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Article

Rescaling and Transforming: “Umbrella Agreements,” Planning Deals, and the Israeli Planning Regime

by
Sharon Eshel
1,
Oren Yiftachel
2 and
Talia Margalit
3,*
1
School of Social and Policy Studies, Tel Aviv University, Tel Aviv 6997801, Israel
2
Department of Environmental, Geoinformatics and Urban Planning Sciences, Ben Gurion University, Be’er Sheva 8410501, Israel
3
Azrieli School of Architecture, Tel Aviv University, Tel Aviv 6997801, Israel
*
Author to whom correspondence should be addressed.
Land 2025, 14(6), 1295; https://doi.org/10.3390/land14061295
Submission received: 8 May 2025 / Revised: 9 June 2025 / Accepted: 12 June 2025 / Published: 17 June 2025
(This article belongs to the Section Land Socio-Economic and Political Issues)
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Abstract

:
This paper analyzes “Umbrella Agreements,” a policy tool implemented by the Israeli government across 32 municipalities over the past decade. Introduced in response to a deepening housing crisis, these agreements offered funding for local infrastructure in exchange for municipal consent to large-scale residential development on (mostly) state- managed land. We argue that umbrella agreements rescale the neoliberal mechanism of “planning deals” from the urban to the state (national) scale, expanding their logic to new contexts, and fundamentally transforming the Israeli planning regime. While prevailing theories of neoliberalism emphasize decentralization and privatization through “free market” mechanisms, the Israeli process is characterized by strong state control over land and a concentration of planning powers at the national level as a pre-condition for private housing development. Our analysis yields three main findings. First, upscaling planning deals erodes the state’s regulatory powers while increasing its interest as a direct beneficiary of the capitalist order. Second, these agreements subject market logic to greater political control. Third, this transformation has seriously undermined the democratic and professional characters of the planning system, leading to regressive social consequences.

1. Introduction

Traveling around Israel in recent years reveals massive residential construction activity, especially on the fringes of the central metropolitan area, where the population of some cities have doubled in less than a decade. Professional discourse contends that accelerated residential construction drives municipal deficits and hinders the delivery of public services [1,2]. This raises the critical question: Why do municipalities agree to a dramatic expansion of housing development that is likely to worsen their economic and social situation?
Our analysis demonstrates that the answer lies in the central government’s “tempting offer”: cities are promised public amenities needed for both new and existing population, on the condition that they concede to extensive housing construction. This mechanism, known as “Umbrella Agreements” (in Hebrew, “Heskemey Gag”), was initiated in 2013 as a response to large-scale housing protests. Through these agreements the government1 rescaled the commonly used mechanism of urban “planning deals” [3] to the state (national) level. In the urban planning deal, site-specific plans are authorized in exchange for high taxation and the financing of various spatial benefits for the public by the developers [3,4,5]. By elevating this mechanism and its underlying logic to the state scale, the central government reshaped its relationship with municipalities and transformed the foundations of the Israeli planning regime.
The new, coercive regime is based on a process that Yiftachel and Avni conceptualized as “privatination” [6], a hybrid process combining the privatization of land and financing with renewed nationalization of the planning system. The centralization of planning and land powers serves as a foundation for privatized housing development. Building on critics of the urban planning deal [3,7,8], we argue that, under the banner of unproven efficiency, this transformation has significantly eroded democracy and considerations of social equity in planning while weakening the power of municipalities and benefiting state bodies and private developers at the expense of citizens.
Previous research points to a connection between upward rescaling of planning powers and periods of societal or environmental crises [9,10]. Indeed, the recentralization of planning has been observed in several countries during the past decade [11,12,13]. In Israel, this process is affected by ethnocratic2 attributes, specifically the management of 93% of the land by the state through the Israel Land Authority (ILA). Another government-led entity, the National Land Council, shapes land policy and directs the ILA’s actions [16]. According to national laws, lands are effectively privatized through long-term leasing (usually for 49 or 99 years) to developers who build, use, and sell their rights to residents [17,18]. The ILA issues tenders to developers for constructing a specific number of residential units on parcels of land in a process known as “marketing land” or “marketing apartments”.
This study relies primarily on semi-structured interviews, using archival analysis of official documents and news media to complement and contextualize the findings; together, these sources illustrate that umbrella agreements mark a discernible shift in planning authority toward centralized governmental entities, and highlight the supremacy of contractual, revenue-oriented logic [19] over sound social and spatial planning principles. While this supremacy was previously evident only at the urban level, in a few large cities in Israel [3,4,20,21], it has now expanded both quantitatively and geographically. Moreover, the agreements accentuate the erosion of a crucial regulatory power of the government regarding the housing market. As we will show, these effects seriously weaken Israel’s planning institutions and the status of municipal government, thereby impinging on basic principles of liberal democratic planning.

