Will everything be renewed after COVID-19?

How COVID-19 affected urban renewal, and what lies ahead

Life is slowly returning to normal, at least here in Israel, and alongside a measured return to routine, construction projects are returning in force. In the previous year—the “crisis year”—real estate did not suffer a fatal blow, but many major projects and urban-renewal plans were frozen. They are now reawakening, as reflected in publications, banks resuming supplementary financing, and authorities again announcing future development areas.

When discussing urban renewal, it is important to understand the nuances of this integral part of the construction industry. It includes combination transactions, evacuation and reconstruction, TAMA 38 and TAMA 38/2, which are subject to dedicated legislation: the Government Urban Renewal Authority Law, 5776–2016.

Forward-looking planning for urban renewal requires an understanding of several parameters: first, what the term means; second, the law’s limitations and the period allocated to it. In principle, urban renewal is the state’s chosen solution to the housing crisis. Although one might expect every municipality or authority to want to expand the housing supply in its territory and provide modern, high-quality housing with suitable infrastructure and a high standard of living, some local authorities deliberately create obstacles for developers, such as reducing the size of replacement apartments in evacuation and reconstruction projects. Notably, Haifa Municipality’s attempt to reduce replacement-apartment sizes met with a judgment overturning the municipal policy, following a petition brought by petitioners represented by Adv. Uri Shiloh and Adv. (Architect) Lior Datz of “E. Shiloh & Co., Attorneys at Law” .

Even if authorities wish to renew and beautify their cities, that is not the actual purpose of urban-renewal regulations. Take, for example, the National Outline Plan for Strengthening Existing Buildings against Earthquakes, commonly called TAMA 38. Its original purpose is solely to strengthen older buildings and make them safe against future earthquakes—in other words, strengthening, not necessarily beautification or renovation.

Because these projects are generally not profitable as they stand, TAMA 38 permits include various incentives under the Land Law (Strengthening Condominiums against Earthquakes), 5768–2008. For example, in addition to strengthening a building, two further storeys may be added and existing apartments enlarged—an addition of up to 25 square metres is customary but not always possible—including a protected room of 12 square metres gross and 9 square metres net, a balcony and a lift.

Urban renewal also includes evacuation and reconstruction projects based on a government programme to demolish older residential complexes and replace them with new residential buildings. Owners of the old apartments move to alternative accommodation and return to new apartments at no cost to themselves. The programme concerns large urban complexes and requires approval by local and district committees.

Another option for constructing new buildings is known as TAMA 38B. It entails demolishing older buildings considered unsuitable for strengthening and constructing additional space under existing development rights, supplemented by rights granted in a permit under the National Outline Plan for Strengthening Existing Buildings. Here, developers must demonstrate their ability to provide all infrastructure, including additional parking spaces, under difficult conditions.

The thaw in the project market, especially with the return to routine—even a COVID routine—finds the industry in a challenging position. In approximately a year and a half, namely October 2022, the programme in its current form will cease to exist, and urban renewal will have to rely on town planning schemes, which are considerably more cumbersome to approve and implement.

This is precisely the time for developers, contractors and construction companies to make a significant effort to advance projects throughout Israel, particularly in earthquake-prone peripheral areas, for which the programme was established, but also in the centre, where many buildings still urgently need strengthening and the urban environment needs improvement.

Residents, too, should now approach professionals, including a law firm specialising in urban-renewal projects, land, real estate, planning and building, to advance TAMA 38 initiatives in their building or residential complex.

Recent years have shown that residents seeking to improve the quality and appearance of their buildings encounter many technical obstacles, particularly bureaucratic and legal ones. These cause motivation and activity to fade until the project is abandoned. Added to these are business mistakes made with developers and/or construction companies, causing substantial damage to apartment owners and tremendous distress.

To avoid wasting time, energy and money, residents should organise a committee and engage a professional law firm specialising in real estate with a reputation for advising on property transactions. The firm will guide residents through bureaucracy, contractual and legal issues, protecting rights, dealing with developers, the construction company, the financing bank, tax authorities, the local authority and sometimes disputes among residents themselves.

You are welcome to contact “E. Shiloh & Co., Attorneys at Law” for professional assistance from property lawyers with extensive experience advising on urban renewal in Haifa and throughout Israel. The firm’s property, planning and building department works tirelessly on the preparation of outline plans, property contracts, expropriation and betterment proceedings and compensation claims, negotiations with developers and buyers, and rights-registration systems for housing companies, commercial clients and private clients.