The KKL, which is an investment fund as very few people know, does not belong to the state, receives 1 billion shekels per year from the State for its share of the revenues from the sale of its lands, and the State, for its part, takes a dime of only a few million shekels in return.
The spokesperson for the KKL issued an extraordinary clarification this week following media reports that the KKL had informed the government of its intention to dismantle its partnership with the State.
The State and the KKL signed a treaty of mutual agreement in 1961. The State administers the lands it owns (13% of the total land in Israel) and participates in management costs, and at the end of each year, the Israeli Land Authority, which manages state lands and KKL lands, shares the rents from leases and land sales together. In recent years, due to rising prices, and because in high-demand areas, a large portion of the land belongs to the KKL, the annual amount that the State transfers to it exceeds 1 billion NIS per year.
Last year, the Ministry of Finance enacted a bill that was not approved because elections were advanced; the bill concerns fees applicable by the KKL due to capital gains made each year from the resale of land, hundreds of millions of shekels are to be gained by the State. The money will serve the housing sector. This proposal infuriated KKL leaders. Ultimately, the elections were advanced, and the Arrangements Law was set aside with this proposal.
But the KKL also understands that what was not approved last December could return immediately after the establishment of the new government. Therefore, the KKL continues to promote the disengagement plan, so that the treaty between Israel and the State of Israel will not be extended from the end of 2018.
Is it good or bad for the KKL to dissociate from the state for Israel?
According to the clarification statement that KKL published this week, it is a real message to the public. “The split will revolutionize the real estate market in Israel, lead to the cancellation of the monopoly of the Israeli Land Authority, and create competition between the two bodies, which will help lower prices.”
However, KKL’s announcement did not indicate that establishing an independent land marketing system would cost the organization a lot and would need to continue over very long periods. It is estimated that it will take a few years for the KKL to successfully establish an independent land marketing system equipped with a sufficiently advanced computer system to allow it to become truly independent. Until then, the housing market, especially in high-demand areas in the center, where the Jewish National Fund has a high percentage of land, may be stuck. Such turmoil in the housing market will not only fail to lower prices but may even raise them.
Furthermore, in high-demand areas, there are areas where part of the land belongs to the State and is part of the JNF. Without coordination between these two bodies, the promotion of housing projects in these areas could fail and become bogged down. Such a case has already occurred in a project that was supposed to be built in Tel Hashomer on land partly owned by the JNF and partly by the State, the result was catastrophic.
Will the KKL survive without the support of the State of Israel?
In principle, the disengagement from the State is supposed to increase the independence of the JNF and perhaps even enhance its bargaining power with the government. Without the cooperation of the State, the JNF can threaten to disrupt the housing market. But on the other hand, this power could become a double-edged sword in the hands of the JNF.
