October 6, 2021

Municipalities oppose building homes on land zoned for offices

Globes, Guy Nardi, 06.10.2021

A bill to convert employment zones to residential zones, which was approved in the first reading of the Economics Arrangements Bill and discussed earlier this week by the Knesset Internal Affairs and Environment Committee, has raised opposition among professionals and local authorities. The first operational step proposed by the Ministry of Finance establishing a National Planning and Building Council subcommittee whose role would be to approve initiatives for detailed plans to convert employment zones (30% of each plot) to residential zones. The move addresses claims that there is a surplus of employment zones and a shortage of land for housing construction.

Opponents, however, argue that the initiative will only create chaos in planning, and will further raise housing prices. According to architect Tzachi Katz, chairman of the Israel Association of Municipal Engineers and Modiin Municipal Engineer, "The legislature comes in and essentially uses the law to create a plan - not tools for planning - that goes over the heads of the local committees who are the experts for their cities. I've had conversations with city engineers from both the central and outlying regions, who say that approving this bill would plant the seeds for fascistic planning. If it's approved, I don't know what will happen next."

The Planning Price: Where are public spaces?

Katz and others also complain about the damage done to proper planning. "In recent years, planning in Israel has suffered from over-legislation and reforms. Amendment 101 was enacted in 2014, and today there are already 128 amendments, and more on the way. I think it signals chaos in the area of planning. This amendment is a bunch of words written by economists and legal advisers, without any involvement by planning professionals, as if economic viability was the only component in planning considerations. No one’s discussing the fact that planning for public spaces in employment zones is completely different from zones planned for mixed use (residential, commercial, and employment). Where are the public spaces? Where are the cultural places? There are completely different considerations regarding streets, transportation, pedestrians when it comes to employment zones. In the end, we'll get poor quality, worthless results, which is why we've standing up and shouting out."

According to Tel Aviv-Yafo Municipal Engineer architect Udi Carmeli, "The main problem today in planning and construction in the State of Israel, and the main reason for all the bureaucracy, is because of the patchwork of quick fixes that the Planning and Construction Law creates through permits. Converting residential employment is great, but should be planned. We're not rejecting the idea, just the way it's being done. You shouldn’t plan via permit. They’re granting licenses by using permits. During the Internal Affairs Committee discussion at the Knesset, I was the only planner to speak on the subject. Even the Israel Planning Authority (IPA) wasn't there. This is a red flag and we're saying 'Stop.'"

The Economic Cost: "Prices will skyrocket"

According to Ramat Hasharon Mayor Avi Gruber, "It's not that they came up with something revolutionary. The point is, how should it be done. They find an area planned as an employment zone, and say it's possible to submit a form to a committee, and add housing. What happens next? Exactly what happened with National Outline Plan (TAMA) 38. The real estate market will get stuck completely, because everyone will wait to see what rights they can get. During those years, demand will continue and prices will skyrocket."

"Certainty is the problem with today's market, and every contractor will testify to that," adds Carmeli. "What’s happening in Israel is that contractors enter into projects, buy land, but don't know what they'll get out of it. These unknowns clearly play a part in the housing price rise. This legislation is a temporary measure that says, 'I can't refuse any request from the Authority, even if it's bad one.' It means clashes with the appeals committees. This legislation is just an opening shot. The legislature will never be able to create certainty in planning through legislation. It's doomed to fail."

The Failure in Logic: "Employment Is Blowing Up"

Carmeli rejects the Ministry of Finance's starting point: that there is a large surplus of employment zones, and therefore some can be converted to residential. "They've made a total mess. The Planning Authority ran a crazy project that counted potential employment and came up with insane numbers, but they didn’t do it right. In planning, you never accomplish one hundred percent. It’s much more difficult to initiate employment construction projects than residential. You need a large planning portfolio before you can begin. The Ministry of Finance understands this but ignores it. As if this will save them from the housing crisis. Employment in Tel Aviv today is blowing up. You can’t find a vacant office space. So, is damaging this situation what the Ministry of Finance - which likes economic growth and a thriving local high-tech industry - wants to do?"

Adv. Eitan Atia, CEO of Forum 15 - The Israeli Forum of Self-Government Cities, notes that the ongoing argument about the housing shortage in Israel is invalid. "There’s a team at the Ministry of Finance that still thinks the right way to deal with the problem of insufficient construction in Israel is to bend the planning rules. Look at the numbers and you see that over 140,000 housing units were approved in the past year. The year before, 130,000 housing units were approved. How many were built? Not even 50,000 each year. In other words, there are hundreds of thousands of housing units approved on paper, but in practice, there’s no one to build them. Instead of taking care of it and bringing over more workers, and creating better productivity, they invent workarounds."

All the interviewees for this article were puzzled by the Planning Authority's approach to the Ministry of Finance's proposal. Atia claims their silence and disregard is intentional "Planning Authority representatives were purposely absent from the Internal Affairs Committee deliberations. They don’t like this thing. They don’t identify with the Ministry of Finance’s irrational statements regarding excess employment zones and the housing shortage. Absolutely. They sent Adv. Benny Arbiv to say whether it is legal or illegal. Why didn’t the chairman of the Tel Aviv District Committee come to the hearing to say there is an excess of employment zones? She didn’t come because she’s embarrassed to show up, in the face of the Ministry of Finance's delusional allegations. "

Adv. Shlomi Heisler, chairman of the National Planning Headquarters, is not indifferent to the allegations made by local government officials. "The Minister of the Interior is trying to maintain the delicate balance between reinforcing the local authorities, which is her agenda, and, on the other hand, freeing the State from irrelevant considerations on promoting residential construction. There is an understanding now that our biggest crisis is housing and the need to provide quick solutions."

Heisler is unmoved by the data presented to the Interior Committee by Haim Bibas, Chairman of the Federation of Local Authorities in Israel, according to which there is no shortage of planned housing units. "There is a shortage of available housing units. In the end, if there were lots of apartments, prices would go down. We’re talking about planned inventory versus available inventory. No one thinks that this (employment zone conversions) is the ultimate solution. We need to release as many available housing units as possible, not just planned ones. This is exactly the same discussion: urban redevelopment or preferred housing done on open spaces. Clearly, quality redevelopment is preferable, but that takes years. Alongside these big projects, we need available inventory. Converting employment structures to residential is a fast solution that can be done immediately."

Heisler rejects the claim that the bill for conversion of employment buildings to residential contradicts the Planning Authority’s concept. "It isn't a conflict between the Planning Authority and the National Council for Planning and Construction. Rather, this is an internal struggle at the Planning Authority. It's an innate conflict between the ideal of planning and the desire to provide an immediate solution and issue as many units as possible. These temporary solutions sometimes deviate from the mean. According to our data, there is an insane surplus of employment space and an insane lack of available housing. It's not so terrible to turn a minus into a plus. That’s what we say. You can’t have holistic, optimal planning at every moment in a nation’s existence."

The Ministry of Finance did not respond to the requests for comment from Globes.

Published by Globes, Israel business news - en.globes.co.il - on October 6, 2021