Ikea: Rishon construction completely within the law

In Sep., the Tel Aviv District Court voided permits granted to Ikea. But Ikea petitioned.

ikea biz 88 224 (photo credit: Ariel Jerozolimski)
ikea biz 88 224
(photo credit: Ariel Jerozolimski)
The management of Ikea-Israel vowed on Sunday to continue the fight against the "powerful businessmen" who are leading the opposition against the opening of a new Ikea branch in Rishon Lezion, saying they have acted completely within the law since opening serious discussions with the Rishon Lezion Municipality about the new store more than two years ago. "We don't know right now who it is that is financing the opposition in their fight against us, but ever since we entered into negotiations with the Rishon Lezion Municipality, we have done everything according to law," Ikea-Israel director-general Shlomo Gabay said at a Tel Aviv press conference. "We feel that Rishon Lezion is a great fit for a second Ikea in Israel, and from what we know, all the residents of the city are happy with the decision to put an Ikea in Ma'ayan Sorek. We expect that the store will add about 450 jobs to the local sector, and positively affect the entire local economy." Last week, Tel Aviv District Court Judge Nurit Ahituv canceled a rezoning permit that would have allowed the opening of a new store in the Ma'ayan Sorek area. The decision voids the company's purchase of the lot and marks a huge victory for the opponents of the Ikea project, which include a varied coalition of some 80 environmental protection groups, local Rishon merchants and residents of nearby moshavim. Ikea-Israel chairman Ron Haddasi said it was clear the small business owners were getting assistance in their fight against the Swedish home furnishings company. "There is no way that they can fund this fight on their own," he said. While Haddasi and Gabay did not divulge who they think is funding the opposition, Elimelech Crystal, legal representative of the opposition coalition, told The Jerusalem Post there were rumors circulating in Rishon Lezion that the owners of the nearby Mitcham Bilu commercial center are funding the opposition's effort against Ikea. "I don't know who is inside the pockets of my clients," he said, "as I am not checking their bank accounts, but first of all, I do have a number of wealthy clients - they own land in west Rishon - and I know that there are claims that people from Mitcham Bilu are involved because they are afraid that if Ikea builds a store, they will lose business. But these are only rumors, and I can't know this for sure." In her ruling last week, Ahituv ruled that Rishon Lezion discriminated in Ikea's favor when the city's mayor granted the store an extraordinary permit, which had allowed for the reclassification of the Ma'ayan Sorek area as a commercial area instead of industrial. Ahituv said said Ikea was granted the tender to purchase the land in Ma'ayan Sorek as the result of an unfair advantage the company had over others vying to buy the property. The property is worth an estimated NIS 110 million. The ruling represents a serious setback to Matthew Bronfman and Shalom Fisher, the Ikea franchisees in Israel. Sweden-based Ikea currently has only one branch in Israel, in Netanya. Guy Kasher, an attorney representing Ikea, told the Post that the home-furnishings giant was appealing Ahituv's decision to the Supreme Court. He expects the court will open the case as early as this week. "We feel that the District Court made a bad decision and we are confident that the Supreme Court will rule in our favor," Kasher said. "Ikea was competing fairly with everyone else - everyone who competed in the tender process had access to the same information as we did." In September, the Tel Aviv District Court had voided the permits granted to Ikea. But Ikea petitioned that ruling. Should the Supreme Court uphold Ahituv's ruling, the Israel Lands Authority will have to reimburse Ikea for all of its expenses, including the purchase of the property and the improvements made, which Ikea claims amount to more than NIS 400m. After receiving the proper building permits from the municipality in 2006, Ikea immediately began construction on a 30,000 square meter store and has had 500 workers building it "day and night," Crystal said. Since the district court has already ruled twice against Ikea, Crystal hopes the Supreme Court will uphold the district court's decision. But he is wary that Ikea's dedicated effort to construct the building might rule the day. "The court may decide in Ikea's favor just because they can claim they have already built most of the building," Crystal said. "But the fact of the matter is that they have gone about this totally illegally."