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(CNN) —  

The Trump administration has settled on a location for the new US embassy in Jerusalem and plans to move into the facility by 2019, two senior administration officials tell CNN.

Rather than design and build a new embassy compound, which officials say could take several years and cost as much as a billion dollars, the State Department has decided to retrofit an existing US consular facility in the West Jerusalem neighborhood of Arnona, which sits near the Green Line, the de facto border of Israel before the 1967 war.

The scaled-down plan for the embassy will cut costs and allow Ambassador David Friedman and his staff to move there as early as next year after some security enhancements are made.

The current facility at the site is the US Consulate in Jerusalem, which handles relations with the Palestinians; the United States does not have a consular office in Ramallah.

The Arnona site was considered one of three possible options for a US embassy in Jerusalem. It may be the easiest logistical option, as it is the largest existing facility. A consular office just west of the Old City is much smaller, while an open plot that Israel leases to the Americans has never been developed.

The timing of the move has caused tensions between Secretary of State Rex Tillerson and US Ambassador Friedman. Officials said Friedman had pushed to move the embassy this year, with support from Jared Kushner, President Donald Trump’s son-in-law and senior White House aide who is leading attempts to revive the peace process between Israelis and Palestinians.

During a meeting at the White House on Thursday, Tillerson successfully persuaded the President for more time to upgrade security of the new facility.

“What you’ll see from the secretary is that we will do this at the pace of security, not at the pace of politics,” said Undersecretary for Public Diplomacy Steve Goldstein.

The new facility was first reported by The New York Times.

Trump’s recognition last month of Jerusalem as Israel’s capital and plans to relocate the embassy there inflamed tensions in the region and sparked outrage across the world. Both Israelis and the Palestinians claim Jerusalem as their historic capitals.

The announcement was condemned by 128 countries in a United Nations General Assembly vote in December.

Earlier this week, Israeli Prime Minister Benjamin Netanyahu said during an official visit to India that the United States would move the embassy from Tel Aviv to Jerusalem by the end of the year. But he was quickly rebuffed by Trump, who said in an interview with Reuters that the move would take longer.

“By the end of the year? We’re talking about different scenarios,” Trump told the news agency. “I mean obviously that would be on a temporary basis. We’re not really looking at that. That’s no.”

United Nations funding

Netanyahu’s comments came one day after the US announced it would freeze $65 million in funding to the United Nations Relief and Works Agency for Palestine Refugees. The agency has become a frequent target of criticism from him.

On Thursday, the United States announced it would be withholding for now an additional $45 million in funding to the UN agency, bringing the total that could be withheld from it to potentially $110 million.

The latest freeze was money intended for food aid, pledged by the United States in mid-December.

“It was not a guarantee,” State Department Spokeswoman Heather Nauert said at a press briefing. “At this time, we will not be providing that, but that does not mean – I want to make it clear – that does not mean that it will not be provided in the future.”

Nauert has also said the move had nothing to do with “punishing” the Palestinians for refusing to negotiate a peace process with Israel or for pushing a United Nations vote to condemn the US for moving the embassy to Jerusalem.

Earlier this month, Trump laid out his reasons, tweeting, “with the Palestinians no longer willing to talk peace, why should we make any of these massive future payments to them?”

The decision to withhold funds from the agency drew sharp criticism from Palestinian leaders, who said, “food, and education is not a bargaining chip but a US and international obligation.”

Officials from the UN agency called it “the most dramatic financial crisis” in its 70-year history, calling on international donors to fill in the agency’s budget.

The US provides approximately 30% of the UN agency’s $1.4 billion budget.