Honolulu's housing debate has long fixated on density, but developers underwriting projects on Oahu say the decisive variable is whether a project can be approved as of right. Bill 18, introduced by Council Vice Chair Andria Tupola, targets that question directly by expanding the reach of the Chapter 32 Affordable Rental Housing program, known as Bill 7 after the 2019 ordinance that created it, into apartment, apartment mixed-use, business and business mixed-use zoning districts, along with the apartment precinct of Waikiki.
The program already offers relaxed zoning standards, property tax relief and fee waivers in exchange for at least 80 percent of units being rented for a minimum of 15 years at rates affordable to households at or below 100 percent of area median income. For 2026, that threshold sits at $93,400 for a single person and $133,400 for a family of four. Successive drafts have also addressed lot area limits, replaced the blanket 60-foot height cap with the height permitted under underlying zoning, allowed additional units near high-service bus stops within the Primary Urban Center Development Plan area, and repealed maximum square footage rules across unit configurations.
Most market-rate residential development on Oahu currently moves through the 201H process, a form of spot zoning that runs through neighborhood boards, public hearings and consultation whose outcome cannot be forecast when capital is committed. Mike Perkins of The Bratton Team at Colliers International Hawaii said the process "provides a lot of uncertainty," and that uncertainty is priced conservatively because a developer carrying land through an indeterminate approval period carries a cost with no defined endpoint.
The provision Perkins identifies as decisive is that Chapter 32 projects proceed directly to the building permit process, so a developer knows at the outset what is permitted. Certainty compresses the timeline, reducing carry and the cost of capital across a project, while widening the pool of capital willing to participate because the risk being underwritten becomes construction and lease-up risk rather than political risk. "That in and of itself would help speed up the process," Perkins said.
The stakes are substantial. The 2024 update to the Hawaii housing planning study put Honolulu's requirement at 27,710 new units between 2023 and 2027, a figure that argues for pathways measured in months rather than years. Two further regulatory developments are shaping how investors read the market: on Maui, Bill 9 is phasing out short-term rental use in apartment-zoned condominiums, while Bill 88, passed in June, created the H-3 and H-4 rezoning pathway. Every Hawaii county must also permit two accessory dwelling units per lot by the end of the year under a 2024 state law, which Perkins assesses as largely a single-family matter that supports housing stock without materially affecting commercial-scale multifamily development.
Perkins said the regulatory picture now weighs more heavily in underwriting Hawaii income property than interest rates do. Entitled land carries a version of the same question, since buyers may need to reaffirm older entitlements, and time is the cost for which buyers discount. For developers and investors, the practical implication is that the regulatory pathway attached to a site belongs alongside its physical characteristics in any valuation: two parcels with identical zoning and dimensions are not equivalent if one qualifies for a by-right pathway and the other requires discretionary approval. Current Hawaii inventory and monthly market statistics describe what is available and how it is pricing, but knowing which approval pathway attaches to a given position is what turns that into an investment decision.
