Tel Aviv Refuses to include TAMA 38 rights in the expropriation compensation

An entire building was expropriated for the benefit of the light rail, and now the battle for compensation begins. The building’s owner is demanding payment that includes building rights by virtue of TAMA 38. However, the Municipality has rejected this, by claiming that there is no certainty that they will be exercised. NTA is actually prepared to compensate for this.

12.12.19 | Shlomit Tzur

For the first time, an entire building in Tel Aviv, located at 103 Ibn Gvirol Street, has been expropriated for the benefit of the light rail; and now, there is a battle for compensation.  Owner of the building, Psagot Yaron Ltd., has sued for compensation totaling NIS 63 million.  However, the Municipality has rejected the demand, claiming that the compensation it deserves is only NIS 24 million, since it should not include rights by virtue of TAMA 38.  The Company has appealed this.

In opposition to the Municipality’s position, NTA’s professional appraisal conducted by land appraisers Ohad Danos and Yaron Lahat, includes the building rights by virtue of TAMA 38, whereby the property owner must be compensated to the sum of NIS 31.2 million.  Because this sum is also lower than what the Company is demanding, it has filed an opposition regarding NTA’s assessment.  Concurrently, it has filed a suit for compensation against the Local Committee.  The total compensation will be divided between NTA and the Municipality.

In the appeal filed by Psagot Yaron to the District Appeals Committee,, through its attorneys Ronen Yardeni and Yael Urieli of the Hamburger Evron & Co. Law Firm, the Company is requesting to revoke the Local Committee’s decision and to appoint an expert appraiser to rule on the issue of the scope of the compensation.

This is an old building designated for commercial and residential use, built on a 506 square meter lot and includes to floors on a built-up area of 480 square meters.  The commercial floor is rented to the Super Yudah Supermarket and the second floor serves as a hall for martial arts.   In the appeal, the Company claims that according to the assessment by land appraiser Ran Virnik, who conducted an assessment in December of 2018, and based on the professional opinion of architect Daniel Master, the building has valid building rights for two additional floors that have yet to be built and additional rights by virtue of TAMA 38 and the municipal policy documents for Ibn Gvirol Street.  If not for the expropriation, it would have been possible to construct a 9-floor residential building in its place with more than 20 apartments.  Consequently, Virnik appraised the value of the lot at NIS 50 million and estimated the total compensation sum at NIS 63.4 million, including expenses due to the expropriation.

In August, the Tel Aviv Municipality’s Local Committee rejected the compensation claim filed by the Company.  In the assessment conducted by appraisers, Edi Gerstein and Ronen Shachar for the Local Committee, a claim was made that TAMA 38 building rights should not be taken into account for the purpose of compensation, because those are only vested rights and the Local Committee can refuse to authorize them.

In the appeal, the Company noted that it was shocked to discover that the Local Committee maintains that the TAMA 38 rights should not be considered.  It also noted that the Local Committee’s assessment was erroneous and unfounded – because its sole purpose was to reduce the scope of the compensation.  According to the Company, the Local Committee’s assessment is completely contrary to NTA’s assessment that determined that TAMA 38 rights should be considered.  “One cannot revoke these rights with the wave of a pen just to reduce the value as much as possible.”

Psagot Yaron also claims that although the dispute is not regarding the existence of the compensation, rather regarding the sum of the compensation, the Local Committee refuses to transfer the dispute to a determinant appraiser.  Even though it agrees that the damage to the Company totals NIS 24 million, it has yet to pay the sum for damages that is not in dispute.

Expropriating the building also has implications regarding the Super Yudah branch that rents the ground floor.  NTA refuses to compensate the supermarket; and in a suit filed against it by Adv. Tzvi Shoob, who represents Super Yudah, there is a claim that by law in a case of legal expropriation, it is customary that the public authority shall pay the tenant for the value of his rental fees and the owners should receive the full value of the available land less the sum paid to the tenant.  “NTA has acted in contravention of the law that determines that every right holder in land that was expropriated has the right to demand compensation and the law has determined that the right holder is also the tenant in the property.  It is unthinkable that the tenant shall be forced to deal with the owner, when it has the direct right to file a suit against NTA.  NTA has chosen to take the easy road, to cause a dispute between the owner and the tenant.

The Municipality has responded:  “The Local Committee for Planning and Construction has received and is studying the appeal.  After it reviews the appeal, it will respond according to the legal procedure.”