Skip to main content
Evergreen Ledger

2SHB 2590

In Committee

House

Limited equity cooperatives

Exempting limited equity cooperatives from the Washington uniform common interest ownership act.

This status may be delayed. See Action History below for the latest updates.

How does a bill become law?
  1. Introduced: The bill is filed and assigned a number.
  2. Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
  3. Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
  4. Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
  5. Governor: The Governor reviews the bill and decides whether to sign or veto it.
  6. Signed: The bill has been signed into law.
Introduced: February 8, 2026
Last Action: March 12, 2026
Status: H Rules 3C
View Bill Text (HTML) (opens in new tab)View Bill Text (PDF) (opens in new tab)

AI Analysis

This analysis was generated by AI and may contain errors. It is not legal advice. Always refer to the official bill text for authoritative information.
People & CommunitiesPeople-leaningCorporate & Wealthy Interests

This bill creates a legal definition for limited equity cooperatives (LECs) in Washington and ensures they are exempt from most state common-interest-community laws unless they choose otherwise. It also provides property tax exemptions for LECs that serve low-income households, and includes safeguards to maintain long-term affordability by limiting resale prices and buyer eligibility. The tax exemption provision expires in 2033.

  • Adds a new definition of 'limited equity cooperative' (LEC) in state law, specifying that resale of ownership interests is restricted to median-income households and resale prices are capped to preserve long-term affordability.
  • Exempts LECs from the Washington Uniform Common Interest Ownership Act (WUCIOA) unless the LEC voluntarily chooses to be subject to it.
  • Grants full or partial property tax exemptions for real property owned by LECs that serve low-income households, based on the percentage of units occupied by low-income households (at least 85% for full exemption).
  • Requires that qualifying LECs receive federal or state housing funding (e.g., from the Washington State Housing Finance Commission or HUD) or be part of specific affordable housing programs to qualify for the tax exemption.
  • Sets a sunset date of January 1, 2033, for the property tax exemption provision.

Who is affected

  • Members of limited equity cooperatives — Residents of limited equity cooperatives (LECs) benefit from property tax exemptions and are protected by clearer rules about resale restrictions and affordability requirements.
  • State and local governments — Local governments may lose some property tax revenue from LECs that qualify for full or partial exemptions, especially if many units are occupied by low-income households.
  • Affordable housing developers and property managers — Developers and housing providers who create or manage limited equity cooperatives gain clarity on how these communities are regulated and taxed, and may find it easier to develop affordable housing under this framework.
  • Low- and moderate-income homebuyers — Low- and moderate-income households seeking affordable homeownership opportunities benefit from preserved affordability and tax incentives that help keep housing costs stable.
Fiscal impact: The bill reduces state and local property tax revenue by exempting real property owned by limited equity cooperatives from taxation (in full or in part), depending on the share of units occupied by low-income households. The fiscal impact depends on how many LECs opt into the exemption and how many units they house for low-income households.Sunset: 2033-01-01
Model: Intel/Qwen3-Coder-Next-int4-AutoRoundGenerated: Mar 19, 2026 at 8:08 PM

Pro/Con Analysis

Stronger case for benefits

Potential Benefits (4)

  • By legally defining LECs and mandating resale restrictions (to median-income households only, with capped price increases), the bill preserves long-term affordability and prevents speculative flipping—ensuring housing remains accessible to low- and moderate-income households over decades.

    HousingPeopleRef: RCW 64.90.010(32)(a)(ii)

  • The property tax exemption for LECs serving low-income households directly lowers housing costs for residents (by reducing carrying costs passed through to members) and makes LEC development more financially viable—especially for nonprofits and community land trusts that lack access to conventional capital.

    HousingPeopleRef: RCW 84.36.675(1)(b)-(d)

  • Exempting LECs from WUCIOA reduces regulatory burden and legal complexity for developers and managers of affordable housing co-ops, lowering barriers to entry for community-based organizations and enabling more flexible, member-driven governance models.

    Business & EmploymentPeopleRef: RCW 64.90.360(6)

  • The statutory definition of 'low-income household' (≤80% AMI) and 'median-income household' (≤100% AMI) aligns with federal housing program standards, ensuring consistency across programs and reducing administrative friction for LECs seeking federal/state funding.

    HousingPeopleRef: RCW 84.36.675(3)(c)
Potential Concerns (4)

  • Local governments lose property tax revenue from LECs that qualify for full or partial exemptions, especially in high-demand areas where LECs may be concentrated; this reduction is permanent until 2033 and could affect funding for schools, roads, and emergency services if LECs grow significantly.

    Local GovernmentPeopleRef: RCW 84.36.675(1)(d)

  • By exempting LECs from WUCIOA unless they voluntarily opt in, the bill removes standard governance protections (e.g., reserve funding requirements, financial transparency, board accountability) that apply to most condos and co-ops—potentially weakening resident oversight and increasing risk of mismanagement or fraud in LECs that lack strong internal governance.

    Rights & LibertiesRef: Sec. 2 (new text: 'This chapter does not apply to any limited equity cooperative unless...')

  • The partial exemption formula creates a disincentive for LECs to serve more than 85% low-income households, since going from 84% to 85% unlocks full exemption—potentially encouraging artificial gerrymandering of occupancy to maximize tax benefit rather than maximize affordability.

    HousingLean peopleRef: RCW 84.36.675(2)

  • The 2033 sunset creates fiscal uncertainty for local governments, as they cannot plan long-term revenue loss; if the exemption is not extended, abrupt policy reversal could disrupt existing LEC operations or trigger sudden tax assessments.

    Local GovernmentRef: Sec. 4 (sunset 2033)

Who Is Most Affected

Low- and moderate-income homebuyersPositive Impact

Low- and moderate-income households gain long-term, stable homeownership opportunities with preserved affordability and reduced housing cost burden; however, those earning just above 100% AMI may be excluded from LEC membership despite needing assistance.

Local governmentsNegative Impact

Local governments face permanent revenue loss from exempted LEC property, especially in high-assessed-value areas; this may strain budgets for schools, transportation, and public safety unless offset by state funding or growth in other sectors.

Affordable housing developers and property managersPositive Impact

Nonprofit developers and community land trusts benefit from reduced regulatory complexity and tax liability, enabling more affordable housing production; for-profit developers are less affected since the policy is tailored to mission-driven models.

Members of limited equity cooperativesMixed Impact

LEC members gain affordability and democratic control but may face limited equity appreciation and resale restrictions; those who leave the cooperative may lose accumulated equity if improvements are not fully reimbursed.