Section 196-64.5 - Commercial property assessed financing program(a) There is established a commercial property assessed financing program to be administered by the authority to enable owners of qualifying property to access non-traditional financing for qualifying improvements. Program financing shall be secured by a voluntary assessment imposed on the benefitted property that is secured by a statutory lien; provided that the statutory lien shall have priority over all other liens except the liens for property taxes and other assessments lawfully imposed by a governmental authority against the property.(b) In administering the commercial property assessed financing program, the authority may impose a governmental lien to secure commercial property assessed financing against real property specially benefitted pursuant to the program established by this section. Commercial property assessed financing shall be secured by the voluntary governmental lien and repaid in assessment installments in accordance with the commercial property assessed financing assessment contract and billed and collected by the authority. The principal amount of financing made pursuant to this section shall be a governmental lien against each lot or parcel of the property, or in the case of a condominium, a governmental lien against the condominium association, assessed for a period beginning on the date of the notice of the assessment and ending once payment is made in full or otherwise satisfied in accordance with the commercial property assessed financing assessment contract; provided that the lien shall have priority over all other liens except the liens for property taxes and other assessments lawfully imposed by governmental authority against the property; provided further that for multiple liens of assessments, the earlier lien shall have priority over the later lien. Neither the governmental lien nor the assessment for repayment on a benefitted commercial property pursuant to this section shall constitute a tax upon the real property within the meaning of any constitutional or statutory provision. The requirement of lender consent pursuant to subsection (c)(7) shall be satisfied for the priority of the lien to be valid.(c) The authority shall design the commercial property assessed financing program authorized under this section to address market needs while attracting private capital ; provided that the program, at minimum, shall include the following elements: (1) A commercial property owner of qualifying property in the State may apply to the authority for approval to use commercial property assessed financing to pay the cost of qualifying improvements and enter into a commercial property assessed financing contract with an approved commercial property assessed financing lender and the authority;(2) A commercial property assessed financing lender may enter into a commercial property assessed financing assessment contract to finance or refinance a qualifying improvement only with the owner of the commercial property and the authority. Each commercial property assessed financing assessment contract shall be executed by the authority as the administrator of the commercial property assessed financing program. A commercial property assessed financing assessment contract shall require the authority to assign, pledge, and transfer revenues to be derived from commercial property assessed financing assessments to one or more commercial property assessed financing lenders as security for their direct financing of qualifying improvements. The obligation of the authority to transfer the revenues to one or more commercial property assessed financing lenders shall be evidenced by the commercial property assessed financing assessment contract as an instrument of indebtedness in a form as may be prescribed by the authority. No other bonds shall be required to be issued by the State, the authority, any county, or any other public entity in order to cause qualifying improvements to be funded through a commercial property assessed financing assessment contract;(3) Qualifying improvements shall be affixed to a building or facility or affixed to real property, subject to the commercial property assessed financing assessments;(4) Before entering into a commercial property assessed financing assessment contract, the commercial property assessed financing lender shall reasonably determine that: (A) The commercial property owner is able to borrow the amount of the property assessed financing using reasonable commercial underwriting practices;(B) All property taxes applicable to the commercial property, and any other assessments levied on the same bill as property taxes, are paid; and(C) There are no involuntary liens applicable to the commercial property, including but not limited to construction liens, that will not be paid or satisfied upon the closing of the financing;(5) The commercial property assessed financing assessment contract shall include the amount of an annual assessment, including interest, over a fixed term that shall be billed annually or as otherwise specified by the authority and collected by the authority in accordance with the commercial property assessed financing lender's amortization schedule;(6) The commercial property assessed financing assessment contract, or summary memorandum of the contract, shall be recorded by the commercial property assessed financing lender in the public records of the State within five days after execution by the parties to the contract. The recorded contract shall provide constructive notice of the lien and obligation of the commercial property owner to pay the commercial property assessed financing assessment. The entire principal amount of the commercial property assessed financing assessment contract shall be a governmental statutory lien against the commercial property that shall be assessed for a period beginning