The city does not determine HOA fees, the developer makes the initial cost estimate. Then when the builder/developer moves on and the HOA board voted into office by residents takes over the HOA fee decisions.
High HOA fees can be a good thing! For many complexes it means that there are ample cash reserves being put aside for future repairs as the faciliites age (to avoid those nasty, nasty special assessments that come when the HOA does not have funds for repairs.)
However, in Fioli I would say they go one step further as to the cost. The building insurance is included and I think it's wall to wall and I have been told that it also include earthquake insurance. I can't validate that. You'll need to do your due diligence when reviewing the HOA docs and insurance cert with your insurer. However, I will tell you that I owned a condo that did not include earthquake insurance and I paid $60 extra dollars out of pocket every month for my earthquake insurance.
My advice: look to the HOA documents, or have the seller's agent tell you what the fees actually include.