Implementing Value Capture in Israel

The working paper investigates one of the most innovative tools in the existing Israeli planning toolkit. TAMA 38, also known as National Outline Plan No. 38, uses value capture in order to help the government protect its citizens in case of an earthquake. How is this done? Quite simply, by upzoning an entire country, and specifically by granting owners extra building rights to sell to developers. These developers build extra housing units for sale at market value and, in parallel, carry out additional works in order to reinforce the existing building against future earthquakes, renovate the building, and in most cases enlarge existing flats. In other words, the value captured by the sale of development rights is used to provide for a public good that the government views as very important. Public authorities enable this by guiding ‘mom & pop’ owners throughout this process. Value is captured in transactions by private owners as well as public authorities and used to prepare landowners’ properties to face a potential natural disaster.

To date, hundreds of TAMA 38 projects have been built, most of them in areas with high land values. At the same time, peripheral towns exposed to greater seismic threats are still experiencing implementation challenges. This report examines TAMA 38 while adding to international literature on the issue of value capture. Our hope is that scholars and practitioners in other countries facing similar hazards learn from the Israeli experience to be aware of potential pitfalls as they shape their own value capture polities, and to revisit their own policy frameworks with the Israeli approach in mind. The analysis is based on data collected from municipalities’ archives, real estate appraisers, and interviews with experts, developers, and policymakers. The overall focus is on the economic, legal, and planning challenges of value capture and their impact on Israeli towns and cities.

This working paper was initially posted on March 20, 2020. Minor edits were made to the paper throughout.