The government has decided to extend by one further year a five-year plan for the Arab sector (Government Decision 922) and the Bedouin community (Government Decision 1480), ahead of the December deadline. This is a NIS 15 billion plan whose implementation has faced numerous troubles, with only NIS 3 billion used so far. A new five-year economic plan will be drawn up during 2021.
Earlier this month, a decision was made to allocate NIS 316 million for implementing government decisions that benefit the Arab society, NIS 275 million of which will go towards Implementation of Government Decision 922. This was made possible after the Housing and Construction Ministry, together with the Social Equality Ministry, received authorization from the Finance Ministry.
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"It is crucial to regulate the construction, and advance planning and development in the Arab sector," says outgoing Housing and Construction Minister Itzik Cohen. "This will be a significant success for the sector and for the State of Israel as a whole."
A large part of the easing measures relate directly to housing and equating conditions that already exist in the Jewish sector when dealing with a growing population: Preparation of city building plans, advancement of detailed planning, infrastructure for new neighborhoods, marketing of the land, and construction starts and marketing them. The main problem is investment in infrastructure, therefore a decision was made to allocate a further NIS 1.7 million from the transport and education ministries for transport infrastructure and education programs.
Five additional Arab cities will be defined as strategic priorities, in addition to the 10 current larger cities that need planning and development on a much larger scale, and therefore will receive enlarged budgets. The marketing limit of 500 new housing units required to get funds will be reduced to just 200 units, and there may even be a total exemption from this condition.
A recently-published report by an inter-ministry team led by the Justice Ministry recommends that due to the flaws in the Arab sector, building on private lands be encouraged, saturated construction up to four stories high, and incentivizing build-to-let projects, as has already started under the "Apartment for Rent - The Governmental Company for Housing and Rental Ltd".
Town clusters
A recent study by the Geocartographic Knowledge Group (Geokg), headed by Chair Dr. Rina Degani, together with Real Estate Today, found that it's not possible to build enough commercial zones that will achieve an economic balance for Arab cities, without building clusters of towns, in order to succeed in the marketing and provide a higher level of services for residents.
In Israel, there are close to 1.9 million Arab citizens, 21 % of the population, which stood at 9.05 million people in 2019.
Over the last decade, the average growth rate of the Arab population was 2.4 %, compared to 1.81 % among the Jewish population. The growth rate of the Arab population is expected to drop sharply in 20 years and will be similar or maybe even lower than that of the Jewish population. In a scenario of medium growth rate in Israel's population, it is expected that the growth rate of the Arab sector will drop to 1.4 %, while the growth rate of the Jewish population will be 1.8 %.
Life expectancy in the Arab sector will get closer to that of the Jewish population, according to that same forecast. A Jewish male will live 82.7 years and an Arab male 82 years.
The Arab population is highly dispersed. There are dozens of towns with less than 30,000 people, many of those with under 10,000. Seven cities have more than 30,000 – Nazareth, Rahat, Umm al Fahm, Shfaram, Taibe, Tamra and Sakhnin. Some 41 % of the Arab population lives in the north, 10 % in the center, and 15 % in the south.
According to the Geokg study, most of the Arab towns today are not thriving financially and languish in Israel's lower socio-economic deciles. Expenditure per capita in Arab towns is low, and the municipalities cannot offer a good level of services to the residents. No extracurricular classes exist for children, no cultural centers, and there are no medical centers.
The size of the towns and their economic situation has created a situation of non-compliance with the minimum population threshold to reach enough demand for business areas and cultural services. Many towns are located in close proximity to other Arab towns, in a way that justifies a shift to regional thinking in the contexts of these services.
How to move forward?
In recent years, the state has invested considerable efforts in advancing non-Jewish towns – promotion of statutory plans, comprehensive outline plans, partial and point plans and government plans. All this done while regulating lands, and transferring lands from the Israel Lands Administration to the towns for their development, housing and business needs.
Under such conditions, Arab leaders hope to reinvigorate the local economy, expand independent revenues of the towns, and improve the level of services they provide residents.
According to Dr. Degani, the rise of the economic levels in the towns will be achieved by enlarging revenue from real estate investments, industry, offices, commerce and municipality initiatives. Another way is to increase revenue of households, by creating more quality jobs and raising the number of participants in the workforce – for both men and women.
It's important to stress that there are major gaps between the Arab and Jewish population when it comes to the level of education and participation in the workforce. The rate of participation among men is not rising, and their salaries are relatively low. The rate of participation among women is still low. These gaps are also due to cultural reasons.
