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Advocates tell House Finance bill on limited-equity cooperatives would reduce regulatory barriers
Summary
Briefing and testimony on HB 2590 described a change to exempt limited-equity cooperatives from the Uniform Common Interest Ownership Act by default and relocate and revise the definition into that statute; proponents said the bill reduces legal mismatches, lowers costs and protects long-term affordability.
Committee staff briefed members on substitute House Bill 2,590 on Feb. 6, 2026, explaining the bill's principal effect: limited-equity cooperatives (LECs) would be treated as exempt from the Washington Uniform Common Interest Ownership Act (WUCIOA/WOCIEWA) unless an LEC explicitly opted in.
Yelena Baker, staff to the Civil Rights and Judiciary Committee, said the tax statute's existing property-tax exemption for qualifying LECs would remain conditioned on the cooperative providing owned housing to low-income households; HB 2,590 instead relocates the definition into WUCIOA and relaxes the definition so a cooperative need meet only one of two listed requirements (rather than both). The bill also replaces a term tied to median-income purchasers with a more flexible "qualified household" concept set in a cooperative's corporate filings and allows cooperatives to specify allowable rates of return in their corporate documents.
Proponents testified that the change removes mismatched condominium and HOA rules that do not fit resident-owned cooperatives and that lenders and financing structures already impose rigorous financial standards for LECs. Victoria O'Banion (Northwest Cooperative Development Center) said the bill would expand use of LECs as a route to long-term affordable homeownership. Jessica McKegan Jensen (Cap City Law) told the committee that exemptions make financial sense by reducing barriers to lending and lowering costs.
Members asked whether the change would allow LECs to adopt overly restrictive membership qualifications if left to corporate documents. Testifiers and staff noted federal fair-housing rules constrain discriminatory membership restrictions and that tax-statutory affordability criteria will continue to limit which cooperatives qualify for the property-tax exemption; staff also offered to work on language to guard against unintended restrictive eligibility rules.
A brief preliminary fiscal note referenced a $3,000 one-time DOR cost for administrative updates.
