Fair Housing Act amendments exempt housing restricted to “older persons” from provisions protecting families with children from discrimination. But municipal leaders who believe that promoting over-55 housing will reduce education costs are in for a rude awakening.Housing - New England ; Municipal finance - New England

Peter Francese

English

Research Papers in Economics

Communities & Banking    9
Age-Restricted Housing 
in New England
by Peter Francese
New England 
Economic Partnership
Getty Images 10    Fall 2008
Forty  years  ago  President  Johnson  signed 
the Fair Housing Act prohibiting discrimi-
nation in housing based on a person’s race, 
color, national origin, religion, sex, disabil-
ity,  or  familial  status  (families  with  chil-
dren). Although other federal laws prohibit 
age discrimination in employment, age dis-
crimination was not addressed in the Fair 
Housing Act. 
In  fact,  subsequent  amendments  en-
acted in 1988 and 1995 codified that any 
housing specifically restricted to “older per-
sons” (defined as anyone 55 or older or, in 
some cases, 62 or older) would be exempt 
from the provision that protected families 
with children from discrimination. 
Age-Restricted 
Communities Increase
Age-restricted communities designed specif-
ically for retirees have been part of the hous-
ing landscape in Florida, Arizona, and other 
snowbird states for decades. Those commu-
nities were designed for people who wanted 
certain recreational and therapeutic ameni-
ties in their retirement years and did not 
want to live near the noise and traffic they 
associated with children.  
Those sunbelt states where age-restrict-
ed developments have been popular recog-
nized long ago that they would also have 
to permit the construction of a great many 
units of unrestricted and affordable work-
force housing, if only to house the workers 
who would care for their fast-growing elder-
ly population. The states also saw the wide-
spread availability of affordable housing for 
all ages as the key element to ensure future 
job growth and economic development not 
related to health care.
By contrast, age-restricted housing in 
New England has become one of the legal 
tools (along with large-lot zoning) that can 
be employed to limit, or exclude altogether, 
the number of affordable units attractive to 
young families with children. The main rea-
son why age-restricted housing has become 
so widespread in this region is that it is per-
ceived by municipalities as a way to control 
the rising cost of public education.
The idea put forth has been that by re-
ducing the percentage of housing units with 
children a town can lower the number of 
children  in  public  schools  and  therefore 
lower school-related property taxes. Part of 
the argument is also that the occupants of 
age-restricted housing will pay their prop-
erty taxes but make few if any demands on 
the town. Both of those widely held beliefs 
are based on fallacies.   
Little  if  any  consideration  is  given 
to the need for workers or job growth by 
largely  residential  New  England  towns. 
This is because it is widely perceived that 
most of the benefits of economic develop-
ment accrue to the state or a region while 
most of the costs of public education and 
other municipal services are borne by peo-
ple paying property taxes in each relatively 
small town.
There is a fundamental difference be-
tween sunbelt states and New England in 
the structure of government. Florida, for ex-
ample, has about 18.5 million year-round 
residents  living  in  67  counties.  Compare 
that number with New England’s 14.3 mil-
lion year-round residents, who coinciden-
tally also live in 67 counties. The key differ-
ence is that, according to the 2007 Census 
of Governments, Florida has 95 school dis-
tricts, between one and two per county. In 
contrast, New England has 700 to 1,300 
school districts, depending on how they are 
counted  —10 to 20 per county.
Considering  how  common  it  is  that  a 
small  New  England  town  with  fewer  than 
10,000  residents  supports  an  entire  pre-K 
through 12th-grade school system (plus a high-
way, fire, and police department), it should not 
be a surprise that so many are searching for any 
way to get control of their extraordinarily high 
and rising property taxes. 
Fallacies about 
Municipal Savings
The truth is that using age-restricted hous-
ing  as  a  means  to  reduce  the  number  of 
children and thus lower local property taxes 
cannot succeed. The total cost of running a 
school district or a municipality is not mate-
rially affected by year-to-year fluctuations in 
the number of students or citizens.
Cape  Cod’s  Barnstable  County,  Mas-
sachusetts, for example, has 15 school dis-
tricts, which served about 26,800 students in 
the 2006-2007 school year, 13 percent few-
er than in the 2000-2001 school year. De-
spite the drop of more than 4,000 students 
in that period, spending for public education 
in those districts increased 26 percent from 
2000 to 2006. Although Barnstable County 
may be an extreme example, a similar story of 
declining enrollments combined with rising 
spending can be found across New England.
The point is that trying to bring down 
school spending by reducing the number of 
school-age children simply does not work. 
Factors such as state and federal mandates, 
the rising cost of employee pay and benefits 
(including health insurance), and the rising 
cost of fuel are far more important than the 
