Where the association's power stops

Receivership of a regulated private water utility is a Public Utilities Commission and court remedy under HRS ch. 269. An association can petition, testify and lobby. It cannot order it, and it cannot operate the utility in the meantime without becoming a utility itself.

That leaves a board with three levers, all imperfect:

Emergency spending. Section 514B-148(e) bars a board from exceeding its adopted annual operating budget by more than twenty per cent during the fiscal year “except in emergency situations or with the approval of a majority of the unit owners” — and requires a written resolution of findings, distributed with the notice of assessment, explaining the necessity and why the expense could not reasonably have been foreseen.

Section 514B-148(h) defines “emergency situation” by five grounds, including an unforeseeable repair and an unforeseeable legal or administrative proceeding. A hurricane destroying the water source qualifies. But the twenty per cent headroom on a small association’s budget is not a water system.

Owner approval for more. Beyond that ceiling, the board needs a majority of unit owners — from an ownership that is, at that moment, dispersed and paying for somewhere else to live.

Borrowing. The association’s power to borrow and pledge assessments comes from § 514B-105 and its own documents. Hawaii’s state Condominium Association Loan Program is, as of this writing, on hold, and in any case is aimed at insurability repairs to the association’s own property.

Why this is a category story and not one building's misfortune

Hundreds of Hawaii condominium and condominium-property-regime projects — concentrated on Hawaii Island, rural Maui and Kaua‘i — depend on private, non-county water and wastewater systems. Many were created as agricultural or rural regimes precisely because they sit outside county infrastructure.

For every one of them the same three questions apply, and they are answerable today, in ordinary weather:

• Who owns the water source, the treatment and the distribution lines, and at which point does association-owned pipe begin? That boundary determines what the association may lawfully spend money on.
• Is the provider PUC-regulated? If yes, there is a forum and a complaint route. If it is an unregulated private arrangement or a mutual system, there may be neither.
• What does the declaration say happens if service fails? Most say nothing, which is itself the answer a board needs to know before it is tested.

The habitability and assessment problem

Owners who cannot occupy their units will ask whether they still owe maintenance fees. The statutory answer is unambiguous, and it is the same early or late: HRS § 514B-146(e), “No unit owner shall withhold any common expense assessment claimed by the association.” And § 514B-144 provides that no owner is exempted by waiver of common-element use or by abandonment.

An owner who stops paying to make a point loses the mediation and arbitration routes as well — § 514B-146(f) conditions them on being paid in full and staying current.

That is a hard message to deliver to someone living out of a suitcase, which is exactly why it should come with the emergency communication rather than with the first delinquency notice.

What to watch

The Public Utilities Commission’s investigation and whether a receivership petition is filed; whether any federal disaster assistance reaches association-served infrastructure; and whether the 2027 session takes up small private water utilities, which is a question about rural Hawaii generally and about its associations in particular.