Appraisal Analysis: Honolulu Bill 6 (2026), CD1 — Apartment & Mixed-Use Zoning Standards
- Curtis Thygerson
- May 22
- 3 min read
Prepared by Curtis Thygerson, MAI, for the Hawaii Chapter of the Appraisal Institute. April 2026 — City and County of Honolulu.
I. Legislative Status
The Honolulu City Council passed Bill 6 (2026), CD1 on March 25, 2026, and Mayor Rick Blangiardi signed it into law as Ordinance 26-007. Appraisers should confirm the effective date before finalizing any highest-and-best-use or land value conclusions for A or AMX zoned properties, as the regulatory basis for such conclusions differs materially under the amended code.
II. Key Zoning Rule Changes (Source: Table 21-3.3, as amended)
Minimum lot area: reduced to a uniform 5,000 sq ft across all districts — previously 7,500 (A-1/AMX-1), 10,000 (A-2/AMX-2), and 15,000 (A-3/AMX-3).
Minimum lot width and depth: reduced from 70 ft to 60 ft for all A and AMX districts.
Maximum non-commercial FAR: changed from lot-size formulas (ceilings of roughly 0.9, 1.9, and 2.8) to fixed caps of 2.0 (A-1/AMX-1), 3.0 (A-2/AMX-2), and 4.0 (A-3/AMX-3).
Additional amendments: maximum building area rows were simplified from a prior tiered structure, and a footnote was added clarifying no minimum lot size for remote parking facilities. Height and setback standards are unchanged.
III. Appraisal Implications
Bill 6 has three compounding effects appraisers should address directly:
Expanded HBU universe. Reducing the minimum lot area to a uniform 5,000 sq ft (down from as high as 15,000 in A-3/AMX-3) means many single-parcel sites previously ineligible for apartment redevelopment now qualify as a legally permissible use. Appraisers must re-examine HBU conclusions for these parcels, particularly where a low-FAR or poor-condition improvement represents the existing use.
Higher supportable land value. The shift from a lot-size formula to fixed FAR caps increases maximum allowable building area significantly. As the Grassroot Institute illustrated in testimony supporting the bill: on a 10,000 sq ft A-2 lot valued at $1,000,000, the prior FAR allowed roughly 13,000 sq ft of building area (about $79 per sq ft of land cost); at the new FAR of 3.0, allowable area rises to 30,000 sq ft, cutting land cost per buildable foot to about $33 — a 58% reduction that can move projects from marginally infeasible to financially viable. Appraisers using the land residual or developer's method should update FAR inputs, and comparable land sales under the old regime will require upward adjustment for the change in entitlement basis.
Reduced land assembly risk premium. When minimum lot sizes exceed prevailing parcel patterns, developers must assemble multiple lots — a process that introduces time, cost, and negotiation risk that suppresses land values. The new 5,000 sq ft threshold allows many existing single lots to be developed independently, removing this friction and supporting higher per-parcel land values in affected districts.
Supply-side monitoring. The BIA of Hawaii cites a need for approximately 27,710 new units in Honolulu between 2023 and 2027. If Bill 6 meaningfully accelerates infill permitting, increased supply could moderate rent growth and price appreciation in affected submarkets over the medium term. Appraisers should track permit activity as a leading indicator in future market analyses.
IV. Recommended Appraiser Actions
Confirm the bill's effective date on each assignment — value conclusions will differ based on which code applies.
Update HBU analyses for A and AMX zoned properties to reflect the new minimum lot and dimension standards.
Recalculate maximum building area using fixed FAR inputs, and adjust comparable land sales executed under the prior formula-based regime.
Monitor neighborhood permit pipelines for supply-side impacts in future market condition analyses.
This memorandum is intended as an analytical reference for appraisal professionals. It does not constitute legal advice; all regulatory determinations should be confirmed with City Planning Department resources.
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