Sheldon Adelson at a Donald Trump-Hillary Clinton presidential debate in Hempstead, N.Y., in September 2016.

Bloomberg News

WASHINGTON—The State Department is set to begin operating its embassy in Jerusalem in May and is entertaining an unusual offer from

Sheldon Adelson,

Republican Party donor and casino magnate, to help pay for a new facility after an initial move from Tel Aviv, U.S. officials said.

Secretary of State

Rex Tillerson

late Thursday signed off on security plans for converting a consular facility in Jerusalem’s Arnona neighborhood. Officials said they are eyeing a ribbon-cutting ceremony on May 14 to coincide with the 70th anniversary of Israel’s declaring independence.

At first, David Friedman, U.S. Ambassador to Israel, and a small group of aides will begin working from the facility. Next, the State Department will begin retrofitting that complex to accommodate more officials, and the department is considering exploring building a new embassy facility in Jerusalem. Mr. Adelson has offered to contribute to the effort to build a new embassy, but the discussions are informal so far.

State Department officials are examining whether the U.S. could accept such a gift. Mr. Adelson’s offer was earlier reported by the Associated Press. A representative to Mr. Adelson didn’t immediately respond to a request for comment.

“There have been no formal talks between the Department of State and any private citizen regarding the funding of any embassy,” said Steve Goldstein, the U.S.’s undersecretary of state.

The embassy move and Mr. Adelson’s unconventional offer come amid an effort by Mr. Trump’s son-in-law,

Jared Kushner,

and Mr. Trump’s chief negotiator,

Jason Greenblatt,

to try to restart the Middle East peace process between Israel and Palestinians. The offer of Mr. Adelson’s gift could complicate those efforts as Mr. Adelson is a staunch supporter of Israel’s Prime Minister

Benjamin Netanyahu

and funds Israel Hayom, a pro-Netanyahu newspaper in Israel.

At the United Nations this week, diplomats pressed Messrs. Kushner and Greenblatt on whether their plan would be biased toward Israel. They responded that they have spent months meeting with Palestinians, Israelis and others in the region to ensure evenhandedness.

Trump administration officials and Palestinian leadership haven’t spoken since December, when Mr. Trump recognized Jerusalem as Israel’s capital.

Efforts to convert the Jerusalem facility or eventually build a new embassy are likely to cost hundreds of millions of dollars, and Mr. Adelson’s offer could offset some of the costs, though it isn’t clear whether private citizens have ever helped to fund embassies before. Mr. Trump has been publicly critical of the steep price tag of the U.S. embassy in London, which cost about $1 billion to build but was financed through the sale of other American properties in the U.K.

The department’s foreign-affairs manual gives guidance on how the State Department should treat gifts from private citizens, including weighing whether accepting would be a conflict of interest. The guidance says the U.S. considers the gifts on a case-by-case basis and takes care to avoid the appearance of a conflict.

Write to Felicia Schwartz at

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