Brief Overview of Country System

Introduction to Israel’s Planning and Building Law (18/12/2007) 
Israel is a small country – 21,000 sq. km. with 7.2 million people. Considering that 50% is a desert, its population density is high. This brief introduction to Israel’s planning law is divided into three major parts: Introduction to the constitutional system and the relations between central and local government; summary of the land-use system and its institutions; and the types of planning instruments.

Constitutional structure
The Parliament and the Central Government 
Israel is a unitary state with a parliamentary political system. The parliament – the Knesset – is composed of 120 members, in a single chamber. The legal system is a combination of British-American and European continental system. Supreme Court decisions have distinct precedential status and much influence.

Although the country is divided into six statutory districts, national government has not devolved any major powers to them. Headed by an officer of the Ministry of the Interior, they are in charge of oversight of local government and land-use planning. The Minister of the Interior has authority over them. Other ministries also have administrative districts, but these are not statutory, they only reflect administrative convenience (often their boundaries don’t even coincide with each other). Israel’s constitutional structure vests within the central government all residual executive powers not specifically assigned by law to local government or to a specific agency.

Given the highly centralized structure of decisions, the high involvement of central government in many aspects of land-use planning comes as no surprise. Some experts argue that Israel’s geopolitical and internal needs justify a high degree of centralization in policymaking. Yet, despite the absence of formal decentralization, the national level policymaking process and the content of policies have de facto changed significantly. These changes reflect the growing local-government assertiveness noted below, the accelerating trends of privatization of public services, and the pullback of government involvement in housing supply.

Background to Local and central government relations
There are approximately 250 local governments, of which more than 70 are in the Arab sector. Local governments are of three types: cities (approximately 60), towns (approximately 135), and regional authorities (56). In densely built-up Israel, the latter include not only agricultural land but also an increasing number of ex-urban neighborhoods, commercial, and industrial sites. The central government regards this number of local authorities as too large and fiscally wasteful. But despite the recommendations of several public commissions that the government has set up over the past 20 years, few mergers have yet been successfully completed because of local-government resistance.

Israel is one of the only advanced-economy countries where no major decentralization and devolution of powers have officially taken place. The central government legally still retains most of the powers it possessed when Israel was in its formative stages.

On paper, the legal powers of local authorities are weak and their financial powers are severely constrained by the central government. Legally and financially, they are weaker than their counterparts in most Western countries. Most major budgetary decisions and spending require central-government approval. All but the most prosperous local authorities are dependent on central-government transfers. Land-use and development control powers are highly centralized .

This picture is, however, somewhat misleading: Despite the rather heavy central-government presence in many sectors, much of the day-to-day development policy and initiatives – the things that affect consumers most – are vested at the local level. Some mayors have learned all too well how to negotiate with the central government to increase their de facto autonomy despite central-government oversight powers.

Israel’s planning law and institutions 
Israel has a rather centralized land-use planning system that combines top-down planning with bottom-up initiative. Central government is involved in two ways: Through the extensive powers to oversee local-level planning decisions, and through the power to make binding national land-use plans. National involvement is channeled, at least on paper, through the hierarchy of plans, from national plans, through district plans, down to the local plans.

National-level review powers over local and district decisions
The Israel Planning and Building Law of l965 controls all planning and development. This law replaced the legislation introduced by the British in l922 and l936 during their Mandate over Palestine that remained in force after the establishment of Israel in 1948 (see Alexander, Alterman, Law Yone, 1983). British Mandate legislation did not have is a national planning body or national statutory plans. The 1965 legislation added both.

Until 1965, planning controls did not apply to central-government bodies. The l965 law required all government jurisdictions – central, district, or local (defense-related uses have special procedures in the law) – to submit a plan for approval and obtain a building permit just like a private developer.

The institutional hierarchy under the Planning and Building Law has remained more or less the same since 1965, with some incremental amendments, the major one in 1995 (see Figure 2). Although I have shown Cabinet at the top, it actually has just one direct role in the statutory system – to approve national plans.

The National Planning and Building Board has 31 members. The Knesset in 1965 took a rather progressive view and included not only representatives of all relevant government ministries (11), but also representatives of the various levels of local government, non-governmental environmental bodies, rural interests, the planning and building professions, women’s organizations, a sociologist, a representative of academia (the Technion), and even a representative of ‘the younger generation’.

