I haven't heard of any formal plans for Arbor Hill, which, of course, doesn't mean there aren't any. Right now the focus is on Park South, an area that directly abuts Albany Medical Center and the Cultural Ed Center at the Empire State Plaza. They have already razed some buldings for Albany Med, offices, and mixed use office-residential buildings. And they are putting in essential services like Panera Bread
.
Plans are also being enacted in the Morton Ave area, where more garden-type apartments, a community service "campus" and a better set-up of buildings security-wise are in store.
Maybe this means the closer you are to the Capitol, the more attention you get? It is also true that Arbor Hill is more stable and has more services than these other neighborhoods. Arbor Hill has a core of active long-term residents, a neighborhood public school, a community center with a pool, the new library branch, a park/ball field, etc. All this means a bit of a sense of community that some other neighborhoods lack is already established in that neighborhood.
NYC has the situation where people with 6 figure salaries can't afford decent housing. This does more to redevelop the bad neighborhoods than any urban development plan ever could. Which isn't to say I want the unaffordable housing situation replicated in Albany!