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Water and Sewerage Corporations (Transfer of Assets) Rules, 5779-2019

כללי תאגידי מים וביוב (העברת נכסים), תשע"ט-2019

Published: 2019-06-03Consolidated Hebrew text as of 2025-09-16 · Last amended 2023-10-30
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Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More

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The Hebrew text as published in Reshumot (ספר החוקים) and on the Knesset website is the sole authoritative and legally binding version. In any discrepancy, the Hebrew text prevails.

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By virtue of its authority under section 11(a) of the Water and Sewerage Corporations Law, 5761-2001 (hereinafter – the Law), and after consultation with the Commissioner, the Council of the Government Authority for Water and Sewerage prescribes these Rules:

Purposes§

1.

These Rules are intended to regulate the manner of the transfer of rights in operational assets that served the water and sewerage sector of the local authority on the eve of the establishment of the company to the company, pursuant to section 11 of the Law.

Definitions§

2.

In these Rules –

"index" – the consumer price index published by the Central Bureau of Statistics;

"price list" – as defined in the Water Rules (Tariffs for the Provision of Infrastructure Services), 5771-2011, or the value of the asset according to a decision of the Commissioner or a person authorised by him for that purpose in a case where a particular asset is not included in the price list;

"operational assets" – as defined in section 9(a) of the Law;

"replacement value" – the total of all depreciated replacement values as defined in section 1 of the Water and Sewerage Corporations (Calculation of the Cost of Water and Sewerage Services and the Establishment of a Water or Sewerage System) Rules, 5770-2009.

Transfer of Operational Assets to the Company§

3.

A local authority that has established a company shall transfer to the company all its rights in the operational assets that served the water and sewerage sector of the local authority on the eve of the establishment of the company, pursuant to section 9 of the Law.

Asset Inventory and Valuation§

4.
(a)A local authority shall prepare an asset inventory and valuation of the assets pursuant to these Rules; the asset inventory shall form an integral part of the asset transfer agreement in accordance with the provisions of section 11(b) of the Law; the Commissioner or a person authorised by him for that purpose shall approve the asset inventory together with the approval of the agreement.
(b)Each entry in the asset inventory shall set out the source of the data on the basis of which the value of the asset was assessed, and documents shall be attached in accordance with the Commissioner's instructions concerning the preparation of the asset inventory that he transmitted to the company; the Commissioner or a person authorised by him for that purpose may approve the asset inventory and their values on the basis of such data, comparative data or estimated data according to his exclusive professional discretion.
(c)Where an asset inventory was prepared prior to the publication of these Rules, the Commissioner or a person authorised by him for that purpose shall approve the asset inventory and the valuation thereof as stated in subsection (a), on the basis of the asset inventory that preceded the publication of these Rules.

Transfer of Real Property§

5.
(a)The local authority shall transfer to the company conditional long-term lease rights for 49 years in operational assets that are land or are attached to real property and cannot be severed pursuant to sections 11 to 13 of the Land Law, 5729-1969.
(b)Prior to a transfer as stated in subsection (a), the local authority shall declare that the assets in respect of which rights are being transferred to the company conform to their designated use under a town-building scheme and that all proceedings enabling the transfer of the long-term lease rights to the company and the use thereof by the company have been completed.

Calculation of the Value of the Transferred Assets§

6.

The value of the transferred assets shall be according to the replacement value of those assets and according to the following principles:

(1)depreciation shall be calculated on the basis of the age of the asset on the date of the performance of the asset inventory, relative to the maximum age of the asset as set out in the price list;
(2)the replacement value of the transferred assets shall be based on actual recognised expenditure in the last five years, linked to the index; where actual expenditure has not been located or the age of the asset exceeds five years, the replacement value of the asset shall be according to the price list;
(3)the replacement value shall not include value added tax;
(4)the replacement value shall include an overhead addition to cover expenses in the amount of 10% for measurements, planning and deficient supervision, and an overhead addition to cover expenses as aforesaid in the amount of 12% for pumping stations, boreholes and reservoirs;
(5)in cases where the price list does not provide an adequate response due to circumstances particular to the local authority or due to components not included therein, and there is no example of actual costs, the local authority shall detail the circumstances and the manner of pricing the costs derived therefrom and shall attach a precise calculation; the Commissioner or a person authorised by him for that purpose shall decide on the replacement value according to his professional discretion; where the Commissioner has so decided, his decision shall be binding on the company and on the local authority;
(6)the value of the land component in real property transferred under a perpetual long-term lease shall be separately from the value of the assets attached to that real property, according to the actual historical cost to the local authority for its rights in the real property, together with linkage to the index;
(7)recognition of cost shall be based on proof of actual expenditure by the local authority; for this purpose, a cost to the local authority resulting from expropriation of land, consolidation and replotting of land, or purchase of land shall be recognised as actual expenditure; for a local authority that has not proved actual expenditure or has not proved its rights in the land, the value of the land in the leased land shall be assessed at zero value;
(8)no additional payment shall be made to the local authority upon the extension of the long-term lease period to the company;
(9)the value of assets attached to land shall be calculated according to the value of an asset that is not real property and shall be added to the value of the land as stated in this regulation.

Manner of Allotment of Shares§

7.
(a)The portion of assets that the local authority shall transfer to the company in consideration for the allotment of shares in the company shall not be less than 70%, or, where the matter stated in the latter part of section 8(a) applies – 60%, of the value of the assets pursuant to these Rules.
(b)The consideration for 100% of the value of the land as calculated pursuant to these Rules shall be received by way of the allotment of shares in the company.
(c)Nothing in subsection (a) shall derogate from the validity of agreements concluded prior to the commencement of these Rules between the State and local authorities, in which the transfer of a portion smaller than 70% of the assets in consideration for the allotment of shares in the company was approved.

Transfer of Assets in Consideration for a Loan§

8.
(a)The portion of assets that the local authority shall transfer to the company in consideration for a loan shall not exceed 30% of the value of the assets pursuant to these Rules; however, local authorities that have established a company jointly with 2 or more authorities, or a regional company, and a local authority with a population of over 250,000 residents that has established a company, may transfer to the company by way of a loan up to 40% of the value of the assets.
(b)The company shall repay the loan in equal instalments spread over 15 years, on terms to be set out in a document attached as an integral part of the asset transfer agreement and approved by the Commissioner.
(c)The local authority and the company may, with the approval of the Commissioner, agree between themselves on terms for early repayment of the loan.
(d)The portion that the company shall transfer to the local authority by way of allotment of shares shall be according to subsections (a) to (c).

Transitional Provision§

9.

Nothing in these Rules shall alter an asset inventory and value calculation that was approved prior to their commencement, whether or not consideration was given and shares were allotted.

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