Another statutory planning body “alongside the National Board” is the Commission for the Preservation of Agricultural Land . The CPAL was in the past extremely powerful – with no counterpart in any country (Alterman 1997). Until a 2006 amendment to the law, the CPAL stood even above the National Planning Board because even national plans that encroaches on declared agricultural land needed CPAL approval. Today such approval is still necessary for any local and district plan that encroaches on farmland, whether temporarily or permanently. If one considers that in 1968 almost any and all vacant land – whether suitable for actual agricultural use or not – was declared Agricultural Land under the law, one realizes the power and importance of the CPAL.

The District Planning Commissions are composed mainly of representatives of central-government bureaus – almost all the ministries relevant for planning. This body was probably conceived as a forum to encourage coordination between national and local planning policies, and among sectorial policies.

Local Planning and Building Commissions are of two types: In most mid- to large cities, they are composed of the local-government elected council; central-government representatives have onlooker status only. In smaller towns and rural regions, a local planning commission serves several small local governments, and is composed of representatives of each. The Local Planning Commissions are the first and usually crucial clearing-house for local policies and most development initiatives. In 1995 a small degree of decentralization was implemented in planning law, permitting local commissions to approve some local plans – those that do not make major land use or density changes.

Central-government oversight is carried out in several ways. Most decisions of the local planning commissions require the approval of the district commission and thus central government in effect controls the heart of the planning system. Additional oversight is provided by the Minister of the Interior who is authorized to call in any local plan for his additional approval. A third, indirect means of oversight is through appeals – though rare – to the National Planning Board’s.

Central government thus has almost all conceivable instruments to oversee local planning initiatives. In theory at least, these institutions could serve to ensure coordinated action to implement national planning policy – providing that such a policy existed.

The hierarchy of statutory plan and building regulation 
The l965 law added national planning over the two tiers that existed earlier – the local level and the district level. The result is a four-tier edifice of plans. Lower-level plans must be strictly consistent with all higher-level plans. Since every action of construction or demolition, whether big or small, requires a building permit, national land-use and development rules should “seep down” all the way to the building permits issued by the local-government engineers.

The four types of statutory plans 
The top tier consists of national plans prepared by the National Planning Board. There are over 30 such plans today – most are sectorial plans that deal with national infrastructure or major land use issues. One of the plans is a comprehensive land-use plan covering the entire country.

At the second tier are the District Plans to be prepared for each of Israel’s six statutory administrative districts and approved by the National Board. The function of these plans is to translate national plans to the district level, to coordinate among local plans, and to propose regional plans. But district plans, tightly sandwiched between national and local plans, have always been of less importance than either one. In most cases, district plans were prepared much later than explicitly mandated in the law (by 1971) and have had minor visibility or impact. However, in the 1990s, when development pressed hard on green areas, regional structures changed, and national plans created new concepts, district plans came finally under the planning spotlight, and a new wave of updating is currently under way.

At the lowest level are mandatory Local Outline Plans and optional Detailed Plans. These are the main instruments for regulating development, and any new construction must usually be anchored in one, or both. Dutch and other European readers (excepting the British) will recognize outline and detailed plans as similar to local plans prevalent in their respective countries. British readers can consider them as similar to their planning schemes before 1947. American readers can view outline plans as a cross between zoning and subdivision regulations, and detailed plans can be viewed as parallel to site plans or Planned Unit Development plans.

The wording of the law leads one to assume that a local outline plan would cover the entire municipal area, but in fact, most local authorities don’t have up-to-date comprehensive plans. Instead, most local authorities have a quilt of countless amendments to some older outline plan, and one can say that ‘the dog wags the tail’. Amendments to plans must follow the same approval process as an original plan. The hierarchy  has thus partly collapsed. Otherwise, the notoriously slow plan-approval procedures would have been even worse.

Building permits and enforcement
The law is extremely strict about building control. A building permit regulates both the land-use aspects and the construction aspect. Such a permit is necessary for almost every type of construction and digging. Unlike some other countries, in Israel the law does not any exemptions (such as small additions to existing structures, single family homes in rural areas) where a building permit is not needed. The courts have interpreted the law strictly. Variances and exceptions may be granted at the building permit level, by the local planning commissions, but their discretion is very limited.

However, building enforcement has been a ‘learning process’. Although it is today more efficient than in Israel’s earlier decades (when it was a developing country), even today enforcement is not as efficient as in central and northern European countries (but much stricter than in neighboring Middle East countries).

