Like many ministers before her, Ayelet Shaked, Israel's 28th Minister of Interior, agreed to our request to hold a tough interview with the leaders of the construction sector, who posed challenging questions based on their personal experience and knowledge of the field.
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Raul Srugo, President of the Israel Builders Association:
The State of Israel needs to build 3 million apartments in 30 years. How do you plan to lead long-term strategic planning processes, shorten planning and licensing procedures, and reduce regulation so that we can meet this daunting challenge?
Shaked: "The goal is to plan about 2.6 million housing units and begin construction on 1.5 million units. This is based on a view that the planning inventory needs to be expanded while gradually implementing the construction of housing units already planned. As of today, a planning inventory is being advanced in the various planning authorities, from the local authorities through district committees and up to the National Planning and Building Committee for Priority Housing Areas (Vatmal), as part of triennial work plans.
"Implementing the planning inventory requires strenuous governmental work to expand and construct infrastructure that supports housing, such as public and private transportation facilities, electricity, water, and sewage infrastructure, etc., and assistance in constructing public buildings such as kindergartens and urban and educational public facilities. All these will allow cities to handle the growth of their population while maintaining the same level of services and quality of life.
"In order to advance and accelerate processes in the planning and licensing market, the regulation and licensing procedures need to be improved, which will improve the ability of the entire system to implement plans for a built housing unit. I intend to advance legislation and reforms in this field in order to improve and streamline existing processes. Some of the reforms are included in the existing Economic Arrangements Law. I also intend to create a team at the National Planning Headquarters made up of experts from the public sector, and, no less importantly, the private sector involved in the field, to recommend additional legislation amendments that can streamline licensing procedures."
Haim Mesilati, Chairman of the Real Estate Appraisers Association: Will you create a self-licensing procedure so as to free the planning bottleneck?
"This issue is currently in the Arrangements Law. Implementing planning procedures through self-licensing will be allowed after an agreement in principle is reached with the Federation of Local Authorities, and will depend on concrete agreements regarding the specific permit request.
"This is a major procedural change and its implementation on the ground needs to be examined. It also requires developing tools for monitoring, enforcement, and supervision. To the degree that such a step succeeds and improves timetables while maintaining the quality of construction – the scope and type of projects that can be self-licensed will grow.
"The Arrangements Law does not provide a total solution to this issue, which is why I plan to act to add more amendments to the law."
Roni Mizrahi, Chairman of the Israel Contractors Association: What is your position on the Shabas-Kahlon Amendment, which allowed construction companies to expand the number of apartments in their projects by up to 30%, with 20% to be sold under the subsidized Buyer's Price program and 10% designated for subsidized long-term rent, with no option for the local committee to submit objections?
"A major addition of housing units under a relief clause reduces certainty for the developer. The developer finds out if the addition has been approved only at the local committee meeting. A procedure that includes relief provisions is also much longer, since it is open to public objections and the decision can be appealed before the Appellation Committee.
"Another drawback of the relief system is that planning based on building permits will lay pressure on the local authority to provide the requisite public space and infrastructure, in light of the fact that the licensing procedure does not include the addition of public spaces."
Ram Marash, Chairman of the Association of Architects and Town Planners in Israel: The quality of planning in Israel is problematic. The Israeli government in general and the Ministry of Interior in particular encourage planning based exclusively on the bottom line. There's a steady tendency to allow those with no qualifications to engage in planning. That's dangerous and harmful to our quality of life. Do you intend to improve the situation?
"The question of who is allowed to submit a plan is currently under discussion by the High Court of Justice. After a decision is made, the Ministry will examine its policy and issue directives as necessary. This issue is partly addressed in the bill for a self-licensing procedure, which is being advanced in the Arrangements Law.
"The bill proposes that only a licensing architect should be allowed to perform the procedure. There's no doubt that this issue should also be taken seriously, and I intend to address it as soon as possible."
Pini Malca, Co-CEO of the Maoz Daniel Group: What will happen with urban renewal in the periphery, where the danger of an earthquake is highest?
"It's true that the TAMA38 program did not increase reinforced construction in the periphery, probably due to a lack of economic profitability. The government will definitely have to create economic budgeting and incentive tracks to assist the private market in penetrating geographical areas where reinforced construction projects are currently not profitable. This is another issue I intend to address as soon as possible."
Yossi Avrahami, owner of the Avrahami Group: Will you ease the endless building procedures that developers have to endure, which mean that apartment buyers pay more?
"The transition from an approved plan to actual construction is undoubtedly one of the major weak points that we have to address. As I said, and as will probably be determined in the Arrangements Law, specific teams will be created to deal with this issue at the National Planning Headquarters.
"These teams will be required to pinpoint the most essential problems in the process and propose reforms and legislation amendments to remove barriers. The team will include representatives of all the parties involved in development, whether public or private, and of course representatives of the various regulating bodies and local government."
