Israeli Ministers Set to OK Rental Housing Body

New state corporation would work to expand the supply of rental housing in Israel.

The ministerial committee on housing is expected to approve Finance Minister Yair Lapid’s plan to set up a new state corporation that would work to expand the supply of rental housing in Israel.

Due to strong opposition by Attorney General Yehuda Weinstein over giving the ministerial panel the authority to decide the matter, the committee's decision on Sunday will be a recommendation of sorts that will also require full cabinet approval.

Lapid has a majority on the ministerial committee and had been insistent that the committee had the authority to create the government company. Over the past week and a half, and despite the Sukkot holiday, Lapid's and Weinstein's offices have been at work on the issue in advance of today's committee vote.

A compromise was worked out permitting the committee to adopt the plan but still requiring formal cabinet approval. Lapid's close associate Uri Shani is expected to be appointed as head of the new corporation, Finance Ministry sources say.

The creation of the new corporation would be the first tangible step in carrying out the pledge that Yesh Atid head Lapid made in the run-up to last January's Knesset election - to provide 150,000 residential rental units over the course of a decade, in an effort to ease the high cost of housing by increasing supply.

The plan calls for the corporation to be under the authority of the finance minister alone. Two-thirds of the board of directors of the corporation will be civil servants, according to the proposal before the committee. The proposal states that the board can number between four and nine in total. Three of the members are to be Finance Ministry appointees with Shani expected to be one of them, in addition to heading the company.

There will also be up to three representatives of the public on the board. The public representatives will be required to have at least five years of city planning or construction experience, or seven years’ experience in infrastructure activity. Shani will not be a public representative but if he were, he would not meet these criteria.

The operations of the proposed government company would be funded by the government for periods of two years each rather than annually, as is more customary. The operating budget is expected to be NIS 8 million a year, in addition to an annual sum of NIS 20 million to advance the projects themselves. It is expected to take four to five years for the first apartments to go on the market.

Lapid's decision to set up the corporation engendered major opposition in the government and within the Finance Ministry itself, particularly within the budget division. Until now, the Housing and Construction Ministry and the Israel Land Authority (formerly known as the Israel Lands Administration) had responsibility for the construction of rental housing. They were not terribly enamored by the idea, either. The new corporation, they claim, will create duplication, unnecessary bureaucracy and a waste of public funds.

However, when Lapid was appointed finance minister, the creation of a government rental housing corporation was included in the guideline agreement for the formation of the current coalition.

Ofer Vaknin