A topic many entrepreneurs are dealing with recently with regards to NBP 38 projects – projects for reinforcing against earthquakes by destroying the existing building and constructing a new building in its place – refers to the way in which building rights due from the project are to be calculated, and stems from two contradicting approaches by the District Appeal Committee in Tel-Aviv.
In this paper we will review both approaches, review who is behind each one and whether there really is an approach chosen to guide the local authorities. We can already say that there is much uncertainty which affects the feasibility of many NBP 38 projects (both current and future) valued at hundreds of millions of Shekels.
The National Building Plan for reinforcing against earthquakes, or NOP 38 as we all know it, was established in order to encourage apartment owners to reinforce them against earthquakes. As part of NBP 38, various benefits are included to those apartment owners, in order to render the reinforcement work worthwhile for them and for the entrepreneur performing the construction for them.
The dispute which is the subject of this paper regards Amendment no. 2 of the Plan, which enables destroying an existing building and constructing a new building in its place, with 2.5 additional floors, and the manner of calculating building rights in such projects. On one hand, according to the limiting approach, the test should include NOP rights which could have been approved as part of the existing building which is intended for destruction, and transfer them to the new building. On the other hand, according to the expanding approach, all potential zoning rights which could have been approved pursuant to relevant zoning plans should be added to the new building (which will be constructed according to the plans applied to the place), and calculate the rights pursuant to NBP 38 based on them.
In order to simplify the dispute we will explain using an example with numbers: let us assume that a building intended for destruction is a small three-floor building with typical floor size of 200 m2. If we calculate the building rights according to the first approach, according to which the rights in the existing building should be examined (and only them), then we receive rights for constructing 500 m2 (2.5 floors times 200 m2). On the other hand, if we take the second approach, then the floor size should not be calculated according to the actual existing size, but according to the size of a typical floor which can be approved pursuant to the approved building rights in the lot according to the plans applying to it. Thus, inasmuch as a zoning plan applies to the building, according to which it is possible to construct a bigger building with typical floor size of 400 m2, then the multiplication of such a typical floor with 2.5 floors will provide us with the total NBP rights for the added floors, namely 1,000 m2. It is clear that greater building rights will be given in the second approach.
The Various Approaches and their Supporters
The expanding approach: was common until recently in most local committees and appeal committees in Israel. This approach was widely specified in the ruling of Golan vs. Givatayim Local Committee, given by the former chairman of the District Appeal Committee in Tel-Aviv, Adv. Micha Gidron. Adv. Gidron was the standard-bearer of the expanding approach and he explained the rationale behind it as such which coincides with the provisions of the plan. Moreover, according to Gidron, in NBP 38/2 projects, enough building rights should be granted pursuant to the NOP in order to render the project economic. Therefore, and in most cases, only the expanded approach will enable reinforcing the building through destruction and re-construction.
The limiting approach: became common recently in rulings by Adv. Gilat Eyal, stand-in for the new chairwoman of the District Appeal Committee in Tel-Aviv. Eyal’s approach is specified in the ruling of Ziv vs. the Ramat-Gan Local Committee, given approximately six months ago, in which Eyal stated that “the adding of floors possible according to the NOP should be calculated according to an existing typical floor”.
Following the change brought by Eyal in the decisions of the District Appeal Committee, it recently became clear that the Attorney General also supports Eyal’s limiting interpretation. This discovery brought objection and extremely severe criticism, which led to the holding of an urgent meeting in the Knesset by the special committee for discussing the bill of the Government Authority for Municipal Renewal.
As stated, on 14/10/2015, the Knesset special committee discussed the limiting approach presented by the state regarding the calculation of building rights, and has rejected it altogether. The committee participants objected to any change which might delay the execution of planned NBP 38/2 projects, therefore it was decided to prevent the uncertainty caused, by expressly amending the bill. In addition, as part of the discussion, it was decided that until 03/11/2015 the new version will be formulated, which will clear the uncertainties and set a single interpretation to calculating building rights, and it is the expanding one.
Indeed, on 03/11/2015, the National Planning and Building Committee amended the provisions regarding the calculation of areas as part of NBP 38/2 and clearly ruled that “the size of a floor pursuant to NBP 38, will be calculated according to the size of a floor enabled according to the plan applying to the lot, in addition to the area given pursuant to the NOP for the purpose of expanding residential units in the same possible floor according to the same plan”.
Where do we Stand Today?
It seems that each approach receives strong support from a different strong government body. In this state of affairs, it is unclear to the entrepreneurs, the property owners and the local committees how they should act, a fact which delays and undermines many NBP 38/2 projects, whether they are at the permit production stage or not.
Evidence for this can be found in decisions recently made in the Haifa District Appeal Committee, as part of which the Appeal Committee has supported the Attorney General’s limiting approach over the expanding approach presented by the National Planning and Building Committee.
Moreover, the Deputy Attorney General has recently openly objected the instruction of the National Planning and Building Committee and has emphasized that it is not binding so long as the amendment of the plan and the law are not officially validated, therefore the local committees must act in accordance with the instruction of the Attorney General, rather than the National Planning and Building Committee.
It seems that in the meantime the uncertainty is here to stay, in a way that makes it very difficult for entrepreneurs and property owners to predict the method for calculating rights which will be applied by the local committee to NBP 38/2 projects. Moreover, the local committees themselves are unclear as to which approach they should adopt and apply.
However, it seems that there is a light at the end of the tunnel, in the form of the official NBP amendment (Amendment 3A) which will be done in a few months’ time, which will anchor the expanding approach of Adv. Gidron and the National Planning and Building Committee for calculating building rights in NBP 38/2 once and for all. All that remains is to wait patiently.
 The specified sizes do not refer to accompanying areas such as residential secure spaces, balconies, parking spaces and such.
 Appeal (Tel-Aviv) 5068/12 Uri Golan, Adv. Vs. the Givatayim Local Planning and Building Committee (published in Nevo 05/04/2012).
 Appeal (Tel-Aviv) 5510/14 Ziv vs. the Ramat-Gan Local Planning and Building Committee (published in Nevo 14/05/2015).
 Decisions of the National Planning and Building Committee, meeting no. 588 dated 21 Heshvan 5776, 03/11/2015.