Israel Reaches Pact With Rothschild Caesarea Foundation on Land and Donations

Fund will give $207 million to Israeli higher education, turn over land for 2,000 homes

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A picture taken on April 26, 2017, shows part of ancient synagogue, discovered during the renovation of the ancient harbour of Caesarea, being displayed during a press conference in the Israeli Mediterranean town of Caesarea.
part of ancient synagogue, discovered during the renovation of the ancient harbour of Caesarea, being displayed during a press conference in Caesarea, April 26, 2017.Credit: JACK GUEZ/AFP

The Rothschild Caesarea Foundation will give out 750 million shekels ($207 million) in special grants to help higher education in Israel, as well as release land to build 2,000 homes in the seaside town of Or Akiva, in a deal with the government due to be signed on Thursday.

The agreement also will give the foundation the right to jointly hold with the Israeli government the land on which the luxury community of Caesarea stands for an extra decade, until the year 2032.

The deal addresses several issues at once. For Finance Minister Moshe Kahlon, it provides a big reserve of land for his flagship Mechir L’Mishtaken (Buyer’s Price) program for lowering housing costs, and extra funds for higher education that the treasury hasn’t been able to provide from the budget.

For the foundation, which was formed a half century ago to manage the Caesarea land, it will get an additional decade of land rights and revenues while creating a framework for resolving a long-standing dispute over its tax liability.

“We have succeeded in arriving at a framework that includes regulating relations between the foundation and the state in a way that maximizes the economic and public benefits to the government and the foundation,” said Deputy Finance Minster Yitzhak Cohen, who led the treasury negotiating team.

The foundation controls 30,000 dunams (7,500 acres) of the hundreds of thousands that Baron Edmond James de Rothschild bought at the end of the 19th century. In an unusual arrangement made in the 1950s, the land was transferred to the Rothschild Caesarea Foundation, which is run jointly with the government and collects revenues from land development in Caesarea, as well as from other investments it uses to fund educational and cultural institutions.

The fund was given a tax exemption by the government, but the agreement was never formalized in a law. Since 2010, the Israel tax Authority has been seeking back taxes from the years 2004-08 from the foundation amounting to 145.5 million shekels.

The two sides didn’t reach any agreement on the tax issue, but the pact conditions the pace of the extra 750 million shekels in donations to be allocated over the next three year to progress on negotiations.

On top of the special contributions, the agreement calls for the foundation to enlarge the minimum ordinary donations it makes to 300 million shekels a year through 2020.

Few details about where the 750 million shekels will be spent were released, part from saying they would be used to “national undertakings in line with the goals of the foundations and in coordination with the Finance Ministry.”

However, much of it will be used to develop a campus for Bar-Ilan University’s Azrieli Faculty of Medicine in the Galilee city of Safed. Treasury sources admitted they had promised over the years to provide funds for the new school but had failed to. In 2015, the school was named for the late real estate developer David Azrieli after his foundation gave it a $50 million grant.

The land portion of the deal frees up land in Or Akiva’s Or Yam section for which the treasury said planning and other approvals would “done in a very short timeframe.”

The Israel Lands Authority claimed the agreement a victory in a dispute that has smoldered with the foundation owes it rent money on the land.