Another roof agreement between central government and a local authority is due to be signed today. The agreement, with the southern city of Sderot, provides for 6,000 housing units to be built and sold in the city over the next three years. Under such roof agreements, the local authority undertakes to expedite planning procedures and the issuance of building permits, while the state undertakes to finance public buildings and infrastructure. The budget for the current roof agreement is NIS 2.5 billion.
The agreement will be signed by the Ministry of Construction and Housing, the Israel Land Authority, and the Ministry of Finance, and by the Sderot municipality.
The agreement includes Buyer Price housing construction tenders, and a NIS 350 million budget for renewal of infrastructure in older neighborhoods in the city. NIS 600 million will be spent on kindergartens, daycare centers, synagogues, sports facilities, and other public institutions. The agreement also provides for the allocation of land for industrial and commercial use.
Over NIS 100 million will be spent on road building and improvement, and junctions at the eastern and western entrances to the city and at the entrance to the industrial zone on Road 232 will be upgraded at a total cost of some NIS 110 million.
"This is a strategic and dramatic agreement for Sderot that will turn it into a leading city in all areas of life," said Sderot mayor Alon Davidi in advance of the signing ceremony. "The needs of all the residents of Sderot come within the compass of the agreement, from infants to the elderly, including new public institutions, improvements to transport, promenades, renovation of old streets, and sports and cultural facilities. I thank the many people in the municipality and in the Sderot Economic Development Corporation who worked on the agreement, and of course the government of Israel."
In its recently released 2017 report, the Bank of Israel criticizes the roof agreements with local authorities. "The roof agreements are initially beneficial to local authorities, and make it possible not only to build infrastructures for new neighborhoods but also to renovate infrastructures in old neighborhoods with the money that flows to development budgets," the report states. "The problems with the roof agreements are liable to surface in the second stage, when the new neighborhoods are occupied and the local authority has to provide services to the additional households, even though rates and government grants will not cover the additional expenditure required…
"In order to continue providing services, the local authority is meant to allocate additional areas for offices and commerce, with the aim of preserving the ratio between such areas and residential areas… the roof agreements often add many housing units in relation to the size of the community, but in many communities it is impossible to increase the areas for offices and commerce proportionately, because reserves of land are limited or because they are close to larger and more important cities."
Published by Globes [online], Israel business news - www.globes-online.com - on April 9, 2018
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