exemptions), in the long term we estimate that these will be covered by the increase in the local authority’s income from property taxes. The willingness-to-pay analysis was conducted using a hedonic regression about the potential increase in the value of properties following the construction of a large medical center. The results show that in Petah Tikva and Nesher, an increase of 10% in the value of apartments in the project is reasonable. However, in most cases, even if the increase is smaller, the entrepreneur’s profit is expected to reach the required level. The following conclusions can be drawn from the research: First, the model for underground development in large urban renewal projects is feasible, and our method makes it possible to analyze what are the best alternatives for underground development, while performing sensitivity analyses. Second, government intervention is still vital to incentivize underground development. The research shows that increasing the allowed built area in a project is the most effective incentive, since this can compensate for the additional costs of underground development. When urban underground functions are attractive, an increase in the willingness to pay for living in the area can be expected. A combination of the three factors opens new horizons for the underground development of large urban renewal projects in Israel. Possible external benefits of underground development, such as their use as a thermal shelter during extreme weather events, will surely increase their utility at the local and even national level. There are additional benefits, as the preservation of open spaces due to increased underground development. In the current study, we did not quantify these utilities. However, previous studies showed that these may have a great economic value, and their exact measurement is a subject for future work, as well as expanding the research to other regions in Israel, with other geographic, demographic, and socioeconomic characteristics. v Below the Surface
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