This amendment creates new rules allowing large cities in Alabama to set up nonprofit groups that own land and lease it for long-term affordable housing.
Alabama2026Enacted
HB404
Alabama Community Land Trust Act of 2026
Last scannedAug 24, 2026, 9:06 AM
In one sentence
This law allows Class 1 municipalities in Alabama to create nonprofit community land trusts to provide affordable housing for low- and moderate-income families.
What it does
- Authorizes Class 1 municipalities to form nonprofit community land trusts by passing a local ordinance.
- Requires these trusts to be audited every year by the Department of Examiners of Public Accounts.
- Allows trusts to buy, lease, and build housing properties using ground leases that last up to 99 years.
- Mandates that trusts publish rules for choosing tenants and release an annual report on their activities and funding sources.
- Exempts trust-owned affordable homes from property taxes for three years and reduces taxes by 20 percent for leased units over 20 years.
Who it affects
- Class 1 municipalities in Alabama that choose to create a community land trust.
- Low-income families earning up to 80% of the area median income.
- Moderate-income families earning up to 120% of the area median income.
Limits and unknowns
- This law only applies to Class 1 municipalities; smaller towns or counties cannot use it.
- The text does not specify how much money the state will give to help pay for building these homes.
- Trusts are prohibited from engaging in political activity, but specific examples of what counts as political activity are not listed.
Plain language
Terms to know
- Community Land Trust
- A nonprofit group organized by a Class 1 municipality that provides affordable housing through ground leases for low- and moderate-income families.
- Ground Lease
- An agreement where the trust owns the land but leases it to ensure the property remains affordable, with terms not exceeding 99 years.
- Class 1 Municipality
- A specific type of city in Alabama that is authorized by this law to establish community land trusts.
Official record
Sources
Official summary
This act is the Alabama Community Land Trust Act of 2026. This act: (1) authorizes Class 1 municipalities to create by ordinance nonprofit community land trusts to promote affordable housing and productive land use; (2) provides for trusts' formation, governance, and board of director's composition, duties, and authorities; (3) requires trusts to be annually audited by the Department of Examiners of Public Accounts; (4) prohibits trusts from engaging in related political activity; (5) grants trusts certain powers to effectuate their duties, including acquiring, leasing, and constructing affordable housing properties; (6) requires trusts to publish tenant selection criteria and an annual report providing certain information regarding its activities, including funding sources, employees, owned property, contracts entered into, and other information determined by the Alabama Housing Finance Authority; (7) provides requirements for ground leases entered into by trusts, including a lease must grant the trust and then the organizing municipality a right to purchase all improvements thereon and that leases may not exceed 99 years; and (8) exempts trust-owned affordable housing property from ad valorem taxes for three years, subject to conditions, and trust leased affordable housing property from 20 percent of ad valorem taxes for 20 years.
Official activity
Bill history
- EnactedHouse
- Motion to Read a Third Time and Pass - Adopted Roll Call 1163 (Yeas 35, Nays 0)Senate
- Third Reading in Second House (Yeas 35, Nays 0)Senate
- Delivered to GovernorHouse
- Signature RequestedSenate
- EnrolledHouse
- Ready to EnrollHouse
- Ready to EnrollHouse
- Read for the Second Time and placed on the CalendarSenate
- Reported Out of Committee Second HouseSenate
- Pending Committee Action in Second HouseSenate
- Read for the first time and referred to the Senate Committee on Jefferson County LegislationSenate
- Motion to Read a Third Time and Pass as Amended - Adopted Roll Call 1110 (Yeas 66, Nays 0)House
- Motion to Adopt - Adopted Roll Call 1109 (Yeas 66, Nays 0)House
- Motion to Adopt - Adopted Roll Call 1108 (Yeas 66, Nays 0)House
- Third Reading in House of Origin (Yeas 66, Nays 0)House
- EngrossedHouse
- Rafferty 1st Amendment OfferedHouse
- County and Municipal Government Engrossed Substitute OfferedHouse
- Read for the Second Time and placed on the CalendarHouse
Changes
Amendments
2 stored
This amendment stops community land trusts from doing political work and changes the rules about tax breaks for their affordable housing properties.