The cancellation of the construction project for two 40-story towers results in a direct loss for the municipality of Tel Aviv. Indeed, the limitation of the building height to only 25 stories on Atarim Square led to this cancellation. Notably, this comes with a loss of several tens of millions of shekels in asset value.
This stems from an expert opinion recently submitted to the Herzliya District Court and reached the press. The municipality of Tel Aviv supported a construction project of 40 stories on the seaside square. However, the coastal environment preservation committee canceled this plan last February.
The expert Betsalel Katzir prepared the opinion as part of the partnership dissolution process. The dispute is over the Kikar Atarim parking lot, between the municipality of Tel Aviv (73%) and the Marina hotel (27%).
According to Katzir, the current value of the parking lot is 136 million NIS, down from 203 million NIS in 2017. Consequently, the parties announced their agreement on the scheme, according to which a tender for the sale of the parking lot will be published at a minimum price of 116.4 million NIS. This is 15% less than the value of the parking lot, according to Katzir.
The municipality of Tel Aviv is appealing to the Supreme Court.
According to the opinion, the parking lot lost 70 million NIS of its value in 2017. This occurred when the city council approved the sale of the municipality’s share in the parking lot for 148 million NIS to the JTLV fund. Amir Biram and Ariel Rotter control it.
The approved price corresponds to an estimated value of 203 million NIS for the entire parking lot, which is 67 million more than today. The municipality’s share alone was worth 50 million NIS more than today.
Immediately after the council approved the agreement, businessman Sefi Zevieli requested the district court to annul it. Zevieli owns a property adjacent to the square. He claims that the municipality, as a public entity, should have sold its share through a public tender. In January 2018, Judge Rachel Barkai accepted the request. Furthermore, she decided that the parking lot must be sold through a public tender. The municipality appealed to the Supreme Court and is now awaiting its decision.
Last March, Attorney General Avihai Mandelblit sent an opinion criticizing the municipality’s behavior. Moreover, he supported the district court’s position. Therefore, it is estimated that the Supreme Court will not annul the judgment and will require the sale of the parking lot through a tender.
In order to buy time, the process of dismantling the partnership in the Herzliya District Court continues to progress alongside the Supreme Court appeal. Judge Yaakov Shaked ordered the preparations for the tender even before the Supreme Court had ruled. Each party will be able to buy the other’s share, but a third party will be able to purchase the entire parking lot.
From a luxury complex to a danger
Atarim Square, inaugurated in 1975, remains one of the most prestigious locations in the city. After a few years of success with shops and restaurants, the place began to deteriorate. Today, a large part of its commercial premises remains abandoned, rendering the square a failure. Over the past ten years, the municipality, in cooperation with landowners, has begun to promote the demolition of the square to build a real estate project in its place.
As part of the new municipal plan for Tel Aviv, which came into effect in 2016, the area of Atarim Square was excluded from the rule allowing up to 25 stories along the coast, permitting the construction of 40 stories. The reason for this exclusion was that, to rebuild the square, a series of costly tasks needed to be imposed on the contractors, and construction rights would need to be increased to make the construction profitable for the contractors.
The JTLV Foundation began promoting a plan to build two 36-story towers in 2015 with the support of the municipality, even before the project’s final approval. However, in April 2018, the district court ordered the transfer of the hearing on the number of stories excluded from the UJIF because the decision to exclude the area had not been discussed by the committee, in violation of the law.
The municipality of Tel Aviv stated that “this is not a tender but a forced sale based on a final decision of the district court.”
While this is a setback for the municipality of Tel Aviv, it is not to be pitied. Indeed, it recently received very good news about the Bazel neighborhood, click here to read the article
