With its population set to double in 30 years, how will Israel cope?
The government plans to build 1.5 million new homes by 2040, mostly in the crowded center, but critics say housing without infrastructure won’t work, call to develop Negev, Galilee
Planet Earth, currently home to 7.7 billion people, will have to cope with an extra two billion souls by 2050 and a total of up to around 11 billion by the end of the century, according to a UN report published Sunday.
Within the same 2050 time frame, Israel’s population — the fastest-growing in the developed world, increasing by two percent annually — is set to almost double from the current nine million to 17.6 million, according to the Central Bureau of Statistics. And that’s in a dot of a country, just a little bigger than New Jersey in the US or Wales in the UK, that already has one of the highest population densities in the West and rapidly depleting open space.
Like many countries facing exponential growth, the Jewish state is trying to grapple with the implications and, following massive social protests in 2011 over the cost of living, of housing in particular, the government has been focusing on the need for a massive number of new homes.
In 2017, having set up a new bureaucracy to fast-track planning and cut red tape, it approved the construction of 1.5 million housing units by 2040.
Critics — among them many mayors — say the government’s overriding focus on massive residential construction fails to take sufficient account of the need for capital investment in additional infrastructure such as roads, sewers, public transportation, schools and hospitals. Increased congestion on roads and crowding of public services will only lower quality of life, they warn.
The building obsession also overlooks the ability of local authorities to finance services for rapidly increasing populations on an ongoing basis, they charge.
Civil society and environmental groups, furthermore, bemoan the draconian powers awarded to a new planning body which, contrary to government declarations about the importance of preserving the country’s rapidly diminishing open space, currently envisions much of the new housing being built on green areas bordering cities and on agricultural land rezoned for residential construction.
Top-down government approach
Following the 2011 social protests, which at their height brought 400,000 Israelis out to the streets, the government established a ministerial committee for planning and construction that became known as the “housing cabinet.” The cabinet’s role is to declare “preferred [priority] sites for housing,” 108 of which had been announced by the end of last year, for the building of 386,000 apartments.
To speedily approve plans for large-scale building on these preferred sites, the government then created in 2014 a temporary Committee for Preferred Housing Sites, known by its Hebrew initials as Vatmal, whose term has already been extended and will come up for Knesset renewal again in August.
Running parallel to the regular tiers of local, district and national planning committees, the Vatmal has since 2014 approved a third of all housing units green-lighted for construction.
The Vatmal is based in the Finance Ministry, where minister Moshe Kahlon has staked his reputation on bringing housing prices down. It has the authority to override all but one existing national plans. A large majority of its 18 members are drawn from government departments. Public objections can be lodged but are rarely accepted, and there is no right of appeal against its decisions.
In February 2017, the government approved a nationwide target of 1.5 million new units to be approved by all planning bodies, including the Vatmal, and to be built by 2040, of which more than a million are to be in Tel Aviv and the center of the country, where demand is high. The planning targets for the various regions actually add up to a total of 2.6 million units to take account of the fact that not all plans reach fruition.
Vatmal’s annual report for 2018 states that plots for 34,500 apartments were in the process of being marketed, with plans for a further 27,000 apartments being advanced within the context of demolishing old buildings in inner cities and building new, bigger ones.
Four years on from the Vatmal’s establishment, earthworks and building are in progress at a small number of sites.
It’s all about the money
But while central government dictates the preferred housing sites and the Vatmal approves the plans, many mayors are in no hurry to issue building permits for two main reasons, both of which come down to money.
As the director general of the Interior Ministry, Mordechai Cohen, told a Tel Aviv real estate conference organized by the business daily The Marker, on Monday, widespread local authority opposition to massive new building could be averted by changes to what he called a “distorted” local tax system.
To date, local councils have focused on boosting commercial development because commercial rates are higher than residential ones. The latter go nowhere near helping to cover the costs of municipal services.
To alter the balance and try to encourage the councils to look more favorably upon major apartment construction, the government introduced “umbrella agreements” (known in Hebrew as “roof” agreements). Around 30 cities have signed such umbrella agreements so far. These are contracts signed between local authorities, the Finance and Housing ministries and the Israel Land Administration.
The agreements allow the state to sell to one or more developers land that it owns within the boundaries of a particular local authority. The developers buy the land in the knowledge that the council has committed to building a certain number of apartments. The deal, usually for several high towers, is attractive to the building companies because of the profits to be made from the sale of so many units. The council benefits because the government transfers to it some of the earnings from the sale of the land to allow for the creation of new infrastructure. Everyone wins. Or do they?
Some mayors think that the money is not sufficient or that government promises cannot be relied on, even if signed into contracts.
Earlier this month, after the municipality of coastal Herzliya approved replacing 570 apartments in old buildings with 1,843 units in 15 new residential towers, up to 30 stories high, Mayor Moshe Fadlon announced that he would not back further urban renewal because the water available to the city would not supply more than an additional 22 apartments.
