The command I ran to start the project
The issue:
The issue probably is that hono is used in two modules, one in server and one in api, but the hono exists only in server's package.json but not in the project's package.json.

The project package json should track the hono version and use "catalog:" for both server and api folder's package.jsons
By making the changes below and running "bun install", the problem got fixed

{ "$schema": "https://r2.better-t-stack.dev/schema.json", "version": "3.14.1", "createdAt": "2026-01-04T17:05:12.474Z", "database": "postgres", "orm": "prisma", "backend": "hono", "runtime": "bun", "frontend": ["tanstack-router"], "addons": ["biome", "turborepo"], "examples": ["todo", "ai"], "auth": "better-auth", "payments": "none", "packageManager": "bun", "dbSetup": "docker", "api": "orpc", "webDeploy": "none", "serverDeploy": "none", }