A word from the Director General PROCEDURE 01/2018 ... · construction of low cost hotel rooms that...

Ministry of Tourism General Administration

5 Bank of Israel, POB 1018, Jerusalem 9100900 | phone: 02 666 4266 | fax: 02 651 0358

25 March 2018

A word from the Director General

PROCEDURE 01/2018: ASSISTANCE WITH CONSTRUCTION/EXPANSION OF

HOTELS IN ISRAEL FOR 2018

In accordance with the Capital Investment Encouragement Law, 5719-1959

In recent years we have been witnessing a continuing trend of growth in incoming tourism, reflected in

both the number of tourists and the number of overnight stays. According to the Ministry of Tourism's

forecast, this trend is expected to continue and even increase in the coming years. The Ministry therefore

acts to reduce the shortage and encourage an increase in the number of rooms available for

accommodation.

The Tourism Investments Administration therefore implements a procedure to assist in the construction

or expansion of hotels, with preference for areas of high touristic demand, in accordance with the

Capital Investment Encouragement Law, 5719-1959, and the Priority Zones Map in accordance with

the Capital Investment Encouragement Order (Defining Special Zones for Tourism Enterprises)

(Temporary Order), 5776-2016.

Furthermore, in accordance with government decision 1556 of 19/06/2016, administrative grants shall

be awarded this year as well for construction/expansion projects of popular hotels recognized as

"Approved Enterprises" for 13% administrative grants in two phases.

The aim of the procedure is to specify assistance tracks in which an "Approved Enterprise" status will

be granted to hotel projects that meet the conditions of the law and the criteria specified in this

procedure, in accordance with the priorities specified in the procedure.

Continuing the Ministry's policy in 2017, intended to increase the chances that approvals are actualized,

a preliminary condition for submitting an approved building permit for the purpose of submitting a

request for recognition as an "Approved Enterprise" shall apply this year as well. As part of the

adjustment to the new preliminary condition, 2 parallel tracks shall be implemented.

In order to implement the policy of the Ministry, changes have been made to this procedure, as follows:

A. In order to reduce the prices of popular holidays in Israel, the Ministry encourages the

construction of low cost hotel rooms that would be popular level rooms, and, therefore, the

definition of "Popular Level Project" has been updated so that the construction cost of a room

in such project shall not exceed 350,000 NIS per room.

B. In accordance with the policy of the Ministry of Tourism regarding the development of public

tourism infrastructures, as well as the marketing efforts for the South region, the Ministry

wishes, in addition, to promote the construction of hotel facilities, as reflected in the project

prioritization specified in Supplement C to this procedure, to which the South region (Dimona

to Eilat) has been added.

C. The Dead Sea area is already moving forward regarding tourism planning, and the marketing

of land for hotels has already began. In order to incentivize entrepreneurs with this marketing,

the Ministry has decided to prioritize the Dead Sea area similarly to coastal cities.

Ministry of Tourism General Administration

5 Bank of Israel, POB 1018, Jerusalem 9100900 | phone: 02 666 4266 | fax: 02 651 0358

The budget of the Investments Administration for this procedure amounts to 110,000,000 NIS, with up

to 10,000,000 NIS of this budget reserved for the "Building Permit Track". The chairman of the

Investments Administration may divert any available budget from one track to the other.

In case the budget for this procedure can be increased, this shall be done as early as possible, before

requests submitted under this track are rated.

Amir Halevi

Director General

Ministry of Tourism

Tourism Investments Administration

3

Procedure for Assistance with Construction

or Expansion of Hotels in Israel

For 2018

In accordance with the Capital Investments Law, 5719-1959

Procedure no. 01/2018

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Table of contents

Chapter Section Topic Page

A Grant in accordance with the Capital Investments Encouragement

Law, 5719-1959

5-24

1 General 5

2 Definitions 5-7

3 The main provisions of the procedure 7-11

4 Submitting a request 11-12

5 Preliminary conditions 12-13

6 Documents to be attached to requests in both tracks 13-16

7 Supplementary examinations for review by the Administration 16-17

8 Examining requests 17

9 Allocating grants 17

10 The Administration's process of review for issuing a "Letter of

Approval"

18-19

11 Executing the plan and the payment of grants 20-23

12 Additional information and contact information 24

B Administrative Grants, Popular Hotels 25

Supplement Topic Page

A Recognized Investment Limit per Room for Construction of New Hotels 26

B Preliminary Request Form 27

C Criteria and Priorities for Budget Allocation 28-29

D Information Regarding the Applicant and Signatories 30-31

E Confirmation of the Local Committee Engineer 32

F Statement Regarding Previous Grants 33

G Execution Guarantee Form 34

H1 Letter of Undertaking for Land owned by the Israel Land Authority 35-36

H2 Letter of Undertaking for Registering a Warning Note in Property

registered at the Land Registry

37-38

I1 Applicant Statements and Undertakings 39-40

I2 Applicant Statements and Undertakings for Track B 41

J Undertaking not to Sell Hotel Units 42

K Hotel Rating Undertaking 43

L Signs Indicating the Assistance of the Ministry of Tourism 44

M Documents to Attach to the Request 45

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Procedure 01/2018 – Chapter A:

Grant in accordance with the Capital Investments Encouragement Law,

5719-1959

1. General

1.1. According to the goals of the Ministry of Tourism (hereinafter: "the Ministry"), the supply of

rooms has to be increased, in order to meet rising demands and reduce the costs of vacations

in Israel.

1.2. The aim of the procedure is to encourage the construction and expansion of hotels in Israel, in

accordance with the Capital Investments Encouragement Law, 5719-1959 (hereinafter: "the

Law"), and in accordance with the priority zones specified in the Capital Investments

Encouragement Order, 5767-2007, and its amendments (or any order that would replace it),

and within the budget approved for this purpose.

1.3. Applicants submitting requests for an "Approved Enterprise" status in accordance with this

procedure, who meet the provisions of the law and the criteria specified in this procedure, shall

be entitled to receive a "Letter of Approval for a Building Permit" or a "Letter of Approval for

an Investments Plan", entitling them to the grants prescribed by the Law.

To assist Applicants, Supplement M has been added, to track and examine whether all the

required documents have been submitted.

1.4. As a rule, rights or obligations prescribed by this procedure may not be assigned, except under

special circumstances to be specified in a request by the Applicant and/or the funding entity,

and approved in advance by the Administration.

1.5. Notwithstanding the provisions specified in this procedure, the Investments Administration

may reject requests submitted by Applicants or by a corporation owned or controlled by

Applicants, who have violated the provisions of the Planning and Construction Law, by using

a hotel structure for other purposes in contradiction to the tourism designation of the lot and

the approved plans.

1.6. Once a year the Investments Administration shall publish its decisions and the status of

approved requests on the Ministry's website.

1.7. The Ministry may cancel or change this procedure at any time, depending on the availability

of a sufficient budget or the investment and development policies of the Ministry.

2. Definitions

For the purpose of this procedure and its supplements the terms below shall be defined as follows:

2.1. "Hostel" – a youth hostel or backpacker's hostel, as defined in the Physical Standards Booklet

for the Planning and Classification of Tourism Accommodation Facilities and any supplement

thereto.

2.2. "Hotel" or "the Structure" – rooms motel, suites motel, rooms hotel, suites hotel, hostel or

holyday resort, as defined in the "Physical Standards Booklet", excluding "special

accommodation facilities", as defined in Director General Circular 5/2009 and its updates.

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2.3. "Zero Report" – an estimate by an engineer appointed by the Ministry, describing the

conditions at the time of submitting a request, for the purpose of determining what investments

were made prior to the submission of the request.

2.4. "Final Implementation Report" (FIR) – a report submitted to the Ministry by an Applicant

upon the completion of a project, summarizing and specifying the total investments involved

in the project.

2.5. "The Capital Investments Encouragement Law" or "the Law" – the Capital Investments

Encouragement Law, 5719-1959.

2.6. "Building Permit" – a permit issued by the competent planning committee, allowing the full

construction of a project, as submitted to the Investments Administration.

2.7. "The Applicant" or "the Entrepreneur" – the submitter of a request for an "Approved

Enterprise" status in accordance with this procedure, who is one of the legal entities specified

in Section 40B of the Law.

2.8. "The Professional Team" – a team appointed by the deputy director general of the

Development and Infrastructures Administration, responsible for receiving and examining

requests and preparing them for review by the Tourism Investments Administration.

2.9. "Permit Recognized Investment" – an investment in accordance with an estimate by an

engineer or 8% of a "Project Recognized Investment", the lower of the two.

2.10. "Project Recognized Investment" – an investment in accordance with an estimate by an

engineer or a Recognized Total Investment Limit, or in accordance with the investment amount

specified in an Applicant's request, the lower of the two.

2.11. "Business day" – a day in which most banks in Israel are open for the purpose of conducting

transactions. Any date specified in the procedure that does not fall on a business day shall be

postponed to the first business day following it.

2.12. "Accommodation unit" or "Hotel Room" – an accommodation unit in a hotel that includes

at least a bedroom and a bathroom, and is used for accommodation and recreation.

2.13. "Letter of Approval for an Investments Plan", "Letter of Approval for a Building

Permit" – a document that entitles its holder to receive grants, subject to meeting the terms

specified in it and the terms specified in this procedure, for a project including at least 11 new

rooms in a hotel facility or at least 25 beds in a hostel.

