Washington bill mandates 99-year leases for homes sold by nonprofits

On February 25, 2025, Washington State lawmakers introduced House Bill 1516, a legislative proposal aimed at addressing the growing need for affordable housing through innovative ownership models. The bill seeks to establish a framework for nonprofit organizations and governmental entities to sponsor housing units that remain affordable over the long term, thereby promoting sustainable homeownership options for low- and moderate-income families.

One of the key provisions of House Bill 1516 is the requirement for sponsors to execute a new ground lease or deed restriction at both the initial sale and each subsequent sale of the housing unit. This legal mechanism is designed to ensure that the affordability of the unit is preserved for at least 99 years, effectively preventing market forces from driving prices beyond the reach of the intended demographic. Additionally, the bill stipulates that any refinancing secured by the home, including home equity lines of credit, must receive approval from the sponsoring organization, unless the sponsor is a limited equity cooperative not partnered with a community land trust.

The introduction of this bill comes amid increasing concerns about housing affordability in Washington, where rising property values have outpaced wage growth, leaving many families struggling to find suitable housing. Proponents of House Bill 1516 argue that it provides a necessary solution to this crisis by creating a structured approach to maintaining affordability while allowing homeowners to build equity.

However, the bill has not been without controversy. Critics have raised concerns about the potential limitations on homeowners' financial flexibility due to the refinancing approval requirement. Some argue that this could deter potential buyers who may feel constrained by the oversight of the sponsoring organization. Additionally, there are questions about the long-term viability of such models and whether they can effectively scale to meet the state's housing demands.

The implications of House Bill 1516 extend beyond housing policy; they touch on broader social and economic issues, including community stability and wealth equity. By fostering affordable homeownership, the bill aims to empower families and contribute to the overall health of communities, potentially reducing reliance on rental markets and enhancing neighborhood cohesion.

As the legislative process unfolds, stakeholders from various sectors, including housing advocates, financial institutions, and community organizations, will be closely monitoring the bill's progress. The outcome could set a precedent for how Washington addresses housing affordability in the years to come, particularly as the bill is set to expire on December 31, 2027, unless renewed or amended. The discussions surrounding House Bill 1516 will likely shape the future of housing policy in the state, making it a critical topic for both lawmakers and constituents alike.