Thursday June 26 2025: Director of the Tax Authority: Owners of damaged apartments must be obligated to agree to urban renewal – or sell the apartment to the state.

Tax Authority Director Shai Aharonovitch supports urban renewal in areas damaged by missiles instead of rehabilitating low-rise buildings: "It's better for the tenants & also saves money for the state

The move will lead to the demolition of many buildings, and depends on the cooperation of the local authorities.

The director of the Tax Authority, Shai Aharonovitch, supports a policy of preferring urban renewal over rebuilding the buildings destroyed by Iranian missiles. Aharonovitch is willing to relax the rules of the property tax fund and increase its expenses in order to enable the construction of new towers, instead of restoring old and low-rise buildings.

Aharonovitch does not hide that one of the reasons he supports urban renewal is to save money for the government. According to his vision, the developers will advance the projects themselves, and the property tax fund will apparently participate only in financing the rent for the tenants until the completion of the construction.

"Urban renewal is a super important move," he says. "Residents will receive new and protected apartments, the state coffers will benefit, and the city centers will benefit from a density of hundreds of additional apartments with new infrastructure. This is a gain for all involved, and this is an opportunity that must not be missed."

Finance Minister Bezalel Smotrich established aninter-ministerial committee to examine the issue, in cooperation with Interior Minister Moshe Arbel and the Housing Ministry. The committee is headed by Matan Yagel, deputy director of budgets at the Ministry of Finance.

The committee is expected to submit its recommendations by the end of this week. The Ministry of Justice is represented on the committee, by Deputy Attorney General Carmit Ulysses, and the ministry is examining the legal implications of its recommendations.

Aharonovitch is leading a line within the committee, which is apparently accepted by most of its members, of maximum support for preferring urban renewal. This support refers to a preference for thedemolition of damaged buildings, and sometimes also of those that were not designated for demolition, in order to build new towers in their place, rather than trying to renovate the old and low-rise buildings.

The argument of the proponents is that it makes no sense to renovate the damaged buildings, which do not have protection against earthquakes or safe rooms, and it certainly does not make sense to build new buildings of several floors, instead of dozens of floors.

"Mayors come to me and think I'm a property tax tsar," says Aharonovitch, "meaning I can decide whatever I want. It's just that I'm subject to the law, and the law today talks about restoring the situation to the way it was before – that is, rebuilding the damaged building for the tenants, of course a new building with a safe room.

According to the director of the Tax Authority, about 30 buildings were designated for demolition following the missile attacks from Iran. Aharonovitch distinguishes between several legal situations. Some of the buildings were already in the process of urban renewal, with the signatures of neighbors. In such a case, the property tax will support urban renewal, but on the condition that the municipality advances the planning processes quickly.

"According to the law, I have to provide the tenant with a roof over my head – a hotel or rent. I have no intention of being stuck for seven years now with the payment of rent. It's not good for the tenants, who already need certainty, and that, too, is terribly expensive for the state's coffers," says Aharonovitch.

According to him, the property tax will do everything possible to support such projects, while financing the rent for the tenants until the completion of the construction. In cases where the economic feasibility is borderline, property tax may transfer to the developer's coffers the amount he was supposed to invest in the construction of a new building. In any case, the condition that will be set is that the planning and building procedures will proceed rapidly, meaning that the local government will be mobilized to promote these projects.

The legal situation is different in a case where a building was damaged for which there were no urban renewal plans. In this case, too, the property tax will require the local authority to promote a plan as quickly as possible.

Aharonovitch also supports the idea — now being examined by Ulysses of the Justice Ministry — of forcing tenants to agree to urban renewal. This can be done by lowering the majority required for consent, or stating that no consent is required at all, and instead tenants will be given representation that will preserve their rights.

In such a case, the tenants will also be given the right to sell the apartment to the state, and receive compensation for it immediately. Aharonovitch proposes that the value of the apartment be determined by a decisive appraisal mechanism, and that the state incentivize the tenants to agree to the sale by means of a discount on betterment tax (which is relevant to housing investors), as well as a discount on the purchase tax on the new apartment they buy.

He said, "There is a question about buildings that are not slated for demolition, but rehabilitating them is a bad abuse of building rights. As far as the tenants are concerned, this will lead to the construction of less good apartments, and it will cost the property tax a lot of money to rehabilitate these buildings. In such a case, too, we must be forced to demolish and rebuild."

In practice, Aharonovitch supports the demolition of many more than the 30 buildings that were designated for demolition, so that buildings that could have been rehabilitated will also be demolished and will be part of the urban renewal plans. However, such a move also depends on the cooperation of the local authorities – they are the ones who should promote a plan to demolish those structures, instead of rehabilitating them.

A large part of the buildings that were demolished are in the center of the country, where there is economic feasibility for urban renewal. In fact, the fact that two severe injuries in Tel Aviv ended without any casualties contributed to the fact that buildings in the area were already empty – in preparation for urban renewal.

This means excellent for property tax—there is almost no need for government support, and projects can be promoted by the free market. In fact, the Iranian missiles only helped speed up the approval process and start construction, which was already planned.

Martin Blackham Israel First TV Program www.isrealfirst.org