Implementation instruments
Israel’s planning law provides a rich set (in comparative terms) of implementation instruments: Expropriation of land for a broad range of public services, compulsory dedication for public services of up to 40% of land plots, and land readjustment. The latter has become extremely important for many planning purposes and is probably the most versatile form of land readjustment operating today in the world. Transfer of Development Rights is not explicitly legislated, but the courts have not ruled-out the legality of some formats. There is a compulsory ‘betterment’ tax of 50%, but also extensive compensation rights – as extensive as in The Netherlands (equivalent to Section 49 of Dutch law).

By Rachelle Alterman


Literature – Cross-national analyses

Land Readjustment for the Supply of Urban Public Services (pre-publication)(18/12/2007) 
Assembling land to supply the variety of public needs is a problem shared by local government, planners, and developers across the world. This problem transcends property systems and is not unique to the private freehold tenure system. Land assembly is also problematic in mixed systems in which public and private property rights coexist and even in systems in which the government owns the land but the market governs a significant amount of physical development initiatives.

One of the most promising tools for land assembly, a tool that can operate across land tenure systems, is land readjustment (LR). However, LR is practiced in only a limited number of countries. While there is no scarcity of academic literature about LR, the literature is just beginning to look in depth at how this tool functions in practice within different land tenure contexts and at its effectiveness relative to alternative tools for assembling land. Though small, Israel possesses attributes that make it a good laboratory for studying land assembly issues.

Click to download: Much More than Land Assembly  (Rachelle Alterman , Analyzing Land Readjustment: Economics, Law and Collective Action , 199 kb)

Regulatory Takings in Land-Use Law (pre-publication) (18/12/2007) 
The impact of land-use regulations on property values – especially in the downwards direction – is the inherent “raw nerve” of planning law and practice. The “regulatory takings” issue, as it is called in American English, has extensive social, ethical, economic,and environmental implications. It is also a key stumbling block in the implementation of land-use policies.

The vast majority of countries across the globe today have some form of land-use law and regulation (though not all countries apply and enforce these laws). Wherever market mechanism works, land use regulations may cause shifts in land values, at times reducing the current or potential economic value of real property and at other times increasing it. Real property usually holds high economic and social value and represent a households” major investments.

Click to download: Regulatory Takings in Land-Use Law  (Rachelle Alterman , Washington University Global Studies Law Review, Vol. 6 (3) 2006 , 88 kb)

When the right to compensation for ‘regulatory takings’ goes to extreme: The case of Israel (pre-publication) (18/12/2007) 
Tucked away in a corner of the Mediterranean is one of the world’s most generous compensation rights for decline in property values due to planning decisions. As counter-intuitive (to some) as this might seem, Israel’s jurisprudence gradually developed a legal doctrine about what Americans call ‘regulatory takings’ which, viewed through a comparative perspective,represents an extreme in ‘property rights friendliness’.

Israeli law regarding compensation for regulatory takings evolved from an almost dormant letter of the law into a major legal doctrine. This evolution occurred without significant changes in the legislation, through a series of Supreme Court decisions that interpreted the language of the statute from an increasingly enhanced property-rights perspective. The result has been the creation of a doctrine about the right to compensation for many types of land-use regulations. This doctrine has had an enormous impact on everyday planning practice, on the economics of real-estate development, on municipal budgets, and potentially on the macro-economy.

Click to download: Israel Regulatory Takings  (Rachelle Alterman , Washington University Global Studies Law Review, Vol. 6, 2007 , 194 kb)

A view from the outside: the role of cross-national learning in land-use law reform in the USA (pre-publication) (18/12/2007) 
In this brief paper, Rachelle Alterman offers a few observations about American land-use law as viewed from the outside. These thoughts are based on my ongoing comparative research into planning law and practice in various countries. I hope that this comparative view might add an additional perspective to the discussion of directions for reform in American landuse law in the 21st century.

Click to download: A View from the Outside (Rachelle Alterman , Chapter 19 (pp. 309-320) in Planning Reform in the New Century, Chicago: Planners Press , 125 kb)



Rachelle Alterman Professor

Urban planner and lawyer.
Technion – Israel Institute of Technology
Haifa 32000, Israel.
Tel: +972-9-8991455; mobile: +972-50-5292917