The parking ransom will now be paid from the offset of the improvement levy

The Supreme Court ruled this week that real estate developers who will be forced to pay a parking ransom as part of a construction project will pay the ransom by offsetting the amount from the value of the land and the improvement levy the developer will pay for exercising the rights to it.

The ruling was handed down by Supreme Court Justices Neil Handel, David Mintz and Yosef Elron following the position of Attorney General Avichai Mandelblit, which was published in this matter last August. The background to Mandelblit’s position is a legal dispute between the Tel Aviv Municipality and property owners in the city.

The ruling in fact gives legal validity to Mandelblit’s opinion and will probably lead to a decision in dozens of open courts in the matter, and real estate developers will snatch hundreds of thousands of shekels as a result.

A parking ransom is a payment required by local authorities in a situation where a developer who builds a new building or adds housing units to a lot, cannot add parking solutions to that lot. This payment is an alternative solution to the addition of on-site parking, and is usually used to build a public parking lot in the vicinity of the property. To date, this expense paid by the developers has not been taken into account in calculating the land costs, and has therefore not been deducted from the calculation of the improvement levy that an developer is required to pay with the land levy.