Nir Mesika, former Deputy Director of the National Housing Headquarters: How does your ministry intend to streamline the process of permit issue, which today is one of the weak links in the chain of manufacturing a housing unit?
"I intend to submit an orderly plan for shortening licensing procedures. Parts of the plan have already been included in the Arrangements Law – canceling the "relief system" and providing some possibility of self-licensing. Canceling the relief system will significantly shorten licensing procedures, since it will boost certainty and prevent unnecessary appeals.
"The self-licensing procedure is also expected to speed up the process. In the upcoming months I intend to propose additional amendments meant to streamline the procedures."
"Alongside these reforms, the Planning Administration is working on guidelines for preparing urban building schemes that can streamline licensing. Preliminary conclusions regarding this issue will be published soon. The Administration is also advancing a number of changes to the licensing guidelines in order to reduce regulation wherever possible. For example, expanding the industrial licensing exemption, which was approved by the National Council and will soon be published."
Hanan Mor, Chairman of Mor Group Holdings Ltd.: Construction can begin on thousands of housing units within a few months, but they're stuck in red tape. What do you intend to do to speed up construction processes?
"Improving processes in the manufacturing chain is a critical issue that is on my agenda. In many cases, the difficulties stem from the real needs of local government. I will act to find solutions for local authorities so that they can handle their city's population growth.
"Cooperation with local government is essential for the success of the real estate sector and for residential real estate in particular, since at the end of the day, the mayor is responsible for absorbing new residents in the city's different frameworks, and he is the one supposed to provide residents with adequate solutions."
Haim Karadi, CEO of Prashkovsky Investments: What is your position on the Municipal Tax reform?
"As part of the decentralization reform I will propose soon, a team headed by the Ministry's Director General and in cooperation with the Budgets Department will examine this important issue. There's no doubt this point requires comprehensive treatment.
"At present, many cities prefer more industrial spaces, which improve the local authority's economic status [since the municipal tax on them is higher], and oppose more housing units. This is also true of cities that already have too much industrial space. Nevertheless, the subject should be approached very carefully and in collaboration with local government. At this time I intend to avoid saddling the public with additional economic burdens."
Eyal Handler, Chairman of Canaan Group: Since the planning procedures are so long, including repetitions and conflicts of interest between the local and district committees regarding urban renewal, why shouldn't some urban building scheme powers be taken out of the hands of the local committees and transferred exclusively to the district committees, while limiting the timeframe to one year from the date of submitting the request? This can be done while determining clear criteria of a 12-sq.m. maximal addition to existing apartment sizes and limiting the developer's profit to 16%. That could streamline planning and add tens of thousands of housing units to the economy.
"Ignoring local government is not the way to achieve quick solutions, but rather to create a situation of conflict and defiance between the sides. However, the possibility of parallel tracks in different planning processes should certainly be considered, so that no committee is the exclusive arbiter and can set impossible conditions. For example, in the memorandum for an alternative law to TAMA38, the district committee will be granted parallel authority after a certain time period, if the local committee stalls on advancing the required planning processes.
"As for limiting the developers' profit, our position is that it is a mistake to predetermine returns for tenants or profits for developers in housing projects. These should be determined according to the tenants' situation, the project's geographic location, its degree of risk, and more.
"It is important to remember that in some cases guiding standards were created, for example Standard 21 for evacuation and reconstruction (Pinui-Binui), which definitely creates a planning norm that planning institutions should adopt."
Yigal Chudner, CEO of Netivey Hakama, which specializes in managing licensing and statutory procedures: How does the Ministry of Interior expect an accessible licensing system to free the bottleneck in licensing procedures if the system treats all requests for permits in the same way, whether it's a permit for moving a window or for building a new 400-unit residential neighborhood?
"The system in question is an online system for submitting requests for building permits. The system was created, among other things, to conduct licensing procedures that are transparent in terms of timetables. However, the local committee can prioritize large projects over small ones. In any case, I intend to examine the system and the issues involved as part of the team to be created at the National Planning Headquarters."
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Sagi Niv, CEO Atidim Park Tel Aviv: A correct planning approach should balance aspects of employment, housing, infrastructure, education, and, of course, transport accessibility. Do you see the Ministry of Interior under your stewardship as a factor that can lead such an approach?
"This issue is of the essence of the Ministry, its goals, and its capabilities. The activities of the Vatmal and the district committees, alongside the National Infrastructure Committee and the other professional committees, enable us to take a broad planning view and are an integrated tool for advancing judicious and high-quality planning processes, which will improve quality of life while increasing employment opportunities and improving access to education and public transportation."
Danny Mor, CEO B.S.T. Group: What do you expect will happen to apartment prices?
"It is unrealistic to expect apartment prices to drop. I don't think that will happen in the upcoming years, to be honest. We're fighting to stop or slow down the current rise. In the past two years the government didn't build enough, market enough, plan enough, and now we're paying a hefty price."
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