2.14. "Protected Structure" – a structure included in the site preservation plan, as specified in

Section 76A of the Planning and Construction Law, 5725-1965, and its fourth supplement, or

a structure included in the preservation index of the local authority.

2.15. "Investment Administration" or "the Administration" – the Tourism Investments

Administration, as defined in Section 1A of the Law.

2.16. "Building Permit Track" – a track intended for projects requiring an investment of or

exceeding 50,000,000 NIS for which a Building Permit has not yet been issued for the entire

project, at the time of submitting the request.

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2.17. "Investments Plan Track" – a track intended for projects requiring an investment of less than

50,000,000 NIS or Popular Level Projects or any other project for which a Building Permit

has already been issued.

2.18. "Popular Level Project" or "Popular Level Hotel" – regarding an administrative grant as

specified in Section 3.2 of the procedure, a level C urban hotel, D urban/resort hotel or a hostel,

in accordance with the Physical Standards of the Ministry, for which the maximum recognized

investment required for its construction/expansion does not exceed 350,000 NIS per room

(including costs of preservation, if relevant), and subject to the opinion of the Ministry's

architect.

2.19. "Capital Investments Encouragement Order" or "the Order" or "Priority Zones Map" –

the map in accordance with the Capital Investments Encouragement Order (Defining Special

Zones for Tourism Enterprises) (Temporary Order), 5776-2016.

2.20. "Approved Plan for Engineers" – an approval by the Ministry for the adjustment of an

Approved Building Permit by the local committee to a project's architectural plans approved

by the Ministry.

2.21. "Operating Period" – the period required by the Applicant to operate the hotel, as specified

in the Applicant's Letter of Approval.

2.22. "Physical Standards" – the Ministry's "Physical Standards for the Planning and

Classification of Tourism Accommodation Facilities", as specified in Director General

Circular 12/20121 and the supplement to Director General Circular 12/2012,2 or any other

circular that will replace the aforementioned circulars and be valid at the time of submitting

the architectural plans to the Ministry for approval.

2.23. "Recognized Total Investment Limit" – the recognized investment limit per room, in

accordance with the rating of the hotel (as specified in Supplement A), multiplied by the

number of rooms in the approved architectural plans. In Protected Structures, an additional

20% shall be recognized on top of the "Recognized Total Investment Limit", i.e. up to 120%

of the investment limit per room, except in cases of request for recognition as a "Popular Level

Project".

3. The main provisions of the procedure

3.1. The Investments Administration shall decide on the issuing of Letters of Approval for grants

in the rate of 20%3 of the recognized investment in projects, in one of the tracks specified in

this procedure.

3.2. In order to encourage the establishment of popular hotels, the government has decided, in

decision no. 1556 of 19/6/2016, to provide an administrative grant in a rate of 13% of the

recognized investment in Popular Level Projects, in addition to the grant specified in the

Capital Investments Encouragement Law, 5719-1959, for a period of 3 years beginning on 1

July 2016 and ending on 30 June 2019. Request reviews and the terms of approval shall be in

accordance with Chapter B of the procedure.

1 See: http://www.gov.il/he/departments/ministry_of_tourism. 2 See: http://www.gov.il/he/departments/ministry_of_tourism. 3 In accordance with the grants rate specified by law.

http://www.gov.il/he/departments/ministry_of_tourism


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3.3. Submitting a request in accordance with this procedure shall constitute an undertaking by the

Applicant to comply with all the terms specified in the Letter of Approval for an "Approved

Enterprise" status, if issued.

3.4. This procedure includes two tracks for construction or expansion:

A. Investment Plan Track – for projects meeting one of the following conditions:

1) The total investment required for the project is lower than 50,000,000 NIS, or the

project is a Popular Level Project (hereinafter: "Track A1");

2) All other projects for which a Building Permit has already been issued (hereinafter:

"Track A2").

B. Building Permit Track – for projects in which the total required investment is 50,000,000

NIS or above, and for which a Building Permit has not yet been issued for the entire project

(hereinafter: "Track B").

3.5. Requests for a Letter of Approval for an Investments Plan, as approved in a Building Permit,

may be submitted for projects that have been approved through the Building Permit Track, and

have met all the terms of the Letter of Approval for a Building Permit and the terms specified

in Section 11.2 below, subject to meeting the terms of the Letter of Approval for an

Investments Plan and the allocated budget. Such projects shall have priority on the budget year

in which the request is submitted, in accordance with the date of presenting the Building

Permit to the Ministry.

3.6. Under special circumstances or for reasons that are not dependent on the Entrepreneur, the

Administration may relax any of the terms of the procedure or replace any requirement by

another or prescribe an alternative provision to any of the provisions of the procedure, for

reasons that shall be specified and in such a way as to fulfil the goal of the original provision.

3.7. The Administration may reject requests for insufficient budget or at its own discretion in the

following cases and for reasons that shall be specified:

- Unreasonable request in terms of planning or economically, or a request that does not

specifically refer to the requirements of the procedure, preventing its assessment in the

opinion of the Ministry.

- The suggested project is not mature, and the chances of its implementation are low.

- The total grant required for the approval of the request exceeds 25% of the total budget for

this procedure.

- In cases of a request by a corporation or a chain that holds one or more Letters of Approval,

the Administration shall examine the progress of implementing such other Letters of

Approval, including meeting milestones.

3.8. The size of the grant:

3.8.1. "The Project Recognized Investment" in Investment Tracks A – the Project

Recognized Investment shall not exceed the Recognized Total Investment Limit, or the

required investment according to an assessment by an engineer appointed by the

Ministry, if required, as specified in Section 7.2 below, or according to the Entrepreneur's

request, as specified in Section 3.19 below, whichever is lower.

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3.8.2. "The Permit Recognized Investment" in Track B – the Permit Recognized Investment

shall not exceed 8% of the Recognized Total Investment Limit or the required investment

according to an assessment by an engineer appointed by a Ministry, if required, as

specified in Section 7.2 below, or according to the Entrepreneur's request, as specified

in section 3.19 below, whichever is lower.

3.9. Protected Structures that that are converted and expanded for hotel use shall be recognized as

construction requests, provided that the area of the new construction addition is at least 60%

of the current area of such structure.4

3.10. "Special Hotel Accommodation" facilities, as defined in Director General Circular 5/2009,

shall not be entitled to receive grants, unless some of the facility's units were sold as FREE

HOLDS prior to 1996, and under the following conditions:

A. The number of units sold prior to the date of submitting the request does not exceed 50%

of the total units in the hotel;

B. The units that were sold, as well as any areas serving only the units that were sold, and the

relative part of any common areas associated with the units that were sold, shall not be

entitled to receive grants;

C. All remaining units in the facility shall be operated as regular hotel units;

D. The Applicant shall be required to sign the letter of undertaking attached as Supplement

J, specifying that no additional units in the existing facility and in the future facility shall

be sold. This undertaking shall be included in a warning note in accordance with

Regulation 27 of the Land Regulations (Administration and Registration), 5772-2011.

3.11. Previous grants:

3.11.1. Grants shall not be provided through this procedure for investment clauses of any

project for which financial support or another government/public grant has been

previously provided, for which the Operating Period has not ended, in accordance with

a Letter of Approval or entitlement for which grants have been made under the terms

specified therein.

To guarantee compliance with this condition, Applicants shall sign the statement

specified in Supplement F.

3.11.2. In case of grant requests submitted before the end of the Operating Period, the

Administration may consider, under special circumstances and reasons to be specified,

providing such grant, deducting the relative part of the grant for the period in which the

hotel was not working, or, alternatively, extending the Operating Period in the new Letter

of Approval.

3.12. Recognized expenses:

3.12.1. Grants in Investment Tracks A – shall be provided for expenses involving planning

(if not previously recognized), infrastructure, construction work and furniture and

equipment purchasing. Investment in planning shall be recognized up to 8% of the total

recognized investment.

4 Total constructed area = current structure area + future additional construction in square meters.

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3.12.2. Grants in Investment Track B – shall be provided for planning expenses, up to 8% of

the total recognized investment. For the purpose of this procedure, "planning expenses"

are: advisor and planner fees, payments of levies and fees for the purpose of obtaining a

Building Permit.

3.13. The Letter of Approval for plans in Investment Tracks A shall include, among other things,

a condition that the Applicant undertakes to operate the hotel continuously for a period of at

least 15 years from the date of opening the hotel (hereinafter: "the Operating Period"), in

accordance with the level specified in the approved request, and as is standard in hotels of

similar level and size. To guarantee compliance with this condition, Applicants shall sign an

appropriate letter of undertaking, for which a planning warning note shall be registered, as

specified in Section 10.6.3 below.

3.14. Applicants whose request for an Approved Enterprise status has been approved shall be

required to install signs indicating that the construction/expansion of the hotel was conducted

with the assistance of the Ministry, throughout the Operating Period, at a location and in a

format specified in Supplement L.

3.15. Applicants whose request for an "Approved Enterprise" status is approved shall receive a

"Conditional Approval" for the request, requiring Applicants to comply with the provisions

of section 10.6 below, within 90 days from the sending date of the notification.

A Letter of Approval shall not be issued before the requirements specified in the Conditional

Approval are met, the examination of the architectural plans is complete and approval for the

compliance of such plans with the Physical Standards and the requirements of the Ministry is

received.

