The "Buyer's Price" project - background, goals and methods of implementation:
- The "Buyer's Price" project is a government-flagship project, and the decision to implement it in a new format was made by the Israeli government in 2015, at the initiative of the Minister of Finance at the time, Moshe Kahlon, following the housing crisis in Israel, which was caused by the significant increases in housing prices and the difficulty created for various populations to purchase an apartment in this situation.
The main goal of the "Buyer's Price" project is to enable affordable housing for those who have been defined as "eligible" for assistance according to the project, mainly targeting young couples and individuals without an apartment, by increasing the supply of apartments at discounted prices, which will enable all those "eligible", as defined in the "Buyer's Price" project, to purchase an apartment.
- The "Buyer's Price" program existed in a significantly reduced format and on a smaller scale in the early 2000s. However, in 2015, the Israeli government decided to expand the program and build thousands of housing units, which would be offered for sale at an affordable price to young married or single couples over the age of 35 who did not own an apartment in the five years preceding their request to be included in the project, all with the aim of lowering the prices of apartments in Israel. Due to the large demand created for the purchase of apartments as part of the "Buyer's Price" project, the "eligible" people were determined to purchase an apartment at a reduced price within the framework of the project through lotteries.
- Government Decision 547 (DR/13) of the Ministerial Committee for Housing Affairs, which received the validity of a government decision on July 14, 2013 (attached as Appendix 1 to the amended Statement of Appeal), established the criteria for eligibility for housing at a reduced price. In Government Decision 203 (DR/13) of the Ministerial Committee for Planning, Construction, Real Estate and Housing, which received the validity of a government decision on July 9, 2015, it was decided to expand the plan to low-cost housing, which was defined as "Buyer's Price" (attached as Appendix 2 to the amended Statement of Appeal), and in the framework of which the mechanism for the implementation of the project was determined. In Government Decision 315 (DR/23) of the Ministerial Committee for Planning, Construction, Real Estate and Housing, which received the validity of a government decision on July 30, 2015, the plan was established for the provision of land discounts, grants and development subsidies in high-density construction (attached as Appendix 3 to the amended Statement of Appeal).
- Accordingly, and for the purpose of implementing the "Buyer's Price" project, decisions were also made by the Israel Lands Council No. 1430 of July 15, 2015 (attached as Appendix 4 to the amended appeal), as well as follow-up decisions and updated decisions (see also Appendix 5 to the amended statement of appeal), which determined, inter alia, the method of marketing the land owned by the state designated for the "Buyer's Price" track.
- According to the aforementioned decisions, plots designated for high-density construction were determined, which will be marketed under the "Buyer's Price" track, whereby in contrast to the usual format of ILA tenders, whereby the winner of the tender for the purchase of the rights to the land is the entrepreneurial company (or contractor) that offered the highest bid for the land, the entrepreneurial companies that competed in the "Buyer's Price" tenders competed and were required to bid the Lowest price per square meter of an apartment (i.e.: final price per built square meter excluding VAT).
This is in accordance with the binding building specifications for apartments that was determined as part of the tender terms (hereinafter – the binding specifications), and when according to the terms of the tender, a maximum price per square meter of apartments was determined by the State (see, for example, clause 3.1.3 of the tender booklet in Tirat HaCarmel – Appendix B to the amended statement of appeal, as well as clause 3.3.9 of the tender booklet, which deals with determining the maximum price for a "Buyer's Price" apartment).
- The price per square meter of an apartment includes all the costs of all the organizational and legal work and handling required for the construction and delivery of the apartments to those entitled to the Ministry of Housing, including the costs of the land component, as well as the planning and execution of construction and development work, as well as all the associated costs - licensing, fees, marketing, legal expenses, financing expenses, contractor profits, guarantees Sale Law, the registration of the building as a condominium, as well as the registration of the rights in the apartments in the name of the apartment buyers (see, for example, clause 3.1.5-3.1.6 of the tender booklet in Tirat HaCarmel - Appendix B to the amended statement of appeal).
- The prices of the lots were determined by the state (ILA), while for the purposes of the "Buyer's Price" project, it was determined that individual assessments of the land complexes would be conducted by the ILA, and the discount rate given from the value of the land in the tender would be up to 80% for each housing unit.
