The Arab Samech Het neighborhood in Lod reminds a visitor more of a developing country than a district in a city a short ride from Tel Aviv. But things have been looking up: Samech Het's homes have just been connected to the municipal water system.

Residents now have running water regularly, though they have to pay the municipality's water company that was set up three years ago for the privilege.

"Previously, there was just one pipe here that didn't supply enough for everyone, and pumps that we installed ourselves," said the chairman of the Samech Het neighborhood committee, Juman Shaban. "Sometimes there was no water at all. When they also arrange sewers for us, I'll throw a celebration."

The experience in Lod, a mixed city of Jewish and Arab residents, reflects a substandard water and sewer infrastructure in many places throughout Israel, especially in Arab neighborhoods where homes have been put up without building permits. In these cases, the houses were not connected to the municipal infrastructure.

In Lod, the problem affects several large neighborhoods that are home to tens of thousands of people. The whole town has suffered from feckless government for years.

"When we started to operate, it turned out that 40 percent [of the water] was being wasted," said Moshe Ashkenazi, the CEO of the municipal water company. He said his staff does not know where all the wasted water is going, but the wastage has been reduced to 20 percent and will be curbed further. Many people in Lod have been illegally tapping into water lines.

Referring to Arab neighborhoods with many illegally built homes, Ashkenazi said "our approach is that if they're not going to demolish these homes, we have to provide them with basic services." After suffering severe financial woes, the Lod water company was allocated a special budget by the national Water Authority to upgrade the city's water grid.

New water lines have been installed throughout the city, mainly in Arab neighborhoods, and illegal tap-ins have been dismantled. In some places, old pipes were discovered that no one knew existed.

The improvements sometimes have to accommodate the existing reality. In one Arab neighborhood, for example, the water company encountered homes that were built illegally on top of a sewer line. The authorities decided they had no choice but to install a new parallel sewer line that could be properly maintained.

At another location, a school agreed to dig up and remove a sewer line from its grounds after the water company offered to build a new sports field. Ashkenazi said the entire sewer network in the Samech Het neighborhood will be completed shortly, which will also end the life of an unauthorized sewer pipe that has been spewing effluent into a nearby stream.