3.16. To clarify, a "Conditional Approval" is not a "Letter of Approval" in accordance with

the Law, does not entitle Applicants to receive grants and/or does not constitute a

commitment of any kind by the Ministry and/or the State towards Applicants. A "Letter

of Approval" is the only entitling document in accordance with the Law.

3.17. After meeting the terms of the Conditional Approval, Applicants shall receive a "Letter of

Approval" entitling them to receive grants in accordance with the Law.

3.18. Any essential changes to plans that would be received after the approval of such plans, such

as: type and level, number of rooms, size of investment, etc., that would have affected the

chances of the approval of such plans if they had been known in advance, shall be re-examined

by the Administration.

In such cases, the Administration may cancel the Letter of Approval and/or the

Conditional Approval issued, and/or not update the Letter of Approval in accordance

with the new plan, and/or forfeit the securities provided. The Administration shall specify

the reasons for its decision.

3.19. Updating the investment limit during a project:

3.19.1. Without derogating from the provisions of Section 3.18 above, if a change in the level

of the hotel is made as part of the examination and approval of the architectural plans to

the Physical Standards of the Ministry, in order to accommodate a higher recognized

investment limit, the Administration may decide not to update the Letter of Approval

accordingly.

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3.19.2. In requests for a "Popular Level Project" in which the requested investment is lower

than 350,000 NIS per room, a higher investment limit per room shall not be recognized.

The Administration may cancel the administrative grant approved for a "Popular Level

Project" if during its construction it becomes clear that the project does not meet the

requirements for this level, following an engineering examination or due to an actual

investment that exceeds the approved investment limit by more than 20% (420,000 NIS)

per room.

3.20. The validity of a Letter of Approval:

3.20.1. In Investment Tracks A: the period of work for the construction or expansion of a

hotel, including obtaining a business license, obtaining a certificate of occupancy and

commencing operation, shall be 60 months from the date of the Letter of Approval, as

specified in section 11.5.2a below.

3.20.2. In Track B: the period of validity of the Letter of Approval shall be 24 months, with a

possible extension of 6 additional month, and no additional extensions. The Letter of

Approval for projects that do not present a Building Permit within 30 months shall be

automatically cancelled without advance notice, as specified in Section 11.5.2B below.

3.21. During the entire Operating Period, Applicants shall operate the hotel as a hotel only, and

shall not submit any requests for a change of designation or special use for the approved project

that is not exclusively hotel use. Applicants shall not operate the hotel for any other purpose,

including "special hotel accommodation" as prescribed in General Director Circular 5/2009 or

any document that would replace it.

3.22. The last date for submitting requests in both tracks in accordance with this procedure

is 01/05/2018 at 11:00.

3.23. The "determining date" for the recognition of investments entitled to receive grants shall be

the date of submitting the request for an "Approved Enterprise" status in accordance with the

procedure and as part of the requests submitted after its publication.

3.24. Notwithstanding the above, Applicants who submitted requests in accordance with the law

earlier than the final date for submitting requests, and the requests have been given a request

number and no grants have been received for the requests, who wish such requests to be

included in the requests examined under this procedure, shall submit a request to renew the

processing of such requests under this procedure.

In such cases, a new request should not be submitted for the same plan, but a request to

renew the previous request under this procedure, and transfer the documents and attachments

required for this procedure before the last date for submitting requests, specifying the date of

submission of the original request.

For Applicants that receive a "Letter of Approval", the determining date for the purpose of

recognition of investments made shall be the date of submitting the earlier request or 36 months

prior to the last date for submitting requests in accordance with the procedure, whichever is

earlier.

4. Submitting a request

4.1. Requests in accordance with this procedure shall be submitted online through the "forms"

system operated by Inbal Company.

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To get access to the aforementioned system, fill the form "Preliminary Request for the Tourism

Investments Plan" (Supplement B). Any questions or requests for clarifications regarding the

online system may be referred to the technical support team by phone at 03-9778065.

4.2. After entering the request in the "forms" system, issue the request report and submit it to the

Ministry with the required documents specified in the procedure (as specified in Supplement

M). The form and its attachments shall be submitted to the Economy, Investments and

Budget Department of the Ministry before the last date for submitting requests.

Notice – the process of submitting a request for the first time may be long.

Furthermore, near the last date for submitting requests, the system and the support team are

expected to be overloaded. It is therefore recommended to begin the process as early as

possible.

Failure to meet the deadline for submitting requests for any such technical reason shall

not be considered cause for accepting documents later than the last date for submitting

requests.

4.3. During the examination and assessment, the Investments Administration reserves the right to

contact some or all Applicants with requests for clarifications regarding their requests, in order

to avoid any confusion when examining the requests. If no response is received for such a

request for clarifications, the relevant request shall be examined based on the documents and

information attached to the request.

5. Preliminary conditions

Applicants submitting requests in either of the two tracks shall be required to comply with all of

the following preliminary conditions:

5.1. City Zoning Plan:

5.1.1. The lot intended for the project has a valid City Zoning Plan, with the appropriate

designation for the request and applicable to the entire area of the lot, allowing the

issuance of a Building Permit for the requested construction or expansion.

Compliance with this condition shall be determined, among other things, based on the

approval of the local committee's engineer, as specified in Section 6.4 below.

In cases where the demolition of existing structures within the designated lot is

required for the purpose of the construction/expansion of the hotel, the Applicant

shall be required to also present a valid demolition permit.

5.1.2. Applicants requesting a Letter of Authorization shall undertake, through Supplement H

(1 or 2), that the City Zoning Plan in not undergoing any changes, and that they have no

intention of conducting any changes in the City Zoning Plan that may delay the

implementation of the plan and the schedule specified in the procedure. Any such

changes to the City Zoning Plan by an Applicant shall be considered a material violation

of the Letter of Approval.

5.1.3. In projects where a Building Permit is issued under a regulatory City Zoning Plan,

allowing additional tourism uses for other designations, such as City Zoning Plan no.

101-0092-098, the Applicant shall undertake, through Supplement I1, to submit to the

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Ministry a valid hotel business license and a municipal taxes payment report by the end

of the first quarter of every year.

5.2. For projects in Investment Track A2, a valid Building Permit is required for the entire project.

5.3. The Applicant has possession of the land on which the hotel is to be constructed/expanded,

and "land rights" for the entire lot.

For the purpose of this section – "land rights" – ownership or sale agreement, the proceeds of

which have been paid in full, together with an irrevocable power of attorney authorizing the

Applicant to carry out the operations required to construct the hotel, or a lease agreement for

a period of 20 years, or a valid and appropriate development agreement with the Israel Land

Authority.

5.4. The Applicant has the financial capacity to provide owner's equity, as follows:

A. Applicants in Investment Tracks A – financial capacity to provide owner's equity of at

least 20% of the total investment required for the project.

B. Applicants in Track B – financial capacity to provide owner's equity of at least 20% of

the total investment required for the Building Permit.

The bank letter shall explicitly specify that the financial capacity refers to the project that is

the subject of the request, as well as the total investment required for the project.

In case of a financial capacity confirmation from a foreign bank, an additional confirmation

from a bank holding a valid license in accordance with the Banking Law (Licensing), 5741-

1981, shall be required, confirming that the Israeli bank recognizes the foreign bank, maintains

regular commercial relations with the foreign bank, and that it has confirmed the content of

the letter with the foreign bank.

5.5. The Applicant is not in the process of receivership and/or pre-receivership and/or liquidation,

and/or has not been declared a debtor of limited means in accordance with the Execution Office

Law, and the Applicant or one of its controlling persons, to the best of the Applicant's

knowledge, is not expected to be involved in any such processes.

6. Documents to be attached to requests in both tracks

When submitting a request, Applicants shall be required to attach the following completed and

signed documents to the request:

6.1. Documents of a corporation registered in Israel:

- Business corporation registration certificate, memorandum and statute.

- Corporation data printout, as appearing on the website of the Registrar of Companies.

- Information regarding stock holders and signatories, in accordance with Supplement D.

Corporations in the process of incorporation may submit a request, but shall be required to

specify in advance the identity of future stock holders. If such a request is approved in principle

by the Investments Administration, the corporation shall be required to complete its

incorporation and registration, and present the relevant documents, within 30 days of receiving

notification regarding the decision of the Administration, as a condition for receiving the

Conditional Approval and/or the Letter of Approval.

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6.2. Authorizations from the Tax Authority:

- Extended book keeping confirmation in accordance with the Public Bodies Transaction

Law (Book Keeping Enforcement and Tax Duties Payment), 5736-1976.

- Deduction at source authorization.

6.3. Land rights confirmation:

- Current confirmation of rights in the land that is the subject of the request from the Land

Registration Bureau or the Israel Land Authority, obtained near the date of submitting the

request in accordance with this procedure.

- Or other documents indicating land rights in accordance with Section 5.3 above. The

Administration may require supplementary documents or commitments for the fulfilment

of this condition.

6.4. City Zoning Plan documents:

- A valid City Zoning Plan, as specified in Section 5.1 above, applicable to the entire lot

intended for the construction/expansion of the structure, including verbal provisions.

- A City Zoning Plan map and an original scale construction supplement in hardcopy or

digital media.

