The Bronfman-Fisher Investment group hopes to overturn a court ruling that annulled the results of the tender they won to build an IKEA outlet in Rishon Letzion, on the grounds that the Tel Aviv Administrative Court made material mistakes.
One problem is that the group's real estate arm, Iris Hagilboa, already has erected the structure meant to house the international furniture chain's second outlet in Israel, at enormous cost. Another is that the group already paid hundreds of millions of shekels to Israeli authorities that had approved the vast IKEA project, and these authorities will now have to repay the money.
For the nonce, following the petition by Bronfman-Fisher, the court has issued a temporary order, expiring in two weeks, that halts execution of the ruling that voids the tender. Bronfman-Fisher are represented by Doron Dan and others from the law offices of Weksler, Bregman & Co.
Iris Hagilboa claims already to have invested more than NIS 400 million in the site, of which NIS 170 million was for leasing the land alone. Another NIS 230 million went into infrastructure and construction, the group says.
On Sunday this week, Judge Nurit Ahituv nullified the tender, citing irregularities in the bidding process. Her ruling followed a lawsuit filed by local businesses, residents and environmental groups against the Israel Lands Administration and the Rishon Letzion municipality, arguing that the leasing tenders covering land in southwest Rishon Letzion were unlawful.
Following Ahituv's decision, the Bronfman-Fisher group filed to suspend execution of her ruling, arguing she had made substantive errors.
Bronfman-Fisher also notes that it paid the Israel Lands Administration, the city of Rishon Letzion, the tax authorities and the Rishon Letzion Economic Corporation more than NIS 400 million in total. Most of that went into developing the land and erecting the structure, which has 30,000 square meters above ground and tens of thousands more underground.
The group adds that the banks that financed the project undertook to register an attachment to the land in order to secure their liabilities, which amount to hundreds of millions of shekels.
The court's decision embarrasses the state authorities as well, Iris Hagilboa told the court. All the construction at the site, and various liens and financial agreements, were made with the knowledge of the Israel Lands Administration. It is fairly clear that if the ILA takes back the land, it will have to reimburse Iris Hagilboa for its investments and development there.
The idea of building a second giant IKEA branch ensued from the extraordinary success of the first outlet, which is just off the main coastal highway in Netanya. But the choice of the site in Rishon Letzion set off a flurry of complaints by local businessman and environmental organizations, the former on the grounds that IKEA would ruin them and the latter on the grounds that the site was unsuitable. Given that a civil proceeding was already underway, the police decided against commencing an investigation against city authorities, including the mayor Meir Nitzan, on suspicions that they had tailored the tender to IKEA's convenience.
Bronfman-Fisher is controlled by Matthew Bronfman and Shalom Fisher.
