Discount Bank is to finance approximately 275 million shekels of a vacate-and-construct project in Kiryat HaYovel in Jerusalem

A vacate-and-construct project to be built on a lot of about 3 dunam (3,000 sqm) received financing from Discount Bank in an amount of ILS 275 million, out of an estimated total cost of approximately ILS 300 million ■ The project calls for the demolition of about 30 residential units in railway-style buildings and the construction in their stead of two 20-story towers comprising 129 residential units

04.12.18 | Adi Cohen

Discount Bank will provide financing of ILS 275 million for a vacate-and-construct project by the companies Carasso Real Estate and Kidmat HaYovel, to be built in the Kiryat Yovel neighborhood in Jerusalem. Under the project, about 30 residential units in old railway-style buildings will be demolished, and 129 new apartments will be built in their place in a project whose total cost is estimated at approximately 300 million shekels. Among other things, the financing amount includes the provision of financing guarantees to the project.

The site in question is located between 13 Tehon Street and 31 Rabinovitz Street, and as well as the increase in residential units, approximately 273 sqm of commercial space and approximately 261 sqm of public space are expected to be built. This plan is part of two plans approved in November 2015 by the Jerusalem District Committee in the framework of which two urban renewal hubs were promoted in the area.

The second plan in the area relates to the area located between Hannah Senesh Street and Henrietta Szold Boulevard, with an area of approximately 8 dunam (8,000 sqm), on which there are 36 housing units in five buildings. Six residential buildings, each of 8 stories, will be built on this site, alongside one 19-story tower to be built on the corner of Henrietta Szold Boulevard, opposite the state of “The Monster (The Golem)”.

The two plans together offer an additional 189 residential units in a string of new buildings with a commercial facade that will create an urban boulevard along Tehon Street. The two plans also propose widening the street in a manner to enable the passage of a light rail line in the future.

Tali Richman, Head of the Real Estate and Infrastructure Division at Discount Bank and Zion Shatach, Business Manager in the Division, led the deal on behalf of the Bank. Adv. Assaf Englard, Head of the Banking and Finance Department at law firm Hamburger Evron & Co., and Adv. Gilad Goni and Uri Shashu from his firm represented Discount Bank in the deal. The developers were represented by Adv. Benny Gavril and Uri Banki.

This project is the first vacate-and-construct to be launched in Jerusalem under Resolution 1519 of the Israel Lands Council, which was approved in September 2017, and which focuses on giving reliefs and incentives for promoting vacate-and-construct projects on state-owned lands.

Adv. Englard noted that “Within the framework of these concessions, the Israel Land Authority  will not collect permit fees for the addition of building rights for residential purposes and, in addition, the local authorities have also joined up, among other things, to grant a full exemption from the betterment levy for all the additional residential rights in projects that meet the conditions”.

Gilad Locker, Head of Urban Renewal at Paz Economics and Engineering, noted that the resolution (1519), is one of a series of new decisions of the Israel Land Authority, at the heart of which is the allocation of supplementary lots for urban renewal projects, with the objective of promoting projects in areas where there is insufficient economic feasibility. “Resolution 1519 determines, among other things, the requirements and the threshold terms for supplementary land. This is a tool of the State to ensure that the project would indeed not be economically viable without supplementary land, before the State is asked to give the land at a discount”.