- If the statute refers to any previous valid City Zoning Plans, or any City Zoning Plans that

affect the valid City Zoning Plan, such plans shall be attached as well.

- Confirmation from the local committee engineer, in accordance with Supplement E,

regarding the validity of the submitted City Zoning Plan, including specification of the

allowed span of the rights.

- Applicants shall specify in the request documents:

A. In projects where the existing City Zoning Plan authorizes the construction of a

structure or a mixed use structure:

1. If any use other than hotel use is planned, Applicants shall present the opinion of

the plans examination committee of the Ministry of Tourism. The Administration

shall not approve requests where entrepreneurs intend to act in contradiction with

the recommendation of the plans examination committee.

2. Specify any additional uses other than hotel uses.

B. In projects where a Building Permit is issued under a regulatory City Zoning Planning,

authorizing additional tourism uses for other designations, such as City Zoning Plan

no. 101-0092-098.

6.5. Building Permit – for projects in Investment Track A2.

6.6. Bank guarantee:

To secure compliance with the terms of the Conditional Approval, if issued, the corporation

shall be required, at the time of submitting the request, to submit a bank guarantee in

accordance with Supplement G. If the corporation's request is not approved by the

Administration, such letter of guarantee shall be returned.

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A. Projects in Investment Tracks A:

- Projects with a required investment of up to and including 10,000,000 NIS – shall

provide a security in the amount of 30,000 NIS.

- Projects with a required investment exceeding 10,000,000 NIS – shall provide a

security in the amount of 50,000 NIS.

Securities shall be valid from the last date for submitting requests in accordance with this

procedure for a period of 18 months, to be extended if necessary, by request from the

Ministry, until the terms for obtaining a Letter of Approval are fulfilled.

B. Projects in Track B:

Shall provide a security in the amount of 30,000 NIS, valid from the last date for

submitting requests in accordance with this procedure for a period of 30 months (the entire

validity period of the Letter of Approval for a Building Permit).

6.7. Confirmation of the corporation's financial capacity, in accordance with the submitted request

(as specified in Section 5.4 above).

In case of a financial capacity confirmation from a foreign bank, an additional confirmation

from a bank holding a valid license in accordance with the Banking Law (Licensing), 5741-

1981, shall be required, confirming that the Israeli bank recognizes the foreign bank, maintains

regular commercial relations with the foreign bank, and that it has confirmed the content of

the letter with the foreign bank.

6.8. In case of a corporation that has started the construction/expansion work, recognition of

investments from the date of submitting the request shall be in accordance with a "Zero

Report" established by an examining engineer appointed by the Ministry of Tourism.

6.8.1. After submitting the request, the Ministry shall send an examining engineer to prepare

the "Zero Report"; if the request is approved, recognition of investments shall be from

the date of submitting the request, in accordance with the remaining investments

according to the Zero Report.

6.8.2. The Ministry shall bear the cost of the engineer's examination.

6.9. Protected Structures – attach an approved site preservation plan, in accordance with Section

76A of the Planning and Construction Law, 5725-1965, and its fourth supplement, designating

the structure as a Protected Structure or an approval from the local municipality engineer

regarding the selection of the structure as a Protected Structure in accordance with the

municipality's preservation card, specifically identifying the structure.

6.10. A map and/or photo, indicating the location of the project and its surroundings.

6.11. Bank information (check photocopy) and/or bank account confirmation.

6.12. For projects in Investment Track A – signed statements and undertakings by the Applicant,

in accordance with Supplement I1. For projects in Track B – signed statements and

undertakings by the Applicant, in accordance with Supplements I1 and I2.

6.13. Applicant statements and undertakings, in accordance with Supplement F, Supplement J

and Supplement K, depending on the requested track, as specified at the top of each

supplement.

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6.14. For requests for expansion – audited financial reports for the tax year preceding the year of

submitting the request. If such audited reports are not available, the reports for the last audited

year shall be attached, together with the non-audited reports for the year preceding the year of

submitting the request. A detailed operations report shall be attached to the financial reports.

7. Supplementary examinations for review by the Administration

Applicants on both tracks shall be required to submit architectural plans, an economic survey and

an engineer assessment, as specified below, no later than 14/06/2018.

7.1. Architectural plans for both tracks

7.1.1. Applicants shall be required to submit detailed architectural plans for the project of

construction/expansion of the hotel, in accordance with the Physical Standards. Such

plans shall be submitted both in print and in computer files, and delivered to an

examining architect on behalf of the Ministry (hereinafter: "the Examining Architect").

The plan shall require the approval of the Ministry's architect, as specified in Section

10.6.2 below.

7.1.2. Applicants shall submit amended/completed plans as requested by the Ministry's

architect or the Examining Architect within 21 days from the date of receiving such

request in writing.

7.1.3. Payment for the examination by the Examining Architect shall be made by the Applicant

to the account of the Ministry, in accordance with a payment request issued by the

Ministry.5

7.1.4. To clarify, structures that fail to meet the requirements of the Physical Standards shall be

considered in violation of the provisions of this procedure, and shall not be approved or

provided with any grants of assistance.

7.1.5. In case of projects for which the Applicant has undertaken to submit a request for rating

in accordance with the Tourism Service Regulations (Hotels), 5773-2013 (as specified

in Supplement K), the process of approving compliance with the Physical Standards

may be relaxed, at the discretion of the Ministry's architect, if required.

7.2. Engineering examination

7.2.1. In projects of expansion of an existing hotel or in projects based on a Protected Structure,

or in any other project deemed necessary by the Ministry, a preliminary examination of

the architectural plans shall be conducted by an engineer appointed by the Ministry, who

will visit the requested project, in order to determine the need for a Building Permit and

estimate the required investment.

7.2.2. If the engineer's estimate of the required investment is lower than the investment

specified in the request, the recognized investment shall be determined in accordance

with the engineer's estimate, and, in any case, shall not exceed the Recognized Total

Investment Limit.

5 Guidelines regarding payment and compliance with the Physical Standards, as specified in Director General

Circular 5/2008, can be found on the Ministry's website at: www.gov.il/he/departments/ministry_of_tourism >

Infrastructure development and investments > Physical Standards for planning and facility classification.


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7.3. Economic feasibility for both tracks

Applicants shall be required to submit an "economic survey" to examine the economic

feasibility of the project for the Applicant, the corporation and the economy. The survey shall

be conducted through a computer system based on the Ministry's economic model.6

Applicants shall bear the cost of the survey, only after the request has met the preliminary

conditions and the budget for its approval has been made available.

8. Examining requests

8.1. Requests that meet the preliminary conditions, and have completed the examinations specified

in Section 7 above on time, shall be examined in accordance with Section 9 below.

8.2. Requests that fail to meet the preliminary conditions shall be rejected without examining the

project.

8.3. Requests that fail to complete the examinations specified in Section 7 on time shall not be

considered and shall be archived. The Administration shall notify Applicants

accordingly.

9. Allocating grants

9.1. The total budget allocated as part of this procedure, including the administrative grant, shall

be subject to the Priority Zones Map and the availability of appropriate budget.

9.2. The method of rating requests in both tracks:

9.2.1. Following the examination of requests that meet the preliminary conditions in both tracks

and the completion of all preliminary examinations, in accordance with the provisions of

Section 7 above, if the required budget for each track exceeds the allocated budget,

requests shall be rated by the Administration in accordance with the criteria specified in

Supplement C.

9.2.2. Except in special cases, the Ministry shall invite the Entrepreneurs to present their

projects.

Entrepreneurs shall be required to present, among other things: planning, funding plans,

meeting milestones, feasibility of the full Investment Plan, progress of the Investment

Plan as part of other Letters of Approval of the Entrepreneur, if any exist.

9.2.3. When rating requests and with an overview of all the requests, the Administration may

change the marks given to any request, for the reasons specified by it.

9.2.4. Requests that received the highest marks shall be reviewed by the Investments

Administration, until the entire budget allocated for the track is used.

9.3. Applicants whose request is not included in the existing budget for the track, in accordance

with the aforementioned rating, shall receive notification regarding the status of their request.

6 Guidelines for the economic survey and its cost can be found on the Ministry's website at:

www.gov.il/he/departments/ministry_of_tourism > Infrastructure development and investments > Tourist

Investments Administration > Economic feasibility examination of hotel.


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10. The Administration's process of review for issuing a Letter of Approval

10.1. Based on the submitted documents, architectural plans, economic survey and engineer's

report, if required, the Ministry may instruct Applicants to make changes and/or amendments

to their requests.

10.2. Requests that meet all the preliminary conditions, the conditions specified in Section 6 above

and for which the Applicant has completed the requirements of Section 7 on time, shall be

brought to the Administration for review and decision, subject to the budget availability

specified in Section 9 above.

10.3. Requests by Applicants who do not meet the conditions and requirements before the approval

of the review by the Administration or before receiving a Letter of Approval, may be

disqualified by the Administration and/or the Applicant's guarantee may be forfeited.

10.4. Applicants shall receive written notification regarding the decision of the Administration and

its reasons.

10.5. Applicants whose request has been approved by the Administration shall receive a notification

regarding a Conditional Approval of a request for an "Approved Enterprise" status for the

construction/expansion of a hotel.