According to the Globes business daily, he called on other mayors to follow suit and slammed the government, saying that it did not stand by its commitments and that there was “no policy.” He warned, “No infrastructure, no urban renewal.”
A Herzliya council spokesperson told The Times of Israel, “The mayor has announced that he will not allow any new building in areas such as north Herzliya without a solution to national infrastructure [needs] in areas such as transportation, water, drainage and electricity.”
According to Yoni Weizman, deputy director general responsible for the development and construction division at the Israel Builders Association, which represents around 6,000 active builders across the country, nearly 60% of the price of every apartment sold goes to the government in taxes, providing a pool of money that could be used to help local authorities initiate urban renewal projects with appropriate infrastructure, without incurring massive debt.
The Vatmal deals with large-scale new building and with inner city projects to demolish complexes of old structures and build new ones.
A second track for urban renewal, which runs through the standard planning committees, is provided via National Outline Plan 38, better known by its Hebrew acronym, Tama 38. The government introduced Tama 38 in 2005 to speed up the strengthening or replacement of buildings constructed before earthquake regulations were introduced in 1980 and to do so within the framework of the private sector.
Regular building plans can take many years to reach fruition. Because Israel is located on the Syrian-African rift earthquake zone and the danger could be imminent, Tama 38 cuts through the bureaucracy. As it already constitutes a plan that has been approved nationally, all that contractors have to do is to request a building permit from the local authority.
Like the umbrella agreements, Tama 38 was framed to offer a win-win opportunity, in this case to builders and residents. Builders are allowed to add up to 2.5 stories to create apartments which they can sell to make a profit while also covering the money they invest in strengthening or replacing the existing old apartment buildings. Residents get a refurbished or new building, without having to spend a dime, along with apartments that are 25 meters (82 square feet) larger than their original ones thanks to the addition of a bomb-proof room and a balcony.
Ramat Gan, near Tel Aviv, was an early poster child for Tama 38. Buildings completed or going through the process of Tama can be seen on every other street.
But at the end of April, the municipality, whose mayor changed in local elections in October, announced that it would henceforth only grant building permits for Tama 38 in exceptional circumstances.
The new mayor, former Likud MK Carmel Shama-Hacohen, opined at a conference this month at Tel Aviv University, “The government opted for a bad plan which has no planning vision and is clearly mistaken.” Economic incentives are not tools of planning, he told the event, organized by Life and Environment, which represents more than 120 environmental NGOs.
Shama-Hacohen, who previously served as Israel’s envoy to the OECD, UNESCO and the Council of Europe, said, “Here, people know that they’re going to get a new, bigger home. But they’re banging their heads against a concrete wall. They don’t think of the implications for infrastructure, quality of life, for the council’s regular and capital development budgets.”
Ramat Gan city engineer Sigal Horesh later explained to The Times of Israel, “The problem with Tama 38 is that to incentivize developers and residents to strengthen old buildings, it exempts both from certain taxes and in so doing deprives the city of millions of shekels that could be used for general development.”
Ramat Gan, she added, was currently in talks with the Vatmal to sign umbrella deals for priority housing sites.
But the city’s sudden reversal of policy threatens to leave builders in Ramat Gan high and dry, says the Israel Builders Association, which went to court earlier this month against Ramat Gan’s decision, seeing it as a test case requiring a court ruling as well as clarification by the attorney general, who is named as a respondent in its petition to the Tel Aviv District Court.
Putting builders out of business
The association’s Yoni Weizman told The Times of Israel that 180 Tama 38 projects were moving along the planning process in Ramat Gan. Without a transition period, such a sudden cancellation could bankrupt many of the small and medium-sized builders who have already laid out considerable amounts of money.
Contractors have to advance millions of shekels on architects, consultants, coordinators of tenants and other items in order to secure a building permit for Tama 38 in a process that can take as long as five years. Then they have to renovate or rebuild the old apartment buildings before they can add stories and create their own apartments to sell to recoup their investment.
Although originally conceived as a solution for buildings in danger of earthquake damage, Tama 38 has come to be seen as a relatively quick-to-implement plank in the national plan to build an average of 65,000 housing units each year — and that, according to Weizman, is before making up for an existing shortfall of 150,000 apartments countrywide.
“At a time when you need to build, you’re going to lose thousands of apartments [by blocking Tama 38 in Ramat Gan], with the result that housing prices in a high-demand city such as Ramat Gan will rise,” Weizman said.
Tama 38 has been a flop in peripheral areas, which, ironically, are the most exposed to earthquake danger due to their location, because low apartment sale prices make the investment uneconomical for developers. Even within more central cities and towns, strengthening or rebuilding under Tama may only be profitable in wealthier neighborhoods where the market value of every square meter is high.
In its report for 2018, the government’s Urban Renewal Authority said that just 3,800 apartments were sold through Tama projects, representing 14% of all new apartments sold during that year. This hardly makes a dent in the target of 65,000 housing units annually.
