Last update - 00:00 31/12/2007
A second life for central Israel
By Guy Lieberman
The public believes it will raise the standard of living. The surge in land prices and vanishing supply of land available for development led the real estate barons to appreciate its charms. The local authorities seem to have grasped the point, too.
Pinui-binui, a plan sweeping the nation, means the demolition of shabby old neighborhoods and construction of shiny - and higher - new ones in their stead. It's urban renewal, and in 2008 it will probably move from the boardroom to the ground.
The 270 families that recently moved into new buildings in Kiryat Ono, constructed by Maslavi Construction Company on land freed of old public housing buildings, are the first harbinger of a wave of urban renewal plans sweeping Israel. There are 107 such programs in the planning process, according to Ministry of Construction and Housing records. Aside from these, dozens of tenant groups are forming to promote urban renewal in their areas, seeing it as a win-win proposition.
It seems the time has come for action, after years of nothing but talk. In Givatayim, the companies Mishab and Mivnei Oferim are marketing apartments that will replace old public housing on Arvei Hanahal Street. In Kfar Sava, all the occupants have left a city center site being developed by Maslavi, and on Givati Street in Rishon Letzion, the Dunietz Brothers corporation has received a building permit for their share of a broad urban renewal project expected to start soon.
What changed? Raul Srugo, president of the Association of Contractors and Builders in Israel, says one answer lies in the spiraling land prices.
"The rising price of land made projects that hadn't been economically feasible in the past feasible now," he explains. A second reason is natural maturation of projects, he adds. "A lot of projects the media talk about now didn't start yesterday. Many of them began in 2001 and 2002, after the Housing Ministry declared areas of urban renewal in several cities, and following the Rabinovitz Committee in November 2001, which recommended tax breaks," Srugo says.
Oded Israeli, a lawyer involved in several projects, including the Weizmann construction project in Herzliya, owned by Shari Arison, suggests a third reason. He calls it a "social tsunami." Urban renewal is actually a reform, he explains. It causes social change by doubling the family's equity. For most families living in the areas marked for renewal, an apartment is their main asset. Thanks to urban renewal, the value of their asset doubles. "That's a social change that not everybody understands," Israeli says.
Makeovers and mules
The Housing Ministry and architect Sophia Eldar, who chairs the interministerial committee on urban renewal, welcome the trend, says Israeli. But the projects that make it sprang up from the grassroots, propelled by the tenants themselves. "Then they feel more committed," he explains.
But it's the entry of big business into urban renewal that really marks the turning point: no more individual spasms here and there, but a wide-ranging change. A month ago, hundreds of tenants in Herzliya, in a housing project owned by Shari Arison, decided to pursue urban renewal in the Weizmann Project, near the Seven Stars Mall. The construction companies Rassco, Ashdar and Minrav - all major players - had vied for the contract, but lost to Arison.
Another urban renewal project, in Tel Aviv's Neve Sharet, will be built by Direct Capital, Electra Investments and LGS. Itamar Prashkovsky of Direct Capital says the involvement of the big companies was to be expected. His company works a great deal in Tel Aviv, where there is basically no land to be had, he explains. "There are no lots appropriate for big projects. One way to 'create' land is urban renewal."
In the case of Neve Sharet, says Prashkovsky, the land has vast potential. "This is an area in close proximity to Tzahala and Ramat Hahayal. It's an area where prices are high and there's no reason for the residents of Neve Sharet not to receive the same high prices," he says.
Doron Ariel, a lawyer, is presently involved in three renewal projects in central Israel and clarifies a point about how sites are chosen: The classic combination for an urban renewal site is low occupancy and high land prices. Where a three-floor edifice with six apartments stood, a tower can be built. The trick is to get the occupants on board, and media exposure helps.
"The more people hear about projects like these in the media, the better they understand that the process is doable. But you'll always find intractable occupants who hold up the process," Srugo said.
Srugo lists three main types of mulish tenants who gum up the works: "There are the extortionists, who want more than the entrepreneur can offer. Take a guy who says he wants to get two apartments in exchange for his single one, or he won't sign. Why? Just because.
"Then there are the apathetic ones, who don't believe the project will ever happen and won't even talk with you until everybody else has signed. They are relatively easy to handle.
"Then there's the third group. They really would cooperate, but can't because of legal problems, such as inheritance issues and divorces," he says.
In short, to make an urban-renewal project work, says Srugo, the entrepreneur needs a team that includes an assessor, an architect, a lawyer and a psychologist. It isn't easy.
Also, the local authorities are crucial to a project's success, but not all of them realize just how important urban renewal is.
"The local authorities have yet to grasp the real contribution that these projects make to a city," complains Srugo. "Where are there other projects in which the state and city invest not one shekel, but get so much in return? Along comes a builder, who takes an old neighborhood and gives it a complete makeover. I'm talking about bringing in younger populations, improving the infrastructure, bringing in strong communities, solving problems of parking and reinforcement" - including bomb shelters and reinforced. "All these contribute to the city. Yet a lot of local authorities still don't help advance the issue."
Dori Shirazi of NAM-5, which is building NAM Tower in Tel Aviv's Treetops Park, thinks that, if anything, the cities should not only refrain from creating obstacles, they should fast-track urban renewal projects. There are tax breaks available, but the whole process takes much too long to reach approval, he feels, which deters major players from getting in the game. And that's a pity, Shirazi says: Urban renewal is good for everyone and has so much to offer. It's a win-win proposition.