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Held hostage in the capital By Ranit Nahum-Halevy Tags: Jerusalem, property market  Potholes, blocked sidewalks, construction everywhere, barricades. People and cars winding their way through the mess. Welcome to the center of Jerusalem. The rest of the city is clearly undergoing a boom in development that is designed to usher - actually, urge - the capital of Israel into the third millennium, but the plans for the downtown area are facing an obstacle or two. One is protected tenants running businesses out of various holes-in-the-wall, who demand exorbitant sums to leave. This is a problem in many cities, but it's especially acute in Jerusalem. These tenants or their parents bought the stores in the 1950s and 1960s, and today run their shoe-repair shops or bulk-noodle stores on sites worth millions of dollars. Thus next to some glittering chain leasing space for $100 per square meters, and investing millions in store design, you get a shop of similar size paying NIS 500 - and that's not per meter, that's for the whole place. Advertisement You can't mistake these stores. They look like they're out of a movie about the 1950s. Next to a shiny Castro, Golf or Fox outlet you see a pole from which hang nightgowns and NIS-10 undershirts, or a grimy metalwork shop showcasing a broken-down hot-water boiler, with a mess of tar affixing it to the ground. Or a locksmith or a backgammon club. Until half a year ago Nahalat Shiva Street featured a ceramicist making clay pots for a throwback era. What can the city do? Shneor Simcha, 57, a seventh-generation Jerusalemite, owns 3,000 square meters marked for development in the Davidka Square area. "We have 20 protected tenants, old people who brought our generation up. The merchants here have laundries, office-supply stores, watch-repair and barber shops, but they barely make a living. They can't leave because they would lose the property. So we're all stuck." The tenants have no interest in renovating their space; they can't afford it anyway. Simcha would like to expand, improve and bring in new tenants, but he can't. So he hasn't even bothered to try negotiating with developers. "I could cry," he confesses. "I see the development of the square and it's so beautiful, but if no solution can be found, none of it is worth it." It's the city's responsibility to rejuvenate the city center and bring in fresh purchasing power. It is also true that the "protected" stores are often not very alluring, with displays that go back decades. Their doors are old, their windows cracked and grimy, and they may have faded wallpaper that was stuck on decades ago. Plus the signs: "Sale, only NIS 10." "On Nahalat Shiva, Havatzelet, King George and Jaffa Streets you have these tiny businesses, irrelevant to today, run by people in their 80s. Some don't even bother opening up, or the shopowners just go there to turn on the light, to prove they're still there," says attorney Eitan Parnass of the Movement to Strengthen Jerusalem. "How can it be that in the heart of Jerusalem, stores just don't open? What do tourists think?" The landlords are helpless. Most of them belong to families that have been in Jerusalem for generations, or at least decades. Back in their countries of origin these were families engaged in banking, commerce, law and real estate, and when they immigrated, they bought land in central Jerusalem. They couldn't have imagined that come the new millennium, they would be trapped in a time bubble while the rest of the city evolves - all because of protected tenants. This is a problem dating back to the British Mandate and it's nationwide, but the absurdity is all the more obvious in Jerusalem, where the authorities are spending billions on improvements and infrastructure, but can't touch these dilapidated, neglected properties. How bad is the problem? Bad: 30% of Jerusalem's stores are held by protected tenants who pay ludicrous sums in rent - as low as NIS 200 a month. The tenants are trapped, too: The moment they leave the landlord can repossess the property. They can't change a thing or renovate without the landlord's permission. Under the law, protected tenants can pass on their asset for three generations, which is a key reason for clinging to useless stores: It raises the ante. To evacuate a protected tenant, the landlord has to offer compensation, and it may be tremendous. The law puts compensation for protected tenants at 60% of the property value, which is determined by a third-party assessor. But in practice, the tenants tend to demand much more. "I own a property on Dorot Rishonim Street that I've been stuck with for years," says Eli Yohanan, who owns a construction business in Jerusalem. "I had four protected tenants. I managed to evacuate three and paid three times what they were due. But one more remains and is embittering my life. It's a real Catholic wedding. He extorts everything he can and has extended building work by years." Yohanan's tenant runs a business in 60 square meters for which he pays NIS 1,500 a