The management of the Israel Land Authority (ILA) recently made a wide-ranging decision regulating the issue of reserving and allocating supplementary plots without a tender in urban renewal plans that require state support, with the goal of easing and enabling the advancement of these projects.
The implementation of this decision can be seen in the approval by the ILA's management to allocate a supplementary plot for the urban renewal project "Tirosh Complex" in Nof Hagalil. The plan will include 648 residential units, of which 173 will be exempt from the tender, covering an area of approximately six hectares.
As part of the decision, the authority will allow the allocation of supplementary land without a tender that will have favorable terms for urban renewal developers who meet the required conditions. The area of the land will be limited to one hectare and will be allocated at a significant discount of up to 80% of its value.
As the land manager in extensive areas across the country and as a promoter of planning and increasing the housing supply, the ILA plays a significant role in advancing urban renewal plans in collaboration with the Urban Renewal Authority and local authorities. The ILA operates to allow, subject to the decisions of the Israel Land Council, urban renewal projects that involve land managed by the ILA.
Additionally, the need for early coordination by the project's initiators during the planning stage was emphasized, and the principles and rules to be examined by professional bodies as part of the decision-making process for reserving supplementary land were elaborated upon.
As a general rule, no economic complement will be approved, as stated, without coordination during the planning stage and without the approval of the ILA's management. It was also emphasized that reserving land and not marketing it during the planning stage does not guarantee its allocation without a tender.
At the allocation stage, the process for examining the economic feasibility and the decision on the allocation of supplementary land was regulated. The method of examining economic feasibility and determining the discount rate was clarified, and the principles for examining economic feasibility according to ILA policy were detailed.
It was also determined that when the authority believes that there is no place for allocating supplementary land (due to the project's economic viability), a process was defined in which developers will have the opportunity to present their arguments to the ILA representatives before a decision is made.
In cases where the authority believes that there is a place for allocating supplementary land for the purpose of establishing the project, the developer may – within the framework of the appraisal dispute process regarding the value of the supplementary land – also raise arguments related to the conclusions of the economic feasibility examination due to their impact on the transaction price. The dispute process, as well as the examination of economic feasibility, will be subject to ILA policy.
"These steps will help remove barriers and ensure project feasibility"
Ruth Afriat, Head of ILA’s Business Division, said: "After thorough and extensive preparatory work, we have made an important decision today that provides developers in urban renewal projects with economic and planning certainty through the allocation of supplementary land without a tender, and the prior reservation of plots in cases where state support is required. These steps will help remove barriers and ensure the feasibility of projects, while maintaining planning principles and public interest.
“The Israel Land Authority sees great importance in encouraging urban renewal, alongside the establishment of new residential complexes like the Tirosh Complex in Nof Hagalil, in a manner that serves many purposes, including the addition of residential units while improving land use efficiency, security and safety aspects, and urban and social considerations,” Afriat said. “The authority is committed to promoting urban renewal and will continue to initiate steps to support this."