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house view.(Photo by: Uriel Messa)
Legal Ground: Waiting for the earthquake
By HAIM V. KATZ AND SAM KATZ
12/17/2010
“TAMA 38” has already been described as a “band-aid” solution to a problem that was described as “potentially existential.”
The world has been pounded over the past few decades by global catastrophes. Hurricanes, earthquakes and tsunamis have claimed hundreds of thousands of lives and displaced millions from their homes and businesses.

Want to hear some frightening facts about where we live? The Knesset Steering Committee on Earthquakes recently pointed out that the State of Israel is situated alongside two tectonic plates along the Rift Valley. Looking back historically the land of Israel has suffered some massive earthquakes. Josephus Flavius describes how, on the seventh year of Herod’s reign (31 BCE), “There was an earthquake in the land of the Jews such as had never been seen before, and 60,000 people were killed under the collapse of buildings.”

A few hundred years later, the city of Beit She’an, which was one of the largest cities in the Hellenistic world, was totally destroyed. Modern archeological digs in the city have uncovered the unprecedented extent of the damage.

In 1837, Safed was almost completely ruined, and in Tiberias the city walls collapsed and one-fifth of its inhabitants were killed. In 1927, there were hundreds of dead and injured in an earthquake that rocked Nablus, Tiberius, Ramle and Lod.

The Knesset committee, headed by MK Meir Sheetrit (Kadima), was told by scientists that in the near future we can expect an earthquake that will be 7.5 on the Richter scale, with the epicenter probably in the Beit She’an area and a horrifying figure of 16,000 dead.

In the light of the above, it is astonishing that the sole government initiative in recent years to protect and strengthen buildings throughout the country recently lost its legal standing.

That initiative – known as “TAMA 38,” which stands for Tochnit Mit’ar Artzit (national zoning plan for strengthening of existing buildings to withstand earthquakes) – has already been described as a “band-aid” solution to a problem that was described as “potentially existential” by the Knesset committee.

The problem begins with the Israeli housing stock. For example, the hugely destructive Turkish earthquake demonstrated the importance of good construction; most construction was not properly regulated, and buildings collapsed in a matter of seconds.

Notably, of the 812,000 buildings in Israel, 370,360 were built before 1975; 361,595 were built after 1975, and about 80,000 buildings were built at an unknown date. Only in the 1980s did the government regulate building construction with a view to a possible earthquake.

The upshot is that a large part of the Israeli buildings stock requires reinforcing and presently is not ready to withstand a potential earthquake.

For the taxpayer to finance the reinforcing of hundreds of thousands of buildings would be an unpopular and expensive endeavor. So the government devised a plan to incentivize house owners to undertake these repairs in cooperation with building companies.

How was this supposed to work? In a nutshell, the government would grant permission for buildings to receive added zoning rights that would allow extra space to be built. The betterment tax usually levied on such extra building rights will be reduced by 90 percent, and other tax relief would be provided.

Contractors would be encouraged to approach building owners, and in return for permission to build desirable penthouses on the roofs, utilizing the newly granted building rights, they would reinforce the buildings and often add to their value by creating lobbies, gardens, much-needed elevators and “safe rooms” and generally improve the facade of the building.

Potentially, this is a win-win situation.

The community receives safer buildings, older people get easier access to their apartments with the new elevators, everyone theoretically makes money, and more much-needed apartments are made available to the public.

But something got lost in translation between the legislative intent and the execution of this otherwise good idea: Problems in obtaining enough neighbors to agree to the process; the reluctance of banks to finance these projects; the “cowboy” element of unprofessional and sometimes scrupulous entrepreneurs entering into the field; the lack of regulation governing the final product given to the sometimes naive owners; and the resistance of local planning committees all hindered the process.

All this led to a minimal amount of projects successfully executed.

So, should you rush and convene your neighbors and prepare your building for the TAMA 38 process? The answer is a definite yes.

First, although TAMA 38 was a temporary measure enacted for a three-year period, which recently ended, this is definitely not the last you will hear of it. MKs and many professionals in the field are pushing TAMA 38 to become a permanent law. This is being treated as a high priority and it will no doubt come back into force shortly.

Second, used correctly, the opportunity provided by TAMA 38 is an unbeatable tax-free method of adding to your assets and, collaterally, contributing to the public good, not to mention your own safety.

Our next article will describe a safe and hopefully profitable road map to TAMA 38.

israelaw@netvision.net.il

Haim V. Katz is a senior partner in a law firm with offices in Jerusalem and Tel Aviv specializing in real-estate, commercial, litigation, family and probate law. Sam Katz is a jurist in Jerusalem. They have collaborated on several legal works on probate and land law including the e-book
Buying Your Home in Israel and Probate & Inheritance – The Complete Guide.
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