Haifa Court Cancels NIS 1.2 Billion Development Levy Demand on Rafael by Kiryat Yam Municipality

After a prolonged legal battle, the Haifa District Court ruled in favor of Rafael Advanced Defense Systems, annulling Kiryat Yam Municipality's demand for approximately NIS 1.2 billion in development levies related to the "Machon David" complex. The court found significant flaws in the municipality's calculations, which were based on residential neighborhood models unsuitable for Rafael's unique industrial site. The court ordered the municipality to reassess and, if justified, issue a revised payment demand reflecting the complex's characteristics.

The Machon David site, a major defense industry facility spanning thousands of dunams in the Krayot area, was incorporated into Kiryat Yam and Akko's jurisdiction in 2018 following a decision by the Interior Minister. Subsequently, the municipality began imposing municipal charges, including development levies, culminating in the 2021 demand to Rafael. Rafael challenged the levy, arguing that the calculation method unfairly inflated fees by applying residential area standards to a predominantly non-residential industrial zone, and that some infrastructure works cited did not warrant levies.

The court agreed, noting that the site is larger than the entire city and is not expected to develop into residential, commercial, or employment zones requiring significant municipal infrastructure investment. It also criticized the municipality's classification of the entire city as a single drainage area and the inclusion of certain infrastructure projects as levy bases. While the court canceled the current levy demand and ordered the municipality to pay Rafael NIS 100,000 in legal costs, it left open the possibility for future levies based on a corrected calculation.

Kiryat Yam Municipality responded by emphasizing that Rafael is part of the city and must contribute to infrastructure costs. The municipality committed to revising the levy calculations per the court's instructions and continuing to enforce development levy collections to ensure all users of city infrastructure pay their fair share.