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In Honolulu, an affordable housing project built under the city’s Bill 7 incentives has stalled between completion and occupancy, leaving an apartment building on Oʻahu empty for nearly 10 months and prompting fresh scrutiny of the program. PenseMetro, at the corner of Pensacola Street and Lunalilo Street, has not received final permitting sign-off and has awaited inspection approvals, with homeless people sleeping in its ground-floor parking area on some nights, according to the report.
The stall underscores a tension playing out at the Honolulu City Council, where some members want to scale back Bill 7’s incentives while others argue for expanding subsidies to speed housing construction. The debate follows a public campaign around specific projects that opponents say do not align with local expectations, including concerns about building height and neighborhood impact.
Mayor Rick Blangiardi had highlighted the program’s purpose when PenseMetro’s construction began moving forward. “This is exactly what we know we need to create,” Blangiardi said last April in Makiki, adding, “It is absolutely on the money, at the right time, incredibly needed.” Another part of the Bill 7 pitch rests on making development financially viable for lower-rise rental housing in areas planned for apartments and mixed-use uses.
Bill 7 relaxed zoning standards for low-rise rentals in parts of Oʻahu set aside for apartments and mixed-use development, so long as at least 80% of units were reserved for people earning no more than the area’s median income. For a person living alone, the program defined that threshold at about $106,000. The incentives package also included 15-year exemptions from property taxes and other charges, including wastewater system charges and building permit fees.
To further sweeten deals, the city council began offering developers grants of up to $50,000 per unit before construction and up to $12,000 per unit after construction, according to the report. Department of Planning and Permitting spokesperson Davis Pitner said six Bill 7 projects were completed and received certificates of occupancy since the program started in 2019, adding 189 units, while 16 projects were under construction and 41 were under review.
The proposal now under consideration would roll back the program’s incentives and narrow its timeframe. A bill introduced last month by Council members Esther Kiaʻāina and Scott Nishimoto would halt the fee exemptions, make maximum building height follow the underlying zoning, and shorten the program’s repeal date—previously extended to 2030—to 2027. Kiaʻāina and Nishimoto’s proposal said the goal of Bill 7 was to “accelerate the construction of affordable rental housing,” but that the “extended repeal date may exceed the period of time needed to accomplish that goal.”
At a tense council meeting in January, developers, housing advocates and other groups testified against the changes. Their warnings included that the revisions would slow housing production at a time when the island is projected to be short about 25,000 housing units by next year, according to the report. Among those weighing in, U.S. Sen. Brian Schatz opposed the changes in written testimony, saying, “Oʻahu residents face an acute and worsening housing crisis, and people need all the help they can get from their government,” adding that he was expressing “deep concern” about bills “which would make it harder to build housing and make our existing housing crisis worse.”
The council vote also reflected unusual resistance to the bill. Council members Matt Weyer and Tyler Dos Santos-Tam voted against it during its first round, an exceptionally rare move at the council, the report said. Weyer said during the meeting, “I have to vote against moving it forward,” explaining that ending the program next year puts “a lot of projects on the line.”
Kiaʻāina, who voted for the measure, told Civil Beat after the vote that her focus was not only on the repeal date but on whether the program allows affordable projects to be up to 60 feet tall—taller than underlying zoning in the Kailua area she represents. She also raised questions about whether increasing subsidies to developers offered enough value compared with potential tradeoffs, including whether other measures proposed by council members could change how subsidies work.
Still, some supporters of a broader overhaul signaled willingness to revise rather than end Bill 7 projects. Council member Andria Tupola said during the January meeting that a larger omnibus bill to revamp the affordable rental housing construction program was coming soon, and that it would incorporate feedback from concerned parties. Tupola added, “I’m going to be very clear that my stance is not to kill Bill 7 projects or to end the program.”
While the legislative fight accelerates, the delays facing PenseMetro appear rooted more in construction and permitting logistics than in the incentive structure itself. The project began construction in 2021 and took about four years to finish, the report said—longer than another similarly sized Bill 7 project on Ernest Street that took about nine months to construct. Developers and observers attributed the timeline stretch to a series of setbacks, including moving power lines that were too close to an outside stairwell, long waits for electrical transformers, and a smoke curtain for the elevator that had to be ordered and installed before an elevator inspection could proceed.
Don Huang, who developed PenseMetro as principal of Collaborative Seven Companies in partnership with ADW Hawaii, said in the reporting that delays piled up in ways he did not directly tie to a single party. “It just got delayed,” Huang said. “I can’t point fingers at anybody right now.”
Nathaniel Char, chair of the Makiki Neighborhood Board, said the project still represents frustration for community members even as advocates note other Bill 7 projects moved quickly. “It is incredibly frustrating,” Char said, describing that the building received a blessing in April of last year but remained sitting empty.
Huang said PenseMetro is awaiting final building inspections before receiving its certificate of occupancy and expected residents could move in within the next week or two. He also described Bill 7 as a successful program for incentivizing small- and medium-sized developers, even as Char questioned whether the affordability outcomes are truly meeting the standard people in the neighborhood expected. Char pointed to rent projections that were set for the program, including a studio projected around $1,400 as of late 2022 that later rose to $1,900 when inflation and construction challenges were considered, as Huang said in earlier reporting.
As the council debate continues, the vacant building has become a live example for both sides of the policy argument—one that critics cite as evidence Bill 7 does not deliver quickly enough and one that supporters may treat as proof the incentives can succeed even when projects run into inspection delays.