Limitations on developing commercial areas in Arab towns include that these towns are usually small and thus lack business areas and economic anchors; private ownership of lands; small towns and locations with difficult access; lack of regulated areas of business; factories and workshops situation within residential areas, which are a nuisance and a barrier to urban development. Such nuisances need to be removed and transferred to commercial areas; many businesses are not statutory regulated and do not have licenses; the demand for factories and businesses is still low; high cost to the development of infrastructure; there is also a managerial challenge of managing a new industrial area and creating value for businesses.
It's important to note that many of these limitations exist in Jewish towns in the same geographical area.
Geokg listed the many solutions that Israel has started implementing in recent years to advance the Arab society, including:
- Arrangement of land uses through comprehensive master plans, to zone residential, employment, commercial, community and social institutions.
- Allocation of very large areas in many towns, Israel Lands Authority lands were added to enable development.
- Decision 922 to advance programs in Arab towns.
- Regulation of properties with building violations for excess construction.
- Transfer of state land for the advancement of residential and employment areas.
- Budgets for developing point or local plans.
- A plan to establish a new Arab city in the Galilee, with up to 100,000 residents.
- Tourism development programs, employment areas and training programs.
Can the master plans drawn up actually be implemented and fill up the business areas with commerce and employment?
Geokg's research found that business areas in Israel start to take off when they have at least 70 thousand sqm. Do such areas exist in Arab towns that can be starting points for expansion? It's difficult to locate such areas.
Development of business areas in Arab towns requires understanding the size of current demand in the Galilee as a whole, and then recognizing the opportunity to boost the business sector in the Arab towns.
Let's take a look at some numbers for developing income-producing real estate in the north: In Israel 1.6 million commercial sqm are built every year. In the Haifa and northern districts, the annual demand is 300-350,000 for business.
In Haifa, under 20,000 sqm of commercial areas are built every year. The Haifa metropolitan area has few modern business areas, that have a mass of offices and high tech. Millions of sqm in the north have been allocated for income-producing real estate: offices, industry, logistics, commerce and medicine. The master plans have called for areas hundreds of % larger than the possible demand.
Everyone wants high tech companies, but the annual increase is less than 10,000 workers across the country. Most of the demand for offices and high tech is split between the Matam business park in Haifa, the rest of Haifa and Yokneam.
In the north, the demand for office space is limited and probably will not add up to anything on a significant large scale. In the Northern District, there are 84,000 businesses, and in the Haifa District there are 66,000, out of which, 40,000 are in the free professions. About 17,000 of them are office users. Only about 2,000 businesses employ more than 10 people.
Economic advancement
Urban planning in general in Israel and the abundance of small towns in the Arab sector have led to a situation where many municipalities find it difficult to create revenue sources and accessible business areas.
The small Arab towns are on the lower end of socioeconomic deciles, and from an economic point of view, do not justify budgeting infrastructure for business development. The Geokg research shows that even if business areas are planned, their realization is slow and limited due to low demand.
This means that what is needed today is a new plan that will enable: a regional solution, including Jewish and Arab towns, that will encourage development of new business areas; division of revenues between towns; creating joint business areas - between 2-5 small towns together; expanding existing business areas; not developing new business areas.
To reach economic advancement each area must be examined to conclude which direction is most applicable - industry, commerce, services, or tourism-leisure. Adaptable solutions are required for the scope and type of demand and the level of availability of the supply. Cooperation is needed between municipalities, ministries must back the plans for support and allocate resources. The business sector must support creating new business ventures or expansion of existing ones. There needs to be a dedicated authority to support businesses, a system that has yet to be implemented in most municipalities in Israel.
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At the same time, it is vital to improve the quality of life for residents by improving salaries, which is the result of better education. An increase in the income of households will raise the rates of property taxes in the town. Fewer households will get discounts or exemptions from paying taxes. The result is more income for a town, and an improvement in the level of services.
What nonetheless has already been done in northern towns? Where are the successes? An excellent example is Yarka, situated in the heart of the towns of Abu Snan, Kfar Yasif and Julis. It's a Druze village which in recent years has become a shopping powerhouse, built stage by stage, and not as a regular commercial center. Commerce in Yarka was started by local entrepreneurs, who started small and grew big.
For example, two brothers who started in a small family grocery store, and eventually built two jeans factories. When the partnership dissolved, one brother built a food factory and the other a large department store. The BIG Outlet was created by a local family. Another local entrepreneur opened a store for baby equipment. Along Route 8533, there is a range of commercial spaces, with a variety of separate commercial areas, which together forged a commercial powerhouse that attracts consumers from across the country.
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