Hawaii housing policy debates often focus on density—how many units a parcel can hold, how tall a building can rise, how much floor area a site can support. But for developers underwriting projects in Honolulu, a different factor carries more weight: whether a project can be approved as of right, without discretionary review. That distinction is why Bill 18 has drawn attention.
Currently, most market-rate residential development on Oahu goes through the 201H process, a form of spot zoning that requires neighborhood board input, public hearings, and consultation with an unpredictable outcome. Mike Perkins of The Bratton Team at Colliers International Hawaii says this “provides a lot of uncertainty to the process.” That uncertainty is priced conservatively because developers carrying land through an indeterminate approval period face costs with no defined endpoint.
Bill 18, introduced by Council Vice Chair Andria Tupola, would expand the Chapter 32 Affordable Rental Housing program—known as Bill 7 after the 2019 ordinance that established it—into apartment, apartment mixed-use, business and business mixed-use zoning districts, along with the apartment precinct of Waikiki. The program offers relaxed zoning standards, property tax relief and fee waivers in exchange for at least 80% of units being rented for a minimum of 15 years at rates affordable to households at or below 100% of area median income. For 2026, that threshold is $93,400 for a single person and $133,400 for a family of four. Successive drafts have also addressed lot area limits, replaced a blanket 60-foot height cap with underlying zoning height, allowed additional units near high-service bus stops within the Primary Urban Center Development Plan area, and repealed maximum square footage rules across unit configurations.
The density provisions help, but Perkins identifies the approval pathway as decisive: Chapter 32 projects proceed directly to the building permit process. Developers know at the outset what is permitted and can proceed on that basis. The financial consequence is substantial. Certainty compresses the timeline, reducing carry costs and the cost of capital across the project. A shorter, more predictable path also widens 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 says—and for housing delivery, timing is where the leverage sits.
The need is pressing. 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 other regulatory developments are shaping investor views: 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. Values in apartment-zoned and hotel-zoned product have moved differently as a result. Separately, every Hawaii county must permit two accessory dwelling units per lot by the end of the year under a 2024 state law, which Perkins says largely affects the single-family side and supports housing stock without materially affecting commercial-scale multifamily development.
Perkins says regulatory clarity now weighs more heavily in underwriting Hawaii income property than interest rates. Entitled land carries a similar question: buyers acquiring an entitled position may need to reaffirm those entitlements, and where the original approval is years old, that reintroduces a variable. Time is the cost, and buyers discount for it. That is why legislation like Bill 18 matters beyond the affordable segment it directly addresses. Anything that converts a discretionary process into a defined one removes a discount that currently applies across the market.
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. The difference shows up in carry cost, financing terms and the breadth of the buyer pool. 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—and as Hawaii’s approval framework becomes more defined, the sites positioned to use it stand to benefit first.
