The Danger of the Fast Track

"Clearly, this is a potential invitation to very bad abuse" – Prof. Joseph Zeira

By ZIV HELLMAN
Construction 521 (photo credit: REUTERS)
Construction 521
(photo credit: REUTERS)
PRIME MINISTER BENJAMIN NETANYAHU CONSIDers it the centerpiece of his policy to lower housing prices nationwide. Environmental groups call it a disaster. The leaders of the mass social protest movement rocking the country since mid-July argue it will only lead to increased profits for building contractors at the expense of home buyers, a view that cabinet secretary Zvi Hauser has termed “intellectually dishonest.”
The Law on Planning for the Expedition of Residential Construction (also known as the Building Committees Law or the Vadalim law, based on a Hebrew acronym), the source of all the controversy, is a law designed to bypass the standard lengthy approval process for new homes, thus streamlining the construction process for new housing. The law passed by a vote of 57 to 45 in the Knesset in early August, with the vote splitting more or less along party lines: Netanyahu and his coalition in favor, Kadima and the rest of the opposition opposed.
Nearly all land in Israel – more than 90 percent – is state-owned and has been since the days of the pre-state British Mandate in Palestine. Releasing land for new housing construction is a lengthy process, requiring the approval of the Israel Lands Administration, followed by review by local and regional building councils and environmental impact committees.
The new law, which now enters an 18 month “experimental” period, after which it may be reconsidered, overrides the current system by establishing six regional committees, each comprising nine members, seven of whom will represent government ministries and two will represent non-governmental organizations.
Approval by a regional committee can fast-track new housing projects by granting them dispensation from going through the standard construction review process. Only residential housing projects may be considered by the new regional committees; commercial projects will not be eligible for their review.
The committees have been granted authority to award tenders and to require tender winners to agree to predetermined conditions, possibly including a requirement that a given percentage of new housing units be reserved for rental only. Approval by a regional committee cannot exempt a proposed project from going through a public hearing stage, which is normally the last stage prior to final approval. Significantly, final authority over the new regional committees and their decisions is vested in the Prime Minister, in contrast to the Interior Minister, who normally has overall authority over the construction planning process.
The Building Committees Law reflects the current government’s pro-market approach: rising house prices, in this view, are mainly the result of supply not meeting demand, in which case the answer is to release more supply as quickly as possible by cutting down on bureaucracy and then letting the market determine new prices.
Environmental groups, however, are appalled by the law’s end-run around environmental impact committee review and fear that the regional committees will disregard environmental issues by permitting construction in “green areas” hitherto protected.
According to Amit Bracha, director of Adam Teva V’Din, the Israel Union for Environmental Defense, a non-governmental environmental group, the new law is merely “a means to bypass current planning frameworks and to unleash uncontrolled development on Israel’s precious rural open spaces and coastlines. [It] will allow for unbridled building but will not lead to affordable housing and it is disingenuous to claim otherwise.”
Joseph Zeira, professor of economics at the Hebrew University, responding by email to a request by The Report to assess the impact of the new law, writes that “the recent Vadalim law is presented as increasing the supply of land for housing. It is not clear how true this presentation is. People from the Planning Authority claim that the required land for large projects is already authorized, it just needs to be marketed, which is not under the jurisdiction of this law.
“But the law is a way for releasing new land for sale, without due attention to the violation of rights of other residents and of nature and environmental concerns. This can be quite dangerous, especially since the law’s main change is allowing the prime minister to intervene in the process in order to push it through. Clearly, this is a potential invitation to very bad abuse. This law therefore only reduces the degree of regulation in the planning process and gives more freedom to private construction companies. As recent decades have shown this is not the way to solve acute social problems,” concludes Zeira.