July 8, 2026, 10 a.m.
Honolulu Hale
To: Honolulu City Council
Tommy Waters, Chair
Andria Tupola, Vice Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: Bill 18 (2026), CD1 — RELATING TO AFFORDABLE RENTAL HOUSING
Aloha Chair Waters, Vice Chair Tupola and other members of the Council,
The Grassroot Institute of Hawaii supports — and offers three amendments to — Bill 18 (2026), CD1, which would make changes to the Bill 7 affordable housing program.
Specifically, the current draft of the bill would allow Bill 7 projects to be built in business zoning districts; increase the 20,000-square-foot maximum lot area to 40,000 square feet; clarify that Bill 7 projects can be built to the height allowed by the underlying zoning district or 60 feet, whichever is taller; and repeal maximum square footage rules for different unit configurations.
Currently, Honolulu’s Bill 7 program offers homebuilders relaxed zoning rules, property tax breaks, fee waivers and other financial incentives in exchange for building multiple housing units, at least 80% of which are required to be rented for at least 15 years at rents that would be affordable to residents making 100% or less of the area median income.[1]
The Bill 7 program has been an important tool for city homebuilders interested in producing affordable housing, and the expansions proposed in Bill 18 (2026) would add much-needed flexibility for homebuilders interested in using the program to reduce Honolulu’s housing shortage.
After all, a 2024 update to the Hawaii housing planning study estimated that Honolulu needs 27,710 new units built between 2023 and 2027 to keep up with demand.[2]
Bill 18 (2026) also aligns with the city’s 2025-2028 Strategic Housing Plan, which sets a goal to “Identify opportunities for maximizing urban land use through adjustments to density standards in the Land Use Ordinance,” and states that “Enhancing predictability for developers is also critical, with a focus on methods to streamline and standardize processes.”[3]
Likewise, this bill supports the housing goals laid out in the city’s Primary Urban Center Development Plan.
Policy H-1.3 in that plan aims to “Encourage a greater variety of housing types, including low or middle-density multifamily housing, ADUs and ohana units, mid-rise apartment buildings and shared housing models,” and policy H-2.1 aims to “Expand the supply of income-restricted affordable housing through requirements, incentives and public-private partnerships.”[4]
However, the bill would benefit from being amended in three ways.
First, Grassroot recommends restoring language from a previous draft of the bill relating to the maximum number of units and a transit-oriented development bonus, as follows:
The maximum number of affordable rental housing units for each zoning lot is determined by dividing the square footage [equivalent of the maximum allowable FAR for that zoning lot, excluding any public open space bonus FAR, by a factor of 800, and rounding down to the nearest whole number.] of the lot by a factor of 130 and rounding down to the nearest whole number; provided that for each zoning lot located within 2,000 feet of an urban high service bus stop at the time of application for a building permit to construct an affordable rental housing project, the maximum number of affordable rental housing units is determined by dividing the square footage of the lot by a factor of 120 and rounding down to the nearest whole number. For purposes of this section, “urban high service bus stop” means any bus stop that is located within the primary urban center development plan area and is served by at least one bus route with a frequency of service interval of 16 minutes or less at any point during the week.
That language would advance policy H-1.1 of the Primary Urban Center Development Plan, which is to “Enable and incentivize residential infill development in transit-accessible planned growth areas.”[5] It would also address a weakness — lack of TOD or rail-corridor-specific development standards — identified in a recent University of Hawai’i Economic Research Organization report on the Bill 7 program. [6]
As an alternative, the Council could look to the TOD language proposed by Martin Nguyen in his June 22, 2026, testimony,[7] which is copied below:
§ 32-2.__ Transit density bonus.
Zoning lots located within 2,000 feet of an urban high service transit stop at the time of application for a building permit to construct an affordable rental housing project, or within the Waikiki Special District, a TOD Special Direct, or adopted Neighborhood TOD Plan, are eligible to receive the following transit density bonus incentives:
(1) Maximum number of units. The maximum number of affordable rental housing units for each zoning lot is determined by dividing the square footage of the lot by a factor of 120 and rounding up to the nearest whole number;
(2) Maximum building height. Three additional stories and up to 30 additional feet;
(3) Maximum floor area ratio. Percentage increase of up to 25%;
(4) Minimum yards and setbacks. 5 feet, or the minimum side, rear, and front yards required by the underlying zoning, whichever is less; and,
(5) Maximum lot area. No maximum lot area.
For purposes of this section, “urban high service transit stop” means any current or planned fixed guideway rail station or bus stop that is located within the primary urban center development plan area and is served by at least one bus route with a frequency of service interval of 16 minutes or less at any point during the week.
Second, the city Department of Planning and permitting suggested in its June 23, 2026, testimony that the height limit in the bill be set at “75 feet or the underlying zoning height, whichever is greater,” with an exception for special districts, in which the height limit would be “75 feet or the underlying district height, whichever is lower.” Grassroot recommends adopting DPP’s suggestion but amending it as follows:
Maximum building height is 75 feet or the underlying zoning district, whichever is greater; except that within special districts, the maximum height shall be the same as that of the underlying district.
This change is needed because some special districts — such as various TOD districts and parts of the Chinatown and Waikiki special districts — specify a height limit greater than 75 feet, and it does not make sense to require Bill 7 projects to comply with a more stringent height limit in those areas.
Third, Grassroot recommends extending the sunset date of the Bill 7 program beyond 2030. Because of delays in obtaining financing and permits, a four year window could doom many beneficial projects. Making this program permanent would be best, but extending the sunset date to 2050 would at least give homebuilders more certainty to plan for future projects.
Thank you for the opportunity to testify.
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
1050 Bishop St. #508 | Honolulu, HI 96813 | 808-864-1776 | info@grassrootinstitute.org
[1] § 32-1.1 Definitions., Revised Ordinances of Honolulu, accessed Oct. 31, 2025.
[2] “Hawaii Housing Planning Study 2024,” prepared by SMS Research and Marketing Services, Inc., FSR Consulting LLC and Ward Research, Inc. for the Hawai’i Housing Finance and Development Corporation, Table 39A, p. 124.
[3] “Strategic Housing Plan 2025-2028,” Prepared by the Mayor’s Office of Housing with CommunityScale, January 2025, p. 70.
[4] “Primary Urban Development Center Development Plan,” Honolulu Department of Planning and Permitting, April 2025, p. 158.
[5] Ibid, p. 158.
[6] Trey Gordner, Edith Prager and Rafael Ceilio Munoz, “Draft report: Assessing Honolulu’s ‘Bill 7’ lnfill/Workforce Housing Program,” University of Hawai’i Economic Research Organization, p. 16.
[7] Martin Nguyen, “Providing Comments Regarding Bill 18 (2026) – Relating To Affordable Rental Housing,” Centre Urban Real Estate, June 22, 2026.
