Bill to keep homeowners on ex-church land out of leaseholder limbo wins broad support
Jerusalemites unsure over future rights due to sale of plots say developer trying to push some apartment owners to buy out leases before Knesset cuffs ability to hike prices
Sue Surkes is The Times of Israel's environment reporter
More than three dozen Knesset members have endorsed a legislative proposal aimed at protecting Jerusalem residents living on land sold to foreign developers several years ago, in order to not jeopardize their rights to remain in their own homes.
The bill, which lists 41 sponsors from both the government and opposition, seeks to correct a situation created when the Greek Orthodox church sold land in central Jerusalem on which some 1,500 apartment owners hold leases set to expire in three decades, after a previous bid failed to garner enough support to win passage into law.
In recent years, the debt-ridden Greek Orthodox Patriarchate, which is the second-biggest real estate owner in Israel, has sold plots and leases of land to various buyers, including parcels with residences and other buildings.
In Jerusalem, David Sofer, a Jewish Israeli businessman living in London, and New York-based American billionaire Michael Steinhardt have bought church land in the Abu Tor and Givat Oranim neighborhoods, and at the First Station culture and leisure complex.
In a separate set of sales, in 2011, the Greek Orthodox Patriarchate sold rights to 570 dunams (140 acres) of land in the upscale Talbieh, Rehavia and Nayot neighborhoods to a consortium of investors for NIS 70 million (then worth just under $20 million).
In January 2023, the consortium, led by the capital’s Ben David family, sold the land for NIS 750 million (then $216 million) to Gary Barnett, the president and founder of the New York-based Extell Development Company.
Many of the sales have involved plots of land where residential buildings have been constructed under 99-year leases from the church. Those leases are set to expire in roughly 30 years, and homeowners on the land worry the contracts may not be renewed, or may only be offered for exorbitant sums. Lessees complain that the uncertainty has negatively impacted the value of their properties.
The Knesset bill seeks to give the homeowners a measure of stability by requiring that lessees be given first refusal on any plans relating to land that they are situated on. It also requires the leaseholder to extend the lease contract under the same terms as the current one, caps leasing fees at 5.5 percent of the value of the unimproved land, and ensures that lease extensions do not carry development levies as a land sale would.
According to the United Headquarters for the Defense of the Lessees, which is representing the homeowners, the government’s Ministerial Committee for Legislation will debate whether to grant the bill coalition backing during the upcoming summer session. Among the 41 names backing the bill are MKs from nearly every party in the Knesset, including Prime Minister Benjamin Netanyahu’s Likud.
As a private member bill, the committee’s imprimatur on the bill will serve as a key litmus test of whether it makes it through the Knesset.
Identical legislation was put forward in 2022, but failed to move forward after former prime minister Naftali Bennett’s government declined to back the measure.
With the bill cramping the landowners’ ability to extract as much from the leaseholders as possible, homeowners allege that representatives of Gary Barnett are trying to persuade some of the lessees to pay to secure ownership of the land now, before the legislation passes.
“We are aware that some of the developers have started to speed up processes, because of the legislative move, and are trying to sign homeowners onto sophisticated ‘forms of agreement,'” the United Headquarters for the Defense of the Lessees said in a statement.
One approach, to apartment owners in a complex in Talbieh, offers full ownership of the land to anyone who pays and agrees to let Extell pull down the buildings and construct new, larger ones under a government urban renewal scheme called pinui binui (evacuate and build). The sums per square meter range from NIS 3,000 ($800), for an owner who bought the property more than five years ago and lives in it as their main address, to NIS 9,000 ($2,400), for someone who bought within the last five years.
Explaining the scheme to journalists a year ago, Barnett was quoted as saying, “This is, in my opinion, a very logical, reasonable offer. We do not want to give people the feeling that we are pressuring them, but on the other hand, we also do not want them to think that they will receive the land for free. They should not be mistaken in thinking that they are entitled to it. Those who do not want can decide that they are waiting –and they will probably receive the land — but in five or seven years, and who knows what will happen until then. I offer them peace of mind from now on.”
Extell publicity material says residents never paid for the land when they bought their apartments.
The residents, however, say they should have the same rights as people with homes on the more than 90% of land owned by the state and managed by the Israel Lands Authority. Since land reform was passed in 2009, the state has been giving leaseholders the freehold to their properties at no charge.
The Times of Israel was unable to reach Barnett by press time.
Barnett’s offer is complicated by the fact that he would need the approval of both the government and the Keren Kayemet Leyisrael-Jewish National Fund, better known as KKL, to undertake any urban renewal during the next 30 years.
This is because the KKL holds the lease to the properties on the former church lands until the early 2050s, subleasing it to the homeowners.
Those original leases allow for the KKL to extend their terms and spell out the mechanisms for pricing those lease extensions. By extending the leases, the KKL could give certainty to the homeowners, but it would have to agree on a price with the landowner.
In 2000, the KKL agreed to enter into a process to extend the leases, but was conned by two criminals, Yaakov Rabinowitz and David Morgenstern, both later jailed, who promised to get the church to agree to extend the leases for $20 million. The two managed to persuade the aging patriarch at the time, Theodorus, to sign a contract by telling the infirm church leader that he was signing an Easter card.
Years later, the investors, led by the Ben David family, reportedly tried and failed to sell lease extensions to the KKL for $100 million.
A KKL spokesperson confirmed in a statement on Tuesday that it had held meetings with Barnett, but declined to give details. It said it was continuing to seek the best solution for the homeowners.
Jerusalem Mayor Moshe Lion has also backed the homeowners in talks with the KKL and government over the issue. He has said the city will support any solution that does not come at the expense of the residents. Deputy Mayor Yossi Havilio, whose coalition agreement with Lion includes a commitment to solve the matter, has called on local and district planners to freeze talks on any development plans until the uncertainty has been dealt with.
The homeowners’ group said it trusts Lion and Havilio to find a solution.
