Housing legislation in Hawaii often focuses on density numbers, but for developers underwriting projects in Honolulu, the more critical factor is whether a project can be approved as of right. Bill 18, introduced by Council Vice Chair Andria Tupola, aims to expand the Chapter 32 Affordable Rental Housing program—known as Bill 7—into additional zoning districts, including apartment, business, and Waikiki precincts. The program offers relaxed zoning standards, tax relief, and fee waivers in exchange for at least 80% of units being affordable for 15 years at rates for households up to 100% of area median income. For 2026, that threshold is $93,400 for a single person and $133,400 for a family of four.
Currently, most market-rate residential development on Oahu goes through the 201H process, which requires political approvals and public hearings, creating uncertainty that developers price conservatively. Mike Perkins of The Bratton Team at Colliers International Hawaii notes that this uncertainty adds significant costs. Bill 18 would allow Chapter 32 projects to proceed directly to building permits, providing certainty that compresses timelines and reduces carry costs. According to Perkins, this would speed up the process and widen the pool of capital willing to invest, as the risk shifts from political to construction and lease-up risks.
The need is urgent: Honolulu requires 27,710 new units between 2023 and 2027, according to the 2024 Hawaii housing planning study. Other regulatory changes, such as Maui's Bill 9 phasing out short-term rentals and Bill 88 creating new rezoning pathways, are also influencing investment decisions. Additionally, a state law requiring two accessory dwelling units per lot by year-end primarily affects single-family housing without materially impacting commercial multifamily development.
Perkins emphasizes that regulatory clarity now weighs more heavily in underwriting Hawaii income property than interest rates. Entitled land may still require reaffirmation of approvals, introducing time costs that buyers discount. Bill 18's conversion of discretionary processes into defined ones removes a discount across the market. For investors, the regulatory pathway attached to a site is as important as its physical characteristics. Two parcels with identical zoning are not equivalent if one qualifies for by-right approval and the other does not. This difference affects carry costs, financing terms, and buyer pool breadth.
Local knowledge is crucial for navigating these nuances. Current Hawaii inventory and monthly market statistics show what is available and how it is pricing, but understanding which approval pathway applies to a given position turns that data into an investment decision. As Hawaii's approval framework becomes more defined, sites positioned to use by-right pathways stand to benefit first.
