Many of Hawaii’s high costs of living are painfully obvious, including the nation’s highest electricity rates, median single-family home prices that top $1 million on Oahu and milk prices that routinely exceed $6 a gallon.

But there’s another less talked about cost that has earned Hawaii an equally dubious distinction: according to a recent study, Hawaii homeowners’ association fees are among the nation’s highest – second only to New York.

The average HOA fee in Hawaii statewide in 2021 was $762 a month, according to a study by Cinch Home Services, a national home warranty provider. That’s compared to the overall U.S. average of $286 and about $37 per month in West Virginia, the least expensive state.

The study shows something painfully obvious to those fortunate 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 comes up, can push a middle-class family or retiree on a fixed income toward the edge.

In a landmark 2018 study, the Aloha United Way determined that 42% of Hawaii households were living in poverty or “asset limited, income constrained, and employed,” or ALICE. Meanwhile, some 86,713 household, or 19%, were near the ALICE threshold, with earnings just above or below it.

“Small increases in regular bills like rent, food, or gasoline, a decrease in wages or hours worked, or an unexpected emergency — the closing of a major employer or a natural disaster — could destabilize a large number of households,” the United Way noted in a 2020 follow-up report discussing the large numbers on the cusp of ALICE. In other words, bumps in HOA fees can cause a lot of pain.

Hawaii’s HOA ranking was included in Cinch’s broader study of association fees, which also looked at the types of citations homeowners received for violating association rules and how much people paid in penalties for the various citations. To conduct the study, the authors scraped data from 56,000 listings from the brokerage site Redfin, including information about the state, city and monthly HOA dues for each property, as well as 2,758 posts from the subreddits r/HOA and r/fuckhoa.

Regardless of whether this methodology was precise enough to authoritatively rank Hawaii’s HOA fees second highest in the nation, one thing seems indisputable: the fees here are high.

Experts Point To A Number Of Reasons

A huge 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 complexes in Hawaii.

“For typical condos, the biggest expenses are employees and insurance,” said Savio, who is also president of the association governing her condominium downtown.

Hurricane and flood risk means high premiums here, she said. Plus, she said, a relatively small market means a small pool for spreading the risk. The result is many insurance companies have left the market, Savio said. Meanwhile, the scope of what’s 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 neighborhoods of single-family homes and are established under one statute. A separate, far more complex statute known as the Condominium Property Act governs the condo high rises that dominate Honolulu’s skyline as well as smaller condo complexes.

It’s the high-rise towers that often have the high insurance premiums, Savio said, because their bylaws often call for the insurance to cover an array of items, including things like tubs, sinks and flooring. Meanwhile, water damage caused by leaking pipes lead to seven to 10 claims a day in Hawaii.

Jane Sugimura is a Honolulu attorney who also serves as president of her Aiea condo’s association. In 2022, insurance premiums for the 22-story building rose by 30%, or $45,000, an increase the board had no choice but to pass on to condo owners.

“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 aren’t of their making.”

Hawaii law also mandates that condo boards impose fees to stay out in front of costs, Sugimura said. Although the general rule under the law is that condo boards are self-governing, the condo statute also requires boards to establish reserve funds to cover anticipated maintenance costs. The law also requires the condo boards to conduct regular studies to determine how much money is needed in the reserve fund.

But condo association presidents say even the studies can’t always anticipate costs.

For example, Savio said the board was shocked to find painting her six-story complex at 800 Bethel St., called Queen’s Court, would be $750,000. Her resulting request for a 40% increase in maintenance fees caused condo owners to “go ballistic,” she said. Then the next year the other shoe dropped: the air conditioning system went out, years before expected.

The board was able to find the $350,000 it needed to restore the air conditioner in another reserve fund, but she said that will have to be replaced.

With the sort of big-ticket items condos need to repair and replace, even a small miscalculation can mean residents getting slapped with a hefty assessment, said Tyler Dos Santos-Tam, who is president of 801 South St. in Kakaako. For instance, he said, the complex might not need to replace its elevators for another 30 years, but when it does the price tag will likely be big.

“I have no idea how much it’s going to cost to replace elevators in 30 years,” he said. “But if your guess is off by 10%, that’s a huge chunk.”

Another potential looming cost for some 300 condo high rises, Sugimura said, are fire sprinkler systems required by a Honolulu ordinance passed after the Marco Polo condo tower fire in 2017, which killed three. Such systems will cost millions of dollars per property, she said.

“Nobody has the reserves set aside for fire sprinklers,” she said.

In the end, she said, there’s little state and local governments can do to ease the burdens on home owners. There’s been talk of establishing a revolving public fund to help apartment complexes pay for mandated sprinkler systems and pay the government back over time, but that idea has gotten no traction, she said.

Most expenses are far beyond the scope of government.

“They can’t make electricity cheaper,” she said, pointing to one example. “And our electricity bills are huge.”

In the end, Savio said, residents simply need to understand maintaining a property costs money, and the expenses have to be paid sooner or later.

But imposing the needed fees hardly wins over friends in the building, Sugimura said.

“It’s predictable,” she said. “If you put double-digit increases on maintenance fees, you’re on everybody’s shit list.”

“Struggling To Get By” is part of our series on “Hawaii’s Changing Economy” which is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.