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A draft agreement that emerged from secret negotiations between the state and owners of a large area of land in north Tel Aviv is to lead to construction of 13 thousand residential units, at a cost of some $2 billion, on land currently occupied by Sde Dov airport and environs.

TheMarker has learned that after 30 years of discussions, representatives of the Ministry of Defense, the Tel Aviv District Attorney's office and landowners have reached a draft agreement according to which the private landowners will surrender one half of the construction rights they hold in the area, which is known as "the big bloc," rights that are valued at $450 million. In exchange, the state will take steps to vacate the airport and allocate surrounding areas for construction.

The big bloc in north Tel Aviv includes an area of about 1,000 dunams, and is situated between Namir Road and the Mediterranean, with the Sde Dov Airport located at its center, and an Israel Air Force base on an additional 800 dunams. The agreement, which is expected to bring $1.6 billion to state coffers, is subject to approval by an assembly of the landowners and the government offices affected by the issue.

The big bloc has been a bone of contention, and the subject of plans and legal proceedings, because, among other reasons, it has been owned by about 1,400 landowners, some of whom even own property (140 dunams) within Sde Dov itself, for the use of which they have billed the state hundreds of millions of shekels.

In the 1980s, the owners appointed managers to represent their interests in discussions with state entities. As a consequence, they signed a waiver of claims for land-usage fees within Sde Dov - in exchange for which they received construction rights for 3,660 residential units on 610 dunams east of the airfield.

Development waits for decades

It was agreed that a decision on the land itself, both within Sde Dov and adjacent land to the west, would be made at a later date. Discussions on those areas began about three years ago, and they accelerated in recent months. About two weeks ago the parties succeeded in consolidating a draft agreement.

According to state estimates, upon vacation of the airport, 1,000 dunams would be rezoned for construction. The state would be allowed to construct 10,370 residential units and 4,500 square meters of commercial space, which should bring in estimated revenues of $1.6 billion - to be used, among other things, for relocation of the Airport. The landowners will be able to construct an additional 3,000 residential units and 1,500 square meters of commercial space, which should bring in an estimated $450 million on the market. These calculations, however, are based on land value of $150 thousand per residential unit, while land prices in the big bloc currently reflect values of $200 thousand or more.

State representatives close to the negotiation process estimate that the pressure being applied on the land-bloc managers to sell their construction rights in a seething real estate market, and the Defense Ministry's wish to vacate the base, together have created a critical window of opportunity for the signing of an agreement. In addition, state representatives estimate that the signing will bring pressure to bear on the Transport Ministry to find an alternative to Sde Dov. State revenues from the marketing of the entire bloc are likely to exceed the cost of relocating the civilian airport.