The most senior figures involved in public land management in Israel will meet Monday to discuss how to deal with a rush of land sales by the Greek Orthodox Church to private investors.
Among those attending will be the deputy attorney general and heads of the Israel Lands Administration, the Keren Kayemeth LeIsrael-Jewish National Fund, the Jerusalem Municipality and the Justice Department.
The impetus for the meeting comes from recent media coverage of a slew of cases in which the Greek Orthodox Church has sold land to private investors, giving the jitters to homeowners whose subleases are due to run out in the coming decades.
The church, one of the country’s largest landowners, owns tens of thousands of dunams (acres) of land around the country, some of it in sensitive areas such as city centers and antiquities sites, including the land the Knesset is built on in Jerusalem. In all, churches own about 100,000 dunams (24,000 acres) in Israel.
Knesset member Rachel Azaria (Kulanu) is seeking to advance legislation that will allow the state to confiscate large tracts of lands that have been sold.
Her bill relates to land currently occupied by residential buildings, whose owners are leaseholders or sub-leaseholders. The confiscation would take effect from January 1, 2018, and the private investors would be compensated.
But the most prominent case centers on the sale of 570 dunams (140 acres) of some of Jerusalem’s most expensive real estate by the Greek Orthodox Church to a group of private investors whose identity is not known.
The land includes large swaths of the upscale neighborhood of Talbieh, in central Jerusalem, as well as the neighborhood of Nayot, extending into large parts of the Valley of the Cross, a rare tract of undeveloped land in the center of the capital, revered as the place where – according to Christian tradition – the wood was taken to make the crucifix for Jesus. It also includes much of the Israel Museum and well known hotels such as the Inbal and the Dan Panorama.
The deal has created massive uncertainty and affected real estate values for more than 1,000 homeowners subleasing from KKL. KKL holds the main lease to the land, which will end in 2050 or 2051 – unless it — or some other body — renews.
If the leases are not renewed, the homeowners who have not sold by then risk being forced to leave their homes or to pay to extend leases or even to rent their own homes.
The KKL-JNF, which was established in 1901 to buy and develop land in what was then Palestine for Jewish settlement, refuses to negotiate with the new landowners, known only by the company name of Nayot Komemiyut Investments. “Don’t give them the respect of a name,” a senior KKL source told The Times of Israel. “Just call them anonymous.”
More than 90 percent of Israel’s land is managed by the Israel Lands Authority on behalf of KKL and the state. It is leased to individuals for the purposes of residential accommodation, work and farming. When leases are about to end, the ILA council meets to decide on renewing them. Since land reform was passed in 2009, the state has begun to give these leaseholders the freehold to their properties.
On private land, primarily owned by churches, the situation is different.
In the 1920s, the churches sold land to Jewish buyers, but in the 1930s, under pressure from Arab nationalists, they stopped. Since then, they have limited themselves to long-term leases.
Between 1951 and 1952, the Greek Orthodox Church signed three contracts with the KKL to lease the Talbieh-Nayot land in Jerusalem for 99 years.
Those contracts give the KKL the right to extend the leases due to end in 2050 and 2051 — in the case of one contract for a further 49 years, and in the case of the other two, for periods to be negotiated. They also spell out the mechanisms for pricing those lease extensions.
As houses and apartment buildings were built on the land, the KKL leaseholder subleased individual plots to house and apartment owners, using contracts that clearly stated when the leases would expire.
Avraham Aberman, an attorney who is partner at Ephraim Abramson, confirmed that the land had been fully acquired by his clients – all of them Israeli — in two deals with the church by two separate but connected groups of investors. Confusingly, the first deal, for partial rights, was by a firm known as Nayot Komemiyut; the second deal — which secured the full rights — was by Nayot Komemiyut Investments, which includes many but not all of the same investors as the original deal.
Both deals were signed in his office together with the Patriarch Theophilus III (he has the photographs to prove it). The second confers full land ownership on Nayot Komemiyut Investments.
Aberman claims that the church offered KKL the right to extend its leases before the investors entered the scene. KKL sources deny this.
He also says that his earlier group of investors (who went under the name Nayot Komemiyut) actually met with KKL about extending the leases, but that nothing had come of those meetings either.
“We respect KKL’s current leases, their right to extend the leases, and the mechanisms in the original contract for determining those extensions,” he said. “We’re even willing to negotiate about selling them the land.”
But, he added, “If they’re not interested, we can sell the leases or the land to anyone, so long as the buyers respect KKL’s rights.”
He continued, “Perhaps we’ll negotiate to sell the land to the homeowners. Many people have already approached us and asked to buy their land. [Homeowners] have tried to contact the KKL and not even had a reply.”
Aberman refused to divulge who the investors are. The only known one is the Ben David family of Jerusalem, which owns less than half the shares. The Ben Davids invest in real estate and oil exploration.
But he stressed that all are Jewish, that most if not all are Israeli citizens, and that all the companies involved are registered in Israel and report to the Israeli tax authorities.
