HB404 Alabama 2026 Session

Summary

Primary Sponsor

Neil RaffertyRepresentative

Democrat

Session

2026 Regular Session

Title

Class 1 municipalities; authorization to establish community land trusts, affordable housing

Summary

HB404 would authorize Class 1 municipalities to create nonprofit community land trusts to develop and manage affordable housing through long-term ground leases.

What This Bill Does

Class 1 municipalities could form one or more community land trusts to acquire land and lease it to qualified low- and moderate-income tenants through 99-year ground leases. The trusts would keep land ownership while leasing improvements with resale-restricted formulas to maintain affordability, and both the trust and organizing municipality would have preemptive purchase rights. The bill sets up a seven-member board with appointments by the organizing municipality, the mayor, and the Alabama Housing Finance Authority, requires annual audits, and requires transparency such as publishing eligibility criteria and annual activity reports. It also provides tax exemptions for CLT property and outlines procedures for transfers if a nonprofit loses status, with an effective date of October 1, 2026.

Who It Affects

• Class 1 municipalities that choose to establish a community land trust and regulate its functions
• Low-income and moderate-income families who would access affordable housing through these ground leases
• Organizing municipalities and the Alabama Housing Finance Authority involved in governance and oversight
• Lenders, buyers, and developers affected by preemptive purchase rights and resale restrictions on properties and improvements
• Public and local governments through required audits, disclosures, and public records of CLT activities

Key Provisions

• Authorizes Class 1 municipalities to establish community land trusts organized as nonprofit corporations
• Ground leases up to 99 years with preemptive purchase rights for the CLT and organizing municipality and a resale-restricted formula to keep housing affordable
• Defines affordable housing and lists eligible programs (LIHTC, Section 8, and other federally/state programs)
• Board of Directors: seven members with specific appointment rules and conflict-of-interest and diversity requirements; annual audits
• Requires annual reporting by the CLT and public posting of selection criteria; prohibits political activity by the CLT
• Grants authority to acquire property, lease affordable housing, construct improvements, and engage in related real estate transactions; ability to mortgage or subordinate interests
• Provides for tax exemptions on CLT property and leasehold interests used for affordable housing
• Preemptive purchase options and transfer/assignment rules for purchases of improvements or property
• Transfers of ground leases upon nonprofit status loss, with timelines and priority to the organizing municipality or designated entities
• Effective date: October 1, 2026

AI-generated summary using openai/gpt-5-nano-2025-08-07 on Apr 1, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Counties & Municipalities