2. Urban Planning Deals: Justifications, Players, Failures

In recent decades, large urban projects were planned and realized by development coalitions, typically composed of politicians, officials, developers, and urban elites [22,23]. These projects used contractual planning [19,24] to balance land values, building rights, taxation, and public benefits in economic, legal, and spatial terms. Politicians and planning officials often present the trend towards urban development through public and business collaborations as necessary for competing in the global field and attract businesses, affluent residents, tourists, and investors, stressing the advantages for the public. They argue that the direct imposition of public tasks on entrepreneurs can finance the improvement of the city’s appearance and infrastructure while simultaneously increasing tax income [5,23,25]. While some researchers conceptualize this exchange as Land Value Capture [26,27], others view these joint projects as a transaction, a deal that benefits the interests of its partners, who divide the tasks, risks, and profits among themselves [3,5,28]. In recent decades, municipalities have routinely promoted planning deals to finance diverse projects, prioritizing them over broader plans founded on environmental and social considerations [3,7,8].
Based on accumulated urban experience, scholars have criticized the business-contractual approach these deals embody, their impact on the planning discipline, and their consequences for the city. First, they argue that this practice promotes mixing of regulation and funding. This tangle is especially evident in “flagship projects” that guarantee profitability and contribute to the urban economy, such as conference and sports centers, commercial and business complexes, residential towers, and expensive hotels [3,5]. Second, scholars claim that the need to ensure profitability for entrepreneurs frequently forces planners to compromise social and environmental principles, waive various developers’ tasks or increase building rights, and make exceptions for projects [25]. As a result, the benefits granted to entrepreneurs often significantly exceed the public benefit [7,25,29]. Moreover, as planners repeatedly use the same tactics, the deals become institutionalized as a budgetary tool and even a default at the expense of other planning options [3,4,20]. Further criticism notes that these deals are dependent on high land values, thereby tending to exacerbate urban inequality by promoting massive, prestigious projects in high-demand areas, catering to affluent populations [4,21,30].
Scholars also claim that contractual planning is dominated by technocratic knowledge and financial and legal experts, and that the need to conclude complex agreements harms planning transparency [24]. Local democracy is compromised because each deal is promoted and discussed individually and in a specific context, thus preventing consideration of cumulative, precedent-setting consequences [3]. Public participation processes, if any, do not relate to the details of the agreements [23,25].
To summarize, the increased emphasis on estimated profit in planning decisions has significantly changed the role of planners. Financial considerations have replaced social and environmental issues, as well as setting public goals, and the conditions for meeting these goals have moved farther away from the public. Seemingly, this has not prevented the Israeli government from adopting and expanding the logic of the planning deals by using the umbrella agreements. Urban planning deals prevail mainly in prosperous global cities, yet by implementing these agreements in small- and medium-sized cities, the government has exposed these cities, for the first time, to contractual planning logic.

3. Rescaling—Increasing Governmental Concentration

The concept behind planning deals has inherent assumptions regarding the relative abilities and power of the municipality, the means at its disposal, and its interests. These assumptions are appropriate for large cities in the Global North, not necessarily for medium- and small-sized cities or for the economic and political structures that characterize other countries [31]. Moreover, these assumptions do not concern locations where the state government manages land and its privatization, as in Israel. In such cases, governmental authorities are involved in promoting transactions on state-owned or managed urban land [32,33] and can concoct broader deals that go beyond large cities to the national level. The government of Israel identified this possibility during the last decade as part of a process of recentralizing planning and development processes [12,21,34,35].
Scholars have observed a tendency to increase state intervention in times of crisis [9,10]. Since 2008, countries have proposed varied reasons for supporting the recentralization of planning [11]: in Ireland and England, it has been justified by increasing the supervision of local decision-making [12], and in New Zealand and Turkey, by the need to promote affordable housing [13,36]. These processes occur on varied scales, including skipping municipal and regional planning, preferring direct state intervention in the city [37,38].
In Israel, this evolution is especially complicated. Israeli planning has been highly centralized since its establishment, specifically due to the vast magnitude of state land management. As part of Israel’s adoption of neoliberalism, planning powers were partially decentralized, and the state encouraged competitive land marketization. Beginning in 1995, municipal planning autonomy was gradually increased through several amendments to the Israeli Planning and Building Law [39,40]. However, when widespread housing protests swept the country in 2011, even these meager attempts at decentralization were curbed or emptied of real meaning; extensive steps were taken to return planning powers to the central government [34,35,41]. The government established new planning agencies (the National Housing Committee in 2013, replaced in 2016 by the National Committee for Preferred Housing Plans) and a Ministerial Committee for Housing Affairs (“Housing Cabinet”) headed by the Minister of Finance. Plans for urban regeneration were managed at the state level [20,42], as well as several programs offering subsidized housing. In this context, the government created the umbrella agreements to overcome municipalities’ opposition to residential development within their boundaries. The cumulative result was the transfer of planning powers to government functionaries on the national level rather than civil society and municipalities [41].
In Israel and elsewhere, these processes of recentralization did not signal a return to the Keynesian policies of the mid-20th century. Central governments continue to rely on privatization and entrepreneurs to finance and realize development plans through hybrid, centralized neoliberalism [35,43] where the imposed regulatory changes integrate state resources, the planning system, and private capital [12,13,34,42,44]. Yiftachel and Avni [6] claim that the process they call “privatination” (defined above) is characteristic of Israel’s spatial development for residential purposes. They also show how it often deepens the socioeconomic and ethnic gaps between communities and cities. The mechanisms adopted to resolve the housing crisis accelerated the trend in that direction when state agencies “use very powerful national mechanisms that seize planning powers from cities and communities,” while simultaneously advancing the privatization of development tasks and delegating residential construction to entrepreneurs (ibid., 276). The use of planning centralization to increase state power is not unique to Israel; it has also been identified in Hungary [45], Sri Lanka [46], and Turkey [47].
It is worth noting that while many writers agree that the state is not merely a regulator but a central player in many neoliberal economies, they view this phenomenon in opposing ways. Some argue that state involvement in the housing market aims to promote national goals under the guise of free market discourse [48,49]. Yacobi considers this a characteristic of settler society states like Israel. Others describe these hybrid forms of governance as “new state capitalism” or “state entrepreneurialism” [50,51] in which the state is an actor with independent economic interests, occasionally using national arguments to mask profits made by the government and its associates. Our research analyzes the umbrella agreement mechanism, ostensibly implemented to address the housing crisis, to determine whether it indeed mobilizes the private sector to promote a national goal or whether the social discourse surrounding the housing crisis is designed to mask a business transaction that benefits the parties involved.