On Monday, Dalit Zilber, head of the national planning committee (as opposed to the Vatmal), told The Marker’s real estate conference that Tama 38’s time had probably come to an end.
Don’t touch our open spaces
Critics such as the Society for the Protection of Nature in Israel say that in the rush to build, environmental considerations are set aside and too many construction plans are approved for virgin or rezoned agricultural land. With a little more effort and research, it argues, space for more intensive building within city boundaries can be found.
Of the target 1.5 million units planned by 2040, 386,000 have landed in the Vatmal’s court so far. Of these, the Vatmal has already approved 164,000 within the framework of 52 plans.
In its fourth annual report on the Vatmal’s work, published in Hebrew in March, the SPNI found that of these 164,000 units, just seven percent were for inner city demolition and building, with most of the preferred housing sites located on the outskirts of cities on open and agricultural land.
The SPNI report calls on the government to strengthen the existing planning hierarchy, which is far more responsive to the public, rather than imposing building targets in a top-down manner, and to look more carefully at existing inventories held by local councils of inner city buildings that can be replaced or enlarged and at empty plots that can be built upon.
Housing stock should be increased as much as possible within cities, the organization says; not only is this much cheaper because of the additional need for infrastructure in green belt areas, but in order to preserve crucial ecological systems upon which this and future generations will depend.
Attending the same conference as Shama-Hacohen earlier this month was Prof. Alon Tal, a veteran environmental campaigner, head of the department of public policy at Tel Aviv University and founder of Adam Teva V’Din — the Israel Union for Environmental Defense.
“Everything that we’re are talking about” — including environmental degradation, and massive building plans — “are symptoms,” he said. “We all know that Israel is growing by two percent a year. It’s very difficult to provide over 60,000 housing units annually without harming citizens’ rights, environmental quality, nature, and our quality of life.”
Tal recently founded another NGO — Zafuf (which means “crowded” in Hebrew): The Israel Forum for Population, Environment, and Society.
In 2016, Yale University Press published his book, “The Land is Full: Addressing Overpopulation in Israel.”
In the book, Tal singles out the two populations most responsible for the country’s galloping population growth; ultra-Orthodox Jews and Bedouin Arabs.
The former, according to a Central Bureau of Statistics report issued May 2017, accounted for 11 percent of the total population in Israel in 2015. By 2040, that figure was predicted to reach 20%, rising to 32% by 2065. Subtracting Arab citizens, this rises to 40% by 2065, with one in two of all non-Arab children being ultra-Orthodox and one in four being of working age. At present, only around half of Haredim work, with men preferring to study holy works instead. (The percentage of Arabs in the population is predicted to remain constant at around 21% until 2065 and then to begin to fall.)
Population growth vs quality of life
“You can always cram in more and more people,” Tal told the conference. “The question is, ‘What sort of life do we want to lead? When does the figure start to harm our quality of life?’ We have to start talking about limiting births.”
Speaking to The Times of Israel on the conference sidelines, Tal elaborated, “It’s a small country. At the end of the day, it’s going to need more than 1.5 million more housing units, it’s going to need 20 million, because you’re growing all the time. We all know that in a closed system, infinite growth is impossible.”
Tal said the way to reduce population growth was to remove government incentives to have more children, which start with grants for each birth and continue with various payments for each child.
“People say to me, ‘Alon, how can you ethically justify the government coming into our bedrooms and telling us what to do?’ And I say, ‘I want to get the government out of our bedrooms! Right now, the government comes in and hands out money and says ‘have kids, have kids, have kids!’ That is lunacy!
“We have the most crowded country in the Western world and it’s doubling in size every 30 years and we have to realize that the ethos and the axioms that have characterized the planning system are outdated, inappropriate and ecologically disastrous.”
Ray of hope?
Maybe hope will come from the Israel 2048 group, which is devoted to developing the full potential of the still sparsely populated Negev and Galilee regions of the country so that they can accommodate a total of seven million people by 2048, instead of the predicted four million, providing the same level of services and employment opportunities as Israel’s overstretched center.
Bringing together government ministries, the National Economic Council, the Israel Builders Association, local authorities in the Negev and the Galilee, students and academic experts, the award-winning organization is working toward reducing the expected population in the central region by actively increasing that in the peripheral north and south of the country.
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It has already established new communities and helped to strengthen existing ones, and has raised funds to create more than 80 infrastructure projects.
“By the year 2048, Israel will likely be home to more than 17 million residents,” says the organization’s website. “Only four million of those people are expected to live in the Negev and Galilee. That’s 75% of Israel’s territory, with just 25% of the population. Meanwhile, 12 million people will live in the small area between Nazareth and Kiryat Gat. The entire country will depend on a single, crowded and unaffordable, economic center. This scenario will destroy the quality of life for Israel’s residents, and exacerbate the already growing socioeconomic gaps.
“We can sit back and watch the crisis unfold,” it argues, “or we can stand up and build a strong, sustainable Israel.”
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