Beit Shemesh, Jerusalem and Kiryat Gat in Rosh

Against the background of the decline in housing supply and the number of construction starts in the shadow of the Corona plague: The Ministry of the Interior has allocated a grant of millions to 54 local authorities for the issuance of residential building permits, Mammon and Ynet have learned. This is a total amount of NIS 135 million, which was given as part of a mechanism to incentivize authorities to issue housing permits – a government decision from 2014 whose budget was approved as part of the follow-up budget for 2020 last September.

The purpose of the grant is to incentivize non-residential building authorities to approve as many building permits as possible, as well as to help cities that are in the process of accelerated housing establish appropriate infrastructure for the apartments being built. The list is led by the cities of Beit Shemesh, Jerusalem and Kiryat Gat, followed by Beer Sheva, Rosh HaAyin, Acre, Ashdod, Kiryat Yam, Bat Yam, Lod and other cities.

The grant consists of a budget of NIS 81 million, which relates to the number of building permits issued by the authorities to developers in 2019 compared to the years 2015-2013; And from a budget of NIS 54 million, which is distributed only to the authorities that have signed an umbrella agreement with the state, and is calculated according to the rate of growth of their population between the years 2019-2016. That is, the higher the rate of population growth in the authority that signed an umbrella agreement, the higher the budget. An authority that has not signed an umbrella agreement has not received a share of this budget.

According to the established mechanism, a local authority will be able to receive a grant of NIS 10,000-20,000 for each apartment that was issued a permit in 2019 – if it issued at least 200 building permits, and if their number is at least 10% higher than the number of permits issued in 2013-2015. That is, even if an authority distributed a much higher number than 200 building permits in 2019 – if the permit rate is not higher than 10%, it will not enter the list of grants (Petah Tikva is an example of a city that did not enter the list: it did distribute in 2019 as 1,000 building permits, but the increase was less than 10% and it is not a roof agreement signed).

The grant program also seeks to incentivize authorities to promote urban renewal projects. Thus, according to the established mechanism – if the rate of increase in the issuance of permits reaches up to 50%, entitlement of NIS 10,000 will be granted for each apartment in the case of a regular permit, and entitlement of NIS 15,000 in the case of an urban renewal permit. If the growth rate is above 50%, eligibility of NIS 15,000 will be granted in the case of a regular permit and NIS 20,000 in the case of an urban renewal permit.

The mechanism further states that if the local authority has not issued 200 new building permits, but the number of housing units in it does not exceed 2,000 while the increase in the number of apartments exceeds 20% – the minimum number of permits for a grant can stand at 150 (instead of 200). If the number of permits for the construction of apartments granted by the Authority under a price-per-tenant program in the two years prior to the measurement year (2019) exceeds 150 per year, the increase in the number of units could be 5% instead of 10%.

In order to create a balance between weak authorities, whose funds are in deficit, and strong authorities, the mechanism stipulates that in strong localities with a high socio-economic index (5-10) the grant will be reduced. This means that even if a strong local authority distributed a high number of permits, it is likely that the grant you will receive will be lower than a weak local authority, which distributed fewer permits during the period under review. Thus, the grant to localities at socio-economic level 5 was reduced by 25%, at level 6 was reduced by 60%, at level 7 was reduced by 80% and at level 8 was reduced by 90%. Cities at the socio-economic level 9-10 (such as Savyon and Ramat Hasharon) do not receive a grant – even if they are entitled to it in terms of the amount of building permits or if they have signed a roof agreement.

Beit Shemesh, for example, which is in a significant construction boom, meets all the criteria: a low socio-economic index (2), a roof agreement and a population growth rate of 13%. The city received a grant of NIS 18.4 million after distributing 3,672 permits in 2019 – the highest number of permits after Tel Aviv (4,660), whose grant was reduced by 90% to NIS 420,000 due to its high socio-economic index (8).

Jerusalem received a grant of NIS 17.9 million, after distributing 2,784 permits in 2019 (782 of them as part of urban renewal). She signed a roof agreement and her population rate climbed by 6%, so she received a share of the budget of the roof agreements. The grant was not reduced because its socio-economic index stands at 2. Kiryat Gat, which promotes a housing program for the ultra-Orthodox public with 11,000 apartments, received a grant of NIS 11.4 million. The city (2 in the socio-economic index) has signed an umbrella agreement and the growth rate of its population is 8%.

The other authorities on the list “settled” for lower grants, either because they issued a smaller number of building permits; Whether because they are not signed roof agreements or they are signed but there is no increase in the rate of population growth; And whether because these are authorities with a high socio-economic index, a criterion that reduces, as mentioned, the amount of the grant.

For example, Be’er Sheva received a grant of NIS 6.42 million. In 2019 it distributed 2,153 permits. Although the capital of the Negev also signed an umbrella agreement, its population growth rate was lower than the three cities at the top of the list (only 2%). In addition, it is considered a strong authority since its socio-economic index is 5 out of 10, and therefore according to the mechanism established the grant was reduced by 25%.

Rosh HaAyin, which received a grant of NIS 5.88 million, distributed only 840 building permits. She received the full grant from the budget of the umbrella agreements, which is calculated according to the massive increase in the rate of population growth in the city (35%). The grant was reduced by 80% because it is an authority with a socio-economic index of 7 out of 10.

Acre, which signed a roof agreement, received a grant of NIS 4.946 million. In 2019 it distributed 1,067 permits and its population growth rate climbed by 3%. Her grant was not reduced because her socio-economic index is 4 out of 10.

Ashdod, which also signed an umbrella agreement, received a grant of NIS 4.89 million. It distributed 1,304 building permits (of which 486 permits as part of urban renewal) and the population growth rate was 2%. Her grant was reduced by 25% because her socio-economic level stands at 5 out of 10.

Kiryat Yam, which has not signed an umbrella agreement, received a grant of NIS 4.25 million. Although it distributed only 961 permits (of which 27 permits as part of urban renewal), this is a significant jump compared to the years 2013-2015, when it distributed only 148 building permits (a jump of about 550%). Since this is a locality with a socio-economic level of 5 out of 10, its grant has been reduced by 25%.

Bat Yam, which also does not sign an umbrella agreement, received a grant of NIS 3.773 million. It distributed 1,263 permits in 2019 (of which 883 permits as part of urban renewal). Its grant has been reduced by 25% since its socio-economic index is 5 out of 10.

Lod, since it signed a roof agreement, received a grant of NIS 3.667 million and it was not reduced, because its socio-economic index stands at 3 out of 10. As in the case of Kiryat Yam, it did distribute only 551 permits in 2019, but compared to 2013 -2015 is a jump of about 800%. The population growth rate climbed by 4%.

Interior Minister Aryeh Deri said: “The accelerated housing trend, which mainly addresses young couples, will continue. But for that to happen, the government in our leadership must assist the local authorities with budgets, especially the weak ones, and we will continue to do so.”