4. Umbrella Agreements: Background

Housing prices in Israel began to rise sharply in 2008. By 2013, the real price of housing—both new and secondhand—had increased by 55% in the central region, with even greater increases in peripheral districts [52]. This surge sparked widespread protests during the summer of 2011, prompting the government to take action. Attributing the high prices to an inadequate housing supply, the government responded by proposing a dramatic expansion of housing construction through the marketing of large parcels of state-owned land to private developers3. Government Resolution 4429, dated 18 March 2012, set an ambitious target: to plan and market 200,000 apartments within five years.
Municipal authorities were a significant obstacle to implementing this decision. They objected to the massive construction of residential units within their boundaries because, inter alia, of their inability to finance the required infrastructure, such as schools and other public institutions4. To deal with this problem, umbrella agreements—previously used sporadically in the 1990s [53]—were reintroduced.
The gist of this mechanism was that new neighborhoods would be built on state-owned land, and the state (through the ILA) would use some of the money that private developers paid for the land to finance the necessary infrastructure. In a 2013 position paper, ILA officials adapted the details of the 1990s agreements to current needs and listed the cities where implementation would begin. The plan was presented to the Housing Cabinet and later to the government, which adopted it as Resolution 768, “Umbrella Agreements with Municipal Authorities for Removing Barriers to Marketing and Development.” The first agreement was signed in 2013, and by 2019, agreements had been signed by 32 municipalities all over Israel (Figure 1) for the construction of 430,000 apartments5 (Table 1). By 2020 (inclusive), land for the construction of 80,000 residential units (in various municipalities) had been marketed to developers under this framework, representing approximately one-third of the apartments marketed in Israel during that period [52,54,55]6.
Under the umbrella agreements, the government aimed to finance municipal infrastructure with revenues from marketing land rather than using public funds. According to the terms of the government resolution, agreements were signed only with municipalities with approved spatial plans that would enable the marketing of land for 5000 or more apartments and that agreed to market at least 2000 units per annum. Below, we examine the extent to which the umbrella agreements maintained the characteristics, as well as the problems, of municipal planning deals and the consequences of rescaling their implementation by the central government in many municipalities.

5. Materials and Methods

We began by searching for news items and documents that shed light on the processes through which the umbrella agreement mechanism was developed, as well as negotiations and signing of agreements by various municipalities. The first finding that emerged was the lack of public transparency; there is almost no documentation or publications about the development of the mechanism and there are mainly PR announcements regarding the resulting agreements. Therefore, we based our archival research on government resolutions, minutes of the few discussions on the subject in parliamentary committees, the text of the agreements themselves, and reports published on different aspects of the umbrella agreements by the Ministry of Interior [2,56], the Bank of Israel [1], and the State Comptroller [52,55]7.
Due to the limited range of documents and media sources, this article focuses primarily on findings from 16 in-depth, semi-structured interviews. Interviewees were selected to reflect diverse roles in the creation and negotiation of the umbrella agreements—six from the central government, nine municipal officials from cities with agreements, and one from the private sector (see Table 2). We asked about the parties who took part in (and those absent from) the formation of the agreements’ mechanism and in the specific negotiations with municipalities, the motivations for their creation and signing, how the negotiations were conducted, the gains and losses of each party, whether there was an opposition, and by whom. The transcripts of the interviews were analyzed to identify the abovementioned characteristics of urban planning deals. Analysis of the interviews revealed not only who was involved and who remained outside the circle of decision-makers or on its margins, as well as the costs and the benefits, but also the justifications for creating the mechanism, the considerations that were neglected, and how the interviewees see the resulting built environment.

