Albany Proposes Zoning Changes to Boost Housing Supply

Revisions to inclusionary zoning aim to spur more development while maintaining affordability targets.

Published on Feb. 25, 2026

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The city of Albany is proposing changes to its inclusionary zoning provisions in an effort to increase housing construction, which has stalled in recent years. The amendments would reduce the required percentage of affordable units, update affordability thresholds, create a fee-in-lieu option, and establish stronger administrative oversight and compliance mechanisms.

Why it matters

Albany's inclusionary zoning law, passed in 2017, was designed to ensure new apartment buildings included some low-income homes. However, the city says the rules have effectively created a housing shortage and driven up rents, forcing people out of Albany. The proposed changes aim to strike a better balance between affordability requirements and development realities.

The details

The key changes in the proposed amendment include: reducing the required percentage of affordable units from a maximum of 13% down to 5%, updating the affordability threshold from 60% to 70% of the area median household income, establishing a fee-in-lieu option where developers can contribute $50,000 per required affordable unit to a new Housing Trust Fund, and requiring developers to submit compliance plans with enforcement provisions.

  • The inclusionary zoning law was originally passed in Albany in 2017.
  • The law was amended in 2023, which the former mayor said effectively created a housing shortage.
  • A 2025 audit found that housing development projects have stalled, adding to the housing crisis in Albany.

The players

Albany

The city of Albany, New York, which is proposing changes to its inclusionary zoning provisions.

Kathy Sheehan

The former mayor of Albany who said the 2023 amendments to the inclusionary zoning law effectively created a housing shortage.

Albany Common Council

The city council that will consider the proposed amendments to the inclusionary zoning law.

Albany Community Development Agency (ACDA)

The agency that will be responsible for publishing an annual report on new housing construction and providing an online list of buildings with available units subject to the inclusionary zoning policy.

U.S. Department of Housing and Urban Development (HUD)

The federal agency that determines the area median household income (AMI) for the Albany-Schenectady-Troy Metropolitan Statistical Area, which is used to set the affordability thresholds.

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What’s next

The proposed amendment will be introduced at the next Albany Common Council meeting. Eleven of 15 councilmembers have agreed to sponsor the legislation, according to the mayor's office.

The takeaway

Albany's inclusionary zoning law was intended to ensure new apartment buildings included affordable housing, but the rules have instead contributed to a housing shortage and rising rents. The proposed changes aim to strike a better balance by reducing affordability requirements while also strengthening compliance and funding for affordable housing initiatives through a new Housing Trust Fund.