Overview
Project Overview
Over the last year, the city has been taking steps to implement priority strategies identified in Albany’s Housing Implementation Plan (HIP) to encourage needed housing in Albany and incentivize more affordable housing, and collecting public input on these strategies.
The Albany City Council adopted the HIP in June 2023. The HIP evaluated policies and strategies that the City can employ to address Albany’s current and future housing needs, as identified in the City’s 2020 Housing Needs Analysis (HNA). The HIP outlines priority implementation steps the City can take to encourage the production of needed housing.
The HIP was built on community conversations and support for the Expanding Housing Options project, which updated the City’s development code and comprehensive plan to allow middle housing types where single-dwelling units were previously permitted.
Implementation
Implementation
Housing Construction Excise Tax effective January 1, 2026
The Housing CET is a one-time tax on new construction, charged at the issuance of building permits, to create a stable revenue source to support needed housing. Cities of all sizes in Oregon have enacted CETs to raise revenue and incentivize affordable housing, which is particularly challenging to construct for those with the lowest or restricted incomes.
The Albany City Council passed the Housing Construction Excise Tax (CET) on August 13, 2025, with an effective date of January 1, 2026. The tax will be phased in over 3 years. It is paid through building permits and is charged based on the improvement values of new residential development that adds livable space, as well as occupiable commercial and industrial development. The Council agreed to exempt the first $50,000 in improvement values from the new fee. The Residential CET will start at 0.25% of improvement values over $50,000, increasing to 0.5% in 2027 and 0.75% in 2028. The Commercial CET will start at 033%, increasing to 0.66% in 2027 and 1.0% in 2028.
For more information, please review the Frequently Asked Questions tab, email
Albany Development Code Changes effective March 2025
The council adopted amendments to the Albany Development Code to reduce barriers to the creation of needed housing and added a couple of standards to increase livability. Summary of the changes:
- Remove barriers for small houses – reduced lot sizes and side setbacks for houses less than 1,250 square feet
- Encourage smaller cottages – by allowing more cottages per lot for those under 800 square feet, decrease the common courtyard for developments with 4 or fewer cottages
- Increase ADU size as a percentage of the main house; keep maximum size of 900 square feet
- Reserve higher density zones for higher density development - set minimum density in the RM and RMA zones and remove maximum densities; max height and lot coverage already determine scale
- Require pocket parks/open space in residential subdivisions of 20 or more lots
- Encourage rear-loaded dwellings to improve pedestrian safety and walkability while preserving on-street parking.
Surplus Property Policy adopted in December 2024.
This policy requires the city to prioritize city-owned surplus property suitable for housing, unless another priority need is identified. This strategy could provide a financial incentive for housing development while allowing the city to control the type of development on the property without incurring additional costs.
Housing incentive programs being considered:
Multi-Unit Property Tax Exemption (MUPTE). This strategy allows the City to provide tax abatements for multi-unit developments in Climate-Friendly Areas near transit in exchange for public benefits. This may be strictly residential or be in a mixed-use building. The tax abatement is available for up to 10 years and applies only to new residential construction. This strategy increases a project's feasibility by lowering initial operating costs.
Low-Income Rental Housing. This tax abatement program would provide a 20-year tax abatement for affordable rental housing. To be eligible, a property must offer rent to low-income residents (at or below 60% of the area median income) or be held for the purpose of developing low-income rental housing. Currently, the City offers a tax abatement for low-income rental properties owned by nonprofits, which requires annual renewal.
Participate
Participate
Public Engagement Summary:
In 2024, stakeholders and community members had a range of opportunities to provide input on strategies. These included focus groups, open office hours, and a survey.
- HB4006 Housing Forum: Affordability Presentation (pdf) and Notes (pdf)
- Focus group notes: Housing Policies (pdf) and Development Code Changes (pdf)
- Survey results - all proposals (pdf)
- Other public Input (pdf)
Policy Proposals Input Summaries
Housing CET (one-time fee on new development)
Participants understand both the urgent need for affordable housing and funding to support it. There were concerns that a CET would contribute to rising costs. However, the potential benefit, especially the ability to leverage other funding, generally outweighed those concerns. Participants noted the success of construction excise taxes in nearby jurisdictions in supporting affordable housing with minimal adverse effects on broader development, and expressed a desire to bring those benefits to Albany.
Low Income Rental Housing Property Tax Exemption
The majority supported this tool, but a couple of people voiced concern about whether for-profit affordable housing developments should be eligible for the tax exemption. There were concerns about how much tax revenue the City can afford to lose by providing tax exemptions and complying with affordability requirements, but most people did not express a strong opinion on whether to exclude for-profit affordable housing developers from the program. This has been a vital program to sustain affordable housing in Albany.
Surplus Property for Housing
Public input revealed both enthusiasm and caution for this strategy. Screening properties for housing suitability without requiring the City to use a property for that purpose was a favorable approach to most. A primary concern was that surplus City-owned land may be needed by the city in the future. Any screening of properties for housing suitability should assess the likelihood of the city needing the land in the future. Nonprofit developers expressed that the ability to purchase surplus land can be enormously helpful in producing affordable housing. Some suggested limiting the sale of City-owned surplus land to affordable housing only, not to other needed housing types.