6. Results

6.1. Included Actors, Excluded Parties

The umbrella agreement mechanism was designed at the national level, and it was clear from the outset that it would require the consent of state, market, and municipal players. During an interview, a strategic consultant to several state agencies described the umbrella agreement as a “pooling of interests” by the ILA that was interested in marketing land; developers who wanted to profit from selling apartments; potential apartment buyers seeking to live in a functioning neighborhood; and municipalities needing financial and other assistance for development. The concept behind it was that the cooperation of all parties was necessary so “the state would be able … to meet its target.”
From the interviews with a former chairperson of ILA and the above strategic consultant, we learned that only some of the stakeholders were partners in developing the mechanism. The 2013 adaptation of the older mechanism was intended to resolve the two points that the Ministry of Finance had opposed: first, imposing development costs directly on the developers, which would have a detrimental influence on the price of land and subsequently on marketing. The second concern involved transferring funds for development directly to municipalities allowing them excessive independence. The new formulation was, therefore, more centralized while still striving to protect the developers’ interests. The government determined that the ILA would serve as a mediator and supervisor, collect development fees from the developers at the time of marketing, allocate these fees for defined tasks—such as the construction of public institutions or infrastructure—and transfer them to municipalities. Centralization also facilitated other solutions without burdening the state treasury. For example, municipalities that signed agreements were granted priority treatment by government ministries (e.g., precedence for building new classrooms by the Ministry of Education or advancing transportation projects that the Ministry of Transportation had already approved and budgeted).
The interviews revealed that the second stage of adapting the umbrella agreements was conducted in cooperation with large residential construction contractors8, who had not previously responded to efforts to market land because, they claimed, the opposition of municipalities would prevent actual construction. Officials from the ILA presented the new mechanism and plans to promote its implementation. Negotiations between state authorities and the municipalities began in earnest only when the ILA succeeded in convincing the developers.
The mechanism, thus, evolved through negotiations between the ILA, the Ministry of Finance, and residential construction contractors. Representatives of the municipalities were not party to the process and were involved only in the negotiations on signing the actual agreements, when there was limited room for change. In general, the negotiations with the municipalities focused on new neighborhoods and the financing of their construction, without any discussion about their impact on current city residents. Moreover, new residents who purchased apartments in these neighborhoods were also unrepresented. Although interviewees claimed that the umbrella agreements ensured that there would be adequate infrastructure, the issue was considered only on a quantitative level. The number of housing units and infrastructure costs received much more attention than the style of neighborhood or type of potential residents and their needs, such as integration in the city and community. Surprisingly, the Ministry of Construction and Housing was also excluded from the process, even though the government resolution that created the umbrella agreements stated that municipalities would be able to choose whether they signed an agreement with the ILA or with the Ministry. Interviewees from the ministry explained that the ILA’s role as caretaker and leaser of most of the land in Israel has steadily increased its dominance in all matters relating to housing, thereby diminishing the role of other agencies. Other interviewees added that the Housing Ministry was inherently less interested in the financial aspects of development (which were at the core of the agreements) and more attentive to the quality of the planning solutions. The Ministry of the Interior was also excluded from developing the mechanism, despite its overall responsibility for municipalities, including the budgetary ramifications of the umbrella agreement. In conclusion, it seems that government ministries that did not share the entrepreneurial perspective underlying the umbrella agreements were not included in its design.
Furthermore, we learned from the interviews that the planning system, on all levels, was not included in the decision-making circles. It might be claimed that the agreements were based on previously approved plans. However, each plan was approved individually, without consideration for the pace of implementation or other plans in the same municipality. In some cases, the agreements doubled or tripled the number of residents in the city and frequently created new peripheral neighborhoods rather than developing the inner city. Nevertheless, planning, environmental, civic, and other government agencies were not consulted, reinforcing the dominance of financial considerations and entrepreneurial logic.
These lacunae and their consequences remained outside of the central narrative, which claimed the agreements would advance rapid, massive residential construction and serve the public in the most economically efficient way. A broad coalition consolidated around this justification, including governmental and private parties. The municipalities joined this coalition but with lesser standing. A former ILA chairperson explained, “Everyone understands that it is necessary to create residential units.” Government Resolution 4429 set high targets for marketing land, and all the interviewees, including those from the ILA, agreed that this was their primary interest when creating the agreements.
To summarize, we found that the umbrella agreements, like municipal planning deals, were based on agreements and cooperation between stakeholders capable of mobilizing resources beneficial to planning projects that would serve their interests, e.g., the state’s interest in marketing land for rapid residential construction and the developers’ interest in sales and profits. They were justified as using private financing to serve the public. Transparency was limited; significant parties, including the public, remained outside the decision-making circle; social and environmental principles were disregarded; and any discussion of overall implications was avoided in favor of the short-term result of increasing the housing supply.

6.2. Tasks, Gains, and Prices to Pay for the Parties in the Deal

6.2.1. Israel Lands Authority

From the interview with a former chairperson of the ILA, we learned that urban planning deals had previously been implemented where the state utilized land revenues to finance large-scale urban infrastructure projects. Thus, mayors secured the ILA’s assistance for funding projects, e.g., moving a part of a light rail system underground or relocating a landfill site, using money generated from marketing land with increased building rights. The umbrella agreements dramatically expanded the use of this practice, diverting some of the proceeds from marketing the land to the development of the building sites and other infrastructure projects. Thus, the ILA promoted the primary feature of the planning deal: avoiding the use of public funds for public goods by having developers finance them in exchange for building rights.
Interviewees from municipalities noted, “the ILA has money in mind” and “its goal is making a profit”. The interviews revealed that the sums that the ILA has transferred to the state coffers over the years had improved its relationship with the Ministry of Finance. Incidentally, both agencies were tasked with the conflicting missions of lowering housing prices while maintaining and possibly increasing revenues from marketing land. While the former task proved elusive, the ILA’s annual reports show that its revenues from land marketing rose from NIS 5.5 billion in 2012 (just before the umbrella agreements were created) to over NIS 12 billion.
The ILA was also interested in the agreements because they bolstered its status and influence in development and planning. An interviewee who held positions both at the Ministry of Finance and the ILA explained that under the umbrella agreements, the ILA became the “largest infrastructure bank in Israel”, since its role included allocating funding and transferring development funds from projects to the municipalities, as well as supervising the municipalities’ use of the funds.

6.2.2. Ministry of Finance

From 2015 through 2020, as part of the general effort to mitigate the housing crisis, all the planning and development authorities and agencies were concentrated in the Ministry of Finance, which chaired the “Housing Cabinet”. However, all of the interviewees agreed that the ministry’s guiding principle in implementing the umbrella agreement was similar to that guiding urban planning deals, saving costs and enriching the state treasury by marketing land. That said, interviewees agreed that development costs, supposedly deducted from the state’s revenue, were still considered an advantage. According to one interviewee from the Ministry of Finance, the umbrella agreements ensured that the revenues from marketing would be used for infrastructure, which the ministry considered “economically appropriate” projects with “internal yield” as opposed to using these revenues for social causes.

6.2.3. Developers

Although the umbrella agreements were signed between public agencies, the head of the National Housing Authority claimed in an interview that their primary purpose was to help developers by tempting municipalities to grant building permits. In addition to explicit clauses limiting the municipality’s ability to slow construction, the umbrella agreements led to a massive expansion of the construction market. The umbrella agreements allowed the ILA to market land for thousands of apartments at once, greatly expanding developers’ opportunities. Developers could now build entire neighborhoods rather than one or two buildings. The agreements also assured that the tendered land would actually be developed, ensuring that developers could build and sell relatively quickly.
The umbrella agreements also guaranteed that there would be infrastructure to serve the buyers, including parks, schools, community centers, etc., promises that could translate into higher prices. Despite the advantages the umbrella agreements grant the developers, they do not bind them in any way; while their participation was essential for the implementation of the agreements and for financing the promised benefits, they were free to participate in ILA tenders based on their evaluation of the chances to profit. In this manner, the notion of a “good business atmosphere” was adopted.

