What‘s new in urban renewal

Urban renewal is one of the cornerstones of the government’s housing policy. It is relatively new in Israel but not in the world. Urban renewal projects have existed for more than 150 years.

In the mid-19th century, Napoleon III had all the slum areas of Paris razed, and the city was rebuilt in a neoclassical style. The beautiful Paris we see today, with its wide avenues and aligned streets, is the product of that urban renewal. At about the same time, something similar happened in Manhattan, which was then the slum area of New York. The whole area was razed to the ground, and the posh Manhattan we know today came into being.

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Since then, there have been urban renewal projects in many cities around the world. This includes Israel, although in that regard we are relative newcomers.

Real estate appraiser Erez Cohen explains. “In the first years of the state, the problem was not to raze but to build, and the result was dozens of new towns built in “nowhere.” Consequently, in a small country of 20,000 square kilometers (some 9,000 sq. miles) — the size of Wales or the US state of New Hampshire — there are now 76 towns registered with the Ministry of the Interior.”

The need to rapidly create accommodation for millions of new immigrants had its price. The buildings were of relatively low quality in depressed environments. Little attention was paid to the quality of the construction, to communal areas or to the surroundings. Consequently, the buildings themselves and the environs are now in a state of decay. At those times, it sufficed. The bulk of the population knew nothing better and rarely wanted something better.

Attitudes began to change in the 1990s. With the advent of the hi-tech industry, GDP rose. The standard of living rose, and families that had been interested primarily in the floor size of their dwelling started being interested in the quality of the building and the environment as well. Shir Hasfari, a city brand strategist, says that this trend among prospective home buyers coincided with a new outlook of municipal administrations. The cities’ mayors were troubled by scenes of urban decay — rundown housing blocks built in the 1950s and crumbling city centers deserted by residents and businesses alike.

As a result, urban renewal became popular with municipal authorities. This meant tearing down apartments blocks with a small number of small apartments and in their stead constructing a great number of apartment buildings with many spacious modern units. The result would be beatifying the urban scene and increasing income. More and bigger dwellings meant increased local land tax ( arnona ).

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For the municipalities, it meant a better-looking city and increased financial resources. However, it did not mean satisfied residents because urban renewal involves temporary dislocation, which is not always popular with homeowners.

Urban renewal is now a key component in government housing policy, but it is not being implemented well enough or fast enough. Cohen says that urban renewal projects are still not sufficiently attractive to entrepreneurs. In addition, there are other problems, such as lengthy bureaucratic procedures and the reluctance of some of home owners, particularly the elderly, to move house.

Yehuda Herzig, the manager/proprietor of Herzig Real Estate, a company that specializes in urban renewal projects, says, “The legal framework for urban renewal is changing, making it more lucrative for entrepreneurs. But it is not changing enough and not fast enough. According to new legislation, urban renewal projects will receive building rights amounting to 350% of the area of the plot. The new legislation will also discourage home owners from stalling the project by making it more attractive, as well as taking into consideration the needs of the elderly. In my opinion, the new legislation will be more profitable for entrepreneurs and home owners alike, but it may not be enough.” Urban renewal is also bringing about changes in architecture, especially the construction of high-rise apartment complexes. One of the reasons for urban renewal is the need to make optimum use of the building land available. This is a problem in most large cities around the world, but in Israel it is exacerbated by the small size of the country in relation to its nine million inhabitants.

Architect Rachel Feller, a partner in the Moore Yaski Sivan architectural firm, believes that Israel’s small size is one of the main reasons that the government is trying to promote urban renewal projects. “In the past, urban renewal projects were mainly executed in old dilapidated buildings. Currently, these projects also include not so old buildings on large plots of land that are torn down to make way for towers of 40 stories and more that combine residential and office space. The optimum utilization of building land is of critical significance to the state. It is the only way to provide our growing population with modern, high-quality accommodation,” she says.

It is true that the optimal use of building land is important, but there are problems with both urban renewal and government policy. Urban renewal will only be implemented where it is profitable for the entrepreneur. As things stand, urban renewal is only profitable in places where real estate prices are high. This means in the center of the country — the coastal strip between Hadera and Gedera plus Jerusalem and Haifa. Areas that are in serious need of urban renewal such as Tiberias, Safed, Dimona and Ofakim are no-go areas. The prices of real estate in these areas make urban renewal projects very unprofitable. Therefore, the government will have to find ways to compensate urban renewal in peripheral areas where real estate prices are low.

One of the ways to compensate the entrepreneurs is to link urban renewal projects in the central region with urban renewal projects in the periphery. For example, an entrepreneur undertaking an urban renewal project in Ramat Gan will have to agree need to do a project in Tiberias as well. He will be compensated for the loss he will incur in Tiberias by receiving extra building rights in Ramat Gan, thereby making the joint projects profitable.

Herzig, whose company is heavily involved in urban renewal, is very critical of the government because he believes it is promoting conflicting and even contradictory policies. “It is subsidizing the building of new neighborhoods under the current buyer’s program. In the process, it is making urban renewal projects less attractive and is developing new neighborhoods that entail a wasteful use of land,” he says.

As an example of these contradictory policies, he cites Ashdod. The Housing Ministry has signed an umbrella agreement with the municipality to build an additional 40,000 dwellings. In such an agreement, the central government finances the necessary infrastructure for the additional dwellings such as schools, roads and sewage.

Herzig says, “This will not only entail the expenditure of billions by the central government, but it will also put paid on any chance of urban renewal programs in Ashdod, a town with a fair number of apartment buildings erected in the 1950s that are in dire need of urban renewal.”

Urban renewal projects are a fine way to supply new dwellings and rejuvenate cities, especially the downtown areas. Despite the fact that the government is saying it is all for urban renewal, the environment in which entrepreneurs operate in relation to urban renewal projects leaves much to be desired. Consequently, the annual number of new housing units in urban renewal projects amounts to a mere 6,000 to 7,000.

Even if the number rises to 10,000, it will mean 200,000 new dwellings by 2040, which is well below the target number of 800,000 forecasted by the Housing Ministry five years ago.

If urban renewal is really to take off and add 800,000 dwellings to the current stock, new policies must be formulated. The policies must make urban renewal more attractive to all concerned — entrepreneurs, residents and the municipal authorities. And ways must be found to make urban renewal attractive not only in Tel Aviv, Jerusalem and Haifa but in Tiberias, Ma’alot and Ofakim as well.

Built to last

Implementing urban renewal projects is important because they can play a part in solving the chronic housing crisis. Nevertheless, if we want to ensure that these new buildings will be able stand the test of time, we must ensure that the proper materials are used. Irena Shayevich, deputy CEO of Hassin Esh, a company that specializes in the production and marketing of building materials, says, “Although Israel is a very small country, it is geographically diverse, and each region has its own special needs with regard to building materials. From humid coastal regions that are exposed to salty sea air, to hot dry deserts, all have different climatic conditions that require their own special materials.”

We have ample proof of what happens when the right materials are not used. The state of the buildings in Israel, especially in seaside towns and cities, shows what happens when unsuitable and shoddy building materials are used. Salty sea air is very corrosive, so to withstand the effects of nature, special building material must be used. The same holds true for buildings in hot, dry deserts. They are exposed to harsh conditions such as strong winds, hot days and cold nights. They require special building materials to prevent decay.

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