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Gov't Will Pay Construction-Freeze Losses

Builders and residents: Losing money because of the construction freeze in Judea and Samaria? The government will pay you back.
By Hillel Fendel
First Publish: 3/7/2010, 5:26 PM / Last Update: 3/7/2010, 5:38 PM

Builders and residents: Are you losing money because of the construction freeze in Judea and Samaria? The government will pay you back.

An agreement has been reached according to which all those financially affected by the construction freeze will be paid back in a fast and easy “Green Line” approach.

The agreement was hammered out over the past few days and weeks between MKs Danny Danon (Likud) and Uri Ariel (National Union), on the one hand, and representatives of the Finance Ministry and the Prime Minister’s Office, on the other hand.

Final details have been worked out for residents and contractors, but arrangements for compensating municipal councils, whose losses are harder to quantify, have not yet been completed.

Prime Minister Binyamin Netanyahu announced a ten-month freeze on all Jewish construction in Judea and Samaria last November. In addition to the political ramifications, it set in motion a series of financial steps that caused losses to contractors, home purchasers, architects, municipal councils, real estate agents, building material companies, and more. The executive order, however, made no provisions for compensation for any of them.

The Danon-Ariel arrangement works as follows. Residents who obtained a construction permit before the freeze was announced will be paid ten months of rent money, based on a formula taking into account where they are living during this period; if the permit was obtained after the freeze was announced, they will be paid accordingly.

Danon emphasizes that this is the “Green Line” approach: “No one will have to produce lots of documentation, or proof that they planned to build, or anything else; this will make it easy for them to receive their money.”

Contractors will also be compensated relatively simply, though the formula is necessarily slightly more complex. They will simply have to show that they took out bank loans for a given project that was frozen, and they will receive the interests payments back. They will also be compensated, based on a particular formula, for their own capital that they invested in the project.

Asked what will happen if the freeze exceeds ten months, as many in Israel expect, MK Danon’s aide Shai Grizim told Israel National News, “The Finance Ministry says as follows: As far as the government is concerned, there is no intention to extend the freeze past September ’10. Therefore, there is no provision for such an eventuality.”

Grizim said that large construction companies might find it more advantageous to continue to pursue compensation for their losses in court. The Neot HaPisgah construction company in the hareidi-religious city of Modiin Illit (Kiryat Sefer) has already filed suit for over 170 million shekels in construction freeze-caused damages.

Architects, real estate agents and others who have suffered losses will not be compensated for their losses in an automatic manner. The new agreement calls for the withdrawal of legislative bills that have been proposed on the matter.