6.2.4. Municipalities

While the individual agreements varied in their details, the underlying mechanism remained the same and determined their scope. The municipalities were not involved in creating this mechanism, and some of them were reluctant about joining the agreement, feeling compelled to sign due to pre-existing funding difficulties.
One former mayor described the shared interests of the municipalities and the state, saying “they wanted a commitment that I would [allow developers to] build within two or three years, and I wanted money for development.” Beyond this, however, the profits and costs to the city were different for each agreement, and dependent on several factors, such as location and local land value, the city’s standing in the eyes of the state, and even the personalities of the municipal representatives and how they perceived the negotiations [57]9. Many interviewees claimed that the municipalities needed in-depth preparatory work to understand local needs and financial possibilities before entering negotiations for a deal with the state. Alas, municipalities with fewer resources were incapable of such preparatory work and were disadvantaged when negotiating with the state. Therefore, they gained fewer benefits and incurred heavier costs (ibid).
Many mayors supported the umbrella agreements for ideological reasons, viewing their participation as “doing their bit” to address the housing crisis. However, they also gave more concrete motivations. First, municipalities were promised funding for infrastructure and public buildings in new neighborhoods and often for updating infrastructure in older neighborhoods as well. Second, they had more control over development works. According to several interviewees, the agreements facilitated collaboration between government agencies to enable development and guarantee that promises from various ministries were backed by the Ministry of Finance. The negotiations meant that the state paid more attention to the municipalities, and some were able to use that to solve long-standing problems. Other interviewees described the umbrella agreements as an opportunity to organize urban affairs, plan ahead, and obtain significant budgets. For example, “It is a good device for municipalities to get all sorts of external arrangements when signing the agreement.”
Growth is another interest that led municipalities to sign: the umbrella agreements brought thousands (even tens of thousands) of new residents to the city, sometimes doubling the population or more. Some interviewees considered this an advantage and noted that the incoming “stronger” population would increase consumption, commerce, and employment. Attracting these new residents was seen as particularly beneficial for cities that had been suffering from negative migration. When interviewed, one mayor remarked that the socioeconomic ranking of his city improved after signing the agreement “not because people suddenly became wealthier … rather people on a slightly higher level became residents of the city.” It seems that municipalities that were unable to attract affluent residents or advance attractive projects were now able to do so.
While largely benefiting other stakeholders, the umbrella agreements had some detrimental effects for municipalities, both financial and otherwise. The first and foremost was the loss of control over their rate of growth. The umbrella agreements set a rate for annual land marketing, at the ILA’s discretion, and expressly prevented the cities from delaying building permits. Government reports noted that the rapid addition of thousands of new residents could create a severe deficit in the municipal budget during the first decade and financial difficulties for many years [1,56]10. Many interviewees concurred. They also noted the burden that massive planning, construction, and population processes placed on municipal services, and the detrimental effects on the city’s functioning in the short and medium term11.
Moreover, if the massive marketing was delayed or unsuccessful12, the promises the state had made to the city under the agreement became void, regardless of municipal needs and the plans it made based on the agreement. The state and the developers were effectively free not to implement the deal—the former by not issuing tenders for marketing land; the latter, by not submitting bids to those tenders—while the municipalities could not renege on their concession to marketing and remained responsible for supplying infrastructure for the houses that were eventually built.

6.3. Land Values and Planning Values

As in municipal planning deals, land values, profit and economic balance are the foundation of umbrella agreements. According to the abovementioned strategic advisor, “the ILA markets the land and allocates part of the proceeds for the development necessary to absorb additional residents, and as long as the land can provide this, we effectively have a closed economy.” This quotation encompasses the three leading principles of the agreements: first, the price of land determines the public benefits granted to the municipality; second, all agreements must be balanced financially; third, the price of land (and subsequent apartments) must ensure profits for the developers so they will build.
The price of land is fundamental because it indicates the marketing potential of the apartments to be built and subsequent potential for implementing the agreement in each city. Therefore, according to the strategic advisor, marketing potential is a key factor when the ILA selects which agreements to promote. The price of the land also determines the offer made to the municipality. An interviewee from the ILA noted, “I can offer more to [a city] in a prime location because it offers more to the State.” “Offers more to the State” refers here to both profits from the sale of land and the number of potential residential units. The interviewee also explained that mayors who agreed to build more residential units were offered higher financing for infrastructure. As in municipal planning deals, the principles of profit and a balanced budget overrule other considerations and lead to building new neighborhoods at the expense of open, green areas. For historical reasons, most of these areas are managed by the ILA, so it is easier and more profitable (for the state) to market them.
During the negotiations, the ILA zealously safeguarded state revenue from the land making it clear that the agreements could not result in financial losses for the state. Municipal officials also approached the agreements as straightforward economic transactions. They described a prevailing “business discourse”, with one interviewee recalling how, after each session, they would check Excel spreadsheets to “show how much money I get.” As another municipal official put it, “You see if it comes out balanced or not, what’s left for me,” and added, “basically, you don’t sign an agreement if you can’t see that at least you’re [financially] covered.” Municipal demands were similarly quantified, as one interviewee explained: “our spreadsheets showed how much money the state was going to make [if our demands were met] … [we told state officials:] so far you’ve managed to sell 50 apartments a year? In the next decade you’ll sell 10,000!” While some municipalities managed to leverage the government’s political urgency to obtain funding for projects that were important to them, this was typically on a negligible scale—an interviewee from the Ministry of Finance estimated that only 5% of the cost of the agreement was set aside for such demands.
Planning issues, even the need for planning at all, received less emphasis, both in the interviews and news coverage. Interviewees from the ILA and the Ministry of Finance claimed that the planning system tended to be a “stick in the wheels” rather than cooperate with the other parties. Interviewees present conditions for implementing plans as capricious stubbornness on the part of planners, or as an excuse that municipalities used to prevent development. In this context, the press reported that the head of the Housing Authority stated that increasing the number of apartments is the most important goal, overriding all other considerations, including the development of transportation and sewage infrastructure for the neighborhoods. He added that from his perspective, “They can take a sleeping bag on Sunday morning, go to work, sleep on the floor, and return home on Thursday. That doesn’t interest me. I will not wait for the roads to build apartments” [58]. Municipal representatives rarely mentioned planning considerations in the interviews, and when they did, planning issues were mixed with economic ones. For example, one city justified its request to rebuild the infrastructure in the old inner city as necessary to attract home buyers; the construction of sports and cultural facilities was examined in terms of funding, and the addition of residents in terms of costs. Quality of life, environment, local identity, and the preferences of residents were never mentioned.
Opponents of the umbrella agreements also used economic justifications. A Bank of Israel report criticized accelerated construction under the umbrella agreements ([1] (pp. 233–234)) and the Interior Ministry warned, more than once, of the foreseen damage caused by agreements, focusing on economic and operational difficulties, harm to city infrastructure and even the economic collapse of some municipalities [2] ([56] (p. 436)).

