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Committee hears bill to exempt limited equity cooperatives from some WUCIOA requirements to preserve affordability
Summary
HB 2590 would exempt limited equity cooperatives (LECs) from certain provisions of the Washington Uniform Common Interest Ownership Act and related tax definitions to reduce duplication with lender requirements, ease formation and operation costs, and preserve long‑term affordability for resident‑owned communities.
House Bill 2590 was presented on Jan. 27 as a measure to ease statutory and administrative barriers facing limited equity cooperatives (LECs), a model many housing advocates and community land trusts cite for permanently affordable homeownership.
Committee staff explained the bill would exempt LECs from certain WUCIOA (Washington Uniform Common Interest Ownership Act) requirements and alter the statutory definition in property‑tax provisions to facilitate limited equity cooperative formation. Sponsor Straub Petersen (21st District) said the change would allow lenders and community developers to work with cooperative models without duplicative or conflicting statutory requirements, enabling lower upfront costs and long‑term affordability.
Multiple panels of witnesses representing cooperative developers, lenders, community land trusts and affordable housing nonprofits described how LECs operate, including use of restricted resale formulas (for example, sharing annual appreciation around a 3% cap) and different governance and reserve‑fund structures than condominiums or homeowner associations. Speakers said lender underwriting requirements, reserve timing and public offering statement obligations under WUCIOA can be barriers to financing small LEC projects.
Proponents argued the exemption would not remove oversight but would allow tailored governance and financing standards that better support permanently affordable homeownership and resident‑owned manufactured housing communities. Several witnesses offered details on the range of LEC models: small clustered for‑sale houses, multiunit developments and resident‑owned mobile home communities.
Committee members asked technical questions about rate‑of‑return limits, reserves and how appreciation would be handled; witnesses deferred some technical explanations to experts but emphasized that the proposed change addresses a specific legal mismatch that impedes new LEC formation. No committee vote was recorded on Jan. 27.
