The Haifa Municipality has officially asked the Ministry of Interior to enlarge the city limits to include the Tamar gas field located 90 kilometers west of its coast. Consequently one can imagine Haifa Mayor Yona Yahav writing the following letter to Delek Group Ltd. (TASE: DLEKG) controlling shareholder Yitzhak Tshuva whose units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling Limited Partnership (TASE: DEDR.L) own 31.65% of the Tamar Field.
"Dear Mr. Tshuva, we are happy to inform you that the Tamar gas field is in the Haifa city boundaries and you are entitled to enjoy the municipal services given to all residents including water, sewage, and garbage collection. Because as far as we understand the asset we are speaking about is 1,600 meters deep you are asked to place at our disposal divers so that we can assess your arnona property tax. As far as is possible we will be happy to set the arnona assessment to the best of our judgement."
This letter is of course imaginary, but, as we reveal here, at the end of 2011 Yahav did officially submit a request to the Ministry of Interior to include the Tamar field in Haifa's city boundaries. "The reason for receiving the aforementioned area is economic," explains Yahav. "Joining to Haifa the drilling areas at Tamar and Dalit and the area between them to Haifa's jurisdiction will leverage Haifa from an economic point of view and allow the development of the metropolitan's northern area."
The Ministry of Interior perhaps thought that this was a joke but Yahav today told "Globes" that he is still waiting for an answer.
Doesn't the fact that the field is outside of Israel's territorial borders bother you?
"I haven't checked this legally but the fact is that this does not prevent the State of Israel from charging royalties on the field, so why can't I collect property taxes?"
Vital infrastructure installations, power stations, ports, container complexes and the like are the ultimate cash cows for local authorities. These are assets spread over huge areas that require virtually no municipal services. The municipalities can collect from the installations almost any amount that the law permits because there is no practical alternative to move to a different site. Courts tend to rule in favor of the municipalities and not the installation owners, who have deep pockets.
Law firms specializing in the area and working on a percentage if successful allow the municipal authorities to act against effectively the installations at no cost if they fail. The problem is that many local authorities have no interest in getting rid of installations that might endanger their residents because they provide a substantial part of their budget. The end result is that these crazy property taxes put up the electricity and fuel bills that we pay.
The attempt by the Haifa Municipality to collect arnona from the gas field deep at sea tangibly shows just how far municipal authorities are prepared to go to increase their arnona income from major infrastructure installations.
Published by Globes [online], Israel business news - www.globes-online.com - on September 11, 2013
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