Israel to Issue Bonds to Pay for Mass Army Relocation

The government plans to issue bonds and sell premier property to raise 50 billion shekels to move military facilities south.

Alon Ron

Israel is planning to issue bonds to finance a massive relocation of Israel Defense Forces facilities to the south of the country, rather than funding the project through the state budget.

“The IDF sits on some of the most valuable property in the State of Israel,” Harel Locker, the director general of the Prime Minister’s Office, said at a conference on Tuesday. “It can help solve the housing crisis and strengthen [Israel’s] periphery both in the north and the south.”

The government had initially planned to directly fund the estimated 13 billion shekels ($3.7 billion) in costs for the initial stage of the move and pay for the rest from the 6 billion shekels (1.7 billion) the state expected to earn from the sale of land on which the military installations are now located.

Now, however, at Locker's suggestion, the government plans to sell bonds to the public to come up with the first 19 billion shekels (5.5 billion) and to fund later phases of the plan to relocate bases between Haifa and Be’er Sheva.

The entire cost of the move is estimated at 50 billion shekels.

The new military complex in the south, known as Training Base city, will be located near the Negev Junction south of Be’er Sheva and is expected to become the Negev region’s third-largest population center, after Dimona and Be’er Sheva. The cabinet decision authorizing the relocation of a number of bases from the center of the country was made three years ago, but so far, none of the facilities have been transferred south. Furthermore, planning has not proceeded in earnest regarding the sites that are to be vacated.

Plans only called for a third of the 19 billion shekels of the initial costs to be financed through the sale of the sites being vacated, despite the fact that many of the bases are situated in areas of high demand for homes in the center of the country.

The other 13 billion was to be funded through the defense and finance ministry budgets. In practice, however, the funding through the ministries’ budgets was not readily available, and the revenues from the sale of land was slow in coming due to the lengthy process of obtaining planning and construction approval.

The bonds that will be issued instead will be secured by the land being vacated and paid off from the proceeds from their sale. In essence, therefore, the state is taking a bridge loan from the public to finance the project. The market for the bonds is expected to be strong.

The April 2011 cabinet decision includes such major military installations as the Tel Hashomer base east of Tel Aviv; Tzrifin farther south; the Sirkin base near the Tel Aviv suburb of Petah Tikva; Glilot, just north of Tel Aviv; the Sde Dov site in Tel Aviv, and a base in Tel Aviv suburb of Ramat Gan. Some of the bases date back to the period of the British Mandate, before Israel’s independence in 1948.

The planned move to the south would not only serve the government’s goal to develop the Negev. It would also free up land for housing in the center of the country, where the government is under pressure to stem the rise in housing prices. Speaking, along with Locker, at "The South is Rising” conference in Be’er Sheva, Roni Palmer, the director of Or, an organization that promotes development outside of the center of the country, said the IDF move must be accompanied by a major investment in civilian infrastructure in the south. “The Negev is the place. The time is now and it’s a rare opportunity. It would be a shame to waste it,” he said.

With reporting by Moti Bassok.

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