Tel Aviv’s affordable housing plan remains on paper, while rents continue to rise.

In August of 2008, the Tel Aviv Municipality announced with much fanfare that it had a “revolutionary plan” to build hundreds of affordable apartments for young people in the city.

One year and a global financial crisis later, apartment prices in the city continue their inexorable climb. Mayor Ron Huldai, who announced the plan just months before the local election, was re-elected, and the plan to build affordable housing vanished from the headlines.

Meanwhile young people, faced with rent hikes at the end of their leases, have increasingly decided to move out of the city center. Those who stubbornly insist on staying put have crowded into smaller, more dilapidated apartments. Others have come up with creative ways to save money, like converting their living rooms into an extra bedroom.

What happened to Tel Aviv’s revolutionary plan?

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One thing, at least, is clear: work on the plan is done. Earlier this year, in May, the municipality announced that the Municipal Commission for Affordable Housing, the panel of experts that put together the plan, had completed its work.

The commission, composed of external consultants from various disciplines alongside municipal officials, had come up with a list of recommendations that sketched out approximately what an affordable housing program in Tel Aviv would look like. Now it was up to the political echelon to decide what to do with those recommendations, which aspects to approve and how to proceed with the initiative.

To date, the commission’s work is still awaiting approval. Despite the city’s promise back in May that the plan would be presented to the mayor and deputy mayors “in the coming weeks,” that has yet to happen. The commission’s full report, which contains details on the various policy tools under discussion, has not been released to the public.

Dr. Emily Silverman, a researcher from the Technion – Israel Institute of Technology’s Center for Urban and Regional Studies, headed the team of professional advisors to the Municipal Commission for Affordable Housing.

“Our main recommendation was that new residential projects built in the center and north of the city include affordable units for rent,” she says. “In exchange for these units, developers would be given extra building rights.”

Silverman continues: “Another recommendation was to push forward building plans in the south of the city and in Jaffa which have already been approved, but have yet to be built due to various regulatory obstacles. Pushing forward those plans would significantly increase the supply of housing.” Indeed, according to press releases put out by the municipality last August, two such projects, slated to contain some 1,650 new apartments, were to be pushed forward immediately.

In addition, a range of other policy tools were proposed, and the commission even suggested specific plots of land for pilot projects.

As to why the commission’s recommendations have yet to be approved, Silverman blames the delay on opposition to the plan among senior figures in the municipality.

The municipality, for its part, appears to be keeping its cards close to its chest for the moment. In response to an inquiry regarding the delay in approving the plan, the Tel Aviv Municipality told Metro:  “The subject of affordable housing is a strategic issue of great significance. Therefore it is important that the approach be allowed to mature in order to reach an operative state. The same goes for the full publication [of the commission’s recommendations].”

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The concept of affordable housing is not really new in Israel. From the early days of the state, government policy aimed to make decent, affordable housing accessible to the majority of the population. The Housing Ministry, which wielded tremendous power and influence, once built entire cities from scratch and provided housing for millions of new immigrants.

Over the years, however, as Israel’s centralized, socialist economy gave way to a privatized, capitalist one, the state effectively withdrew from the housing market and the Housing Ministry lost much of its power and resources. The government ceased building public housing apartments for low-income populations, and instead began selling off publicly-owned apartments. In cities like Tel Aviv and Jerusalem, where changes in the rental market threatened to make housing out of reach even for middle-income people, pressure began to grow for local governments to intervene.

Israeli municipalities, however, strapped for cash and constrained by antiquated legal structures (the law setting out the powers of local authorities in Israel is a leftover from the British Mandate), were hardly in a position to respond. The demand for a new sort of affordable urban housing grew out of this situation, led by young people struggling to remain in their urban neighborhoods and academics who pointed out that many cities around the world, including London, New York and Paris, had successfully implemented programs to regulate rents and build affordable housing units. In both Tel Aviv and Jerusalem, the issue played a key role in the elections for mayor in late 2008.

Initially, officials inside the Tel Aviv Municipality approached the idea with trepidation. Mayor Ron Huldai was quoted more than once criticizing the idea in the media.

Dr. Emily Silverman recalls that the project, ironically, grew out of an attempt by the municipality to justify not taking action. It was back in 2007, Silverman recalls, that calls from local politicians calling on the city to explore the issue of affordable housing were growing louder. In response, City Engineer Chezi Berkowitz asked the municipal planning team to draw up a professional opinion explaining why the municipality did not have the capability to create such a project, based on two previous assessments of the issue written by economists.

However, when members of the planning team consulted with Silverman, a known expert on the subject, she managed to convince them that it was possible. The planners in turn convinced the City Engineer, and thus the idea for the commission was born.

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Another irony is this: even if the plan is eventually approved and implemented, it probably won’t lower rents across the board. A certain number of people, it’s unclear how many, would be eligible for cheaper apartments, but the steps that the municipality is currently considering are not expected to have a significant impact on the greater housing market.

Gil Gan-Mor is a human rights lawyer at The Association for Civil Rights in Israel (ACRI) and a leading advocate of housing rights and affordable housing. ACRI is part of the Coalition for the Advancement of Affordable Housing in Israel, which also includes The Association for Distributive Justice, Bimkom – Planners for Planning Rights, and research institutes from Tel Aviv University, the University of Haifa and the Technion. The coalition has started a Hebrew-language blog as a platform for public discussion on the issue and is working on passing an affordable housing law in the Knesset.

