The Tel Aviv municipality is demanding $31 million from Amcor for a building permit on the company’s plot and for a lease extension. The municipality will also demand $40 million for increasing building percentages to 450%. The demands put in doubt last week’s deal, in which Rad Bynet and Ampa Real Estate bought the compound on Yigal Alon Street from Amcor for $40 million.
The buyers plan to build 112,000 sq.m. at the site, contingent on municipal approval of 450% construction, instead of the existing 216%. The contract includes a clause stipulating that Rad Bynet can cancel the deal if an agreement with the municipality is not reached by February 28, 2001. Amcor agreed that this would not constitute violation of the contract.
The municipal demand for $31 million consists of two sums:
- The historical town planning permit is for 150% construction, whereas a new one allows for 200%, plus another 15% concession. The municipality is demanding $120,000 per dunam (0.25 acres) totaling $2.3 million for this permit.
- 19 dunam (4.9 acres) of the compound owned by the municipality has been leased to Amcor until 2010. The municipality is proposing that Amcor pay for a 49 year extension lease at $1.5 million per dunam, to a total of $28.5 million.
Amcor is seeking approval of 450% construction and estimates say the municipality and Israel Land Administration will demand another $40 million for doubling the building rights.
These demands cancel out the economic feasibility of the Amcor site construction. It is also the reason leading companies, such as SGS refused even to negotiate a possible deal to purchase the plot, or part of it.
Sources close to the deal estimate that Amcor, Rad Bynet and other landowners in the area, for example, Ha’argaz and Ashtrom, will ask the municipality to lower its demands. The developers will underscore that if the municipality insists on its demands, office and high-tech companies will leave Tel Aviv for adjacent towns.
No comment was received from the municipal spokesperson or Amcor by web-posting.
Published by Israel's Business Arena on 24 December, 2000