A measure allowing owners associations at existing high-rise residential buildings to apply for tax credits for installing automatic sprinkler systems is under Honolulu City Council review.
Introduced by Council member Andria Tupola, Bill 57, as drafted, would allow condominium HOAs on Oahu to file an application for a tax credit with the city Department of Budget and Fiscal Services.
The proposed request would be no later than 24 months after installation of the automatic sprinkler system is completed, in accordance with applicable building and fire codes. The application must be filed on or before Sept. 30, preceding the tax year in which the credit is claimed. Applications are on behalf of eligible owners within the existing high-rise, the measure states.
If adopted, those credits apply to tax years beginning July 1, 2026, and thereafter, the bill states.
But Hawaii Kai resident Natalie Iwasa was skeptical of this tax credit bill and questioned how an HOA actually would determine which owners are eligible for such credits.
“How does that work with BFS, who has to go through these applications and determine that a homeowner hasn’t filed already individually, and then also under the HOA application?” Iwasa asked, during the Council’s meeting Tuesday. “Seems like a lot of administrative work.”
She also requested the city divulge how many of these properties have tax credits “so we can tell how much this is costing taxpayers.”
“Because if there aren’t any, or very few, then what’s the point of doing all this?” Iwasa asked.
To that, Tupola said she met in 2023 with the Honolulu Fire Department as well as all high-rise buildings that have Association of Apartment Owners, or AOAO, membership.
She noted that 162 tax credits have been issued to date under the city’s program, which she stated leaves “about $141,261 in the funds remaining to use this credit.”
“There are 372 total high-rises in Honolulu, of which 303 do not have sprinklers,” Tupola said, adding that “294 have completed a life-safety evaluation, of which only 22 had an acceptable score.”
She alluded to prior Council legislation — first enacted in 2018 — that requires all existing high-rise residential buildings to conduct fire safety evaluations within three years and take steps to pass the evaluations within seven years.
According to the city, that ordinance was prompted by the fast-moving fire that ripped through the 36-story Marco Polo building on July 14, 2017, killing four people and causing $107 million in damage to about 200 units.
The deadly blaze, according to the city, brought to light the consequences of a residential high-rise building not having an automatic fire sprinkler system.
Fire sprinklers have been required to be installed in Oahu’s high-rises since 1975.
But Marco Polo, built in 1971, was not equipped with building sprinklers, the city said.
Marco Polo owners later voted to retrofit the 35-story building. Replacing that high-rise’s full sprinkler system cost $6 million.
The costs to add fire sprinklers in individual high-rises can vary widely, however.
In 2013, at the 568-unit Marco Polo tower, owners received an estimate of roughly $8,000 per unit to install a sprinkler system.
In 2005 a city task force study estimated the per-unit cost at $4,306 for the Marco Polo, $1,995 for the 300-unit Pearl One tower in Aiea, $10,460 for the 67-unit Wilder Avenue building and $22,902 for the 112-unit Royal Court high-rise in Kakaako.
Low-rise condos and single-family homes in Honolulu, regardless of the year built, are not required to have fire sprinkler systems.
But many HOAs object to the city’s costly, mandated retrofits.
In 2023 local condo associations lobbied Council Chair Tommy Waters to repeal the 2018 building sprinkler retrofit law, arguing costs can be in the millions of dollars and result in thousands of dollars in assessments for owners of individual units.
After the meeting, Waters suggested it would be counterproductive to repeal that city law.
“With the tragedy that happened at the Marco Polo building still fresh in our minds, it’s difficult to imagine that the Council would choose to go in any direction other than to strengthen fire safety for buildings and apartments that house multiple residents and families,” he told the Honolulu Star- Advertiser via email.
He said he’s met with owner associations regarding such retrofits and that he’s also supportive of Bill 57.
“So far, I have only had some very preliminary meetings with building associations and residents who could potentially be impacted by Bill 57,” Waters said. “Some of the folks I talked to are elderly and find the paperwork to apply for the tax credits on their own very confusing. Bill 57 would simplify this process, making it easier for our kupuna to access these benefits.”
As far as her proposed tax credit measure, Tupola said, “What I’m suggesting here in this bill, frankly, is that each of the buildings don’t necessarily have an individual unit doing the sprinkler upgrades.”
“More likely than not, it’s the building infrastructure that is updated through the AOAO, that is paid for by the association that gets the sprinklers installed,” she said at the meeting. “And therefore, for that reason, after meeting with all of the associated buildings that are affected by this law, it would be more advantageous to allow them to do it in this way, to incentivize them to complete and comply with the law.”
Tupola said the origins of Bill 57 “came from a working group that we had with many of the buildings that want to comply with the city ordinance requiring them to sprinkler the buildings for certain years, and, of course, for safety.”
“So I’m looking for us to have more conversations in committee about this, and make it more financially feasible because we want people to comply, but it is very expensive,” she said. “Granted, all of the buildings are different sizes. Nonetheless, the cost is a lot, and it wouldn’t be fronted by the AOAO; that would just be split amongst all of the owners.”
“And we do not want to increase the cost of living for our local residents,” she added, “and I think this is a positive way forward.”
Ultimately, the Council voted to pass Bill 57 on its first reading.
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Star-Advertiser staff writer Andrew Gomes contributed to this report.
