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SB307 INTRODUCED
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SB307
NR1X6T8-1
By Senators Coleman, Coleman-Madison, Smitherman (N & P)
RFD: Jefferson County Legislation
First Read: 12-Feb-26
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NR1X6T8-1 02/05/2026 VSM (L)VSM 2026-414
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First Read: 12-Feb-26
SYNOPSIS:
This bill would authorize a Class 1 municipality
to create nonprofit community land trusts to provide
affordable housing to low-income and moderate-income
families through long-term ground leases between the
community land trusts and qualifying lessees.
This bill would require a community land trust
to be membership-based with open meetings and a board
of directors appointed by the mayor and confirmed by
the city council. This bill would authorize a community
land trust to acquire and lease real property, make
improvements to residential real property, and enter
into 99-year ground leases with qualified low-income
and moderate-income lessees.
This bill would also establish an option for the
community land trust and the municipality to purchase
certain properties or improvements to the real
properties, to allow property tax exemptions for
certain property owned by the trust, and to establish
qualifications for potential lessees.
A BILL
TO BE ENTITLED
AN ACT
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AN ACT
Relating to counties and municipalities; to authorize
Class 1 municipalities to establish and regulate a nonprofit
community land trust for the purpose of creating affordable
housing alternatives; to allow municipalities to appoint a
community land trust board of directors; to allow a community
land trust to acquire and lease real property to low-income
and moderate-income families; and to allow property tax
exemptions for certain trust property.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. This chapter shall be known and may be cited
as the Alabama Community Land Trust Act of 2026.
Section 2. This chapter applies only to Class 1
municipalities.
Section 3. When used in this chapter, the following
words have the following meanings:
(1) AFFORDABLE. For dwelling units available for lease,
the insurance, utilities, and other fees constitute no more
than 30 percent of the annual household income for low-income
or moderate-income families as defined in this section.
(2) BOARD OF DIRECTORS. The governing body of a
community land trust elected and formed in accordance with the
bylaws of such organization.
(3) CLASS 1 MUNICIPALITY. A Class 1 municipality as
defined in Section 11-40-12, Code of Alabama 1975.
(4) COMMUNITY LAND TRUST. An entity that:
a. Provides affordable housing to low-income and
moderate-income families through ground leases; and
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moderate-income families through ground leases; and
b. Is organized by a Class 1 municipality.
(5) FAMILY. A household consisting of one or more
individuals.
(6) GROUND LEASE. A lease between a community land
trust and a tenant of real property owned by a community land
trust that is designed to ensure that the property remains
affordable to low-income and moderate-income families.
(7) LIMITED EQUITY PRICE. A price for the sale of any
improvement located on community land trust-owned land that is
determined by means of a resale-restricted formula.
(8) LOW-INCOME FAMILY. A family household with an
aggregate income at or below 80 percent of the metro
statistical area median income adjusted for family size, as
determined by the Department of Housing and Urban Development
(HUD).
(9) MODERATE-INCOME FAMILY. A family household with an
aggregate income at or below 120 percent of metro statistical
area income adjusted for family size, as determined by HUD.
(10) ORGANIZING MUNICIPALITY. The Class 1 municipality
creating the community land trust pursuant to this chapter.
(11) PREEMPTIVE PURCHASE OPTION. The right of a
community land trust or the organizing municipality to
purchase the improvements constructed on the community land
trust-owned real property pursuant to a ground lease prior to
any other party.
(12) PROCEED-SHARING PROVISIONS. The resale formula
provisions in the ground lease that establishes the maximum
resale price and determines the allocation of sale proceeds
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resale price and determines the allocation of sale proceeds
between the seller and the preservation of affordability for
future buyers.
(13) QUALIFYING LESSEE. An individual or family that
meets the criteria of low-income family or moderate-income
family, as defined in this section, on the effective date of
the lease.
(14) REAL PROPERTY. Both land and improvements,
including a leasehold interest in real property.
(15) RESALE-RESTRICTED FORMULA. A formula designed to
maintain durable affordability of community land trust-owned
real property.
(16) SPECIFIED INTEREST. The leasehold interest in the
real property and associated structural improvements as
distinct from the fee simple interest in the land retained by
the community land trust.
Section 4. The governing body of a Class 1 municipality
within the State of Alabama is hereby authorized to create, by
ordinance, one or more community land trusts to operate within
its jurisdiction.
Section 5. (a) The purpose of a community land trust is
to:
(1) Provide affordable housing for low-income and
moderate-income families;
(2) Keep housing affordable for future residents; and
(3) Capture the value of public investment for
long-term community benefit.