Development Code Changes Input Summary
- Remove barriers to small houses and cottages - support
- Increase flexibility for accessory dwelling units (ADUs) - support
- Reserve higher density zones for higher density development – majority support
- Require open space in residential subdivisions of 20 or more lots – support, don’t require play equipment, allow storm water quality facilities to count
- Encourage rear-loaded development to save streets for parking - support
Contact
Anne Catlin
City of Albany Community Development Department
333 Broadalbin Street SW
Albany, Oregon 97321
Documents
Documents
Housing Implementation Plan Documents
The City of Albany prepared the Housing Implementation Plan (HIP) to identify actions the City can take to help increase housing options that create more housing for more people. The HIP prioritizes current and future housing needs and outlines equitable and actionable policies, strategies, and implementation steps needed to encourage the production of housing that is needed in the Albany community. The HIP summarizes recommendations for adoption of a range of housing strategies or tools to study further—these include regulatory changes, incentives, funding sources, programs, and partnerships.
- Housing Implementation Plan
- Appendix A - Part 1 Background Report
- Appendix A - Part 2 Background Report
- Appendix B - Focus Groups Summary
- Appendix C - Survey Summary
- Appendix D - Housing Strategies Menu
HIP Housing Policies Background Report
This report analyzes and assesses the potential of 3 housing policy strategies recommended in the HIP to incentivize additional housing development in Albany. The Surplus Property for Affordable/Needed Housing and Tax Abatement programs might be used to facilitate the development of affordable housing as well as market-rate housing if it meets public needs (e.g., housing density or mixed-use goals), while the Construction Excise Tax (CET) is designed to be used specifically for affordable housing. Encouraging the development of affordable housing, often undersupplied by the market, is the primary goal of these strategies. A secondary goal may be to incentivize other types of development, such as mixed-use, transit-oriented, or denser housing in some planning areas such as the designated Climate Friendly Areas (CFA) or other town centers.
Albany Market Feasibility Study
The market feasibility study was completed as one component of the City of Albany Housing Implementation Project. The purpose of this study is to assess the feasibility of mixed-use (MU) development forms in the City’s six potential climate-friendly areas (CFAs). CFAs are a requirement of the state Climate Friendly and Equitable Communities rule (CFEC), which requires cities with a population greater than 25,000 residents to designate and plan CFAs to be future areas where greater housing capacity, commercial options, and transit access will allow residents to meet most of their daily needs without the need for a car. The CFAs, therefore, need to allow more flexibility in housing types, density, and mix of uses. These development forms can be more expensive and complex to develop than lower-density construction, so they may not be feasible in all areas immediately. However, the right combination of incentives and positive amenities can help bridge the feasibility gap to achieve these goals. This study summarizes local market conditions for residential and commercial real estate. The study identifies feasibility gaps and proposes strategies and tools to address them.
Background Materials
- 2020 Housing and Residential Lands Needs Analysis
- 2020 Albany Housing Strategies Report – This 2020 document pre-dates the middle housing code updates and this project.
- Accessibility Requirements and Data
- Albany Data and Stats
Other Documents
Project memos, reports, and other work products will be posted here throughout the process.
FAQs
FAQs
Yes, state law outlines specific kinds of uses as exempt. See the list on the next page. A Construction Excise Tax Exemption Application must be completed, signed, and submitted with your building permit application to demonstrate a project is exempt from this tax. Supporting documentation may be required prior to approval. This form is the City’s website under Planning Forms and Checklists.
CET Exemptions
Albany Exemption
Projects with improvement valued at less than $50,000. For projects valued at over $50,000, the first $50,000 of the value of construction improvements to each new or existing structure on the same property within a 12-month period is exempt from the CET.
State Law Exemptions: ORS 320.173:
- Private school improvements.
- Public improvements as defined in ORS 279A.010 (Definitions for Public Contracting Code).
- Long Term affordable housing (available to households that earn no more than 80 percent of the median household income for a period of at least 60 years following the date of construction of the residential housing).
- Public or private hospital improvements.
- Improvements to religious facilities that are primarily used for worship or education associated with worship.
- Agricultural buildings, agricultural grading and equine facilities, as defined in ORS 455.315.
- Facilities that are operated by a not-for-profit corporation and that are:
- Long term care facilities as defined in ORS 442.015,
- Residential care facilities as defined in ORS 443.400, or
- Continuing care retirement communities as defined in ORS 101.020.
- Disaster/Fire Replacement Housing: Residential housing being constructed on a lot or parcel of land to replace residential housing on the lot or parcel of land that was destroyed or damaged by wildfire or another event or circumstance that is the basis for a state of emergency declared under ORS 401.165 (Declaration of state of emergency) or 401.309 (Declaration of state of emergency by city or county) or for the exercise of authority under ORS 476.510 (Short title) to 476.610 (Payment of claims).
- Any improvements to buildings and facilities that are now or hereafter exempt under state law.
