Supreme Court Upholds 45 Million Shekel Betterment Levy for Kikar HaMedina
The Supreme Court ordered Kikar HaMedina landowners in Tel Aviv to pay a 45 million shekel betterment levy after dismissing an appeal over a canceled tunnel project.
Canceling a planned tunnel in Tel Aviv can increase land value without adding apartments: landowners in Kikar HaMedina must pay a betterment levy of 45 million shekels after the Supreme Court rejected their appeal.
The dispute centered on a plan that canceled a tunnel intended to pass beneath the square and altered the project's phasing. According to rulings adopted in the proceedings, these changes accelerated the completion date, thereby enhancing the land value.
The decision demonstrates that betterment is not solely dependent on the number of apartments or building volume. Changing the conditions for realizing construction can also add value to the land. The ability to complete a project earlier allows owners to receive apartments or sales revenues sooner, creating an economic advantage.
The original plan was approved in 2000.
The Kikar HaMedina project involves approximately 270 private landowners who banded together after decades of delays and disputes. The 2000 plan included three 25-story towers with 387 apartments, commercial areas, and a tunnel to route Jabotinsky Street beneath the square. A 2013 plan converted commercial areas to residential use, increasing the floors to 40 and apartments to 453. In 2018, a plan canceling the tunnel was approved.
The Tel Aviv Local Planning and Building Committee demanded a betterment levy of 135 million shekels for canceling the tunnel. Owners argued the cancellation actually harms land value, predicting a 15%-20% increase in traffic and worse noise and pollution.
The appeals committee determined the plan advanced the project's completion by years, appointing advisory appraiser David Dadon, who assessed the levy at 45 million shekels—one-third of the original demand.
The Supreme Court upholds the appraiser's assessment
Both parties appealed to the Administrative Affairs Court, which rejected both challenges and upheld the appraiser's stance. The landowners subsequently petitioned the Supreme Court for leave to appeal.
Supreme Court Justice Yael Willner ruled that the petition raised no fundamental legal questions or fear of miscarriage of justice, as the arguments regarding the tunnel cancellation and phasing concerned professional determinations by the appraiser and appeals committee. The appeal was dismissed, the 45 million shekel levy remains in force, and the owners were ordered to pay 5,000 shekels in legal costs.