10.6. Upon receiving a "Conditional Approval", prior to obtaining an "Approved Enterprise"

status in accordance with the Law, Applicants shall be required to complete the following

actions, within 90 days from the date of the notification:

10.6.1. Execution guarantee:

A. In Investment Tracks A: deposit an autonomous and unconditional bank guarantee

(hereinafter: "Execution Guarantee") from an Israeli bank or an Israeli insurance

company licensed to engage in insurance in accordance with the Financial Services

Supervision Law (Insurance), 5741-1981, in accordance with Supplement G, in an

amount equal to 5% of the grant approved in accordance with the law, linked to the

known consumer index at the time, to guarantee the fulfillment of all of the

Applicant's commitments in due time, valid for a period of 72 months.

In any case of extending the Letter of Approval, the aforementioned guarantee shall

be extended for a period of one year from the end of the extended validity of the

Letter of Approval.

B. Applicants in Track B are exempt from depositing an Execution Guarantee.

10.6.2. Obtain the Ministry's approval that the architectural plans meet the Physical Standards

and the Ministry's requirements, to the satisfaction of the Ministry's architect. Extension

of the date of approval of plans beyond the date specified in this procedure shall be made

by written request from Applicants, specifying the reasons for the extension, and subject

to advance written approval by the Ministry.

10.6.3. Warning note registration:

A. Applicants in Track A shall be required to submit an extract confirming the

registration of warning notes at the Land Registration Bureau, in accordance with

the Land Regulations (Administration and Registration), 5730-1969, regarding the

land designation of the project, the use of the land and the prohibition on designation

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change or land use other than hotel use without authorization from the Ministry, as

well as an undertaking to transfer the commitment of the entrepreneur to any buyer

or receiver of rights in the property insofar as they are sold – the aforementioned

warning notes shall be in accordance with the undertaking attached as Supplement

H2.

- In cases of property owned by the Israel Land Authority and/or property that is

not duly registered with the Land Registration Bureau, a letter of undertaking in

accordance with Supplement H1 shall be submitted. This letter of undertaking

shall be attached as a supplement to the lease agreement with the Israel Land

Authority regarding the property.

- In special cases where a note cannot be registered in accordance with Regulation

27, and subject to approval from the Ministry, a request may be submitted to the

Ministry, to replace the aforementioned with a warning note in accordance with

Section 128 of the Land Law, the text of which shall be determined by the

Ministry, and sign the form attached as Supplement H2.

- In cases of property under a lease agreement, the registration of a warning note

may be substituted for an operating guarantee for a period of 15 years, in an

amount equal to 5% of the approved grant, as guarantee for the project's

operation during the Operating Period.

B. Applicants in Track B are exempt from the registration of a warning note.

10.7. Following the Ministry's approval that all actions have been taken and that all the terms of the

Conditional Approval have been met, Applicants shall receive an appropriate "Letter of

Approval". The Letter of Approval shall specify the date of the Conditional Approval,

as specified in Section 3.20.1 of this procedure.

10.8. To clarify, the Conditional Approval does not entitle Applicants to receive grants and/or any

undertaking by the Ministry and/or the State towards Applicants; the Letter of Approval shall

be the only entitling approval for the purpose of grants.

10.9. Validity of the Letter of Approval:

10.9.1. In Investment Tracks A – the execution date shall be for 12 months each time, from

the date of the Letter of Approval.

10.9.2. In Track B – the execution date shall be for 24 months from the date of issuance of the

Letter of Approval.

10.9.3. Extending the validity of the Letter of Approval:

Holders of a Letter of Approval shall contact the Ministry with requests to extend the

execution date.

A. In Investment Tracks A – extending the Letter of Approval for the first year shall

be subject, among other things, to compliance with the terms specified in Sections

11.1 and 11.2 below. Additional extensions shall depend on meeting the schedules

of the milestones specified in Section 11.5 below.

B. In Track B – extending the Letter of Approval shall be allowed for an additional 6

months. No further extensions shall be allowed.

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11. Executing the plan and the payment of grants

11.1. Plans in Investment Tracks A:

Applicants shall be required to meet the following conditions, no later than 10 months from

the date of the Letter of Approval:

11.1.1. Building Permit: Applicants in Track A1 shall provide a Building Permit for the plan

approved by the Administration.

11.1.2. Funding plan: Applicants shall provide a bank authorization for a detailed funding plan,

including the funding sources required to execute the project in full, in accordance with

the Letter of Approval. Funding sources shall include: owner's equity, shareholder's loan,

bank/institution credit and grant. The Ministry may approve other sources of funding, at

its own discretion.

11.2. Plans in Track B:

11.2.1. Applicants who meet all the milestones specified in Section 11.5.2 below, shall submit

the Building Permit as proof of the full execution of the plan, during the period of the

Letter of Approval.

11.2.2. Entrepreneurs interested in obtaining a Letter of Approval for an entire plan approved

through Track B, who meet all the conditions of the Letter of Approval, shall provide the

following when submitting the Building Permit:

A. Financial capacity to provide owner's equity in an amount equal to at least 20% of

the total investment required for the project.

B. All other requirements that may be required, including the required documents for

Investment Tracks A, specified in Section 10.6 above, in accordance with the

Administration's decision to approve the Investment Plan.

11.3. Approved plan for engineers – plans for Building Permits approved by the local committee

shall be delivered to an examining architect on behalf of the Ministry, in order to approve them

as approved plans for engineers. In any case, grants shall not be provided without an approved

plan for engineers.

11.4. Project accompaniment:

11.4.1. The Ministry accompanies projects regarding engineering control and grant approval

through selected companies, hereinafter referred to as "Accompanying Bodies".

11.4.2. After receiving an approved plan for engineers, and upon beginning the work specified

in the Letter of Approval, Applicants shall contact the execution and monitoring

commissioner at the Ministry with a request to appoint an Accompanying Body.

11.4.3. Communication between the Applicant and the Accompanying Body and the Ministry,

for the purpose of execution reports, requests for grant payments and various updates to

the Letter of Approval, shall be conducted through the "Shenhav System". Instructions

on how to use the system, as well as a user name and password, shall be provided by the

Accompanying Body.

11.4.4. In Investment Tracks A – the Accompanying Body shall instruct the Applicant to sign

a letter of undertaking, issue a bond to the State and register a floating charge for the

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corporate's assets, for the purpose of securing the execution of the approved plan and the

operation of the hotel as required by the Letter of Approval. The accompanying body

shall transfer all of the above to the Ministry of Tourism.

11.4.5. In order to the guarantee the meeting of obligations and milestones for the execution

and completion of the project:

A. Applicants in Investment Tracks A shall inform the Accompanying Body at least

about the completion of each of the stages specified in Section 11.5.2A below.

Following this notification, an engineer from the Accompanying Body shall visit the

project, in accordance with the request of the Applicant, as a preliminary condition

for receiving any of the grant payments, subject to the provisions of Section 11.6

below.

B. Applicants in Track B shall inform the Accompanying Body at least about the

completion of each of the stages specified in Section 11.5.2B below.

11.4.6. In investments plan projects where the approved investment specified in the Letter of

Approval is up to 15,000,000 NIS, no more than 6 (six) engineer visits shall be

conducted. In investments plan projects where the approved investment specified in the

Letter of Approval exceeds 15,000,000 NIS, no more than 12 (twelve) engineer visits

shall be conducted. The cost of any additional engineer visits over the number of visits

specified above shall be borne by the Applicant, in accordance with the current valid

rates of the Ministry.

11.5. Project milestones:

11.5.1. The execution of projects in accordance with milestones is a material condition of the

Letter of Approval. Corporations that fail to meet schedules shall be required to inform

the Administration and provide reasons for the delay.

11.5.2. In case of failure to meet the schedules prescribed by the milestones specified below,

the Administration may decide to forfeit the Execution Guarantee, in part or in full, at its

own discretion.

A. In Investment Tracks A:

Milestones for

grant payments Max.

execution

time (months)

Accumulated

execution

time (months)

Grant rate

(%) Accumulated

grant rate

(%) Meeting the

conditions specified

in Sections 11.1 and

11.2 above

10 10

Completing the

foundations,

demolitions and/or

reinforcements

24 24 10 10

Completing the

frame and internal

partitions

12 36 25-30 35-40

Completing the

piping systems 12 48 15-25 50-65

Finish works,

furnishing and 12 60 25 75-90

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opening of the hotel,

presenting a

business license,

receiving an

occupancy form,

determining the

hotel's rating Submitting a final

execution report 5 95

Approval of the

final execution

report

5 100

B. In Track B:

Obtaining full Building Permit for the entire project within 24 months from the date

of the Letter of Approval, and no later than 30 months from the date of the Letter of

Approval.

After 30 months the Letter of Approval for the Building Permit shall be cancelled

and the guarantee shall be forfeited.

11.6. Grant payments:

11.6.1. During projects in Investment Tracks A, grant payments shall be made as follows:

A. Payment of the first part of the grant shall be made after the completion of the first

milestone. In cases where the lot is owned by the Israel Land Authority, and a

development agreement has been presented as proof of ownership of the land,

payment of the grant, in accordance with this section, shall be contingent on a valid

development agreement.

B. Additional payments shall be made for reported and approved investments of at least

10% each time from the total approved investment for projects of up to 15,000,000

NIS, and at least 5% each time for projects exceeding 15,000,000 NIS.

