Gary Barnett’s Camp Welcomes Supreme Court Push for a KKL Deal on Jerusalem Church Land

In a hearing on a petition filed by 260 Jerusalem households, the Supreme Court instructed the parties to hold accelerated negotiations to settle the leasehold rights on Jerusalem Church land, and recommended bringing in the Jerusalem Municipality and the Israel Land Authority (ILA) as well. While Barnett’s associates welcomed the decision, the leaseholders were disappointed that no ruling was made on their rights. Deputy Mayor Yossi Havilio warns: “Such a settlement will solve only a small part of the problem.”

By Ranit Nahum-Halevi, Nadlan Center

A new development in the battle over Jerusalem Church land: today (Wednesday), the Supreme Court heard a petition filed by hundreds of sub-lessees on Greek Orthodox Church land in Jerusalem against Keren Kayemeth LeIsrael (KKL-JNF). The petition concerns the sale of the rights to American businessman Gary Barnett. The court called on the parties to talk to each other and try to reach a settlement that would resolve the long-running dispute.

In a decision issued at the end of the hearing by Justices Barak-Erez, Grosskopf and Kasher, the Supreme Court called on the parties to hold accelerated negotiations and try to reach an agreed settlement. It also recommended including the Jerusalem Municipality and the Israel Land Authority (ILA) in the talks. The court intends to set a time limit on the negotiations, and the parties will have to submit an update to the court on their progress. Meanwhile, the petition will remain pending.

The decision drew mixed feelings among the petitioning leaseholders. On the one hand, it is a significant development: keeping the petition open lets them use the legal process as leverage to advance a settlement, without having to file a new petition and bear the costs involved. On the other hand, at this stage the court did not require KKL-JNF to renew the lease agreement as they had demanded, nor did it rule on their rights, which caused disappointment.

Barnett’s associates, by contrast, expressed satisfaction. From the developer’s point of view, sending the parties to negotiate could pave the way for a settlement with KKL-JNF that would also extend the lease period for apartment owners.

At the heart of the affair is Jerusalem Church land that the Greek Orthodox Patriarchate leased to KKL-JNF for long terms in the 1950s. The ownership rights were later sold to private parties, the Ben David family. In 2023, the land changed hands again when Extell, controlled by American businessman Gary Barnett, bought the rights for about NIS 750 million. The compounds at the center of the dispute include areas in the Talbiyeh and Rehavia neighborhoods, among them the Omariyya compound, where a separate battle is being fought over development plans for the land and public rights to the open spaces.

The petitioners argue that KKL-JNF, as a public body and as the party that signed the original lease agreements, is not doing what it should to protect the leaseholders’ rights and secure their future, even though only about 25 years remain until the leases expire. They say that because their rights have not been settled, apartment owners face uncertainty about the future of their properties and the terms under which they could keep holding them after the lease period ends.

Extell, controlled by Gary Barnett, also wants to advance a settlement with KKL-JNF. However, while the leaseholders want to secure their rights to their apartments, Extell’s interest also includes the option of exercising the ownership and development rights on the land it purchased.

Adv. Ilan Sofer represents the petitioners: 259 households leasing apartments on Jerusalem Church land, including the Prima and Inbal hotel chains. He believes the decision is balanced. “On the one hand, the decision limits the negotiations between Extell and KKL-JNF to a set period, while preserving the petitioners’ right to challenge the agreement if its terms are unacceptable to them. On the other hand, if Extell and KKL-JNF fail to reach a settlement, the petition will be heard on its merits. The court instructed KKL-JNF and Extell to take into account all the public considerations at stake, including the rights of the sub-lessees,” Sofer said.

“This deal could have been resolved 15 years ago”

One source familiar with the affair took part in the early talks with KKL-JNF when the Church land was being bought for the Ben David family, who acquired the land rights and later sold them to businessman Gary Barnett. The source says KKL-JNF missed one opportunity after another to settle. Proposals that could have resolved the dispute and protected the rights of all parties were presented to it more than a decade ago.

According to Adv. Avrami Avraman of the S. Friedman Abramson law firm, today’s hearing produced a very welcome result that opens the door to resolving the issue once and for all. “In all the years I accompanied the Niot Group, from buying the land until the sale to Gary Barnett’s Extell Group, we never managed to reach agreements with KKL-JNF. At first, they didn’t want to negotiate with us at all, and later many obstacles came up. Among other reasons, decisions are hard to make in a complex public body, and the people we dealt with kept changing. Today in court, we also heard that the negotiations with Extell have been stalled for a long time for various reasons. The court acted correctly today in choosing to help find a practical solution that would benefit everyone. If the court sets a reasonable time frame for the negotiations, it seems this will finally put the process on a binding timetable with reporting to the court, which can help lead to an agreement.”

Yossi Havilio, Deputy Mayor of Jerusalem, warns that even if KKL-JNF reaches a settlement with Gary Barnett, it would only be a partial solution. It would not help hundreds of other apartment owners in Jerusalem whose land was sold to private parties. “I came to court to support the apartment leaseholders,” Havilio said. “The proper solution is legislation by the Knesset, and we will try to advance it through the Jerusalem Union faction with whatever government is formed. Alternatively, I support KKL-JNF acting to extend the lease period, but it must be understood that such a settlement will solve only a small part of the problem.”

According to him, the dispute between KKL-JNF and Barnett involves only two or three land compounds. Meanwhile, there are hundreds more apartments in Jerusalem on land leased directly from the Church, where the ownership rights were bought by other private parties, such as the Corenti company.

“Among others, these include compounds in the S.Y. Agnon, Oranim, Rassco and Katamon areas,” Havilio explains. “In these places, KKL-JNF is not a party to the lease agreements at all, so an extension of the lease by KKL-JNF would not help the residents. The right solution is legislation that applies to all apartment owners.”

Extell said in response to the hearing: “The court accepted our position that there is no justification for further delay through long years of legal dispute when a settlement can be reached soon. A win-win solution for the residents, many of whom have already joined, for Jerusalem and for all parties.”