7. Discussion: Planning Deals at the National Level and Their Consequences

This study shows, theoretically and empirically, how state adaptation of the neoliberal-contractual mechanism of urban “planning deals” propels centralization, despite the rhetoric of “market logic”. Moreover, this trend impinges on democratic and social considerations in the name of efficiency. We found similar justifications for the urban- and state-level planning deals: municipalities justify them as crucial, even essential, for developing the city and its infrastructure, while the central government justifies them as critical for creating sufficient supply of housing with essential infrastructure.
The public demand for affordable housing set the stage for policies speeding up housing construction, offering political dividends for those championing them. However, assigning the responsibility for implementing these policies to for-profit entities, who chose the location of their activities based on the potential rise in land values, resulted in the undisputed domination of transactional logic.
As in local deals, every agreement guarantees that the costs of development will be imposed on market actors, thereby creating profit both for developers and the public coffers. Similarly, the chief planning calculus in the umbrella agreements was based on economic indices rather than actual municipal needs or environmental and social considerations. The divergence in land values among municipalities played a significant role in amplifying inequality; municipalities with higher land values secured more favorable agreements than those with lower values, improving their circumstances, exacerbating gaps, and creating “prosperity bubbles” at the national level similar to those that urban planning deals create within the city [57]. Like city planning deals, the umbrella agreements promote large neighborhoods and high-rise buildings, for relatively “strong” populations13. As shown in Table 3, despite the change in dimensions, goals and managerial scale, the umbrella agreements largely repeat the characteristics and consequences of urban planning deals.
The agreements afforded some financial benefits to the municipalities that signed them. However, we have shown that this came at a price. The findings show that recentralization and adoption of the deal mechanism at the state level strengthened the status of national government agencies. This progressed relatively quickly in Israel, because like other centralized–ethnocratic countries, the state has always held significant authority and power over land and development, while devolution of power in these areas has generally been shallow and non-binding [59,60]. These powers allow high levels of coordination between the central government and major developers, while diminishing the role of municipalities in managing their own affairs. Just as cities “impose” planning deals on the public—theoretically for their benefit, but without involving them in their formulation—so, too, the umbrella agreements are imposed on municipalities and their publics.
The primary significance of the increased utilization of planning deals at the national level is the expanded scope of the projects, and their spread from a few large cities in central Israel to small and medium-sized cities throughout the country. In 2014–2020, about a third of the new apartments in Israel were built on land marketed in this way [54,55], which represents the entire planned inventory in most of the cities that signed umbrella agreements, especially those that are less affluent or central. No other mechanism is available for promoting housing or competing with the entrepreneurial coalition led by the national government. Our findings explain why umbrella agreements have become so popular with state officials and politicians: they save public funds by transferring the costs of public infrastructure to private developers and increase state revenues by enabling the ILA to market large parcels of land in a short time. Indeed, these agreements have become common practice, without thorough examination or public debate regarding their impact on cities.
The expanded use of planning deals also has significant consequences for the planning system and for planning as a discipline. After a period of cautious democratic attempts to decentralize planning, the new centralized mechanism restored control of urban spatial development to the state [34,35,41]. Rescaling planning deals to the state level expanded the state’s role as the strongly dominant actor in planning and the housing market. Moreover, its engagement as a land-owner and entrepreneur compromises its crucial role as a regulator, impinging on the necessary critical–regulatory distance. Subordinating the planning system as a whole to the logic of deal making has left very few regulatory eyes to monitor its (mostly negative) consequences. This transformation impinges on major tenets of democratic, transparent, and socially oriented planning, particularly the vital aspects of separation of powers, accountability, and the monitoring of social consequences. From sporadic accounts we have mentioned earlier (Hungary [45], Sri Lanka [46], Turkey [47]), we observe similar processes elsewhere, where the rise of hybrid centralized–neoliberal regimes causes upward rescaling, with central governments increasingly playing a dominant role, applying entrepreneurial logic to broad policy fields.

