Kiryat Yam sent Rafael a bill for 1.2 billion shekels, the court ruled: "Unreasonable"

The District Court in Haifa ruled that the Kiryat Yam Municipality is entitled to collect development levies from Rafael, but canceled the payment demand of 1.245 billion shekels, after finding that the calculations on which it was based were flawed and led to an unreasonable result.

The dispute between the parties arose after about 6,000 dunams of the approximately 6,800 dunams of the Rafael complex were annexed to the municipal territory of Kiryat Yam in 2018, which until then had been defined as a regional area not belonging to any local authority. The Rafael property in Kiryat Yam, also known as the David Institute, is the largest of its assets in Israel, and its area is larger than the area of the city before the factory area was added to it. However, since its establishment, shortly after the founding of the state, and until 2018, it was defined as a regional area — an area not located within the municipal territory of any authority.

Three years after it was assigned to Kiryat Yam, the municipality sent Rafael the bill: a demand for payment of development levies in the amount of no less than 1.245 billion shekels. The amount is for road paving levies, drainage levies, and public open spaces. Rafael strongly opposed the charge itself and filed a petition with the Haifa District Court (sitting as a court for administrative matters), arguing that they had never benefited from the urban infrastructure of Kiryat Yam. It was also claimed that there were flaws in the procedure promoted by the municipality for collecting the levies. For example, Rafael pointed out that the Kiryat Yam Municipality collects 2.7 million shekels in levies annually, but is asking to collect from it an amount equivalent to over 400 years, which raises the question of whether the municipality actually needs these amounts for the benefit of establishing urban infrastructure.

Judge Ron Sokol ruled that the calculation made by the municipality relied on an examination of four neighborhoods where there is high-density construction, without taking into account that only a small part of the area is built in Rafael (about 270 dunams out of 6,000).

"The use of a sample based on residential neighborhoods to determine the levy tariff for the Rafael complex is unreasonable, and does not align with the purpose of conducting a calculation that will allow only for the financing of urban infrastructure, without enriching the municipality's coffers," the judge wrote in his decision.

The judge further wrote that "even without expertise, it can be noticed that the demand for development levies from Rafael, based on the calculations prepared in accordance with the sample, leads to an unreasonable result." In conclusion, he wrote: "The demand for Rafael's liability must be canceled, as the calculations according to which the tariffs were calculated and according to which the levies were calculated were flawed."

The Kiryat Yam Municipality stated: "From our perspective, the verdict establishes the most important principle: Rafael is not a separate island within Kiryat Yam. Even a large and unique complex must participate in the development and infrastructure costs of the city in which it is located. The municipality stood up for the rights of its residents and succeeded in establishing the very liability for development levies. Now we will work to correct the calculation in accordance with the court's instructions. At the same time, we will work to fully exhaust the city's duty to collect development levies. These are public funds, and we intend to continue and act decisively so that everyone who makes use of the city's infrastructure participates in the development costs and pays their share."