How do municipalities continue to provide their constituents with all the services they want and need, and still keep a lid on taxes? Monroe Township, N.J., and several other cities may have found the answer: housing developments only for residents 55 and older.

Although the federal Fair Housing Act as amended in 1995 prohibits discrimination against families with children, it allows an exception for senior communities. And local officials, finding such communities cash cows, are increasingly rolling out the red carpet for age-restricted or “active-adult” developments. Monroe Township's tax base grew by $269,000 last year; of its 677 new residential certificates of occupancy, one-half were for age-restricted homes.

Healthy, financially secure, active adults 55 and older typically pay their taxes early, use few local services, have disposable income, perform community volunteer work and, most importantly, do not have school-aged children, which can overburden school systems. In addition, upscale active adult communities that municipalities are targeting, often charge residents association fees to pay private contractors, rather than town employees, to plow snow and remove yard waste.

A proliferation of the developments in eastern Massachusetts prompted the Boston-based Citizens' Housing and Planning Association in June 2005 to study how much of the 55-and-over neighborhood market is driven by demand, how much is industry initiated, and whether local land use regulations and fiscal considerations have contributed to the growth. The group found that more than 60 percent of eastern Massachusetts communities have created zoning regulations that allow age-restricted housing in greater densities or in areas of town where they normally would not be allowed. Additionally, by building age-restricted housing with a certain percentage of “affordable” units, cities can meet state-mandated affordable housing obligations without adding more children to school rolls.

A design development district created specifically for age-restricted housing in East Hartford, Conn., opened the door for two such projects, both of which are under construction. Director of Development Charles Karno says the town's primary objective was to provide housing that appeared to be in demand, but acknowledged the fiscal benefits to the town as well. “Because active-adult housing does not have the same service requirements as traditional housing, there should be a net tax benefit to the town,” Karno says.

While revenue-rich active adult communities are most common in the sunbelt states and the northeast, the housing trend is making headway with local officials in other areas of the country. In December, Maple Grove, Minn., approved its first active-adult community and has created a point-based project review system that awards extra credit to developments that provide 55+ housing. The city also allows the neighborhoods to include smaller lot sizes. “That is the crux of what we, as a city, are doing to encourage these types of development,” says Assistant City Planner Peter Vickerman. “It is a combination of rewarding developers who bring in this type of proposal and simply not letting zoning get in the way.”

Despite the immediate financial benefits from building such communities, some officials fear that inviting age-restricted developments may be a short-sighted move because of demographic changes. Officials also say demand for the neighborhoods may wane.
— Annie Gentile is a Vernon, Conn.-based freelance writer.