Request for Leave to Appeal 1975/24 Request for Leave to Appeal 25226-04-25 Tel Aviv Local Planning and Building Committee v. Leviathan Adiv Shmuel (Edwin Samuel) - part 5

The Appellants' arguments

25. The Local Committee Civil Case and the Jerusalem Local Committee (hereinafter: the appellants) are of the opinion that within the framework of the judgments that were rendered in their matters, the district courts erred in determining that in calculating the value of the land "in the previous state", the increase in the value of the land that originated in the approval of TAMA 38 should be included.  According to the appellants, the increase in the value of the land that originated in TAMA 38 should be neutralized in the calculation of the value of the land "in the previous state".  The appellants base this argument on similar reasons, while asking us to accept their requests and the appeals against the judgments below, and it was determined that the increase in the value of the land that is the subject of the discussion, which derives from TAMA 38, will be neutralized in the calculation of the value of the land in its pre-betterment plan.
26. According to the appellants, the betterment that results from the approval of TAMA 38  reflects only a speculative planning possibility, and therefore, according to them, since this is not a real betterment, this component of the land system in its state that preceded the betterment plan should be     The appellants further arguethat in the assessment of the "previous situation", the increase in the value of the land that derives from regulatory planning moves should be neutralized, as opposed to a general planning potential that is part of market opinion.  In this regard, the appellants rely on what was stated in  the Lusternik case.  In this framework, the appellants claim that the rule established in the Lusternik case  applies not only to the expectations deriving from the planning proceedings that preceded the betterment plan, but also to any regulatory gift, whatever its source.
27. The appellants elaborate and argue that the inclusion of the effect of TAMA 38 in the value of the land "in the previous state" will unjustifiably increase the value of the land and reduce its betterment by means of the betterment plan, to the point of granting an exemption from betterment levy to the landowner.  The appellants are of the opinion that this will substantially harm the main purpose of TAMA 38 – to encourage the reinforcement of buildings against earthquakes.  This is becauselandowners will be able to receive an exemption from paying a betterment  levy resulting from the approval  of TAMA 38 without actually exercising the reinforcement rights by obtaining a building permit andrealizing it.  It was further argued that the position that the effect of TAMA 38 should not be neutralized in the assessment of the "previous situation" is inconsistent with the principle of fairness.  This is because at the time of the sale, a betterment levy is not paid for the increase in the value of the land resulting from TAMA 38; In addition, the betterment that comes from the betterment program is reduced.  All of this, it is claimed, leads to excessive enrichment on the part of the landowner, who does not share with the public any part of the gift he received from the state or the local authority.
28. Finally, the appellants argue that the need to calculate the value of the rights by virtue of TAMA 38 will require appraisers to assess the degree of feasibility of obtaining a building permit – a matter based on engineering, planning and economic considerations that are not within the area  of the appraisers' expertise and knowledge.  According to the appellants, this will turn the valuations of real estate intospeculation that will end in uncertainty in taxation.

The Local Government Center's arguments

29. The Local Government Center, which was joined as a party to the proceeding at its request, supports the appellants' position and also argues that sincethe rights by virtue of TAMA 38 are conditional and unformulated rights, the realization of which is not guaranteed, there is no justification for including them in the assessment of the value of the land. Therefore, the economic value of these rights must be neutralized.
30. The Center for Local Government further argues that it relies on  the case law  according to  which elements originating in the planning proceedings that preceded the approval of the betterment plan should be neutralized from the increase in the value of the land.  In this way, it was clarified that the "market value"  method is not absolute and is not strictly implemented, but  rather it is based on the principles that ensure a fair and accurate betterment assessment.  According to the Local Government Center, this is how the ruling should be made in our case as well.

