On February 24, 2025, Washington State introduced House Bill 1995, a legislative proposal aimed at addressing the pressing need for affordable housing and support for individuals with developmental disabilities. The bill seeks to create a framework for tax credits and exemptions that would facilitate the transfer of low-income housing developments and residential properties designated for supportive living arrangements.

The primary focus of House Bill 1995 is to establish a tax exemption for qualified transfers of low-income housing developments. This exemption is designed to encourage the transfer of properties to entities that will maintain their use as affordable housing. Notably, the bill stipulates that this exemption will not apply to transfers occurring after July 1, 2035, ensuring a time-limited incentive for property owners. Additionally, the Washington State Housing Finance Commission is tasked with gathering data on the fiscal impacts of this exemption, including any savings for transferees and the ongoing use of properties for low-income housing.

Another significant provision of the bill addresses the needs of individuals with developmental disabilities. It allows for the transfer of residential properties by legal representatives of these individuals to qualified entities without the exchange of consideration. This provision ensures that adult children with developmental disabilities can continue to reside in the transferred properties, provided that the living arrangements are deemed safe and appropriate. The bill mandates that these properties remain in use for supportive living for a minimum of fifty years, promoting long-term stability for vulnerable populations.

While the bill has garnered support for its potential to alleviate housing shortages and provide essential services, it has also sparked debates regarding its long-term implications. Critics express concerns about the sustainability of the tax credits and the potential for misuse of the exemption provisions. Proponents argue that the bill is a necessary step toward addressing the dual crises of affordable housing and the need for supportive living arrangements for individuals with disabilities.

The economic implications of House Bill 1995 are significant, as it aims to stimulate the housing market by incentivizing property transfers that prioritize low-income and supportive housing. Socially, the bill seeks to enhance the quality of life for individuals with developmental disabilities, ensuring they have access to safe and stable living environments.

As the legislative process unfolds, stakeholders will be closely monitoring the bill's progress and its potential impact on Washington's housing landscape. The anticipated review by the Joint Legislative Audit and Review Committee in 2033 will provide further insights into the effectiveness of the tax preferences established by this legislation. House Bill 1995 represents a critical effort to address housing challenges in Washington, with the potential for lasting benefits for both low-income families and individuals with developmental disabilities.