The State notified the Jerusalem District Court that it would
not approve at present continued construction on the Agan
Ayalot Basin neighborhood, a project to build 600 apartment
units in Givat Ze'ev, which lies just north of Jerusalem. It
cited a directive by Prime Minister Ehud Olmert and Defense
Minister Ehud Barak to freeze settlement construction, though
the State has already invested NIS 100 million ($27 million)
in the project.
According to a report in Ha'aretz the notification to
the court contradicts remarks last week by Minister Eli
Yishai (Shas), who said Olmert had promised him there would
not be a building freeze in the greater Jerusalem area.
The lots for the construction of Agan Ayalot were first
marketed by the Housing Ministry and the Israel Lands
Administration in 1999, but when the Second Intifadah broke
out towards the end of the 2000 fiscal year, the project was
halted. Contractors who had won tenders beforehand and had
paid development costs and loan guarantee payments sued the
State for breach of contract, demanding cancellation of the
deal. Throughout years of court hearings the State refused,
and held its ground until a few weeks ago.
Atty. Rachel Wosner, the State's legal counsel, had told the
Jerusalem District Court, "The State believes in the project,
put NIS 100 million into it, completed the infrastructures
and access roads in a way that would allow the apartments to
be lived in if construction is completed, would like to move
forward — and does not agree to cancel the deal."
After years of halted construction, several contractors
recently managed to unfreeze the project and began selling
dozens of apartments in Agan Ayalot to religious buyers. Some
even began negotiations with the State about revoking their
lawsuits filed against it. When the contractors recently
wanted to extend the land development contracts with the
Israel Lands Administration and the Housing Ministry,
contracts that expire after three years, they found the State
refused to do so due to the directive from Olmert and Barak.
Without extending the contracts, which have already expired,
building permits cannot be issued and bank loans cannot be
obtained to provide funding and guarantees for apartment
purchasers based on the Purchasers' Sale Law.
The Legal Forum for the Land of Israel, through Atty. Shlomo
Gan Tzvi, asked Attorney General Menachem Mazuz to decide
which of the State's two positions reflects his view: the one
that rejected the contractors' request to allow the contracts
to lapse or the more recent one stating the project has been
frozen due to the government directive.
Atty. Gan Tzvi said the State's refusal to extend the
development contracts would bring about the project's
collapse because it would be impossible to continue selling
"What's absurd is that a project initiated by the State,
which invested a fortune in it, a project whose entire
infrastructure system has already been finished after the
State pressed on despite the contractors' desire to cancel
— will collapse right when an opportunity has arisen to
extract it from its difficulties," said Gan Tzvi.