Respondents' arguments

31. The respondents rely on the judgment of  the   district courts in their matters, and wish to adopt  their principled approach, according to which the effect of TAMA 38 on the value of the land in their situation prior to the betterment plan should be taken into account – while expressing the conditional nature of the rights anchored in TAMA 38 in a manner that will reflect the lack of- The certainty involved in their realization.
32. In the meantime, the respondents argue that in accordance with the aforesaid in arbitration claims, betterment levy should be collected only for that betterment that was created as a result of the approval of the betterment plan (hereinafter: the causal connection requirement). According to them, the requirement of a causal connection is not fulfilled in the cases before us, since the betterment resulting from TAMA 38 is not connected to a causal connection to the construction and construction of the property in respect of which the levywas imposed.  It was also argued that according to the requirements of the law and in order to realize the  "real tax" tax, the rate of the levy must reflect the real betterment in accordance with the value of the land in the free market.   Artificial neutralization of the increasein value that arose from the very approval of TAMA 38 entails taxation that does not represent the  real value of the real  estate and even leads to inequality between different taxpayers.
33. Moreover, the respondents claim that although in the Ron case it was determined thatthe rights by virtue of TAMA 38 are not vested rights,  this determination does not relate to the valuation of the real estate and does not establish  an appraiser's conclusion that TAMA 38 did not improve the land.  In other words, it is the real estate market alone that provides an answer to the question of whether the very approval of TAMA 38 has improved the real estate in question.  Accordingly, the respondents claim that the Lusternik rule  only instructs the neutralization of the expectations created by the planning proceedings of the betterment plan itself.  This neutralization prevents the double weighing of the betterment plan, for obvious reasons.
34. The respondents further argue that the approach according to which the effect of TAMA 38 on the value of the land should be neutralized raises a difficulty. This approach requires the appraiser toisolate the impact of the TAMA while ignoring the real estate prices set by themarket.  On the other hand, the approach according to  which the impact of the TAMA should be included in the assessment allows appraisers to rely on real transactions in the free market, which by their nature embody the aforementioned increase in value – to the extent that it exists.  In this way, according to the respondents,  a more objective and well-founded assessment of the value of the land is achieved.

The Attorney General's Position

35. At the request of the court, and taking into account the broad scope of the decision on the issue that is the subject of our discussion,  the position of the Attorney General on the matter was requested and accepted.  The Attorney General (hereinafter: the Attorney General) asks us to determine that when evaluating the value of real estate "in the previous state", the effect of the application of TAMA 38 on the land must be neutralized.  In other words, according to her position, the "previous state" of the land is the planning regime that applies to them prior to the approval of TAMA 38.
36. The consultant argues that the rights deriving from TAMA 38 are not "vested rights" but rather "conditional rights", the formation of which depends on the receipt of a building permit from the local planning institution. Therefore, as was ruled in the Ron case, these rights do not create  a tax event, which is based on betterment, at the time of the sale of the land.  Accordingly, according to the consultant, these rights cannot be taken into account in the assessment of the "previous situation".  Taking these rights into account in the "previous situation" will enable the taxpayer to "hold the rope at both ends": in the sale of the land, the taxpayer will not  be liable for betterment levy for the increase in value resulting from TAMA 38, since he does not have rights granted for more extensive construction; At the same time, the economic value of those conditional and ungranted rights will increase the value of the land in the "previous situation" and thereby reduce the taxpayer's liability for betterment levy in respect of another betterment plan.
37. The Consultant refers to the Lusternik case, where it was determined, as stated, that in the assessment of the "previous situation", the increase in the value of the real estate that stems from market expectations due to planning proceedings prior to the approval of the betterment plan itself should be neutralized.  According to her, this rule can also be applied in our case:  until  the issuance of a building permit, the planning process by virtue of TAMA 38  had not been completed, and the increase in value resulting from the TAMA 38, it was argued, is essentially similar to an increase in value due to the deposit of a plan.  Accordingly, even where TAMA 38 was eventually replaced by another plan,  the rule established in the Lusternik case will apply,  according to  which in calculating the betterment, the increase in the value  of the land that resulted from the planning process should be ignored as such.  According to the consultant, this approach is appropriate in relation to any "other" betterment plan, but is even more valid when it comes to a plan by virtue of section  23 of TAMA 38 (hereinafter: section 23).  It was argued that in these cases, the approval of TAMA 38 and the approval of the detailed plan  can be viewed as a single planning process, in a manner that justifies, even more strongly, the neutralization of the increase in value that  resulted from the TAMA as an interim stage towards the establishment of the detailed plan that grants building rights by virtue  of section 23.
38. The consultant notes that her position does not prevent taking into account the general increase in value that derives from the application of TAMA 38 in a particular area (as opposed to specific real estate). It was argued that this distinction is consistent with the determination in the Lusternik case, which distinguished between general planning potential and potential deriving from the conduct of a concrete planning proceeding.
39. In addition, the Consultant argues that taking into account the effect of rights by virtue of TAMA 38 in the assessment of the "previous situation" will lead, in practice, to the granting of a sweeping exemption from betterment levy for the betterment that arose by virtue of the TAMA – an exemption that is not anchored in law. According to her, there is a real concern that if the effect of TAMA 38 is not neutralized by the land assessment in the "previous situation", the betterment that arose from the other plan will merge with the betterment by virtue of the TAMA in a manner that will completely exempt the taxpayer from the betterment levy.  This result, according to the consultant, will frustrate the purpose of the betterment levy.