The CET amount is calculated based on the value of the improvements after subtracting the first $50,000 in improvement value. The improvement value is the value of all structural improvements associated with the project as calculated by the International Code Council (ICC) construction valuation table regardless of the number of separate building permits involved. The CET is applied to this discounted value. The Albany City Council opted to phase the tax in over 3 years between 2026 and 2028 and set different rates for residential and commercial/industrial development.
Residential CET
In 2026 the rate will be one-fourth of one percent (0.25%) In 2027, this will increase to 0.5%; and in 2028 this will increase to 0.75%.
Example: For an improvement valued at $100,000, the CET is $125.00. ($100,000-$50,000 = $50,000 x 0.25% = $125.00).
Commercial CET
In 2026, the CET rate is one-third of one percent (0.33%). In 2027, the rate will increase to 0.66%, and in 2028 it will be 1.0%.
Example: For $200,000 in improvements, the tax is $495.00. ($200,000-$50,000 = $150,000 x 0.33%)
The Housing CET is a one-time tax on new construction, assessed at the issuance of building permits, to create a stable revenue source to support needed housing. This tool was established in 2016 through Senate Bill 1533 and is codified in Oregon Revised Statutes (ORS) 320.175 to 320.195. Many Oregon cities of all sizes have enacted CETs to raise revenue and incentivize affordable housing, which is particularly challenging to construct for those with the lowest or restricted incomes.
The Albany City Council passed the Housing Construction Excise Tax (CET) on August 13, 2025, with an effective date of January 1, 2026, and will phase the tax in over 3 years.
The tax is due and paid prior to the issuance of any applicable building permit. There are financial penalties for under payment due to change of qualifying exempt status or understatement of improvement value.
This CET only applies to building permits which will construct improvements that result in livable residential and occupiable commercial space, or industrial improvements within the Albany city limits. The City Council authorized an exemption to the first $50,000 value of improvements valued over $50,000, unless exempt. Exemptions and how value is established are listed below.
City does not have funding to support Albany’s most needed housing types, especially housing for households earning less than 80% of the area median income (AMI). Albany currently has a little over 500 long-term affordable units but needs about 3,000 dwellings affordable for residents earning less than the median income. Almost 1,000 Albany households are waiting for housing assistance and half of Albany renters pay far more than 30% of their income on housing costs.
The Housing Affordability Task Force evaluated different ways to raise a small amount of revenue to incentive needed housing, especially affordable housing, and this strategy was favored over others. The Community Development Commission and City Council will be identifying priority housing related needs and will develop programs to address those needs. At a minimum, 15 percent of the CET on residential construction will be used to support homeownership for low-moderate households.
The HIP will guide a work program that will be implemented over many years. The HIP will identify priority actions and potential funding sources (where needed), necessary partnerships to carry out strategies, and an expected timeline for when actions will be complete.
No, the City is voluntarily electing to create a Housing Implementation Plan to help meet the community’s housing needs. However, in the future, the City will be required to adopt a “Housing Production Strategy” in conjunction with a future update to its Housing Needs Analysis. House Bill 2003, adopted in 2019, requires Oregon cities with populations over 10,000 to develop Housing Production Strategies (HPS), which include a list of specific actions that the city will undertake to address housing needs identified in their HNA. The City of Albany will not be required to adopt an HPS until the year 2028. However, the City intends to incorporate ideas and resources provided by the state of Oregon for HPS’s into its voluntary Housing Implementation Plan.
The 2020 HNA found that there is significant need for new medium- and high-density housing to meet the City’s 20-year housing needs. This includes multi-family housing and “missing middle housing” such as duplexes, triplexes, quadplexes, and townhomes. The analysis also found both existing and future needs for housing affordable to low-income households (defined as households earning 80% or less of area median income). In particular, the HNA identified a shortage of rental units at the lowest pricing levels that would be affordable to the lowest-income households. Residents, realtors, the housing authority, and developers have also indicated a need for one-bedroom dwellings, accessible housing of all shapes and sizes, smaller one-story housing for residents wishing to downsize or buy their first home, and narrow lot housing. These gaps will be a focus of the City’s Housing Implementation Plan.
Albany’s Housing Implementation Plan (HIP) will identify a set of policies and tools that the City can implement to facilitate housing development that meets the needs of the community. The HIP will prioritize strategies that promote fair and equitable housing choices for all residents, especially residents especially residents of protected classes and those experiencing housing insecurity.
“Affordable housing” means a housing unit for which a person or household earning 80 percent or less of area median income would not pay more than 30 percent of their gross income for housing payments.
The HIP may include strategies in the following categories:
- Zoning and development code changes
- Reducing regulatory or process barriers to housing
- Financial incentives (such as tax abatements or system development charge reductions)
- Funding sources (such as a Construction Excise Tax)
- Land, acquisition, lease, and partnerships with housing providers and other community organizations
An exhaustive list of potential tools, actions, and policies that cities can implement to promote housing development was assembled by DLCD and can be found here.
The HIP was adopted in June 2023.
