Urban Renewal – The Solution to a Shakey Problem?

We’ve been told repeatedly by the experts to expect an earthquake in Israel at some point, with all that implies in terms of collapsed buildings and possible casualties.

In order to minimize structural damage, a change in the national zoning laws (Tama 38) has been made to allow the strengthening of buildings built before the 1970s which meet the specified criteria.

This change enables owners of apartments in these buildings to strengthen the buildings at no cost to themselves. A construction company renovates the building, adding on another room or two to each apartment in return for building rights allowing him to add a number of new apartments to the building. The proceeds from the sale of these apartments will more than cover the cost of the project, making it worthwhile for the construction company.

This seems like a win-win situation. The apartment owners get a fortified, renovated building and a larger apartment, and the construction company profits from the sale of the new apartments.

If this is the case, why don’t we see more of these projects?

In order to implement a project like this, legal changes must be made in the registration of the building in the land registry. This used to mandate the agreement of all the apartment owners. If just one apartment owner objected, the project could not begin.  A recent change in the law allows for the required change in the registration even when one of the apartment owners disagrees.

Since the costs of this type of project are high, it is only economically feasible if the new apartments built are sold at good prices. Generally, these types of projects are only worthwhile for the construction company in cities where the prices of apartments are high.

Unfortunately, older apartments in lower-priced areas and public buildings are not high on the list of attractive propositions for contractors, leaving them largely unfortified in the face of an earthquake.