month. He's holding out for more than half-a-million dollars to leave. But it's unfair to relate to these tenants as "extortionists." "I'm not budging," clarifies one protected tenant, who has been managing a cheap cosmetics store in a 60-square-meter space belonging to the veteran Moussaieff family. "I'm 65, I made aliyah 37 years ago from Poland with my parents. They didn't leave me a thing. This place is my life, my pension, the estate I'll leave to my children. If they want to evacuate me, they'll have to pay me a lot." How much? "I haven't thought about that. But go to the kiosk across the street. I heard he got hundreds of thousands of dollars to leave." Moshe Haim, 70, has been running his 40-square-meter store for 30 years and pays NIS 180 a month. He's demanding double what the law asks for to leave. Haim: "At the time I paid 60,000 lira as key money for the property. At the time I could have bought three apartments on Shmuel Hanagid for that money. Then places there cost 20,000 liras; today they cost $600,000. Let them pay me $300,000 for the property. What do they want - to get it for free? My whole life is here." Under amendments to the law dating from 2002, a developer wanting to evict a protected tenant can do so after obtaining a building permit for the site. With the permit, he gets eviction permit, too, but the outcome may be a legal battle lasting years that can end in a compromise leaving the protected tenant in place. Yehuda Saban owns a 400-square-meter property on Strauss-Jaffa Street, with four protected tenants. He says he offered them way more than the law instructs, but gave up: "Each tenant thinks he can get more. There's no end to it," he complains. Ultimately it's all about economics and sometimes the cost of eviction just doesn't pay. Meanwhile, protected tenants running ancient businesses dramatically lower property values. Potential buyers automatically are less interested. In 2002, the Knesset changed the law. Among other things, the law now states that unless key-money was paid, protected tenants have to pay realistic rental rates. The number of protected tenants has dived - from 40% in the 1990s to 30% today, which is little comfort to landlords who still have to deal with them. "I have a protected tenant on Agrippas Street with an 800-square-meter property for which he pays NIS 1,000 a month and rents rooms out for $80 a day," moans Ezra Kokia, seventh-generation Jerusalemite, who isn't happy about being shackled by "arcane laws." Since the law shelters protected tenants until the third generation, landlords watch their properties like eagles for the slightest infraction - renovation, damage, improper use - that could serve as grounds for expulsion. Put simply, the landlords can make their tenants' lives miserable, too, hoping to force them out. Let's say the contract originally read that the tenant could sell shoelaces: That's what the tenant will have to do. If he starts selling paint, he could be evicted. Hence the weird businesses in a time bubble, existing in the midst of a bustling city. "The landlord doesn't want to invest, he wants to get rid of the tenant," explains attorney Nurit Mazower-Rez, an expert on land and tenancy law. "It isn't true that the tenants are extorting money - the court wouldn't lend a hand to blackmail. In most cases the tenants' claims are true, and a compromise is reached." People become attached to a place they've occupied for decades, Mazower-Rez says: All they want is proper compensation, no more. And money aside, there is the emotional element of being evicted: "Suddenly somebody comes up and says, get out of here. It's hard. He isn't a squatter: He received the place legally," she explains. But the asset owners have a point, she adds: "Sometimes the tenant is in a better financial situation than the owner. Some tenants are actually landlords with protected tenants of their own." The law is definitely problematic, the attorney notes: It's undergone a lot of amendments and "patchwork," yet it's never been thoroughly revamped. The owners think another amendment is the answer, certainly if the municipality wants to develop the city center, which it does. Meanwhile, the Movement to Strengthen Jerusalem is working on establishing a neutral mediation body to bridge between landlords and tenants, in order to expedite Jerusalem's development. At this stage, the Jerusalem Municipality isn't doing anything. It may have plans for the city center, but many of them are still on the drawing board. Bookmark to del.icio.us   And the Oscar goes to... Olmert is pulling for Beaufort, saying 'it's time Israel won an Oscar.' Battling on foreign soil Israeli Americans voted Clinton, but Obama won the global primary.   1.   Protected Landlords--When the dynamic shifts 08:17  |  dov epstein 29/01/08   2.   My Heart Bleeds for the Golf & Fox Outlets 08:40  |  B`Galil 29/01/08   3.   Jerusalem`s real estate BOOM is killing it 21:23  |  Mike 01/02/08   4.   landlords know before they buy 16:54  |  Barry 15/02/08

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