number of students in determining the ex-
pense of operating a school district. 
The  second  fallacy  regarding  age-re-
stricted housing holds that the older occu-
pants, many of whom are senior citizens, 
will pay full property taxes but not make 
any demands on the municipality. In fact, 
two  types  of  cost  shifting  are  occurring, 
both of which reallocate costs away from 
the elderly to younger taxpayers. 
The first type of cost shifting occurs 
when legislation is passed to relieve senior 
Using age-restricted 
housing to reduce 
the number of 
school children cannot 
succeed. The total 
cost of running a 
school district is not 
materially affected by 
year-to-year 
fluctuations in the 
number of students.
Mandates, 
the rising cost of
employee pay, and 
the like are more
important than the 
number of students 
in determining the 
expense of operating 
school districts. Communities & Banking    11
citizens of the burden of paying some or all 
of their property taxes. Over 100 towns in 
New Hampshire, for example, now provide 
property tax abatements to home owners 65 
or older on the basis of their income and as-
sets. Those tax abatements collectively shift-
ed more than $20 million in property taxes 
to younger New Hampshire home owners 
in 2007, up from under $12 million in the 
2000 fiscal year. Since 2000, the amount 
of  those  abatements  has  been  increasing 
10 percent per year compounded annually. 
Meanwhile,  approximately  3,500  units  of 
age-restricted housing have been built in the 
state since 2000, according to a late 2006 
survey by the New Hampshire Housing Fi-
nance Authority.1 
The second type of cost shifting occurs 
in the price of health insurance. Any corpo-
rate, not-for-profit, or municipal employer 
in New England can testify to the fast-rising 
cost of health insurance. One of the reasons 
given is that hospitals and other health-care 
providers are paid at below their costs by pa-
tients covered by Medicare or Medicaid. As 
the numbers of such patients rise, health-
care providers shift more of the cost of med-
ical services to patients covered by private 
insurance, who tend to be nonelderly.
Social Costs
The social costs of permitting age-restricted 
housing rather than workforce housing are 
less quantifiable but no less real. Since most 
age-restricted housing in New England is 
permitted  at  higher  densities  than  work-
force housing, it is often less expensive than 
other housing. But when young adults go 
looking for a place to live, they are prohib-
ited from buying or renting affordable age-
restricted homes. 
My  opinion,  formed  after  interviews 
with scores of young adults, is that many are 
leaving the region because other states offer 
a warmer welcome for them and their chil-
dren. For whatever reason, there is a grow-
ing imbalance in age distribution. Accord-
ing to Census Bureau estimates, the number 
of New England residents ages 30 to 39 de-
clined by 13.7 percent to 1.9 million be-
tween 2000 and 2006. If it had declined at 
the same rate as for 30-to-39-year-olds na-
tionwide (5.4 percent, a rate associated with 
fewer births after the postwar baby boom), 
New England would by mid-2006 have had 
approximately 2.1 million residents of 30 to 
39 years old, or nearly 200,000 more.
Another way to measure the unusually 
rapid aging of the region is to look at the 
change in median age. From 1990 to 2006 
New  England’s  median  age  went  up  5.3 
years from 33.6 to 38.9 years old, compared 
with a 3.6-year increase for the nation. The 
Census Bureau reports that in 2007, Maine 
(median age 41.6) and Vermont (40.8) were 
the nation’s two oldest states. Also by that 
measure, all six of the New England states 
are now among the nation’s 10 oldest states. 
The change in age distribution leads to the 
question, How much is related to age-re-
stricted housing, an influx of retirees seek-
ing such housing, and an outflow of young 
families unable to find someplace affordable 
among freed-up properties of local retirees?
Time to Change Direction
Communities that exclude affordable work-
force  housing  but  welcome  age-restrict-
ed housing may want to reconsider, given 
the impact on the region’s ability to retain 
young workers. States in other regions seem 
to understand better the importance of hav-
ing enough young workers to sustain eco-
nomic  growth.  They  attract  our  young 
adults by having a sufficient supply of hous-
ing for them.
Fifty years ago it was legal and even ac-
ceptable to exclude people from purchasing 
a home on the basis of their skin color or 
their religion. We as a society have come to 
believe that such discrimination is not only 
morally  wrong  but  bad  economic  policy. 
Perhaps 50 years from today we will look 
back on the widespread age discrimination 
we practice in housing in New England and 
wonder why it took so long to recognize the 
damage it was doing to our economy and 
our sense of justice.
Peter Francese is the director of demographic 
forecasts for the New England Economic Partner-
ship. He can be reached at peter@francese.com. 
Endnote
See  http://www.nhhfa.org/rl_age.cfm  for  data.   
1 
A report is forthcoming.
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Age-restricted housing in New England

http://www.bostonfed.org/commdev/c&b/2008/fall/Francese_age-restricted_housing.pdf

Age-restricted housing in New England

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