Temporary approval to convert residential offices on the stock exchange

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The massive move from office towers to work from home has led the Ramat Gan municipality to a creative interim solution. The municipality is examining the possibility of allowing residential uses in the stock exchange complex, by granting a permit for the excessive use of residential office buildings for about a decade. This is a sharp change of direction, since just before the outbreak of the Corona virus, the municipality promoted a plan that increases the building rights in the complex to 3.7 million square meters of employment.

The plan in question was submitted for objections at the end of 2019. As part of the objections submitted to the District Planning and Building Committee, office owners in the TASE complex argue that the decline in demand for offices caused by the crisis casts doubt on the feasibility of implementing the plan. Opponents further argue that most of the housing units that the program includes are located in plots owned by the municipality or the state, while the private plots include the addition of employment areas only. As a result, they demand that the plan include a wider scope of residential apartments, which will also change the area and breathe life into it, and also provide economic feasibility for adding office space in private plots.

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The stock exchange complex in Ramat Gan. Office owners fear a drop in prices Photo: Amit Magal

The current municipality’s proposal meets the demands of the opponents, but does not mean that it intends to waive business property tax, which is five times higher than the property tax paid in residential complexes.

According to Carmel Shama, mayor of Ramat Gan, “there will be no conversion of one square meter of residential offices as long as the residential property tax is a loss to the city, compared to the business property tax that holds the city’s economy while subsidizing residential property tax losses.” To implement, “while paying business property taxes and flexing standards and requirements for public buildings, especially education.”

According to data from the Central Bureau of Statistics, the non-residential property tax in Ramat Gan currently constitutes 54% of the total property tax collected by the city – NIS 355 million, out of NIS 659 million per year. In Tel Aviv, of course, the exception compared to most other cities in Israel, the non-residential property tax constitutes 72.5% of the total property tax collection – NIS 2.3 billion out of NIS 3.2 billion in property tax revenue.

According to the wording of the objection filed by the owners of old offices on Habonim Street, “Since the value of the land in employment uses depends on market stability, a mix of uses allows for economic balance for future projects.” The opponents, represented by attorneys Sharon Petel and Ben Hameiri of the Herzog Fox firm loyal“Due to the consequences of the spread of the corona virus, it is very possible that the scope of use of office space will be reduced and the need for extensive office space will decrease. The proposed design should be adapted to reduce the expected demand for office space.” “Increasing the scope of the living space at the expense of office space will reduce the chance that the office space whose construction was allowed by virtue of the plan will remain orphaned even after the epidemic has spread.”

The mayor of Ramat Gan, Carmel Shama HaCohen. "We will not agree to a loss property tax" The mayor of Ramat Gan, Carmel Shama HaCohen. “We will not agree to a loss property tax”

Similar reasons are raised by the Diamond Exchange, which is simultaneously promoting a program that increases the building rights in the three existing stock exchange towers in the 77-story, 88-story and 120-story towers. In the opposition, submitted by the Diamond Exchange through Adv. Yaakov Cohen of AYR – Amar Reiter Jean Schochtowitz & Co., the Diamond Exchange seeks to add residential uses in a 120-story tower.

In another objection filed by the owners of a 13-story building at 5 Snail Street, filed through attorney Rami Manoah, it was stated that “Sharp prices, while on the other hand demand and prices for residential housing units. And it seems that this trend will intensify even in the face of the change in the nature of work in all areas while preferring work from home and cost savings.”

The few residential buildings that exist in the stock exchange complex are also worried in light of the expected increase in the number of offices in the plan. In the objection filed by the house committee of a residential building on Bezalel Street, it was stated that: “The entire plan lacks homes while it is known that the area has criminal activity. If they add homes, this will prevent it from becoming a place of attraction for criminals.”

According to Adv. Zvi Shuv, an expert in planning and construction and real estate, who represents the rights holders in the complex, “it seems that the office sector has been in question since the Corona arrived, which led to a general crisis in the economy, with demand falling. Designed even before the Corona crisis, with large employment areas of about 3 million square meters, which may not be utilized properly, it is proposed to change the mix of uses so that the living areas will be increased. Please note that the plan divides the area into 4 types of complexes, each of which has a detailed content plan. However, not all complexes will allow residential use, which, as is well known, in many cases increases activity in employment areas and allows for a proper mix of uses, as the plan designates for the development of the stock exchange area.

Moreover, in the city of Ramat Gan there is a strong desire to change the stock exchange complex as a whole, and to eradicate the negative effects that exist in the area, and many believe that the residence will provide the appropriate solution. ”

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