Assessing Honolulu’s “Bill 7” Housing Program – UHERO
(Funding provided by the City and County of Honolulu, Department of Housing and Land Management)
by Trey Gordner, Sakura Takahashi, Edith Prager, and Rafael Cecilio Munoz, UHERO, Nov 9, 2026
Honolulu’s Affordable Rental Housing Program, commonly known as “Bill 7,” was enacted in 2019 to make small-scale infill apartment development financially feasible while keeping most new units affordable to moderate-income households. The program offers additional density, fee waivers, grants, tax incentives, and relief from some zoning and building standards in exchange for affordability restrictions. Since 2019, 85 projects containing 2,280 units have entered the program, but only seven projects and 224 units have been completed—well below the statutory goal of 500 completed units per year. Another 776 units in 22 projects have received permits as of September 2026….
(DO THE MATH: 7 yrs x 500 units = 3,500 -- 224 / 3,500 = 6.4%)
Executive Summary
Honolulu’s Affordable Rental Housing Program, commonly known as “Bill 7,” was enacted in 2019 to make small-scale infill apartment development financially feasible while keeping most new units affordable to moderate-income households. The program offers additional density, fee waivers, grants, tax incentives, and relief from some zoning and building standards in exchange for affordability restrictions. Since 2019, 85 projects containing 2,280 units have entered the program, but only seven projects and 224 units have been completed—well below the statutory goal of 500 completed units per year. Another 776 units in 22 projects have received permits as of September 2026.
This report uses UHERO’s Housing Policy Simulator to estimate how much Bill 7 improves project feasibility and which policy changes could improve it further. On a representative 10,000-square-foot parcel in a medium-density apartment district (A-2), Bill 7 increased the potential project size from 26 to 49 units and raised estimated return on cost from 5.0% to 6.2% compared with the zoning rules in effect before 2026. While this was a substantial improvement in feasibility in absolute terms, it still falls short of the industry target of 6.6%, which helps to explain why more projects have not been proposed and completed under the program.
Higher interest rates and construction costs have made development more difficult since 2019, while permitting times have remained well beyond the 90-day timeline set out in Chapter 32. Broader zoning and building code reforms have also extended several Bill 7 advantages to ordinary projects, including eliminating parking requirements in Ordinance 20-41 and allowing a single staircase to serve up to 3 floors as fire egress (ROH §16-1.1(85)). Most notably, Ordinance 26-7 increased allowable density in apartment districts, improving feasibility for standard projects and narrowing Bill 7’s return-on-cost advantage in a simulated project from 122 basis points to 74. Even so, Bill 7 vastly outperforms the standard pathway on residual land value, due to fee waivers, construction subsidies, and property tax exemptions. The City waives more than $950,000 in fees for Bill 7 projects compared to non-Bill 7 ones. Our simulated Bill 7 projects approach feasibility on 47% (3,658) of the 7,855 parcels eligible for the program, for a total of 143,574 potential units. No simulated standard project on the same parcels clears the same near-feasibility threshold at comparable rents.
A sensitivity analysis demonstrates two main paths to improve feasibility further: increasing units per project or increasing subsidy amounts. A density bonus allowing 55% more units per project, through a combination of height, FAR, and unit cap increases, would raise the simulated project’s return on cost from 6.2% to 6.5% and its residual land value by 61% without increasing the City’s per unit subsidy. Incidentally, the city’s new “pre-construction grant” is awarded during construction, and is earmarked to cover the cost of prevailing wages; both of these features limit its impact on feasibility. Paying the same amount before construction and without encumbrance would raise its contribution to land value by 31%. Fee waivers, though valuable, are already maximally deployed, with 98.4% of all fees waived for Bill 7 projects.
Despite unexpected macroeconomic challenges, the Bill 7 program has produced hundreds of workforce housing units in central locations with excellent transit access. It is a housing program that also furthers the City’s transportation, economic development, and sustainability goals. If the City wishes to maintain and extend a feasibility advantage for the program over market-rate projects, policymakers could raise limits that constrain units per project, accelerate permitting, or increase or restructure subsidies.
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UH News: UHERO report highlights opportunities to build on Honolulu’s Bill 7 housing program | University of Hawaiʻi System News
HNN: UHERO report explores challenges of a city-led affordable housing initiative | Hawaii News Now
HNN: UHERO: Honolulu housing program falls short of production goal | Hawaii News Now
Introducing the Housing Policy Simulator - UHERO