(b) The bylaws of a community land trust shall provide
that:
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that:
(1) The organization is membership-based;
(2) Corporate membership is open to the general public;
(3) Membership meetings are open to the general public,
including nonmembers;
(4) The board of directors shall consist of seven
directors serving four-year terms.
a. Four directors shall be appointed by the governing
body of the organizing municipality and shall have expertise
and experience in careers or activities involving real estate,
property management, finance, real estate law, transit
planning, residential contracting, banking, architecture, or
city planning.
b. Three directors shall be appointed by the mayor of
the organizing municipality. One director shall be a
professional in the finance or banking industry with
experience in affordable and low-income housing, lending,
finance, or tax credits for residential and commercial
properties. One director shall be a registered architect,
landscape architect, or city planner with experience in long
range planning and neighborhood/community master planning. One
director shall be a specialist in housing-related activities
with experience in developing affordable housing for
low-income and moderate-income families or a member of a
nonprofit entity or organization involved in affordable
housing for residents of the organizing municipality .
c. The board of directors shall reflect the diversity
of the community served by the community land trust to the
extent practicable.
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extent practicable.
(5)a. The board of directors shall have the authority
to establish, through resolutions or bylaws, provisions for
director compensation, including salary, per diem, and travel
expenses.
b. The board of directors shall have the authority to
employ staff through resolutions adopted by the board.
Employees of the community land trust shall not be subject to
the Merit System Act.
c. A majority of the directors then in office shall
constitute a quorum for the transaction of business.
d. Directors may participate in meetings by
teleconference or other electronic means, and such
participation shall constitute presence at the meeting.
e. Directors shall be immune from civil liability for
acts or omissions made in good faith within the scope of their
official duties, except for acts or omissions involving
willful misconduct, gross negligence, or fraud.
(c) Upon dissolution, the assets of the community land
trust shall be transferred in accordance with Section 12 of
this act.
Section 6. (a) A community land trust may have any or
all of the powers permitted to a nonprofit corporation under
Chapter 3 of Title 10A, Code of Alabama 1975 .
(b) A community land trust may also:
(1) Acquire real property for residential purposes;
(2) Lease residential property;
(3) Acquire an interest in property for construction of
improvements to residential real property;
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improvements to residential real property;
(4) Make improvements to real property for residential
purposes;
(5) Enter into ground leases with qualified lessees as
defined in this act and any other agreements or real property
transactions supported by criteria established in the ground
lease for the transfer of an interest in residential real
property;
(6) Engage in other activities related to the sale,
leasing, management, maintenance, and preservation of
properties under the control of the community land trust.
(7) Accept funding from the organizing municipality and
any other source authorized under Chapter 3, Title 10A, Code
of Alabama 1975.
Section 7. (a) A community land trust may lease housing
units only to qualifying lessees.
(b) Notwithstanding subsection (a), for multi-unit
dwellings, housing units located on one or more tracts of land
owned by the community land trust that constitute a contiguous
geographic area or are located within the same platted
subdivision :
(1) At least 80 percent of the community land trust's
leased dwelling units shall be leased to low-income families;
and
(2) Up to 20 percent of the community land trust's
leased dwelling units may be leased to moderate-income
families.
(c) A community land trust shall determine qualifying
lessee status at the time of lease. The lease may be
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lessee status at the time of lease. The lease may be
automatically renewed without redetermining the lessee's
qualifying status.
Section 8. (a) Each ground lease shall grant the
community land trust and organizing municipality the right to
purchase all improvements to the real property.
(b)(1) The community land trust shall have 120 days to
exercise its purchase option from the date notice of the event
that triggers the purchase option is received.
(2) If the community land trust fails to exercise its
option within those 120 days or declines the option, the
organizing municipality shall have an additional 120 days to
exercise the purchase option from the date notice is received
that the community land trust has not executed or declined its
purchase option.
(c)(1) The community land trust may assign its purchase
option to a qualifying owner regardless of any other criteria
established in the ground lease for the transfer of an
interest in residential real property. Any sale pursuant to
the assignment must be completed no more than 60 days from the
assignment or the purchase option shall be considered to have
not been excercised if more than 120 days have passed from the
notice.
(2) The organizing municipality may assign its purchase
option to a qualifying owner regardless of any additional
criteria established in the ground lease for the transfer of
an interest in residential real property. Any sale pursuant to
the assignment must be completed within 60 days of the
assignment or the purchase option shall be considered to have
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assignment or the purchase option shall be considered to have
not been exercised if more than 120 days have passed from the
notice.