Discussion and Decision

40. The legal issue that arises in our case concerns, as stated, the determination of the value of real estate – to which TAMA 38 and another betterment plan apply – for the purpose of assessing betterment levy.  This issue has been raised more than once in recent years before the Appeals Committees for Compensation and Betterment Levies, as well as before the District Courts sitting as an appellate court.  Contradictory solutions were given to it by the various panels that sat on the court (see: Administrative Appeal (Administrative Live) 33949-09-20 Lavi v. Haifa Local Planning and Building Committee [Nevo] (July 12, 2021)); Administrative Appeal (Administrative Tel Aviv) 56975-09-23 Tel Aviv-Yafo Local Planning and Building Committee v. Blue Marble inTax Appeal [Nevo] (March 6, 2025); See also: Appeal (Tel Aviv) 85143/13 Zin v. Ramat Gan Local Planning and Building Committee [Nevo] (February 24, 2016); Appeal (Center) 8053-08-21 Levy v. Ra'anana Local Planning and Building Committee [Nevo] (April 14, 2022)); In this case, a binding precedent has not yet been ruled by this court (see:  Civil Appeal Authority 6188/04 Rabin v.  Sharonim Local Planning and Building Committee [Nevo] (September 26, 2004)).  Moreover, it seems that there is no need to elaborate on the significant broad implications involved in the decision before us, both from the perspective of the local government fund and from the perspective of the many taxpayers involved in the matter.  This is, without a doubt, a question of principle that justifies a hearing "in a third incarnation" (see: Administrative Appeal Leave Application 3416/18 Madovy v. Givatayim Local Planning and Building Committee, para. 10 [Nevo] (July 29, 2018)); Civil Appeal Authority 103/82 Haifa Parking Lot in Tax Appeal v. Matzet Or (Hadar Haifa) Ltd., IsrSC 36(3) 123 (1982)).
41. Therefore, in accordance with our authority under Regulations 149(2)(a) and (b) of the Civil Procedure Regulations, 5779-2018, which also appliesto applications for leave to appeal in administrative matters, by virtue  of Regulation 34 of  the Administrative Courts  Regulations (Procedures), 5761-2000, I would suggest to my colleagues that we discuss the applicationfor leave to appeal before us as if permission had been granted andappeals  were filed in accordance with the permission granted.  Leave to appeal is granted only in relation to the fundamental question at hand, and I will deal with it only later in my remarks.  The other arguments of the parties in relation to the particular issues that arose in their case cannot in any case   be included in section66 "in a third incarnation".
42. I will preface by saying: After I have considered the written and oral arguments of the parties, I have reached the conclusion that the law is with the respondents, as determined in the trial judgments. If so, I am of the opinion that we must determine that when valuing real estate "in the previous state" for the purpose of assessing betterment tax, the contribution of TAMA 38 (by virtue of its approval) to the values should not be ignored, to the extent that it  Therefore, I would suggest to my colleagues that we dismiss the appeals before us.

Interim Requests

43. First, two interim motions filed as part of the Leviathan case are removed from the agenda:

• A request on behalf of Leviathan dated September 26, 2025 to obligate the local committee in a civil case to provide details regarding the implementation of the Quarter 3 plan - this request is hereby rejected, as it relates to the specific circumstances of the case and is not relevant to the fundamental legal question that is the subject of our discussion.
• Request on behalf of the Local Committee Civil Case dated September 16, 2025 to remove from the court file the State Comptroller's report submitted to it by Leviathan – this request is granted since the State Comptroller's report cannot be used as evidence in a legal proceeding in any case (see:  Section  30 of the State Comptroller Law, 5718-1958 [Consolidated Version]).

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