C. The remainder of the grant payments, in an amount no less than 10% of the grant

approved in the Letter of Approval, shall be made subject to the following

conditions:

- Submitting a Final Implementation Report – Applicants shall be entitled to 5%

of the approved grant for submitting a Final Implementation Report upon

completion of the investments, in accordance with the approved plan, presenting

a valid business license for the hotel and informing the Ministry about the

opening of the hotel.

- In cases where the land is owned by the Israel Land Authority, and a

development agreement has been presented when submitting the request as proof

of ownership of the land, the payment of the grants shall be contingent on the

presentation of a lease agreement with the Israel Land Authority.

- Applicants who undertake to submit a request to participate in the rating

procedure shall present the request submitted by them.

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- The last grant payment – shall be made upon approval of the Final

Implementation Report by the Ministry. When examining the Final

Implementation Report, the company's compliance with the conditions of a

competitive enterprise, in accordance with Section 18A of the Law, shall be

examined, as specified in Section 11.9 below.

11.6.2. For projects in Track B, grant payments shall be made following the presentation of a

Building Permit.

11.7. Execution guarantee:

11.7.1. In Investment Tracks A:

A. Upon execution of 50% of the approved investment, and the completion of the

second milestone, Applicants may request to reduce the guarantee by 50%.

B. Upon the presentation of an occupancy form and a valid business license for the

hotel, and after opening the hotel, Applicants may request to reduce the guarantee by

an additional 25% (for a total reduction of 75%).

C. Applicants shall receive the remaining guarantee upon approval of the Final

Implementation Report and the presentation of a lease agreement, as specified in

Section 11.6.1C above.

11.7.2. In Track B: Applicants shall receive the guarantee upon presentation of a Building

Permit.

11.8. At any time, Applicants shall be required to allow the Ministry or its representatives to inspect

its operations and supervise the execution of the project, and act in accordance with the

instructions of the Ministry.

11.9. In accordance with the provisions of the Capital Investments Encouragement Law, holders of

a "Letter of Approval for Investment Tracks A" are required to meet the conditions for a

competitive enterprise throughout the "Operating Period". Section 18A(c)(3) of the Law

specifies: "for tourist overnight stay facilities – at least 25% of all overnight stays in each tax

year, or according to the average for the tax year and two preceding tax years, as the case may

be, shall be overnight stays by foreign residents who are not residents of the area;

The calculation of the average, for the purpose of the above paragraph, shall be made by

dividing the number of overnight stays by foreign residents in the aforementioned tourism

facility during the aforementioned years by the total overnight stays in such facility during

such years.

11.10. Failure to meet the terms of this procedure, the terms of the Letter of Approval or the

requirements of the Law, including the obligations specified in Supplements F, I, J and K,

shall be considered cause to revoke the "Letter of Approval" for the grant prescribed by the

Law, revoke the "Letter of Entitlement" for the administrative grant prescribed by government

decision, forfeit the guarantee and/or request the return of grant funds.

11.11. Applicants shall comply with the laws of intellectual property applicable in the State of

Israel. In cases of Applicants who are convicted by final verdict in an Israeli court for violation

of Israeli laws of intellectual property, the Administration may revoke any benefit and/or grant

or part thereof and request its return, with interest and linkage differentials as prescribed by

law.

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12. Additional information and contact information

Additional information can be found on the Ministry's website at:

www.gov.il/he/departments/ministry_of_tourism > Infrastructure and Investments Development >

Tourism Investments Administration.

You may contact Ms. Orit Hemed, Tourism Investments Manager, or Ms. Jenny Arbeli, Tourism

Investments Coordinator, at the Economy, Investments and Budget Department of the Ministry, by

phone: 02-6664384/94, or by e-mail: [email protected], [email protected] or

[email protected].

You may also contact the department secretariat by phone: 02-6664390/1.


mailto:[email protected]



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Procedure 01/2017 – Chapter B: Administrative Grants, Popular Hotels

In accordance with Government Decision 1556 of 19/6/2016, administrative grants of 13% shall be

provided, in addition to the grant prescribed by the Capital Investments Encouragement Law, 5719-

1959, for a period of three years from 1 July 2016 to 30 June 2019, for popular level tourism facility

projects.

The 13% administrative grant includes VAT and recognized expenses components.

"Popular Level Project" or "Popular Level Hotel" – for the purpose of an administrative grant as

specified in Section 3.2 of the procedure, a level C urban hotel or level D urban/resort hotel or a hostel,

in accordance with the Physical Standards of the Ministry, for which the maximum recognized

investment required for its construction or expansion does not exceed 350,000 NIS per room (including

preservation costs, if relevant), subject to the opinion of the Ministry's architect.

These projects shall be estimated by an engineer, and the Project Recognized Investment shall be in

accordance with such engineer's estimation or the Recognized Total Investment Limit or based on the

amount of the investment in the Applicant's request, whichever is lower.

The conditions for receiving an administrative grant are:

A. The investment in the project does not exceed 350,000 NIS per room.

B. The Administration may cancel the administrative grant approved for a Popular Level Project if

during its construction it becomes clear that the project does not meet the requirements for this

level, following an engineering examination or due to an actual investment that exceeds the

approved investment limit by more than 20% (420,000 NIS) per room.

C. Complete execution of the "Letter of Approval".

Administrative grants shall be provided to Popular Level Projects with at least 25 rooms, backpacker

hostels with at least 70 beds, or youth hostels with at least 125 beds, in two phases and under the

following conditions:

A. First phase – as addition to the grant prescribed by the Law (20%), an administrative grant equal

to 8% of the recognized investment specified in the Letter of Approval, in accordance with the

milestones specified in this procedure.

B. Second phase – an administrative grant equal to 5% at the end of the calendar year, provided that

at least 25% of the hotel's revenues, during 18 months out of the first 36 months from the date of

opening the hotel to the end of the third full calendar year, are derived from incoming tourism.

To clarify, in accordance with the government decision, the total administrative grants provided

shall not exceed 25% of the Tourism Investments Administration's annual budget.

In cases where the aforementioned budget is spent by approved requests, in accordance with their

rating according to Supplement C, and no budget remains in accordance with the government

decision, and insofar as the Investments Administration has any remaining budget, requests shall

only be entitled to the grants prescribed by the Law.

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Procedure 01/2018 – Supplement A – Recognized Investment Limit per

Room for Construction of New Hotels

(This limit is updated every month)

Month Points (base index January 1992 = 100)

February 2018 303.4644

Investment limit in NIS

Level A rooms hotel recreation 987,045

Level A rooms hotel urban 870,603

Level B rooms hotel recreation 731,994

Level B rooms hotel urban 630,996

Level C rooms hotel recreation 513,003

Level C rooms hotel urban 438,423

Level D rooms hotel recreation 395,654

Level D rooms hotel urban 320,595

Level A suites hotel recreation 1,026,693

Level A suites hotel urban 909,386

Level C suites hotel recreation 652,691

Level C suites hotel urban 541,835

Level A rooms hostel recreation 628,781

Level A rooms hostel urban 534,149

Level C rooms hostel recreation 350,384

Level C rooms hostel urban 228,055

Level A suites hostel recreation 729,893

Level A suites hostel urban 606,929

Level C suites hostel recreation 490,451

Level C suites hostel urban 408,355

Level A holyday resort 973,586

Level C holyday resort 535,385

Youth hostel (per bed) 110,706

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Supplement B – Preliminary Request Form for Tourism Investments Plan

Hotels / Motels / Attractions

Please fill in the following information in clear and legible letters:

All fields are mandatory!

Business information

Company number:

Name of Business:

Corporation stamp: ____________________

Director General circular: ____________________

Corporation contact person

First name: Family name:

I.D. Number: Phone:

E-mail:

Country of citizenship:

If an attorney-in-fact has been appointed for the project, fill in the information below and attach the

appointing power of attorney

Attorney-in-fact on behalf of the corporation

First name: Family name:

I.D. Number: Phone:

E-mail:

* Please send the form by electronic mail to the following address: [email protected]

When your e-mail message is received, information on how to connect to the system shall be

sent to your personal e-mail address.

* Questions and requests for clarifications can be referred to the support team by phone

03-9778065.


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Procedure 01/2018 – Supplement C – Criteria and Priorities for Budget

Allocation

In accordance with Section 9.2 of the procedure, requests shall be rated according to the following

standards:

1. Establishing new rooms in touristic areas with a relative advantage (up to 30 points)

Jerusalem 30 points

South Region* and Tiberius 25 points

Nazareth and round Kineret 20 points

Shore cities and the Dead Sea 18 points

Other areas in the relevant Priority Zones Map 15 points

*From Dimona southward.

2. General impression (up to 35 points)

General impression of Administration members regarding the following criteria:

- The project's status as a popular project and its contribution to the reduction of holiday

prices (up to 15 points)

- Location of the project with respect to significant tourism attractions, such as: beaches,

historical sites or other tourist attraction (up to 5 points)

- Unique features of the project and compliance with the Ministry's policy, such as: meeting

Standard 5281 for green construction, Protected Structure, contribution to the environment

or to employment, periphery/confrontation line development with "pioneer hotels",

thematic tourism – desert, wine, sports, bicycle tourism, etc. (up to 5 points)

- General impression of the Entrepreneur and the project (up to 10 points)

3. Building Permit for the project specified in the request (up to 10 points)

Holding a valid Building Permit at the time of submitting a request, or projects in Track B, shall

earn 10 points.

