The huge Neve Tzedek-Gvulot project in Tel Aviv's Florentin neighborhood by the Boulevard Terra company has been called off. The company has refunded down payments by buyers in recent days, sources inform "Globes." Some of the money was paid to the company five years ago. The company says that the lengthy process of obtaining building permits from the Tel Aviv municipality was a key factor in the project's failure. The municipality denies the allegations, saying that it did everything to expedite the planning processes.
The land for the project is located near the Neve Tzedek tower in southern Tel Aviv, near the corner of Eilat Road and Gvulot Street. Five years ago, it was reported that the company had signed an agreement with the lot's owners to buy it for tens of millions of shekels. Boulevard Terra, whose owners include Ami Federmann and Erez Navon, planned to build a residential project with 177 apartments with an average of 60 square meters per apartment, together with 1,000 square meters of space for commercial uses. According to one of the buyers, a two-room apartment was previously marketed for NIS 1.4 million. Advance deposits amounting to 7% of the apartment price were made for 160 of the apartments to date.
The project failed to make progress. A notice to the buyers issued by Boulevard Terra in April and obtained by "Globes" stated, "All of the apartments put up for sale were sold. The rest of the apartments will be marketed along with progress in the project… The demolition permit was approved and should be received in the coming weeks. Discussion in the committee of the full permit for the project is scheduled for after the holiday." Another letter sent by the company to the purchasers in May was less optimistic: "As of this date, no building permit for the project has yet been received." It was also stated that this was complicating the bank financing agreement, because the bank had made a complete building permit a suspending condition for the agreement. Last month, however, the purchasers received a letter from the Boulevard Terra with the headline, "Notice of Agreement Cancellation." This letter stated, "We regret to announce that in view of the prolonging of processes for issuing the building permit for the project, Boulevard Terra Florentine Ltd. hereby announces the cancellation of the agreement. We will contact you shortly for signing the documents for canceling the purchase agreement needed in order to arrange land taxation and repayment of the first payment you made." The letter was signed by Boulevard Terra CEO Shay Polonsky.
"The municipality expedited the process"
Real estate appraiser Ran Fermon, whose relatives purchased apartments in the project, said that his relatives had been summoned recently to Boulevard Terra's offices on Ha'Arba'a Street in Tel Aviv to a personal meeting with Polonsky. During the meeting, "It was explained to us that the project was being canceled because of the lengthy processes of issuing permits and the problems this created for obtaining bank financing. He asked us to sign documents canceling the agreement as a condition for repayment of the NIS 200,000 down payment on the apartment, with no compensation for an increase in the value of the land or the almost five years that had passed since then."
Boulevard Terra stated, "When the purchase agreements were signed, it was emphasized to the buyers that the project did not yet have building permits. The buyers therefore paid only a 7% down payment, all of which was deposited in trust. It was emphasized and agreed with the buyers that if they building permits are not obtained within 27 months of the signing of the contract, both the company and any of the buyers would be entitled to cancel the agreement and receive the full amount of the down payment. As a result of the change in the municipality's policy and the prolonging of the building permits process and the negotiations with the municipality, which have been going on for five years, the permits have not yet been received.
"The company nevertheless did everything in its power to move the project forward. Among other things, it contacted each of the buyers in order to extend the timetable for the project, but only two thirds of the buyers agreed. For this reason, the project cannot be continued, and the company notified the buyers of the cancellation.
"Under the agreements and notices received by the buyers throughout the entire process, the company will return all of the buyers' money, as it undertook. Furthermore, although it is not legally required to do so, the company is also reimbursing the buyers for their legal expenses in signing the contract."
The Tel Aviv municipality said in response, "In contrast to what was alleged, the municipality is doing everything necessary to expedite the project and move it forward, including authorizing the issuance of the permit before payment for it is received from the developer."
Published by Globes, Israel business news - en.globes.co.il - on December 13, 2018
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