8. Conclusions

These are the key “take aways” from our study, relevant to all countries undergoing a process of urban neoliberalization, and particularly for centralized ethnocratic regimes: (a) Imposed “umbrella agreements” or similar hybrid neoliberal procedures tend to rescale the neoliberal mechanism of ad-hoc “planning deals” from the urban scale to the national, thereby subjecting neoliberal “market logic” to greater political and spatial control; (b) this “scalar jumping” tends to transform the nature of the planning regimes, thereby eroding long-term professional considerations; (c) in the name of (unproven) efficiency, this transformation seriously impinges on principles of democracy and equity.
Based on our findings, we recommend two main policy directions: first, to strengthen municipal autonomy in planning decisions by granting local authorities more influence over the types, locations, and standards of new developments; and second, to restore the central role of professional planning agencies by ensuring that planning decisions are guided by sound spatial, social, and environmental values, rather than primarily by contractual and financial considerations. These steps would help address the erosion of democratic planning and the marginalization of professional expertise identified in our analysis.
Our account of the emerging regime of “national planning deals” contributes to theoretical debates over the phenomena scholars call “contractual planning”, “neoliberal technocracy” [24], “post-political planning” and centralization of planning [61], or “urban privatination” [6,62]. As in other cases of contractual planning, national planning deals are advanced by a pro-growth technocracy whose “apolitical” usage of quantitative, legal, managerial and technical terminology replaces civil and political deliberations [63,64] and legitimizes the state’s centralizing drive, particularly in ethnocratic states. Under such regimes, contractual decisions are presented as consensual and imperative for the “the common good” [65], while actually imposing an a-contextual, growth-oriented practice over local knowledge and alternative development paths. These debates mostly relate to the urban scale and city governments, but scholars show that in less democratic (particularly, ethnocratic) settings, neoliberal goals generate the boldest plans, generally via speedy processes that bypass established bureaucracies [66]. While some may interpret the centralization of housing governance as a departure from neoliberalism, our findings support the argument that it represents an evolved, hybrid neoliberal–centralized planning, which tends to occur in less democratic planning systems, as in Israel. In such a context, adapting the planning deal to the national scale also means expanding the opaque mazes of decision-making, and using “free market” discourse to mask increased profits for developers and the central government. We call on scholars in other places to further expand these theoretical insights by researching new planning regimes proposed in response to housing crises, in comparable international settings.

Author Contributions

Conceptualization, S.E., O.Y. and T.M.; investigation, S.E.; writing—original draft preparation, S.E. and T.M.; writing—review and editing, S.E., O.Y. and T.M.; supervision, O.Y. and T.M. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Data Availability Statement

The raw data supporting the conclusions of this article will be made available by the authors on request.

Conflicts of Interest

The authors declare no conflicts of interest.

Notes

1
For clarity and to facilitate smoother reading, we will use the term “government” to refer to the central government and “municipality” to denote the local government.
2
The term “ethnocracy” refers to a regime that attempts to promote control by one ethnic group over disputed, multi-ethnic territory while maintaining quasi-democratic representation and relative political openness. In such a regime, ethnic affiliation prevails over citizenship as the main factor determining the allocation of resources, especially land, that the dominant ethnic group strives to control [14]. Ethnocracy in Israel explains the high centralization that has existed continuously since its inception and the changes that have occurred in the political economy and culture, particularly regarding the land regime and spatial development [15].
3
Friedman and Rosen [44] argue that by framing the housing crisis as a supply-side problem mainly affecting the middle and upper-middle classes, the government shaped policy to prioritze price stabilization for these groups, rather than addressing the needs of lower-income or marginalized populations.
4
In Israel, the measures for taxing construction on a municipal level are insufficient for municipalities to offer their residents the desired standard of public services [53].
5
This was more than twice the initial target set for the ILA by Government Resolution 4429.
6
Regrettably, we were unable to locate data regarding the number of apartments that were actually built.
7
It is worth noting that those few official reports were critical of the umbrella agreements, highlighting its potential risks. This critical stance can be attributed to the fact that these reports were produced by agencies—such as the Bank of Israel, the Ministry of the Interior, and the State Comptroller—that were not involved in the creation of the agreements and did not necessarily share their underlying logic (as further discussed in Section 6.1).
8
In one interview, the names of four or five companies were mentioned, and the interviewee stressed that these were the leading entrepreneurs in residential construction in Israel.
9
Eshel et al. [57] suggest that personal factors, such as the political leverage of municipal officials, also have an effect on the deal outcome, but more prominent factors seem to be land value, municipal economic stability and municipal understanding of needs and problems.
10
The Ministry of Interior report [56] was based on data from 2019, only six years after the first agreement was signed (see Table 1). Considering the time needed for development and construction, it is quite telling that 7 out of the 32 municipalities that had signed the agreements showed a population increase of over 4% in 2019 alone (one had a 7% increase; another, 9.7%).
11
The actual effect the agreements had on the municipalities fall outside the scope of this paper, which focuses on the creation of the umbrella agreement mechanism and the negotiations with the individual municipalities. A comprehensive assessment of the impact would require long-term study; however, some initial findings are discussed in Eshel et al. [57] and in reports by the Bank of Israel [1] and the Ministry of the Interior [56].
12
According to the State Comptroller’s Report for 2021 [55] only 33% of the apartments projected under the umbrella agreements (as a whole) were actually marketed; in some municipalities the rate was as low as 0%.
13
According to Friedman and Rosen [44] all the housing mechanisms of recent years cater chiefly to middle-income deciles.

