Can A $400+ Million Loan Push The Stagnant Coco Palms Project Ahead?

Developers behind the planned rebirth of Kaua‘i’s famed Coco Palms hotel have secured a $431 million loan to reconstruct the 1953 resort where Elvis Presley’s “Blue Hawaii” was filmed.

Finalizing a deal to secure the money needed to fund construction is “the pivotal final step” in moving the stagnant project forward, Jon Day, chief financial officer at Reef Capital Partners, said in an email. The historic hotel has been closed since 1992, when Hurricane Iniki ravaged the island.

Construction is scheduled to begin next year. The project now has a target opening date of 2028 under the name Coco Palms, A Kimpton Resort.

X-Caliber, a commercial real estate lender, has agreed to lend the project $186 million in conventional financing and $245 million in financing through X-Caliber affiliate CastleGreen Finance under the Commercial Property Assessed Clean Energy, or C-PACE, program.

A C-PACE loan is a financing tool that allows developers to finance clean energy projects through a municipal property assessment. The loan is repaid as a special assessment on the property tax bill so it’s tied to the property, even if it’s sold.

‘Skeptical At Best’

Even with the new infusion of money, public confidence that any developer might succeed in seeing the project through is tenuous. For 30 years developers have pitched plans to revive the hotel ruins.

“I’m skeptical at best,” former state senator and Kauaʻi council member Gary Hooser said. “These are dealmakers. If you look at the history, it’s been one developer after another making promises with almost no results.”

First promised in 2017, a second coming of Coco Palms has been mired in postponements and political obstacles. A string of developers have tried to push the project forward in the face of lawsuits, protests, expired permits, state land use violations and concerns over Native Hawaiian burial grounds. Meanwhile, cost estimates have crept upward and construction timelines have leapt ahead.

A Facebook page created by a former Coco Palms tour guide hired by the developer to herald the resort’s planned renaissance lit up this week after the financing deal announcement. Most of the comments showed excitement but displayed varying degrees of faith that the rebuild might now actually happen.

“Long live the beautiful and iconic Coco Palms!”

“Oh wow, just can’t wait. But hurry up as I’m getting too old to travel that far.”

“One can only pray this happens this time.”

Developers have secured all of the zoning permits required for the redevelopment project, Kaua‘i County officials said. A multimillion-dollar demolition project began on the site in 2024, resulting in the removal of three large concrete buildings and other smaller structures.

The developer is soliciting bids from subcontractors to demolish the old wooden retail building that fronts Kūhiō Highway. After that, work is expected to begin to install utilities and restore the underground parking garages. Residents can expect to see a couple dozen workers on site starting in late summer or early fall, Day said.

“I sometimes get frustrated when critics say nothing has happened on the site — those concrete structures didn’t demolish and recycle themselves,” Day, whose firm is leading the development, said in an email. “But I understand that people are excited for the vertical construction and I am, too.”

Major construction is slated to start up in early 2027. The developer anticipates that the project will create more than 1,000 construction jobs and another 350 full-time jobs once the resort opens.

Hopes for its restoration have hinged on a county ordinance that allowed property damaged by Hurricane Iniki to be rebuilt in compliance with the county rules and permitting requirements in place at the time of the storm.

The current permits to rebuild Coco Palms were approved before what’s colloquially known as the Iniki ordinance sunset in 2015. So although the hotel ruins sit across the highway from a vulnerable coastline fortified by an old seawall, the hotel redevelopment project does not have to comply with newer county rules, such as its conservative shoreline setback ordinance that aims to defend new construction from a watery demise as sea levels rise from climate change.

Hooser, who opposes the project and made a push in the past to convert the property to a public park, faults the county rules that allow the hotel to be restored under outdated building and zoning standards.

“The hotel sits right on a four-lane highway,” Hooser said. “It’s in a flood zone. It’s in a tsunami zone. It would never be allowed to be built there today.”

Traffic is another issue. The hotel sat on a once-quiet stretch of Kūhiō Highway that over the decades has become notorious for traffic bottlenecks. Residents worry that reopening the hotel will further complicate daily commutes.

Project proponents tend to share a wistful affection for yesteryear. The hotel conjures the romance of youth for those who wed, honeymooned or vacationed there. Through the lens of Hollywood, Coco Palms is immortalized in at least a half dozen feature films as a backdrop for sun- and surf-inspired fantasies, often ignoring the island’s social and political tensions. Frank Sinatra, Bing Crosby and Rita Hayworth were regular guests of the hotel during its golden era.

The pitfall of this nostalgia is that it papers over the property’s cultural distinction as a burial ground for Hawaiian royalty, said Mason Chock, a community advocate and former councilman.

Dozens of human remains were unearthed on the property in the 1970s. Today there is a grassroots movement that aims to preserve the former Coco Palms site not as an ode to Elvis but as the island’s ancient religious and political capital.

It’s likely that additional Hawaiian burials, human remains and artifacts exist on the property that have not yet been discovered, according to I Ola Wailuanui, a community-based nonprofit organization that wants to preserve the site.

“Of all places to have a hotel, that is the wrong place to have it,” Chock, an I Ola Wailuanui board member, said. “I don’t want to dishonor the history of this hotel where people had their honeymoon and our parents celebrated their anniversaries — that’s part of our history, too — but at the time it was acceptable. For many of us, now it’s not. We just didn’t know then what we know now about how special and unique this place is.”

Whether the resort should be rebuilt is a question that Kaua‘i officials and residents have been grappling with over for decades. Whether the Coco Palms revival will ever actually take shape is another question entirely, and the large loan secured for the project this week appears to hint at its answer.

“This is the next turn in a long, long drama,” Chock said. “Anything could happen.”