House Bill 404 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

Authorizes Class 1 municipalities to create nonprofit community land trusts to provide affordable housing through long-term ground leases to low- and moderate-income families.

What This Bill Does

It would allow Class 1 municipalities to establish nonprofit community land trusts that operate to make housing more affordable through 99-year ground leases. The trusts must be membership-based with open meetings and a seven-member board, and can acquire property, make improvements, and lease it for residential use. The bill introduces an 80% low-income and up to 20% moderate-income unit allocation for certain multi-unit properties and a resale-restricted formula to keep housing affordable over time. It also provides mechanisms for property tax exemptions, preemptive purchase options, and defined transfer rules related to improvements and ownership when properties change hands.

Who It Affects

• Low-income and moderate-income families who would gain access to affordable housing through community land trusts and ground leases, with eligibility and occupancy rules defined in the bill (including an 80/20 unit split for certain properties).
• Class 1 municipalities and nonprofit community land trusts that would form, regulate, and operate CLTs, including governance structures, funding options, property transactions, tax treatment, and succession or dissolution procedures.

Key Provisions

• Authorizes Class 1 municipalities to establish nonprofit community land trusts to provide affordable housing through long-term ground leases.
• CLT governance requires a membership-based organization with open meetings; a seven-member board appointed by the municipality and the mayor, with specified professional and community-diversity representation; staff and compensation provisions; and board meeting flexibility (including teleconference participation).
• Powers granted to CLTs: acquire/lease real property, make improvements, enter 99-year ground leases, and engage in related property transactions to preserve affordability; establish a resale-restricted formula for pricing.
• Unit allocation rules for multi-unit properties: at least 80% of leased units to low-income families and up to 20% to moderate-income families, within qualifying tracts.
• Preemptive purchase options: CLT and organizing municipality can purchase improvements; defined 120-day windows for exercising options by each party; conveyance timelines and restrictions on transfers.
• Tax treatment: property tax exemptions for CLT-owned parcels not under a ground lease (up to 3 years under construction or transfer); special assessment and valuation rules for ground-leased properties, including initial sale price basis and income-based valuations for reassessment.
• Ground lease terms: maximum 99-year term with renewal rules and required provisions (resale formula, occupancy, lease fees, tax payments); require recording of the lease.
• Dissolution/transfer: if the CLT loses nonprofit status, its ground-lease interests must be transferred to the organizing municipality or designated nonprofit within 120 days; failure to transfer triggers specific consequences.
• Effective date: October 1, 2026.

AI-generated summary using openai/gpt-5-nano on Feb 12, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Counties & Municipalities