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Land 14 01295 g001
Figure 1. The geographical distribution of signed umbrella agreements.
Figure 1. The geographical distribution of signed umbrella agreements.
Land 14 01295 g001
Table 1. Umbrella agreements signed, 2013–2019.
Table 1. Umbrella agreements signed, 2013–2019.
CityPopulation SizeNo. of Existing Housing UnitsDate of the AgreementScope of Housing Units in the AgreementRatio of New Housing Units to Existing Ones
1Kiryat Gat51,50015,910Nov 201364420.40
2Kiryat Byalik39,10015,583Jan 201472530.47
3Modi’in88,70023,028Jan 201411,8040.51
4Rosh Ha’ayin42,90012,334Feb 201413,0001.05
5Rishon Lezion244,00077,688Nov 201417,9390.23
6Ramle73,70021,284July 201574830.35
7Beersheba203,60074,581Oct 201518,1400.24
8Ashkelon130,70045,151Oct 201531,7910.70
9Herzliya91,90034,475Jan 201674430.22
10Netanya207,90075,542Apr 201612,2880.16
11Yavne42,30012,650Aug 201615,4791.22
12Tirat Hacarmel19,4007136Sep 201610,1601.42
13Afula44,90016,574Sep 201610,4960.63
14Maalot21,3006802Feb 201755450.82
15Ofakim25,6007649Feb 201714,4361.89
16Eilat49,70018,323Mar 201718,3721.00
17Or Yehuda 36,20010,535Apr 201750200.48
18Bet Shemesh103,90020,700Apr 201717,0000.82
19Akko47,70015,802May 201717,8001.13
20Lod72,80022,119May 201728,0001.27
21Beer Yaakov 18,4005354June 201711,0002.05
22Ashdod 220,20065,115Aug 201740,0000.61
23Naharia 54,30020,180Oct 201798000.49
24Migdal Haemek 25,0008462Nov 201770000.83
25Netivot 31,3007450Dec 201713,0001.74
26Dimona33,30011,973Jan 201826,0002.17
27Sderot23,1007115Jan 201888001.24
28Elad44,9007327Mar 201854000.74
29Haifa278,900116,109Mar 201815,0000.13
30Jerusalem919,438228,943Mar 201915,5000.06
31Yehud-Monosson29,9299500Sep 201973000.77
32Raman Gan156,30063,950Dec 201990000.14
Table 2. Summary of interviewee roles and affiliations.
Table 2. Summary of interviewee roles and affiliations.
Role Years
Head of the ILA2011–2016
Head of the National Housing Headquarters2016–2018
District director in the ILA at the time of the interview. Previously held several positions in the Ministry of FinanceUntil 2023
Director General of the Ministry of Housing and Construction at the time of the interview Previously held several positions in the ILA and the Ministry of FinanceUntil 2021
Division head in the Ministry of Housing and ConstructionUntil 2023
District director in the Ministry of Housing and Construction2002–2011
Mayor of the city of Rishon LeZion2008–2018
Mayor of the city of Ramla1993–2017
Mayor of the city of Rosh Ha’ayin2003–2013
Deputy Mayor of the city of Rosh Ha’ayin2013–2018
CEO of the city of Ashkelon at the time of the interview. Previously CEO of the city of Rosh Ha’ayin and the town of Be’er Ya’akov2019–2020
CEO of the city of Rosh Ha’ayin2013–2018
CEO of the municipal Economic Corporation of the city of Lod2015–2022
Deputy CEO of the city of Modi’in2017–present
Mayor of the town of Be’er Ya’akov2003–present
Head of Paz Group—a real estate consulting company that was a consultant for the ILA, the Ministry of Housing and Construction, and several municipalities
Table 3. Summary of the findings: comparison of urban planning deals and umbrella agreements.
Table 3. Summary of the findings: comparison of urban planning deals and umbrella agreements.
Characteristics of an Urban Planning DealCharacteristics of Umbrella Agreements
1. CoalitionAgreements and cooperation between municipal officials and developers in a development project that combines financing for public purposes and economic gains Agreements and cooperation between state agencies, municipal officials, and developers in a development project that combines financing public purposes and economic gains
2. JustificationThe transactions are justified as essential for urban development, saving public funds, and encouraging private investment The agreements are essential for massive residential construction, saving public funds and encouraging private investment
3. Transparency and cooperationLimited transparency and public participationLimited transparency, no public participation, limited participation by municipalities
4. Planning considerations
  • Reliance on land value
  • Flexible regulation and extended development rights
  • Forgoing social and environmental principles
5. Profits and costsProfits for entrepreneurs: from the sale of apartments
Costs for entrepreneurs: financing the construction of housing, public facilities/infrastructure, taxation, purchase of land
Profits for the municipality: external funding for public purposes, taxation, and payments for land purchases		Profits for entrepreneurs: from the sale of apartments
Costs for entrepreneurs: financing housing and public facilities/infrastructure, taxation, purchase of land
Profits for the state: external funding for public purposes, taxation, and land revenues
Profits for the municipality: financing for needed public infrastructure, income from governmental incentive mechanisms, advancing infrastructure projects costs to the municipality: burden on budget and operations because of accelerated population growth
6. Construction characteristicsHigh-rise, expensive construction for an affluent populationMassive buildings for “strong populations” in adjacent neighborhoods
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Eshel, S.; Yiftachel, O.; Margalit, T. Rescaling and Transforming: “Umbrella Agreements,” Planning Deals, and the Israeli Planning Regime. Land 2025, 14, 1295. https://doi.org/10.3390/land14061295

AMA Style

Eshel S, Yiftachel O, Margalit T. Rescaling and Transforming: “Umbrella Agreements,” Planning Deals, and the Israeli Planning Regime. Land. 2025; 14(6):1295. https://doi.org/10.3390/land14061295

Chicago/Turabian Style

Eshel, Sharon, Oren Yiftachel, and Talia Margalit. 2025. "Rescaling and Transforming: “Umbrella Agreements,” Planning Deals, and the Israeli Planning Regime" Land 14, no. 6: 1295. https://doi.org/10.3390/land14061295

APA Style

Eshel, S., Yiftachel, O., & Margalit, T. (2025). Rescaling and Transforming: “Umbrella Agreements,” Planning Deals, and the Israeli Planning Regime. Land, 14(6), 1295. https://doi.org/10.3390/land14061295

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