Washington Terrace was founded on the site of a former military housing project in 1948. The original construction began in 1942 when the government built temporary housing at the Washington Terrace Housing Project. At the end of the war, the place was scheduled to be torn down but the local citizens and some of their leaders were able to put together a mix of federal funds and private investments to buy the property and turn the development into single-family homes.

A recent election to determine a mayor for Washington Terrace ended in a tie. A roll of the dice was used to place Mark Allen in the mayor's office.