, CEO of the 15th Forum (which brings together the largest cities in Israel), also mentioned Neve Sharet's example of the harsh criticism that he cast during the process: "Sometimes, to drive urban renewal in a neighborhood with low land values ​​- right and justified for the municipality to grant exemption From the levy of praise. However, after a project or two is built in the neighborhood, the value of the land will increase, and so will the need to give benefits to entrepreneurs in the improvement levy to pay. So was Neve Sharett. In order to drive urban renewal in the neighborhood, the municipality granted a five-year exemption. After the first project was established, and the five years were nearing completion, the municipality refused to extend the exemption, as the land values ​​increased in the neighborhood, and there was already economic viability for the projects without giving full or partial relief.

Atia believes that uniform policies should not be adopted even when it comes to complexes or entire neighborhoods: "As a general rule, this move does not mean creating certainty, but sticking to projects. In fact, local authorities have to stop everything and break their heads on fixing individual policies for each neighborhood in their area - "That would put all the evacuation into construction in cities for at least two or three years. You have to understand that more than anything else, the local authorities have a vested interest in promoting urban renewal. If we want to move ahead with it more quickly - stop playing with the legislation and come up with new amendments and proposals every two weeks."