Adi Cohen Law Firm presents:

Urban Renewal Legal Services for Developers and Residents

We offer comprehensive legal guidance for urban renewal processes, starting from feasibility studies and obtaining the necessary permits to initiate the project, securing resident consent, negotiating for optimal rights, drafting contracts, providing ongoing support, and managing all bureaucratic and legal issues throughout the project, until its successful completion.

What is Urban Renewal?

Urban renewal is a joint initiative of state authorities aimed at increasing the housing supply on existing and developed land, improving and renewing the urban fabric, aesthetics, and infrastructure, and replacing old buildings constructed according to outdated building and safety regulations with new, reinforced buildings that meet high safety standards.

Urban renewal is based on investments by developers and contractors who demolish the old buildings and construct new ones in exchange for rights to the land and increased building percentages granted by the local authority. This allows the developer to build additional housing units on the land and sell them, recouping the investment and generating a profit from the project.

Urban renewal projects are considered complex and are subject to declaration orders and/or building permits obtained through lengthy bureaucratic processes. The immense economic potential of these projects necessitates the professional guidance of an experienced and skilled urban renewal attorney to protect the interests of developers and property owners and to advance the project with the authorities.

Types of Urban Renewal Projects

TAMA 38/2

Urban renewal through the National Outline Plan TAMA 38/2 involves the demolition of old buildings constructed under outdated building codes and their reconstruction.

Under a contractual agreement between the developer/investor and the property owners, the contractor receives the land rights in exchange for constructing a new building according to modern construction standards and delivering a new apartment to each existing apartment owner.

The apartment owners will receive a new apartment, larger than their current one, with a reinforced room (Mamad) and often additional benefits such as a balcony, storage, and parking, as well as other benefits depending on the agreement signed with the developer.

What are the requirements for obtaining a permit for TAMA 38/2?

Generally, buildings for which a building permit was issued before the cutoff date of January 1, 1980, are eligible for a permit to implement the National Outline Plan TAMA 38/2.

Exceptions to this criterion include buildings that underwent changes/additions that complied with Standard 413, the Israeli standard for earthquake-resistant buildings.

Additional conditions for obtaining the permit:

• Approval from a licensed structural engineer that the building needs reinforcement against earthquakes.
• The building is not subject to a demolition order.
• Consent of at least 80% of the apartment owners in the building.

Benefits for the apartment owners:

• Significant upgrade and improvement of the property, increasing its value substantially without any financial investment.
• Improved quality of life and living environment by receiving a new building constructed according to updated construction and safety standards, including the building’s facade and common areas.
• Addition of an elevator.
• Increase of the property’s area by approximately 25 square meters on average.
• Addition of a reinforced room (Mamad) and a balcony.
• Exemption from capital gains tax.

Benefits for the Developer/Investor:

• A construction project without the need to purchase land.
• Increased building rights: A building permit for up to 3.5 additional floors relative to the existing building, with all additional apartments available for the developer to sell as new apartments at high market value.
• Simplified bureaucracy and shortened procedures for obtaining a building permit.
• Exemption from betterment levy.

Project Duration:

A TAMA 38/2 project can be completed within approximately four years. Professional guidance from an urban renewal attorney from the start will help expedite bureaucratic processes, shorten the project duration, maximize rights and benefits, and facilitate participation in the project with a suitable developer capable of providing appropriate securities and fulfilling their obligations.

The Roles of an Urban Renewal Attorney Representing Residents in TAMA 38/2 Projects:

• Providing information to apartment owners—convening and supporting resident meetings, explaining and addressing project stages, timelines, implications, potential benefits, and challenges.
  Securing broad consent as much as possible to advance the project with full cooperation.
• Handling resistant residents—examining the reasons for refusal and striving for tailored solutions that address all apartment owners’ needs, including alternatives for elderly residents, people with disabilities, and others.
• In case of resistant residents without a valid reason (e.g., attempting to extract unreasonable benefits as revenge for neighbor disputes), applying sanctions and legal actions to prevent an individual from harming the collective within the legal options available.
• Negotiating with developers to secure extensive benefits in a fair framework that considers proportionality according to the size and characteristics of the existing property.
• Drafting a professional and detailed contract that leaves no loopholes, documenting all parties’ agreements and commitments, including securities and protections against potential breaches.
• Engaging with authorities and institutions to advance bureaucratic processes and obtain the necessary permits.
• Registering rights in the Land Registry according to project stages: merging the land and registering the developer’s rights, re-dividing the land, and returning proportional rights to the apartment owners accordingly.
• Managing interactions with the Tax Authority to maximize and obtain exemptions and entitlements.

Pinui Binui Project

Pinui Binui (Evacuation and Reconstruction) is a National Outline Plan promoted by the Ministry of Housing that also involves demolishing and rebuilding buildings by a developer and investor to gain land rights, increased building percentages, and new construction.

The difference between TAMA 38/2 and Pinui Binui is that while TAMA 38/2 plans involve a single qualifying building, Pinui Binui plans involve residential complexes and neighborhoods, including multiple buildings.

In addition to approval from the local authority, Pinui Binui plans also require approval from the Ministry of Housing and Construction through the issuance of a declaration order designating the area for evacuation and reconstruction.

In these projects, the developer commits to personal benefits for the residents and investing in infrastructure and the environment, providing residents not only with new, upgraded apartments in a new, stronger, and safer building but also with improved infrastructure and an upgraded living environment.

Threshold Conditions for Pinui Binui

• A declaration order issued by the Ministry of Housing—initiated by the Ministry or at the request of the local authority.
• Preliminary approval from the planning and licensing department of the authority.
• Updating the project’s outline plan in the Urban Building Plan (UBP) by the local authority.
• Consent of 50% of the apartment owners in each residential building or 60% of the apartment owners in the entire project complex.

A Pinui Binui project may last 10-12 years.

It is particularly important to consult with an urban renewal attorney at the start of the project to select the most suitable path for initiating and advancing the project, receive professional and comprehensive support, and protect the rights and interests of the represented parties throughout the process.

Attorney Adi Cohen brings deep expertise and extensive experience in urban renewal and, along with her firm’s team, provides clients—developers, contractors, and residents alike—with comprehensive services at uncompromising professional standards, with personal and dedicated support.