Gan-Mor says he supports the move to create affordable housing in Tel Aviv, but believes that the city’s plan in its current form leaves much to be desired.

“The municipality could decide to set up a rent control mechanism that would allow landlords to raise rents incrementally, according to a set percentage every year,” says Gan-Mor. “Today, landlords take advantage of a lack of supply to hike rents substantially, and if a renter doesn’t agree to this, he simply has to look elsewhere.”

Dr. Emily Silverman admits that building a large number of affordable apartments for a specific group would probably not have a significant effect on the general rental market. “Affordable housing programs don’t usually result in a general lowering of prices, except for the target population,” she says.

However, she adds, speeding up construction of already-approved plans in order to increase supply (which was recommended by the commission) could theoretically lower rents across the city – it’s a matter of supply and demand. Silverman agrees that rent control mechanisms could also potentially benefit all of the city’s renters.

The problem, says Gan-Mor, is that regulatory tools, like rent control, which have been implemented successfully in many places in the world are not even being discussed – at least not according to the information that the municipality has made public. Says Gan-Mor: “The city’s method of releasing information through periodic press releases does not allow for a proper public discussion of the issue.”

He also notes that the municipality is considering making army service a condition for eligibility for affordable housing, a move which would effectively exclude the Arab community of Jaffa from the program.

Questions have also been raised regarding the project’s choice of target population. The commission’s mandate was to find affordable solutions for households with monthly incomes of between NIS 12,000-13,000. Last year, Dr. Emily Silverman described the target group to Metro as “moderate-income, socially-mobile young professionals.” For this population, the city would offer rents of around NIS 2,800.

However, as Gan-Mor points out, the plan provides no solutions for low-income residents of the city.

The municipality admits that this is the case, but argues that it does not have the resources to provide housing assistance to a low-income population. The Tel Aviv Municipality told Metro: “Public housing, everywhere in the world and in Israel as well, is the responsibility of the government, and not the responsibility of the local authority. The municipality does not have the capability to supply public housing like the government, without any means or appropriate tools. Therefore, the recommendations define the target population as an intermediate population, which is able to pay, but unable to afford to live in the city at market rates.”

To Gan-Mor, the city’s refusal to provide housing aid to low-income families is unacceptable. “The municipality’s plan states that it trusts the government to provide housing assistance for people in the lower income deciles,” he says. “The problem with this is that the State has scaled back its public housing programs in recent years. The waiting period for public housing in the center of the country can be over ten years, and rental subsidies provided by the government are way too low to cover rents in the Tel Aviv area. The inevitable result is that people with low incomes are forced to leave the city.”

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Not everyone, of course, is convinced of the merits of affordable housing. A number of conservative economists have publicly expressed their doubts about the plan. One of them is Dr. Yair Duchin, a professor at The Hebrew University of Jerusalem who made headlines last month when he called the idea of providing affordable housing in Tel Aviv “idiotic.”

Though he admits that, from a social perspective, there may be a problem in Tel Aviv’s housing market, Duchin says he prefers to look at the larger picture. The country’s periphery, he says, is emptying out. “Youth from all over Israel, including graduates of universities in Haifa and Be’er Sheva, are streaming to Tel Aviv. Affordable housing will only serve to attract more of them.”

“Of course the mayor of Tel Aviv wants to attract a young, strong, productive population. That’s perfectly legitimate. But there are also national goals. I think that the country’s limited resources should not be invested in those who want to live in central Tel Aviv.”

As for Tel Aviv’s young residents, Duchin suggests that they move out of the city, to Bat Yam, Holon or Petach Tikvah. If enough people move out of central Tel Aviv, he says, perhaps market forces alone will be enough to lower rents.

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For Prof. Noah Efron, a city council member from opposition party City for All (Ir Likulanu), it’s pretty clear why the plan is not going anywhere. “Nobody within the municipality wants to advance it, so it’s simply not being advanced,” he says.

While Efron thinks that the commission’s plan is insufficient, he admits that “it’s excellent for what it is,” and should be implemented right away. Noting that City for All has a much more extensive affordable housing plan of its own, Efron says he believes that the municipality’s plan has the potential to establish a number of important principles.

“The implementation of mixed housing, building for the rental market, dealing with apartment sizes – talking about these issues, even on a small scale, can begin to change the discussion about housing in the city and create important precedents, making it easier for the city’s planning committees to insist that developers build projects that are mixed, and not just for the rich or super-rich.”

To a limited extent, that has already begun to happen. Even without an official stamp on the commission’s plan, city planning committees have begun to use the momentum created by its work to require developers to integrate affordable housing units into new projects.

This is what happened, for example, in discussions regarding the former site of the city’s wholesale market. An enormous real estate project is planned for the 60-dunam site, which sits partially on city-owned land near Carlibach Street. When representatives from several local political parties insisted that the plan include an element of affordable housing, the developer agreed to add 60 small, affordable rental units.

“In the scheme of things,” says Efron, “it’s a drop in the bucket. But it’s also a sign that, if we continue to be vigilant in the municipal committees and bring enough public pressure to bear, we can begin this process, eventually making it into the norm. The municipality has publicly committed to doing this, now we have to push it to honor its commitments.”

This article was originally published in The Jerusalem Post’s “Metro” supplement on Sept. 11, 2009 (click here for a pdf of the original print version).