Many of Hawaii’s high living costs are painfully obvious, including the the highest electricity rates in the countrythe median prices of single-family homes that top $1 million on Oahu and milk prices regularly exceed $6 per gallon.
But there’s another less-talked-about cost that has earned Hawaii an equally dubious distinction: According to a recent study, Hawaii’s homeowners’ association fees are among the highest in the country, second only to New York.
The average HOA fee in Hawaii statewide in 2021 was $762 per month, according to a study by Cinch Home Services, a national home warranty provider. That compares to the overall US average of $286 and about $37 per month in West Virginia, the cheapest state.
The study shows something obvious and painful for those lucky enough to own a home in Hawaii: Association fees these days can be almost as high as mortgages. And an increase in association fees, often imposed when the need for a major repair arises, can push a middle-class family or a retiree on a fixed income to the edge.
In a landmark 2018 study, the Aloha United Way determined that 42% of Hawaiian households lived in poverty or “limited assets, limited income, and employed,” or ALICE. Meanwhile, some 86,713 households, or 19%, were close to the ALICE threshold, with incomes just above or below.
“Small increases in regular bills like rent, food or gas, a decrease in wages or hours worked, or an unforeseen emergency – the closure of a major employer or a natural disaster – could destabilize large numbers of households,” United Way said. noted in a 2020 follow-up report discussing big numbers at the dawn of ALICE. In other words, increases in HOA fees can cause a lot of pain.
Hawaii’s HOA rating was included in Cinch’s larger association fee study, which also looked at the types of citations owners received for breaking association rules and the amount of fines people paid for the various citations. To conduct the study, the authors extracted data from 56,000 listings from the brokerage site red finincluding information on state, city, and monthly HOA dues for each property, plus 2,758 posts from the subreddits r/HOA and r/damn.
Regardless of whether this methodology was accurate enough to authoritatively rank Hawaii’s HOA fees as the second highest in the nation, one thing seems indisputable: the fees here are high.
Experts point to a number of reasons
A large inventory of aging high-rise condominiums in a tropical climate means a significant ongoing need for repairs and maintenance – in a place where just about everything is expensive. But it’s not just maintenance that drives up HOA fees, said Sue Savio, president of Insurance Associates, an agency with a range of clients, including 1,000 condominium resorts in Hawaii.
“For typical condos, the biggest expenses are employees and insurance,” said Savio, who is also president of the association governing her downtown condo.
Hurricane and flood risk mean high premiums here, she said. Plus, she says, a relatively small market means a small pool to spread the risk. The result is that many insurance companies have exited the market, Savio said. Meanwhile, the scope of what is typically covered by condo association insurance policies contributes to high condo association premiums, she said.
Hawaii has two types of homeowners associations. Planned community associations generally govern subdivisions and single-family home neighborhoods and are established under a single statute. A much more complex separate law known as the Condominium Act governs the condominium buildings that dominate the Honolulu skyline as well as smaller condo complexes.
It’s the high-rise towers that often have the high insurance premiums, Savio said, because their regulations often require insurance to cover a range of items, including things like tubs, sinks and liners. of ground. Meanwhile, water damage from leaking pipes drives seven to 10 claims a day in Hawaii.
Jane Sugimura is a Honolulu lawyer who is also president of her condo association Aiea. In 2022, insurance premiums for the 22-story building increased by 30%, or $45,000, an increase that the council had no choice but to pass on to residents.
“We can’t tell the insurance company, ‘Well, we don’t want to pay the increase,'” she said. “Boards are kind of stuck between a rock and a hard place. They have these bills to pay that are not their fault.
Hawaiian law also requires condominium boards to charge fees to stay out of cost, Sugimura said. Although the general rule under the law is that condominium boards are self-governing, the Condominiums Act also requires boards to establish reserve funds to cover expected maintenance costs. The law also requires condominium boards to conduct regular surveys to determine how much money is needed in the reserve fund.
But condo association presidents say even surveys can’t always anticipate costs.
For example, Savio said the council was shocked to find that painting his six-story complex at 800 Bethel St., called Queen’s Court, would cost $750,000. Her resulting demand for a 40% increase in maintenance fees caused residents to “go ballistic”, she said. Then the following year, the other shoe fell: the air conditioning system turned off, years before it was expected.
The council was able to find the $350,000 it needed to restore the air conditioner from another reserve fund, but she said it will need to be replaced.
With the kind of big ticket items condos have to repair and replace, even a small miscalculation can mean residents are hit with a hefty assessment, said Tyler Dos Santos-Tam, president of 801 South St. in Kakaako. For example, he said, the resort might not need to replace its elevators for 30 years, but when it does, the price will likely be steep.
“I have no idea how much it will cost to replace elevators in 30 years,” he said. “But if your guess is 10% off, that’s a big chunk.”
Another looming potential cost to some 300 condo buildings, Sugimura said, are fire sprinkler systems required by a Honolulu ordinance passed after the 2017 Marco Polo condo tower fire that killed three people. Such systems will cost millions of dollars per property, she said.
“No one has reservations about fire sprinklers,” she said.
Ultimately, she said, state and local governments can do little to ease the burden on homeowners. There has been talk of creating a revolving public fund to help apartment complexes pay for mandatory sprinkler systems and reimburse the government over time, but that idea has not been successful, she said. declared.
Most expenditures are far beyond the reach of government.
“They can’t make electricity cheaper,” she said, citing an example. “And our electricity bills are huge.”
At the end of the day, Savio said, residents just have to understand that maintaining a property costs money and the expenses have to be paid for sooner or later.
But imposing the necessary fee hardly wins over friends of the building, Sugimura said.
“It’s predictable,” she said. “If you put double-digit increases on maintenance fees, you’re on everyone’s shit list.”
“Struggling to get by» is part of our series on «Hawaii’s Changing Economywhich is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.