A senior source at the KKL, who asked not to be named because of various legal cases underway, denied that the KKL had fallen asleep at the wheel and failed to protect the long-term interests of the homeowners.
In 2000, the KKL was the victim of a fraudulent ruse to have the lease extended. The KKL was conned by two individuals, both of whom were later jailed, who promised to get the church to agree to sell the land for $20 million. The two managed to persuade the aging patriarch Theodorus to sign a contract by telling him, while he was on his sickbed, that he was signing an Easter card.
Once the ruse was exposed, a criminal court ruled that the deal had to be canceled because it was put together illegally. But a civil court accepted that the KKL had acted in good faith and – more significantly — even allowed the organization to put a cautionary note into the land registry saying that the issue was not yet closed – a move which KKL sees as an important foot in the door to eventually owning the land.
In 2007, it was an Israeli minister who put pressure on the church to part with its land — not only in Talbieh and Nayot, but all over the country.
The current patriarch, Theophilus lll, was voted into his position by the church’s synod in 2005 but Israel withheld official recognition for two years.
Rafi Eitan, formerly a senior Israeli intelligence operative who was then a minister in a government led by Ehud Olmert, tried to condition Israel’s recognition on Theophilus’ agreement to an eight-point plan.
Among the demands were one that the church give the state first refusal on any land or buildings it wished to sell or lease long-term.
Another stipulated that the patriarch would honor a legally dubious agreement made between the church and front companies for an Israeli settler organization to lease two hotels in the Old City, close to Jaffa Gate. That agreement spelled the downfall of Theophilus’ predecessor, Irenaios, who was accused of handing important church land over to Jews – an accusation that Irenaios denied.
A third point demanded an accounting of all church lands in Israel and in the West Bank and Gaza.
Theophilus rejected the plan and in late November 2007, complained to the then US secretary of state Condoleeza Rice while the latter was visiting the capital.
The common wisdom is that it was Rice who put pressure on Israel to recognize Theophilus as patriarch.
In 2008, further attempts were made by KKL to obtain rights to the Talbieh-Nayot land. Whatever was promised or not promised is the subject of ongoing proceedings in the courts.
In 2011, Nayot Komemiyut managed to gain partial rights on the land, but Aberman, the lawyer, said talks with KKL went nowhere .
“The day after I signed the first contract in 2011, I informed KKL,” he told The Times of Israel.
“They got a copy of the contract then. There were meetings between Nayot Komemyut and the KKL — I sat with them personally — but the KKL didn’t want to decide whether to extend the lease beyond the 40 years they had left.”
“The key is with KKL. They can decide whether to extend right up to the last minute, in 2050, but we think it’s right that they decide to extend soon to give the homeowners peace of mind.”
The KKL source confirmed having met with the investors. “They appeared and said they had a contract with the patriarch,” he said. “But they wouldn’t show us the full agreement and they wouldn’t tell us who the buyers were. There were more question marks than anything else. Since then, we’ve been going back and forth with them to try to understand who and what they are.
“KKL deals with the national imperative to look after and settle the land,” the source continued. “We signed the contracts in the 1950s to develop the lands, not to do business.”
He added, “They actually did us a favor. This [sale of church lands to private bodies] is happening elsewhere in Israel too. It’s a problem of the government, the ILA, the KKL, all of us.
“We all dealt with the patriarchate before. We had to think of the Greeks and the Russians and their interests, and the need to be sensitive to a religious minority.
“But we have the tools to protect the residents from businessmen, to remove them from the fingers of cynicism, and we’ll use them.”
In an escalating war of words, the KKL recently issued a letter, first to the media and then to Aberman, accusing the investors of breaking the existing leasehold contract with KKL by initiating meetings with sublessees and causing them distress.
Aberman denied breaking any contract and pointed out that the claim was ironic. “The KKL says it doesn’t recognize us. But then it says that we are breaking a contract, which is untrue. We haven’t initiated any meetings with tenants. They have contacted us. Many have tried to contact the KKL and have not even had a reply.”
A further dispute revolves around KKL’s lease payments and the amount of those payments. KKL calculates what it owes in the tens of thousands of shekels, Nayot Komemiyut Investments in the hundreds of thousands.
Aberman says KKL hasn’t paid a penny to the church since 2008, or to his investors since 2011.
KKL counters that their agreement is with the church and that the church – one of whose accounts underwent foreclosure – has not told them where to send the money.
“There’s nobody at the church to talk to,” the source said.
In addition to the sale to Nayot Komemiyut Investments, the church has sold land in Jerusalem’s Givat Oranim and Abu Tor neighborhoods to a shell company called Koronetti, registered in the British Virgin Islands.
Korenetti has since sold the land in Givat Oranim on to another company called Oranim Ltd.
Koronetti is also involved in commercial real estate and has purchased land from the patriarchate on Jerusalem’s prestigious King David Street (number 8), where a boutique hotel-retail development is planned.
In a separate deal, as revealed by the Calcalist business newspaper in 2012, the church sold to developers Benny Nehemia and the Azorim company part of the land on which the luxury development King David Residence has since been built at King David Street 14.