on the date of recordation entered into pursuant to this section and ending once paid or satisfied in accordance with the commercial property assessed financing assessment contract; provided that the lien shall have priority over all other liens except the liens for property taxes and other assessments lawfully imposed by a governmental authority against the property;(7) Before entering into a commercial property assessed financing assessment contract for any commercial property, the commercial property owner shall : (A)(i) Provide the authority and the commercial property assessed financing lender with evidence of the written consent of each holder or loan servicer of any mortgage that encumbers or otherwise secures the commercial property, where the consent is in the sole and absolute discretion of each holder or loan servicer of a mortgage on the commercial property, at the time of the execution of the commercial property assessed financing assessment contract by the parties; provided that the consents shall be in a form prescribed by the authority; and(ii) For a commercial property that is a condominium organized under chapter 514B, or preceding state law governing condominium property regimes, as an alternative to clause (i), the condominium association shall provide the authority and the commercial property assessed financing lender with evidence of the written consent of each creditor with a valid Uniform Commercial Code financing statement or mortgage recorded with the bureau of conveyances that encumbers or otherwise secures the condominium, where the consent is in the sole and absolute discretion of each creditor, at the time of the execution of the commercial property assessed financing assessment contract by the parties; provided that the consents shall be in a form prescribed by the authority; or(B) Agree to the commercial property assessed financing lender's remedies if a default occurs, including foreclosure, in accordance with the terms and conditions of the commercial property assessed financing contract;(8) At or before the time a purchaser executes a contract for the sale and purchase of any commercial property for which a statutory lien has been recorded under this part and has an unpaid balance due, the seller shall give the prospective purchaser a written disclosure statement notifying the prospective purchaser of the commercial property assessed financing assessment;(9) The term of the commercial property assessed financing assessment contract shall not exceed the useful life of the qualifying improvement being installed or the weighted average useful life of all qualifying improvements being financed if multiple qualifying improvements are being financed, as determined by the authority; (10) Except as otherwise provided for commercial property assessed financing assessments under chapter 514B, the authority shall bill and collect any approved commercial property assessed financing assessment . Each commercial property assessed financing assessment that is approved for collection shall be billed and collected in accordance with the commercial property assessed financing lender's amortization schedule. The authority may charge interest or other fees on assessment amounts not paid on a timely basis. The authority shall develop guidelines and procedures providing for the method of undertaking and financing qualifying improvements as well as penalties , collection processes, sale, and lien priority, in the case of delinquency as is provided in this section. The authority shall remit any commercial property assessed financing assessments collected, less any reasonable administrative costs to pay each commercial property assessed financing lender in accordance with each commercial property assessed financing assessment contract. For the benefit of any commercial property assessed financing lender , the authority shall commence and diligently pursue to completion the foreclosure of delinquent commercial property assessed financing assessments and any penalty, interest, and costs by advertisement and sale and with the same effect as provided by general law for sales of real property pursuant to chapter 667 and in accordance with the terms of the commercial property assessed financing contract. Any guidelines and procedures developed pursuant to this paragraph shall specify a deadline for commencement of the foreclosure sale and any other terms and conditions the authority determines reasonable regarding the foreclosure sale. For commercial property assessed financing assessments levied but not paid when due pursuant to a commercial property assessed financing assessment contract, the foreclosure of the lien of the commercial property assessed financing assessment, lien of general real property taxes or any other assessments levied under section 46-80, or any other lien foreclosed, shall not accelerate or extinguish the remaining term of the commercial property assessed financing assessment as approved in the commercial property assessed financing assessment contract; and(11) All moneys collected for assessments for the commercial property assessed financing program, including any interest accrued and fee revenues collected, shall be deposited in a separate subaccount in the clean energy and energy efficiency revolving loan fund established pursuant to section 196-65.5 and expended only for the administration of the commercial property assessed financing program; provided that any surplus moneys remaining at the end of each fiscal year after the payment of expenses of the commercial property assessed financing program shall be transferred and credited to the Hawaii green infrastructure special fund established pursuant to section 196-65 and may be expended for the administration of the commercial property assessed financing program.Amended by L 2024, c 41,§ 4, eff. 7/1/2024.Added by L 2022, c 183,§ 2, eff. 6/27/2022.