In other words, the state has decided to subsidize the price of land in "Mehir LaMishtaken" projects, so that the contractor or the entrepreneurial company can offer the lowest possible price per square meter of apartments, in relation to the mandatory specifications of the apartments intended for construction in the project. It should be noted that this format of "Buyer's Price" tenders has had a significant impact on state revenues, and according to the Israeli government's financial statements for 2017, more than NIS 4.5 billion was deducted from the state's revenues due to the discounts given on the land, in addition to a subsidy of development costs for developers as well as grants given to apartment buyers in the framework of the project, which amounted to an additional NIS 1.4 billion (see the State Comptroller's report for 2020 in relation to the Ministry of Construction and Housing, "Aspects of the government's housing program "Buyer's Price", the relevant parts of which were attached as Appendix 6 to the amended statement of appeal).
- According to the terms of the "Buyer's Price" tender - after winning the tender, the winning contractor is required to sign a lease contract with the ILA. An appendix to the lease contract was attached to the "Special Conditions (Buyer's Price Track)", in which it was determined that its provisions prevail over the provisions of the lease contract (hereinafter – Appendix to the Special ConditionsIt also determines, inter alia, the timetable for the execution of the actions that the winner is required to perform, including the signing of a construction contract with the Ministry of Construction and Housing, and the date for the completion of the construction – within 40 months from the determining date, which is the date of notification of the winning of the tender (the lease contract and the appendix to the special conditions were attached as part of Appendix B to the amended statement of appeal).
- In the framework of the construction contract (see for example Appendix 7 The affidavit of the main witness of the appellant's CEO, Mr. Arnon Friedman, determined the winner's undertakings to carry out the construction of the housing units and the development work within the boundaries of the lot, in accordance with the binding specifications and the timetable set out in the construction contract (see, for example, clause 6 of the building contract). Appendix 7 to the appellant's affidavit).
- In addition, the winner of the tender undertakes according to the construction contract to sell all the "Buyer's Price" apartments in the complex to those who will be selected in the lottery process (see, for example, clause 9.7 of the building contract). Appendix 7 To the appellant's affidavit as well as the rules of the lottery for those entitled to purchase apartments in the "Buyer's Price" tracks, Appendix H to the amended statement of appeal), in the contractual framework of a sale agreement, the principles and terms of which were determined by the state (see paragraph 13 of the construction contract, and Appendix C6 The construction contract has "Guidelines regarding the formulation of key terms in a standard contract between a seller and an apartment buyer"), for a price not exceeding the price per square meter of an apartment, which was offered by the winner of the tender.
In other words, after winning the tender and making the required payments from the winner, he is required to invite the eligible winners who won the lottery, according to a list sent to him by the state, in order to be able to choose an apartment in the project and to sign a sale agreement for an apartment in the "Buyer's Price" project for the final price according to the tender. All in accordance with the instructions of the state authorities, and specifically through and in accordance with the instructions of a control company on behalf of the Ministry of Construction and Housing (hereinafter – Control Company) and the timetable set therein (see in this regard the table and flow chart sent by the control company to the winner of the "Buyer's Price" tender, which include the approval process, publication for the lottery and the sale of Buyer's Price apartments. Appendix A and Appendix B to the amended statement of appeal).
- After signing the sale agreements, the winner is required to fulfill his obligation to build the apartments in the "Buyer's Price" project within the stipulated time period (40 months from the date of winning the tender) and to ensure that the rights therein are transferred to the eligible buyers, and that they are registered in their name.
- It should also be noted that there are "Buyer's Price" projects, in which, according to the terms of the tender, all the housing units that are to be built meet the conditions of the "Buyer's Price" program, and there are also projects in which about 80% of the apartments in the project are under the limits of the "Buyer's Price" program, while about 20% of the apartments can be sold by the developer/contractor on the free market without the limitations and conditions of the "Buyer's Price" program.
The factual basis that is not in dispute:
- The ILA and the Ministry of Construction and Housing published three tenders in the "Buyer's Price" track in Tirat HaCarmel, Kiryat Eliezer in Haifa and Kiryat Ono (the tender booklet in Tirat HaCarmel from 2016 (identical to the tender in Kiryat Eliezer) was attached as Appendix 1 to the Appellant's affidavit and the Kiryat Ono tender booklet from 2018 was attached as Appendix 6 to the Appellant's affidavit).
The tender in Tirat HaCarmel is intended for the purpose of building 244 residential units, while the tender in Kiryat Eliezer is intended for the purpose of building 213 housing units. The housing units included in the tenders of Tirat HaCarmel and Kiryat Eliezer are all subject to the "Buyer's Price" conditions.