Holding an excavating permit or an affirmative decision from the relevant planning institution

shall earn 5 points.

4. Hotel expansion (up to 15 points)

Requests to expand a hotel shall earn points in accordance with the following table:

Up to 20

rooms

21-50 rooms 51 rooms

and above

Up to 25% of the total number of rooms

in the hotel

5 10 12

26%-50% of the total number of rooms

in the hotel

10 12 15

51% and above of the total number of

rooms in the hotel

12 15 15

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5. Commitment to the rating process (5 points)

Projects that undertake to enter the hotel specified in the request to the rating process, by signing

Supplement K, shall earn 5 points.

6. Affiliation with an international hotel chain (up to 5 points)

Accommodation facilities intended to be run by an international hotel management chain, as

defined by the Ministry, which manages up to 5 hotels in Israel, subject to the presentation of

a contract between the Applicant and the aforementioned chain. Contracts for a period of 10

years shall earn 5 points. Contracts shorter than 10 years shall earn points relatively.

Maximum accumulated score for all criteria – 100 points.

In case of different projects earning equal scores, priority between such projects shall be determined by

comparing their individual scores in each criteria, in the order of the criteria.

Ministry of Tourism


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Procedure 01/2018 – Supplement D – Information Regarding the Applicant

and Signatories

Corporation name:

Corporation number: Organization type:

Registration date:

Address: City __________ St. __________ Postal Code _______

POB __________

POB postal code __________

Phone: Fax:

Requesting corporation stockholders

Name Ownership

percentage

Reg./I.D. number Citizenship Address

1

2

3

4

5

Requesting corporation personnel and contact persons:

CEO

First name Family name I.D. number

Phone Fax Mobile

Address E-mail

Accountant/CFO


Phone Fax Mobile

Address E-mail

Contact person at the requesting corporation


Phone Fax Mobile

Address E-mail

Signatories and persons authorized to assume obligations on behalf of the corporation, and other

requirements, such as corporation stamp, if available:

Name: __________________ I.D.: __________________ Signature sample: ___________________

Name: __________________ I.D.: __________________ Signature sample: ___________________

I, the undersigned, ____________________, advocate, confirm that on __________, Mr./Ms.

____________________ and ____________________, who identified themselves by I.D. numbers

____________________ and ____________________, and who are known to me personally, appeared

in person at my office on ____________________, and after I examined the corporation's documents

and confirmed that ___________________ and ____________________ are authorized to sign this

Ministry of Tourism


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statement on behalf of the corporation, and after I explained to them the meaning of this statement,

approved and signed the statement in my presence.

Date Advocate's name Address Signature and stamp

Ministry of Tourism


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Procedure 01/2018 – Supplement E – Confirmation of the Local Committee

Engineer

Date: _________

To

The Ministry of Tourism

RE: CONFIRMATION FOR THE PURPOSE OF SUBMITTING A REQUEST FOR AN

"APPROVED ENTERPRISE" STATUS

Name of the corporation: ____________________

Project: ____________________

Lot no. __________ Block __________ Parcel __________ (hereinafter: "the Lot")

I hereby confirm that:

1. The most recent valid plan applicable to the lot is plan no. __________.

City Zoning Plan expiration (if relevant) __________.

All possible designations for the lot, in accordance with the City Zoning Plan:

____________________

2. In accordance with the valid planning status of the lot, building rights are as follows:

Built area:

Hotel designation: ____________________ square meters

Other designation (specify type): ____________________ square meters

Unfulfilled building rights:

Hotel building rights – main area: ____________________ square meters

Hotel building rights – service areas: ____________________ square meters

Building rights for other designations: ____________________ square meters

Comments: ________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

Sincerely,

Local Committee Engineer

Name: __________________________

Signature: _______________________

Stamp: __________________________

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Procedure 01/2018 – Supplement F – Statement Regarding Previous

Grants

I/we, the undersigned, state and confirm on behalf of the Applicant as follows:

I and/or any of my representatives and/or associates did not receive any aid and/or grant from

any government body for the purpose of constructing or expanding a hotel on the lot on which

I intend to construct or expand the subject of this request.

The hotel and/or structure and/or relevant wing that is the subject of this request received aid

and/or grant of the type ____________________ from government body

____________________ for the purpose of its establishment, in Letter of Approval no.

__________ of __________ [year], and the date of approval of the Final Implementation

Report of the previous plan of __________, for an Operating Period of __________.

Date ____________________ Corporation stamp ____________________

Name: ____________________ I.D.: ____________________ Signature: ____________________










Ministry of Tourism


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Procedure 01/2018 – Supplement G – Execution Guarantee Form

Name of bank/insurance company _______________________

Phone number ______________________________________

Fax number ________________________________________

LETTER OF GUARANTEE

To

The government of Israel

Through the Ministry

Subject: Guarantee no. __________

At the request of ____________________ (hereinafter: "the Debtor"), we hereby guarantee, by this

autonomous and unconditional undertaking to pay __________ NIS (5% of the amount of the approved

grant), as specified in the Investments Administration's notification to the Debtor of __/__/____, linked

to the consumer's index of __/__/____, the fulfillment of Letter of Approval for a grant to

construct/expand a hotel in the Building Permit track for the construction of a hotel.

We shall pay you any amount, up to the amount specified above, within 7 days from the date of your

first request sent to us by registered mail, without requiring you to provide any cause for your request,

without offering any claims of defense for the Debtor regarding his obligations towards you, and

without requesting that the aforementioned amount shall be first settled by the Debtor.

This guarantee shall be valid from __/__/____, for a period of ___ months, until __/__/____, unless

extended before the end of this period by the Debtor.

In any case where partial payment of the guarantee amount shall be requested, the remaining guarantee

balance (i.e. the difference between the guarantee amount and the amount in your request) shall remain

as guarantee until the end of the guarantee period, as specified above, under the terms specified above.

This guarantee cannot be transferred or assigned.

Any requests in according with this guarantee should be referred to the bank branch/insurance company

at:

Name of bank/insurance company Bank number and branch number

Address of bank/insurance company

Date Full name Signature and stamp

Ministry of Tourism


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Procedure 01/2018 – Supplement H1 – Letter of Undertaking for Land

owned by the Israel Land Authority

To To

The Ministry of Tourism The Israel Land Authority

Dear Sir or Madam,

LETTER OF UNDERTAKING

I am aware that in accordance with the procedure regarding hotel construction/expansion I am required,

among other things, to register a warning note for the property identified as block __________, parcel/s

__________ in __________ [city] (hereinafter: "the Property"), for which I have submitted request

no. __________ to receive an "Approved Enterprise" status from the Tourism Investments

Administrations (hereinafter: "the Request").

Whereas the Property is not registered with the Land Registration Office, but with the Israel Land

Authority, and the aforementioned warning note cannot be registered, I hereby provide this letter of

undertaking.

I, the undersigned, Mr. ____________________, I.D. no. ____________________, the Applicant

submitting the Request, hereby undertake as follows:

A. I shall return any part of the grant funds determined by the Administration, if any use other than

hotel use is made within 15 years of the date of the report by the Ministry's examining engineer.

B. The Property shall be used solely as a hotel, and not as a special hotel accommodation facility,

as defined in Ministry of Tourism's Director General Circular no. 5/2009 or any document that

will replace it, and no use shall be made of the Property, whether in whole or in part, other than

hotel use, without the consent of the Ministry of Tourism.

C. I hereby declare that the City Zoning Plan is not undergoing any changes, and that no such

changes to the City Zoning Plan are planned by me, that would delay the implementation of the

plan and the schedule specified in the procedure for its execution.

D. I shall not plan, submit or request a designation change for the Property nor make any non-

conforming use of the Property, whether in whole or in part, except with written approval in

advance from the Ministry.

E. If the rights in the Property are sold or transferred, whether in whole or in part, this Letter of

Undertaking shall be transferred in its entirety to the buyer and/or receiver of the rights.

F. I hereby give my consent to the Israel Land Authority to condition any transaction or change in

the Property upon the consent of the Ministry of Tourism.

I further give my consent that this letter of undertaking shall be attached as a supplement to any

lease agreement that would be signed between me and the Israel Land Authority for the

Property.

Date Signature

Ministry of Tourism


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Ministry of Tourism


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Procedure 01/2018 – Supplement H2 – Letter of Undertaking for

Registering a Warning Note in Property registered at the Land Registry

To To

The Ministry of Tourism The Local Authority

Dear Sir or Madam,


I am aware that in accordance with the procedure regarding hotel construction or expansion I am

required, among other things, to register a warning note for the property identified as block __________,

parcel/s __________ in __________ [city] (hereinafter: "the Property"), for which I have submitted

request no. __________ to receive an "Approved Enterprise" status from the Tourism Investments

Administrations (hereinafter: "the Request").

I, the undersigned, Mr. ____________________, I.D. no. ____________________, the Applicant

submitting the Request, hereby undertake as follows:

A. To register a warning note in accordance with Regulation 27 of the Land Regulations, with the

following wording:

"The hotel shall be used solely as a hotel, and not as a special hotel accommodation facility, as

defined in the Ministry of Tourism's Director General Circular no. 5/2009 or any document that

will replace it, and no use shall be made of the hotel, whether in whole or in part, other than

hotel use, without the consent of the Ministry of Tourism.

