Israel: Amendment 3A To NOP 38

Background and purpose of the amendment

It has been over a decade since the National Outline Plan (NOP) 38 in the matter of building reinforcements from earthquakes, was first approved. One of the substantial amendments to the provisions of NOP 38, is the second amendment approved in 2010 which added demolition and construction provisions to the plan, under the framework of an NOP 38 project ("NOP 38/2").

Throughout actual implementation of the provisions of NOP 38/2, it transpired that the calculation of rights under the NOP 38/2 format, is not clear enough, and is open to different interpretations, leading to two entirely different main calculation methods regarding the scope of building rights provided under the provisions of NOP 38/2.

On November 21, 2016, amendment 3A to the provisions of NOP 38 was approved ("Amendment 3A"). Amendment 3A focuses mainly on the method of calculating building rights under the NOP 38/2 format (demolition and construction); the local committee's discretion in NOP 38 projects and; in the matter of demanding a letter of indemnification from the developer. In this article, we will focus on the issue of calculating building rights.

In order to comprehend the provisions of Amendment 3A which relate to the way of calculating the scope of building rights, we will shortly describe the two different methods for calculating building rights prior the amendment, after which we will describe the method of calculation determined under the framework of Amendment 3A.

For the sake of good order, it is noted that Amendment 3A relates only to projects under NOP 38/2 format (i.e. demolition and construction). The scope of rights under an ordinary format of a NOP 38 project – building reinforcement and adding floors – remains unchanged.

Calculation methods prior Amendment 3A

The customary method for calculating the scope of building rights was based on a typical floor which is possible to build upon, according to the zoning plan applicable in the area, as distinct from what is built in practice (the "New Building Method").

The above method was rejected by the district appeals committee of Tel Aviv, headed by the chairman of the committee, Adv. Gilat Eyal, which determined that calculating building rights under NOP 38/2 shall be done based on the actual existing typical floor (the "Existing Building Method").

The differences between the two methods are substantial with regard to the scope of building rights which may be granted under the framework of an NOP 38/2 project. In principal, it is possible to say that according to the New Building Method, larger building rights were granted more so than according to the Existing Building Method (according to both methods, the number of additional floors allowed for construction was identical – 2.5 floors).

The decision of the appeals committee dragged many objections (mostly from developers) on the one hand, but also reinforcement from other entities on the other hand, the most prominent of which was the attorney general which literally adopted the appeals committee's decision. In light of the substantial differences between both methods, some of the local committees determined that until otherwise decided upon, the calculation shall be conducted according to the method of the attorney general (the Existing Building Method) and some of the local committees even froze building permits approvals until the publishing of Amendment 3A which will clarify the method of calculating building rights.

The method of calculating building rights after Amendment 3A

The formula determined for calculating the scope of rights actually combines between the above mentioned two methods and is based on the following main principles:

Below is an example for calculating the scope of building rights in accordance with Amendment 3A:

A plot of land of 1,000 sqm., upon which 3 floors building is built, on a colonnaded floor whilst the area of the typical floor is 500 sqm. (4 apartments in a floor). The zoning plan rights which apply to the plot, are 200%.

Before calculating the building rights under the NOP, one must first calculate the rights which apply under the zoning plan. In our case, the zoning plan rights which apply are 200%. If, for the purpose of the example, the area of the plot is 1,000 sqm., then the rights under the zoning plan allow the construction of 2,000 sqm. (A).

Now, the size of the typical floor is to be calculated, after which the area of the extended typical floor (which includes the increase of 13 sqm. for each of the apartments in the floor), followed by increase of building rights with respect to the increase in floors. Finally, 12 sqm. for constructing an apartment protected space, are to be added to each new apartment which is to be built.

In our example, the built up area of the typical floor is 500 sqm.

The building consists of 12 existing apartments to each of which, 13 sqm. are to be added, meaning, an increase of 156 sqm. to the entire building (B).

There are 4 apartments in the typical floor, so that the increase for each floor shall be 52 sqm. (4*13). In total, the area of the extended typical floor is 552 sqm. The building consists of 3 floors, so it is possible to add 3 additional floors (which are calculated according to the area of the extended typical floor). Thus, increase in the building rights with respect to increase in floors shall be 3*552= 1,656 sqm. (C).

Now, 12 sqm. should be added with respect to an apartment protected space for each new apartment to be built. In our example, the new building shall consist of 24 apartments, thus the increase due to the apartment protected spaces for the entire building shall be 24*12= 288 sqm. (D).

In total, the increase of rights under the zoning plan and under the NOP shall be 4,100 sqm. according to the following calculation: 2,000 sqm. by virtue of the zoning plan (A) + increase of 13 sqm. to each of the apartments in the building, in total 156 sqm. (B) + 1,656 sqm. by virtue of increase of floors (C) + 288 sqm. with respect to increase of the apartment protected spaces to each of the 24 new apartments to be built (D).

Increase of rights under the authority of the local committee

In places where the value of the land is low, it seems that the rights provided under the provisions of NOP 38 do not constitute a big enough incentive as far as the developer is concerned. In order to overcome this, and in order to provide a bigger incentive in these places, section 23 under the framework of the NOP provides the local committees with a wide authority to increase the rights provided under NOP 38, under certain terms.

Amendment 3A expanded the local committee's authority to approve a detailed plan which its purpose is to reinforce buildings from earthquakes, this, by diminishing the restrictions and the terms to activate the committee's discretion in approving the said detailed plan.

Conclusion

There is no doubt that Amendment 3A provided some certainty as to the scope of building rights provided under the framework of NOP 38/2, but there is still doubt as to whether such certainty will increase the number of projects under the framework of NOP 38/2. In this respect, it shall be noted that not everyone gained from Amendment 3A. Alongside projects which became much more worthwhile after the amendment (due to increase of the number of floors in buildings of 3 floors and above), a significant number of projects became unworthy due to a smaller scope of building rights, such as a one storey building. In any event, it seems that the certainty in calculating the scope of building rights shall bring to a renewed prosperity of projects which were frozen for a considerable amount time by the local committees due to the lack of clarity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.