The National Planning Administration announced last week that it doesn't intend to extend its Tama 38 program past May 2020, which would leave up to a million Israeli homes at risk of being damaged or destroyed in an earthquake.
Tama 38 was originally designed as a means of encouraging homeowners to reinforce their homes against earthquakes by awarding extra building rights to buildings that undertook quake-proofing measures. However, the financial and tax incentives proved effective only in a few places, mostly in central Tel Aviv, where the earthquake risk is relatively low.
Tama 38 evolved over the 14 years since it was launched as a way to increase Israel’s urban housing supply at a time of soaring demand and rising prices. Urban renewal programs, most of them part of Tama 38, accounted for about 15% of Israel’s housing starts last year.
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“Tama 38 was supposed to save lives – not to improve the lifestyles of homeowners,” said Haim Mesilaty, chairman of the Israel Property Appraisers Association.
The decision not to extend Tama 38 isn’t final – it needs to be approved by the National Planning Council – and it has sparked a lot of criticism since it was announced. But if the decision is implemented, the government will be left without a program for reinforcing buildings even though Israel is prone to earthquakes and scientists warn that a major tremor is overdue.
There is no consensus about how many homes are at risk. In 2010, the Housing and Construction Ministry and the planning administration estimated the number at about 810,000 apartments. This figure takes into account apartments in buildings of three floors or more that don’t meet earthquake standards.
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Last year, the State Comptroller’s Office put the number of buildings at risk to at least some damage at 310,000 – most of it minimal – which would be about one million apartments. It said 28,000 buildings were at risk of major damage because they are in bad condition to begin with.
The Housing and Construction Ministry and the Urban Renewal Authority told TheMarker that 36,000 housing units in towns like Tiberias, Safed, Beit She’an, Kiryat Shmona and Eilat needed urgent reinforcement. That’s because they are located along, on or near the Jordan Rift Valley, the center of earthquake activity in Israel.
The cost of strengthening just the buildings deemed at the highest risk and in need of immediate work is considerable. A study by Hebrew University, led by profs. Eran Feltelson and Maya Negev, estimated the cost at 1.7 billion shekels ($480 million at current exchange rates). Taking care of the 70,000 housing units in high-risk areas would cost 3 billion shekels.
The Urban Renewal Authority has an even higher estimate of 7.2 billion shekels for 36,000 housing units in the highest-risk areas, after discounting the kind of costs covered by the private sector under Tama 38, which include things like new facades, adding elevators and expanding the size of a building’s existing apartments.
Critics of the planning administration’s decision said it would not only leave Israel without any policy of quake-proofing homes but would upset the housing market, where prices have turned higher after a year or so of stability.
The Urban Renewal Authority estimates that 14% of new-home sales last year were part of urban renewal, 80% of those through Tama 38. Without the program, Israel’s housing supply will grow tighter and price increases will accelerate, the authority warned.
But the planning administration counters that Tama 38 is not helping in the areas where it’s needed. It estimates that 70% of all the housing affected under the program was in the greater Tel Aviv area between 2005 and 2018. Just 1% of the construction occurred in the northern district, where quake risk is the greatest.
Officials dismiss the criticism of the proposed Tama 38 cancellation as having nothing to do with concerns about earthquake preparedness but over lost business for the armies of builders, architects and lawyers who have benefited from Tama 38 projects in the center of Israel.
They said there is no market-based solution to the problem of reinforcement because it’s not financially viable in the parts of Israel that need it the most. In the northern district, only 25 buildings were approved for Tama 38 in the 10 years through 2015. In the southern district, there were 105 approvals, but that included missile-defense measures for construction in Ashdod and Ashkelon, near Gaza. Officials say those trends haven’t changed since 2015.
“Tama 38 has produced distorted results,” said Yigal Govrin, chairman of the Construction and Infrastructure Engineers Association. “If you want to fix this, budgets should be allocated only in areas prone to earthquakes -- Kiryat Shmona, Hatzor Haglilit, Tiberias, Eilat and so forth. These are localities in which Tama 38 has not been employed because the economics are uncertain. Property developers only use it in high-demand areas.”
Mesilaty, of the Israel Property Appraisers Association, said that as a first stage the government should consider applying Tama 38 only to those areas on or near the Syro-African Rift. Only later and on a smaller scale could the program be expanded to the Tel Aviv area, he said.
“The government needs to open up its pockets to finance Tama 38 in high-risk areas or it should give property developers incentives that encourage them to build in the periphery,” he said.
In the meantime, the decision has led to sniping between officials. When the National Planning and Building Council meets after the next government is formed to approve the administration’s plan, the Housing Ministry and Urban Renewal Authority are expected to fight hard to keep Tama 38 in force.
“You can’t stop everything in one day,” said Einat Ganon, deputy head of the Urban renewal Authority. Everyone agrees that Tama 38 was designed to save lives. Even if it hasn’t met that goal, you can’t paralyze urban planning. Tama 38 has been one of the main tools for creating new housing units on densely populated and expensive land in the center of the country.”