Furthermore, no plan for a designation change or for any non-conforming use of the Property,

whether in whole or in part, shall be submitted, except with prior written approval from the

Ministry".

B. To register a warning note in accordance with Regulation 126 of the Land Regulations, with

the following wording:

"If the rights in the Property are sold or transferred, whether in whole or in part, I hereby

undertake that all my obligations towards the Ministry of Tourism and/or the Tourism

Investment Committee and/or the Tourism Investment Administration regarding the Letter of

Approval/Letter of Entitlement shall be transferred in its entirety to the buyer and/or receiver

of the rights".

C. I hereby declare that the City Zoning Plan is not undergoing any changes, and that no such

changes to the City Zoning Plan are planned by me, that would delay the implementation of the

plan and the schedule specified in the procedure for its execution.

D. I shall return any part of the grant funds determined by the committee, if any use other than

hotel use is made within 15 years of the date of the report by the Ministry's examining engineer.

Date Signature

Ministry of Tourism


38









Ministry of Tourism


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Procedure 01/2018 – Supplement I1 – Applicant Statements and

Undertakings

I/we, the undersigned, hereby state and confirm on behalf of the Applicant as follows:

1. The undersigned or the corporation submitting the request is not in the process of receivership

and/or pre-receivership and/or liquidation and/or has not been declared a debtor of limited

means in accordance with the Execution Office Law, and the Applicant or one of its controlling

persons, to the best of the Applicant's knowledge, is not expected to be involved in any such

processes.

2. I have read and understood the provisions of this procedure regarding the allocation of grants

in accordance with the Capital Investments Encouragement Law, 5719-1959, and the

administrative grant (if relevant to this request), and therefore submit this request accordingly.

3. I accept the procedure and all its sections and declare that I shall have no claims or demands

regarding any misunderstanding or oversight of any of the provisions of the procedure and its

supplements and documents.

4. I hereby declare that I hold the knowledge, expertise and experience required to fulfil my

obligations in accordance with this procedure.

5. I/we undertake:

A. To keep the hotel in compliance with the requirements of the competent authorities,

including the requirement of a business license, unless a specific exemption has been

obtained.

B. In projects where a Building Permit is obtained under a regulation City Zoning Plan,

allowing additional tourism uses – to comply with the provision regarding the hotel part

of the property, as determined by the Administration in the Letter of Approval.

C. To return the grant funds in the amount determined by the Administration and/or the funds

of the Administrative grant, if any use is made of the hotel structure other than hotel use,

within 15 years from the date of the report by the Ministry's examining engineer, approving

the completion of the project.

D. To return the funds of the Administrative grant, if the project shall involve an investment

that exceeds 350,000 NIS per room by more than 20%.

E. To refrain from transferring the rights in the project without written authorization from the

Investments Administration.

F. I am aware that meeting the schedules specified in the milestones, as specified in Section

11.5.2 of the procedure, is a material condition of the Letter of Approval, and I undertake

to meet them.

G. To post signs at the hotel reception area or at another prominent location around the hotel

throughout the Operating Period, in accordance with a format provided by the Ministry

(Supplement L), specifying that the construction/expansion of the hotel was made with

the assistance of the Ministry.

Ministry of Tourism


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Date: ____________________ Corporation Stamp: ____________________











Ministry of Tourism


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Procedure 01/2018 – Supplement I2 – Applicant Statements and

Undertakings for Track B

I/we, the undersigned, hereby state and confirm on behalf of the Applicant as follows:

1. The undersigned or the corporation submitting the request is not in the process of receivership

and/or pre-receivership and/or liquidation and/or has not been declared a debtor of limited

means in accordance with the Execution Office Law, and the Applicant or one of its controlling

persons, to the best of the Applicant's knowledge, is not expected to be involved in any such

processes.

2. I have read and understood the provisions of this procedure regarding the allocation of grants

and therefore submit this request accordingly.

3. I accept the procedure and all its sections and declare that I shall have no claims or demands

regarding any misunderstanding or oversight of any of the provisions of the procedure and its

supplements and documents.

4. I hereby declare that I hold the knowledge, expertise and experience required to fulfil my

obligations in accordance with this procedure.

5. I/we undertake:

A. To obtain a Building Permit for the entire project, in accordance with the approved

architectural plans and the Physical Standards of the Ministry.

B. To refrain from transferring the rights in the project without written authorization from the

Investments Administration.

C. I am aware that meeting the schedules specified in the milestones, as specified in Section

11.5.2 of the procedure, is a material condition of the Letter of Approval, and I undertake

to meet them.












Ministry of Tourism


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Procedure 01/2018 – Supplement J – Undertaking not to Sell Hotel Units

To


Dear Sir or Madam,


I, the undersigned, ____________________, I.D. no. ____________________, the Applicant and

signatory on behalf of the hotel, hereby state and undertake as follows:

A. The hotel ____________________ that is the subject of the request, consisting of __________

accommodation/suite units of level ____, was built in accordance with City Zoning Plan no.

__________ of ____________________ [date], allowing the sale of hotel accommodation units

to private owners.

B. In accordance with past policies, between the years __________ and 1996, __________ hotel

units were sold out a total of ________ hotel rooms/suites, as FREE HOLD.

In total, _______ accommodation units were sold as FREE HOLD.

C. I hereby undertake that no additional hotel unit in the hotel shall be sold to private owners by

myself, my representative or the hotel, whether as special hotel accommodation or FREE

HOLD, including the units specified in the expansion plan that is the subject of the Letter of

Approval and any other existing unit in the hotel that have not yet been sold.

D. I am aware that failure to meet this obligation shall constitute a fundamental violation of the

terms of the Letter of Approval.

This undertaking shall be registered as a planning warning note, in accordance with Section 27 of the

Land Regulations, to the lot/s on which the hotel stands, and shall apply to all structures on such lot/s.











Ministry of Tourism


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Procedure 01/2018 – Supplement K – Hotel Rating Undertaking

To


Dear Sir or Madam,


I hereby undertake to enter the hotel that is the subject of this request in the rating procedure.

I, the undersigned, ____________________, I.D. no. ____________________, the Applicant, hereby

undertake as follows:

A. To submit a request to participate in the rating procedure upon completing the construction of

the hotel.

B. To complete the rating procedure, as stated by me in my request under this procedure, in

accordance with the method specified in the Tourism Services Regulations (Hotels), 5773-

2013, immediately upon opening the hotel and no later than 3 months from the date of opening

the hotel.

C. To maintain the level of the hotel in accordance with at least the rating it receives in the rating

procedure, for a period of at least three years.

D. If the rights in the Property are sold or transferred, whether in whole or in part, this Letter of

Undertaking shall be transferred in its entirety to the buyer and/or receiver of the rights.

E. To return the funds of the grants (the grant prescribed by the Law and the administrative grant),

in the amount determined by the Administration, if I fail to meet this obligation.

F. I undertake to allow inspectors from the Ministry to inspect the hotel from time to time, in

accordance with the law, and to cooperate with such inspectors as necessary.

Date Signature









Ministry of Tourism


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Procedure 01/2018 – Supplement L – Signs Indicating the Assistance of the

Ministry of Tourism

As specified in Section 3.14 of the procedure and in Section 5G of Supplement H, the hotel is required

to present signs indicating that the construction/expansion of the hotel has been made with the assistance

of the Ministry of Tourism. Such signs shall be posted at the hotel reception or in another prominent

location around the hotel.

Below are 3 sign options to choose from, to use in later stages of the project.

Wooden sign Aluminum sign Glass sign

Ministry of Tourism


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Procedure 01/2018 – Supplement M – Documents to Attach to the Request

In accordance with sections 4-6 of the procedure

Below is a list of documents that must be submitted with the request report to the Ministry after it is

entered into the "Forms" system:

Name of Document Whether

attached

Request report

Corporate registration certificate, memorandum and articles of association

Or

A corporation in the process of association: statement regarding the corporation's future

shareholders

Corporation information printout as appearing on the Companies Registrar's website

Supplement D

Extended book keeping confirmation

Tax deduction at source confirmation

Updated confirmation of rights in the property that is the subject of the request from the

Land Registration Office or the Israel Land Authority

Or

Other documents proving rights in the property

Valid City Zoning Plan – verbal instructions, drawing and construction supplement

Any previous City Zoning Plans that are valid or may influence the valid City Zoning

Plan should also be attached

Demolition permit – in case of an existing structure requiring demolition

Supplement E

Building permit – in investment track A2 projects

Bank guarantee – by track (Supplement G)

Confirmation of financial ability to provide equity – by track

If such confirmation comes from a foreign bank, a validation from an Israeli bank

Protected structures only:

Approved site conservation plan

Or

Authorization of the local authority's engineer regarding the protected status of the

structure according to the local authority's conservation file

Map and/or photograph indicating the location of the project and its surroundings

Bank information (check copy) and/or bank account confirmation

Supplement F – by track

Supplement I1

Supplement I2 – for projects in investment track B

Supplement J – by track

Supplement K – by track

Request for expansion – audited financial reports for the tax year preceding the year in

which the request is submitted

Supplement M

A word from the Director General PROCEDURE 01/2018 ... · construction of low cost hotel rooms that...

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