An investigation by "Globes" has found that the government's development subsidies for the sale of 4,600 housing units in the new haredi (ultra-orthodox) town of Harish will exceed NIS 1 billion.
The Ministry of Housing and Construction has published tenders for 29 lots in Harish, in which the contractors will apparently receive the so-called Sheves supplement, a legal amendment granting contractors an additional 20% of housing units in a project, for the marketing of 4,600 housing units out of the 10,000 units planned.
100-square meter apartments in Harish will be sold for NIS 500,000-600,000. This remarkable price is possible because land will be free and the development costs will be subsidized.
The marketing of the lots in Harish was preceded by several hushed up moves. First, Nissim Dahan, a Shas party member, was appointed chairman of a special local planning and building committee, and he adapted the urban building plan for haredim, demonstrating that planning committees have marvelous capabilities to change huge plans in a very short time.
Second, Prime Minister Benjamin Netanyahu recently made a quiet and seeming insignificant decision that communities where the number of housing units increases seven-fold will be eligible for Priority A Area status. This status grants 50% subsidies for development costs. The status is reserved for the periphery, but has been extended to Harish, a town in the center of the country by the decision. The cost of subsidizing Harish under Priority A Area status is NIS 350 million.
Third, the land tenders in Harish include a commitment that in cases of people eligible for Ministry of Housing benefits (the homeless), and construction is completed within 26 months, the ministry will grant the contractor an additional development subsidy amounting to NIS 50,000 per apartment. The additional subsidy totals NIS 222 million for Harish. For the government, the subsidy totals NIS 120,000 per apartment, while the contractor pays NIS 22,000 in development costs per apartment.
Fourth, in the Harish land tenders, the Ministry of Housing declared that it reserves the right to grant aid to homebuyers of up to NIS 60,000 per homebuyer who promises to live in the apartment for ten years. In other words, the benefit is tailored to homebuyers. The cost of this additional subsidy for religious and haredi homebuyers in Harish is almost NIS 300 million.
The additional subsidy means that the total subsidy to a contractor and homebuyer could reach NIS 180,000 per apartment. Assuming that the contractors will receive the Sheves supplement of 10% of the apartments, and that 5,000 apartments will be built in Harish in the coming years, government subsidies for the town total NIS 920 million.
Tenders tailored for haredim
Shas ministers Minister of Housing and Construction Ariel Atias and Minister of Interior Eli Yishai have said that anyone can buy an apartment in Harish, but a more thorough examination clearly shows that the project is designed for the haredim. Harish's urban building plan requires the construction of a balcony for Sukkot, and includes a trick enabling a building to be enlarged, by permitting the addition of a room to an apartment without paying for a permit.
Purchasing associations, which receive 170 days to pay the development costs, have a built-in edge over a contractor who has 60 days to pay. The tender also directs bidders to the Ministry of Housing's instructions for construction for haredim, including the apartment vestibule will have a place for hanging hats and streimels, a Sukkot balcony with room for a bed, double sinks for meat and dairy dishes, entry to the kitchen will not be through the living room to prevent the housewife from being seen, the bedrooms must be large enough to fit two beds (compared with the standard of one double bed), each apartment must have a Sabbath clock, and buildings of more than five floors must have a Sabbath elevator (which runs continuously during Saturday).
A school for each sect
The lot prices in Harish, according to the tenders, is zero. This decision contravenes Israel Land Authority Council decision 1244, which states, "The Israel Land Authority will publish the minimum prices in tenders to prevent influencing the price of the land."
The tenders also lack the contractors' requirement to pay for public buildings. Haredi community leaders and media promise homebuyers that the Ministry of Housing and the Ministry of Education will build public buildings at their own expense. The promise is even more far-reaching, because the homebuyers are promised not only mivkas and primary schools, but also schools for every sect, one for girls and one for boys.
The cost of building public buildings in the number needed to meet the requirements and promised to the haredim in Harish is NIS 200 million. There is also the cost of an overpass to Road 6 (the Cross-Israel Highway), and a water tower from other sources. The final cost of the development subsidies exceeds NIS 1 billion.
The Ministry of Housing's original development budget for Harish in the 2012 state budget was NIS 4 million in cash for immediate expenses, NIS 250 million subject to income (from contractors for development costs), and a NIS 180 million commitment.
At a meeting early this year, the Knesset Finance Committee was asked by the Ministry of Finance representative to temporarily divert money from Harish to another urgent project. Finance Committee chairman MK Moshe Gafni (United Torah Judaism) looked at him with astonishment, and said, "Do you understand what you're saying now? Fortunately there is no haredi journalist in the room."
Published by Globes [online], Israel business news - www.globes-online.com - on September 20, 2012
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