(Update: Bloomberg News reports that Israeli authorities reached a deal to end eight years of disagreement between the government the Church of the Holy Sepulchre over the church's US$2.3 million water bill debt. The Israeli government has agreed to cancel the outstanding debt, but the church will pay water bills from 2012 forward.)

The Church of the Holy Sepulchre may be located on one of the holiest sites in all Jerusalem—Calvary—but its historic location does not exempt it from paying utilities.

At least, that is the argument made by Jerusalem water company Hagihon, which recently began pressing the church to pay up on decades of water-bill debt. Until it does, the Greek Orthodox Patriarchate of Jerusalem's bank account remains frozen, leaving the church unable to pay salaries. The church has threatened to close for a day in protest.

The General Secretary of the Patriarchate, Archbishop of Constantina Aristarchos, told Reuters the church would be willing to pay for future utilities, but paying "the accumulated debt, stemming back years, would be problematic."

A report in Israeli newspaper Maariv on Friday said that for decades a former mayor of Jerusalem exempted the Patriarchate from paying for water used by the Church of the Holy Sepulchre. A spokesman for Hagihon, however, said the law did not permit the company to make such exemptions.

CT previously reported that churches in Israel jointly oppose new property taxes on church buildings. Church leaders, representing an array of historic denominations, say the attempted property tax is an "aggressive action" not imposed by any previous governing body in the geographical area.

American churches have faced similar struggles: Chicago-area nonprofits and churches recently lost free access to water at their facilities.