Hawaii joined thirty-nine other states when David Ige signed Act 183 (SLH 2022) into law authorizing Commercial Property Assessed Financing (C-PACE) in Hawai‘i. The legislation authorizes the Hawai‘i Green Infrastructure Authority (HGIA), an agency attached to the Department of Business, Economic Development and Tourism (DBEDT), to establish program guidelines and administer C-PACE for the soon-to-be available financing program.
C-PACE enables eligible commercial property owners to access financing for qualifying improvements on their property and repay the investment through a voluntary assessment, similar to a real property tax. C-PACE is a non-accelerating, senior lien secured by the property. The repayment obligation may transfer automatically to the next owner if the property is sold, and in the event of default, only the payments in arrears are due. This arrangement spreads the cost of the qualifying improvements over the expected life of the measure. Because the payment is secured by a senior lien, C-PACE projects are seen as less risky and below market capital (compared to interest rates charged for regular equipment loans) can be raised from the private sector. According to PACENation, to date, over 325,000 property owners have invested over $9.0 billion in qualifying improvements utilizing property assessed financing.
“In collaboration with Hawai‘i’s four counties, C-PACE will unlock new markets for commercial banks and other private capital providers to help the State address a number of critical initiatives for commercial property owners, including aging cesspools, water conservation, energy efficiency upgrades, resiliency measures and transitioning to clean energy, while creating jobs and providing other economic development benefits” said DBEDT Director Mike McCartney.
“We are excited that local banks as well as private capital providers, like Petros Pace Finance and Nuveen Green Capital, are leaning in to provide commercial property owners in a Hawaii an exciting new financing tool,” said Gwen Yamamoto Lau, HGIA executive director. “Additionally, we have already received a number of inquiries from major developers, including Meridian Pacific, Ltd. and the Kobayashi Group, as well as small business owners for projects located in all four counties, demonstrating interest and demand for this financing mechanism.”
County codes will likely need to be amended to accommodate this new financing program. HGIA anticipates the C-PACE program to be available during the first quarter of 2023 while it develops program guidelines in collaboration with C-PACE lenders, stakeholders and county officials.