The Greek Orthodox Patriarchate of Jerusalem has petitioned the Jerusalem District Court seeking an urgent injunction to prevent SMS Train Compound Ltd., owned by venture capitalist and former MK Erel Margalit, from moving forward with its construction plans on land around the former railway station.
This latest legal move is part of a protracted legal dispute between the Greek Orthodox church and SMS about the future of the land. In 2019, the church announced it was cancelling the leasing agreement with SMS that it signed in 2010. Judge Shoshana Leibovich has asked for the response of SMS.
The Greek Orthodox Patriarchate claims that SMS is promoting the construction plan behind its back, even though it has cancelled the leasing agreement. The church discovered that the Jerusalem District Planning and Building Committee last month approved for objections a plan to build high-tech offices without its knowledge.
A source familiar with the subject at SMS told "Globes" that church representatives did know about the plan's progress and had been reported to on occasions and has even been asked to collect drafts of the plan but had ignored the matter. The source said the plan had been initiated some years ago and did not require court support.
In 2010 the Greek Orthodox Patriarchate signed a 99 years lease with Erel Margalit's SMS for 88% of the land in the northern part of Jerusalem's old railway station. As part of the agreement, the company was given a nine year option to obtain agreement for plans to rezone the area for housing, offices, commerce and hotels. The agreement also said that the church would approve any plans. SMS paid $4.2 million for the lease and the church would be entitled to 15% of the profits of any hotel built in the area.
SMS's plan for the 4.25 acre site is to build 200 housing units, 10,000 square meters of high-tech offices, and 4,000 square meters of commercial premises as well as 3,000 square meters for a school and other cultural, educational and public use. This is part of a much larger plan for the 18.75 acre site. Margalit has already built offices for startups and his Jerusalem Venture Partners (JVP) venture capital firm on the adjacent site of the former government printing house.
The Greek Orthodox Patriarchate claims it cancelled the lease last year because SMS had taken too long to obtain rezoning and develop the plans. The Patriarchate said, "A crisis of trust was caused by grave violations, which led the Patriarchate to examine the state of the property. It then became clear that shortly before that the company had submitted to the planning authority 'proposed plans' without serious planning, and that there was no practical possibility that the company would meet its commitments to approve the master plan during the period of the option."
In December 2019, nine years had passed since the signing of the lease agreement, and the Patriarchate informed SMS that the lease was cancelled.
For its part SMS claims that the lease was cancelled illegally and it has asked the Jerusalem District Court for an order allowing it to continue with the construction plans.
SMS told "Globes," "The Margalit Startup City innovation and entrepreneurship quarter is a major project for Jerusalem and will add thousands of high-tech jobs and create a new urban center in the heart of an area that has been neglected for decades. The project includes cybersecurity and food-tech centers, a cultural area, housing, commerce and a volunteer center for national service recruits is also planned to be built."
SMS added, "As expected for a project of this size, which changes the orientation of the city center, there are objections, bargaining, and various desires to receive compensation for this and that. Attempts to halt the plan from various agencies over the years have meant that the planning has dragged on for too long. But after almost ten years of methodical planning and work with the authorities, including approval by the local committee and the district committee, the plan is ready to go ahead."
Published by Globes, Israel business news - en.globes.co.il - on November 9, 2020
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