The Kobi Maimon-controlled Nitsba Group has issued a three-month deadline for US businesses to leave the 10 bus stations it owns throughout Israel. In an effort to advance real estate developments, the demand intensifies the real estate company’s war of attrition with the government over the transport terminals.
Ten bus stations—nine in Nahariya, Hatzor Haglilit, Akko, Tzfat, Tiberias, Netanya, Kfar Saba, Ramla, Rishon Lezion, and Beersheva—are owned by Nitsba; some of them are managed by a separate business. By the end of September, the company demanded that Egged and the other public transportation providers cease operations at the bus stations, claiming that its lease with Egged had expired.
The matter has been reported to the Ministry of Transport by Egged, the party with whom the lease was signed. said Egged, “Despite the state’s requests, Nitsba has yet to provide economic and operational data on which the state is prepared to hold a conversation. To maintain and raise the level of service provided to the public at the facilities owned by Nitsba and generally, the state will conduct its business in accordance with the law.”
NITB reported “”The company contacted the Ministry of Transport to renew the contracts that had already run their course, with the rental payments and management fees to be determined by a neutral appraiser who will be appointed,” said Globes. However, the Ministry of Transport has been putting off renewing the contracts, continuing to pay rents and management fees that were established many years ago and are significantly less than what Nitsba is entitled to.”
The Ministry of Transport is impeding the bus stations’ proper and correct operation, Nitsba continues. According to Nitsba, the Ministry of Transport may, under certain conditions, order that the operations of public transportation in the various central stations continue, provided that a reasonable fee is paid for their use and management.
Nitsba went on, “In effect, the Ministry of Transport has forced Nitsba to take action to protect its rights by refusing to appoint the mutually agreed-upon appraiser who would determine a fair amount to pay Nitsba for use of the central bus stations. To our great regret, the Ministry of Transport has forced Nitsba to go to court after Nitsba offered to resolve all disagreements between the parties through arbitration by an agreed arbitrator (a retired high court justice).”
The scenario: Private bus stations with public transportation
The privatization of public and necessary properties is what gave rise to the disagreement. As a division of the Egged bus cooperative, in which the government was a significant shareholder, Nitsba was established in 1948. Egged’s property had to be maintained by Nitsba. Businessman Kobi Maimon bought Nitsba in the early 2000s through Airport City (TASE: ARPN), which he was in charge of at the time.
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If Nitsba is successful in raising the rent and management fees, it will benefit on two fronts: it will make more money and the value of the land will rise. The state is either likely to pay higher rent or vacate the land, in which case the real estate company can promote other, more lucrative real estate projects on the land of the central bus stations.
It is alleged that Nitsba has sought to rezone the bus stations for other projects over the years, particularly housing. The New Central Bus Station in Tel Aviv serves as a prime illustration of this, as noted in a 2017 opinion by Tel Aviv District Court Judge Benjamin Arnon, who stated that “Nitsba’s plan has been to lead the bus station to collapse throughout the years and its business interest can be found in the bus station’s real estate.”
Rezoning the bus station is undoubtedly a crucial component of its stated strategy. The company described its strategy in its 2021 report of activities, stating that it would “gradually reduce dependence on transport operators as the main tenants” and “add value to the reserves of existing assets by optimizing the range of uses of the assets, for example, rezoning transport assets for use of building development including housing.”
However, because the talks on the issue have stalled and there are no clear solutions in sight, neither the Ministry of Transport nor the municipalities concerned have any other plans to allocate additional land for bus stations.
