The Association of Contractors and Builders in Israel (ACBI) is negotiating with the senior officials in Tel Aviv, Jerusalem and Haifa a plan to build thousands of rental apartments. ACBI rental housing committee chairman Avner Levy has discussed the plan with Haifa Mayor Yona Yahav and senior officials in Tel Aviv and Jerusalem over the past two weeks. ACBI says the plan's main purpose to halt the flight of young couples from Israel's large cities.
ACBI proposes two building tracks. Under the first track, new buildings will be built on the municipalities and Israel Land Administration (ILA) land reserves in the Manshiya neighborhood in Tel Aviv, and in downtown Jerusalem and Haifa.
Under the second track, thousands of new apartments will be added by adding one to three floors to existing buildings. Investment in these projects will be relatively low, since there is no need to buy land.
Levy says the plan is viable, provided that all the parties concerned cooperate. The ILA must allocate land in the relevant areas, the municipalities must grant discounts on the betterment tax and relax parking standards, and the Ministry of Finance must initiate tax benefits.
The ACBI plan calls for the construction of apartments solely for rent. The apartments will be rented in long-term leases, while tax breaks will enable contractors to charge lower rents. Levy says municipal officials support the plan in order to prevent the flight of young couples to the suburbs.
Minister without portfolio Meir Sheetrit is submitting, through MK Colette Avital (Labor-Meimad), a bill to encourage the construction of rental housing. The bill proposes the construction of new buildings, in which apartments will be leased in 25-year leases, and for the Ministry of Finance to grant tax breaks.
Levy told "Globes" that he did not think that Sheetrit's plan was viable, because it did not give contractors a worthwhile return on investment. He said the ACBI plan was better because it ensured a reasonable return, both because it proposed inexpensive construction of added apartments to existing buildings, and because it requires municipalities to grant substantial breaks to contractors.
Published by Globes [online] - www.globes.co.il - on May 16, 2004