An Israeli municipality has billed me tens of thousands of shekels in development levies. Do I have to pay it?

The letter is not an arnona bill and it is not a tax assessment. It is a demand for payment from the municipality's engineering department, for road paving and drainage works, on a plot the family has owned since 1988 and visited four times. The figure is NIS 71,000. Nobody in the family authorised any works, and nobody was consulted. Under Israeli law that is not a defence, and the municipality knows it does not need to chase you for the money.

---

Detailed Answer

Development levies (היטלי פיתוח, hetelei pituach) are one-off charges imposed by by-laws that municipalities are empowered to make under the Municipalities Ordinance, to fund the infrastructure that serves properties in their area: paving of roads and pavements, drainage channels, and historically water and sewerage. Sewerage charging began under the Local Authorities (Sewerage) Law 5722-1962, and since the municipal water corporations took over the networks these connection charges are levied by the corporation as establishment fees under the Water and Sewerage Corporations Law 5761-2001 rather than by the municipality. The trigger is usually new construction, an addition, a change of use, or the actual execution of works serving the property, and the demand often arrives years after the concrete was poured. They are not arnona, which is an annual occupation charge, and they are not the betterment levy under the Planning and Building Law, which is charged when a plan increases the value of the land. Owners abroad frequently pay one of the three believing they have paid another, and we set out the difference in our guide to arnona for non-resident property owners.

These demands are challengeable more often than they are challenged. The by-law must have been validly enacted and published, the calculation must follow its formula for the area and use in question, the works must be of the type the by-law covers, and the property must be one the charge can attach to. Israeli courts have cut demands substantially on all four grounds, and the seven-year limitation period under the Limitation Law 5718-1958 does real work where the works were carried out long ago. The forum is the Administrative Affairs Court, and a petition is generally due within 45 days of the decision under the Administrative Affairs Court Procedure Regulations 5761-2000, which is why receiving the demand at a stale address is so damaging. The pressure point comes later. Section 324 of the Municipalities Ordinance provides that no transfer of a property may be registered in the land registers without a certificate signed by the municipality confirming that all debts owed to it by the owner in respect of that property have been paid. That is the certificate every Israeli sale and every transfer of an inherited apartment needs, and it is where a levy demand nobody answered for six years reappears with linkage and interest, at the moment the family has a buyer and a completion date. The certificate may only be withheld for a concrete debt presently owed by that owner on that property, which is itself an argument, but arguing it takes weeks a sale does not have. Where a sale is imminent, the usual answer is to pay under protest, take the certificate, and litigate the recovery afterwards.

In Practice: Section 324 of the Municipalities Ordinance is the lever: no registration of a transfer without the municipality's certificate that the owner's debts on the property are paid, which is why the demand surfaces at completion rather than at billing. Paving, drainage and water levies on a new single-family house commonly total NIS 40,000 to NIS 90,000, and on an apartment addition run well into five figures. A challenge goes to the Administrative Affairs Court, generally within 45 days of the decision, while the clearance certificate itself is issued by the municipality within about 7 to 21 days once the account is settled.

When to Consult a Lawyer

• You are under contract to sell and the certificate is being withheld. Every day of delay is a breach exposure under the sale agreement, and the payment-under-protest route has to be documented properly or the right to recover is lost.
• The works were carried out more than seven years ago, or you cannot find any works at all. Limitation and the factual basis for the charge are the two grounds that most often cut these demands, and both need to be raised before payment rather than after.
• The demand is addressed to a deceased owner or to a former owner. Who owes a development levy, and on what date the liability crystallised, decides whether it belongs to the estate, the heirs or the buyer, and municipalities routinely bill whoever is easiest to find.

---

Speak With an Israeli Attorney

We audit the by-law and the calculation behind a development levy demand, protect an imminent sale by paying under protest against a proper reservation of rights, and take the recovery to the Administrative Affairs Court where the charge does not stand up.

Contact us for a confidential initial consultation.