(d)(1) The failure of a community land trust to
exercise the preemptive purchase option does not prohibit the
community land trust from exercising any other right
established in the ground lease, including the right to share
in the proceeds of the first sale to a purchaser following the
failure of the community land trust to exercise its right to
repurchase.
(2) If the community land trust and organizing
municipality both fail to exercise or decline their purchase
option within the prescribed time period, the homeowner shall
be permitted to sell the improvements to any seller at a fair
market value.
(3) Only the first arm's-length, third-party
transaction of the specified interest in real property after
the community land trust and organizing municipality fails to
exercise or declines their purchase option is subject to the
proceed-sharing provisions of the ground lease.
(4) A second or subsequent purchaser who acquires the
specified interest in the real property in an arm's-length,
third-party transaction for a fair market value receives title
free of any rights established in the ground lease or deed of
conveyance that would otherwise have been enforceable by the
community land trust.
(5) Notwithstanding subdivision (4), if a community
land trust home is subject to a ground lease at the time a
subsequent purchaser who acquires the specified interest in
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subsequent purchaser who acquires the specified interest in
the real property in an arm's-length, third-party transaction
for a fair market value after the community land trust and
organizing municipality have not exercised their preemptive
purchase options, the purchaser shall pay the monthly ground
lease fee in effect at the time of sale for the remaining term
of the lease unless otherwise agreed to by the subsequent
purchaser and the community land trust or their successors in
interest.
(6) The community land trust, or its successor in
interest, shall not have the right to eject the subsequent
purchaser for any reason other than failure to pay the monthly
ground lease fee amount.
Section 9. (a) A ground lease shall have a maximum term
of 99 years and may be renewed under conditions set forth in
the ground lease.
(b) A ground lease shall include, but is not limited
to, the following provisions:
(1) The term and, if applicable, renewability of the
ground lease.
(2) The resale-restricted formula.
(3) A community land trust's preemptive purchase option
right.
(4) An organizing municipality's preemptive purchase
option right.
(5) Any term that, if violated, is grounds for
cancellation of the ground lease.
(6) Occupancy requirements.
(7) Amount of the ground lease fee and the conditions
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(7) Amount of the ground lease fee and the conditions
under which it may be increased.
(8) The party responsible for payment of applicable
property taxes.
(c) A community land trust shall record any ground
lease in its entirety.
Section 10. (a) For real property acquired for
residential purposes, owned by a community land trust, not
subject to a ground lease, the real property shall be exempted
from all property taxes for a period not to exceed three years
if the community land trust intends to transfer or lease the
home in accordance with Section 5, and is either:
(1) Conducting construction on the real property,
including, but not limited to, construction of a new
residential property, rehabilitation of an existing property,
and related tasks; or
(2) Attempting to transfer or lease the home in
accordance with Section 5.
(b) For real property subject to a ground lease that is
designed to preserve affordability for no more than 99 years,
the real property shall be assessed and taxed in accordance
with this section, provided:
(1) At the time the ground lease is made, the buyer is
a qualifying owner; and
(2) The dwelling unit is owner-occupied.
(c)(1) In determining the initial property tax
assessment valuation, community land trust real property shall
be assessed at the sale price.
(2) In subsequent reassessments, the community land
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(2) In subsequent reassessments, the community land
trust real property shall be assessed at the lesser of:
a. The limited equity price as determined by the
resale-restricted formula; or
b. The fair market value using an income method of
valuation.
(d) Leased community land trust residential property
shall be assessed utilizing an income method of valuation. The
assessor must base the assessment of the property upon the
actual income generated by the property and may not take into
consideration in reaching a decision the amount of any federal
or state income tax credits received during development or
sale.
Section 11. (a) A nonprofit organization that loses its
nonprofit status may no longer operate as a community land
trust.
(b) After losing its nonprofit status, the organization
must transfer, within 120 days and without financial
compensation other than incidental associated costs, its
interest in any ground leases, in order of priority, to
either:
(1) The organizing municipality; or
(2) A municipal entity or a nonprofit affordable
housing organization designated by the organizing municipality
that shares the purposes of the community land trust and has
received a determination under 26 U.S.C. §501(c)(3).
(c) If the entity or organization that gives up or
loses its nonprofit status fails to begin the transfer of its
interest in any ground leases or deeds of conveyance within
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interest in any ground leases or deeds of conveyance within
120 days as provided in subsection (b), all interests shall be
transferred to the organizing municipality effective
immediately.
Section 12. The provisions of this act shall control
where inconsistent with the provisions of another law.
Section 13. This act shall become effective on October
1, 2026.
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