- The Washington Times - Wednesday, February 4, 2004

When a married couple with two preteen children start hunting for houses in the Washington area, they might assume they can purchase a home anywhere they like as long as they can afford it.

Ask any consumer if those selling new homes or resale homes can discriminate against buyers because of age, and the likely answer is “absolutely not.”

If that family with two children attempted to buy a home in planned community designated for “active adults,” though, they would be turned away — legally.

Most people accept the concept of active adult communities, recognizing that older people often want to live in a neighborhood without young children or teenagers disturbing their peace.

People might also want to live in a neighborhood with other families that share their particular language, customs, race or religion. Excluding people from a neighborhood based on any of those factors, however, would violate federal fair-housing laws. So how do builders and buyers in active adult communities get away with age restrictions?

“Most active adult communities have been built under the federal Housing for Older Persons Act of 1995, known as HOPA,” says Bill Slenker, president of Slenker Land Corp., developer of the Central Parke active adult communities in the Washington and Baltimore areas.

“HOPA was generated by Congress and signed by President Clinton, and, in my opinion, this is a well-conceived and well-acted-out piece of legislation,” he says. “Over the past 20 or 30 years, people have recognized that seniors would like to live with others who are in a similar phase of life. They’re pre-retired or retired, and they want to have friends with similar interests easily available. They have extra leisure time and want to share it with people who also have extra leisure time.”

Before 1995, legislation related to senior housing was far more complicated.

“The Fair Housing Act, written in 1968, prohibited discrimination for a variety of reasons including race, color and religion,” says Sheila C. Salmon, an attorney with Coan & Lyons in Washington, who co-authored an article on the Fair Housing Act and seniors’ housing in fall 1995 for “The Urban Lawyer,” a publication of the American Bar Association.

“The Fair Housing Act was amended in 1974 to prohibit discrimination on the basis of sex, and in 1988, it was amended again to include people with disabilities and familial status,” she says. “The familial-status revisions came about because there was evidence to support the claim that families with children were having trouble finding housing. At the same time, Congress recognized the desire among senior adults to live among their own group.”

“Congress at first passed a very complex legislation, which allowed housing developments exclusively for senior citizens but with all kinds of qualifications,” Mr. Slenker says. “There was basically a laundry list of facilities and services that were required to be provided, which made the whole process very litigious, and [it] scared the development community away from building senior housing.”

The 1995 HOPA act simplified the process.

“The primary purpose of HOPA was to eliminate the requirement that communities must have significant facilities and services in order to receive an exemption from the Fair Housing Act,” Ms. Salmon says. “Lots of communities had felt it was too burdensome to meet this requirement, and this act made it easier to obtain an exemption.”

In order to qualify for an exemption to the familial-status provisions of the Fair Housing Act, communities need to meet certain requirements, according to Ms. Salmon.

“Either every resident must be 62 or older, or at least 80 percent of the units are occupied by at least one person over age 55,” Ms. Salmon says.

“Some communities also prohibit the admission of families with children and set an age requirement to make sure only adults live in the housing units,” she says.

Enforcing the age restriction falls to the communities themselves, which have the incentive of wanting to keep their Fair Housing Act exemption to remain designated as an active adult community.

“Communities need to advertise that they are age-restricted and periodically do a survey to prove they are meeting the age requirement,” Ms. Salmon says. “Theoretically, 20 percent of the remaining housing units could be occupied by anyone, but in order to make sure the community maintains the 80 percent occupancy by older people, they need to be careful not to allow too many younger people to occupy the homes.”

At the Central Parke active adult communities, the homeowners association in each development manages its compliance with HOPA by sending an annual affidavit to each household, and it has the authority to check birth certificates if further proof of age is required.

“We’ve never reached the point of needing to verify the ages of our residents,” Mr. Slenker says. “I think the last legal ingredient by Congress shows just how wise Congress was when writing this legislation.

“The rule that 20 percent of the community can, at any time, not meet the age restriction allows for leeway in certain circumstances,” he says. “For instance, if a couple is living in a home and the husband is 61 and the wife is 50, and the husband passes away, the law is designed so that she doesn’t have to move out. She can stay as long as she likes. It would be rare that situations like this would exceed 20 percent of the community.”

Surviving spouses also can choose to sell their home and may sell it to anyone of any age as long as at least one occupant is 55 or older. It is that occupant who matters, not the owner.

“This way, kids could rent or sell the home at their leisure if they inherited it from their parents, as long as they rent to someone 55 or older,” Mr. Slenker says.

Some active adult communities, including the Central Parke communities, restrict their homes further by not allowing anyone younger than 19 to live full time in the development.

“In most urban and suburban areas where we build, the schools are overcrowded, so by not allowing school-age children to live in a development, we remove the stigma of contributing to overcrowded schools,” Mr. Slenker says. “The National Association of Home Builders and the Senior Housing Council did some studies on transportation issues, which prove that active adult communities create a minimal transportation problem for the roads in the area.

“Most of the residents of these communities are retired and will avoid travel during peak times, so they do not contribute to rush-hour problems,” Mr. Slenker says.

Avoiding adding to the Washington area’s education and transportation woes may mean easier acceptance of active adult communities, but there is no guarantee that an active adult community will be permanently designated for senior housing only.

“There is no guarantee that a community will stay forever as a 55-and-over community,” Mr. Slenker says. “If a community falls below the 80 percent rule, they will no longer be covered by HOPA and will be required to allow anyone of any age to live there.”

Debbie Rosenstein, president of Rosenstein Research Associates, agrees that no guarantee exists for senior housing, but she says she thinks that once a community has been zoned as an active adult community, it will probably remain so.

In addition, she says, the expanding older population will contribute to the longevity of active adult communities.

“The demographics show that the market for age-qualified communities is not expected to hit its stride until 2009,” Miss Rosenstein says. “The average age in active adult communities now is in the upper 60s, so the question is whether, in the future, the 55- to 60-year-olds may view this type of development as only for older people.”

“By 2015, over 100 million people will have reached the age of 55 and older in this country,” Mr. Slenker points out. “The Washington-Baltimore area has a large, affluent aging population, which has created a high demand for active adult communities.”

“A lot of people locally are coming from planned communities with a lot of amenities, and so they expect to find the same level of amenities in age-restricted developments,” Miss Rosenstein says. “You have two classes of active adults right now: The first is the Depression-era generation, and then following along are the baby boomers who are now entering active adult communities. These two groups have different tastes and issues which builders need to cater to.

“To attract the baby boomers, developers are constantly looking for the next step or the latest trend in amenities. The next step will be that these communities will resemble Disneyland for adults,” she says. “This is a shift in focus, because earlier age-restricted communities were less focused on recreational amenities.”

Older adults flooding the market now may be concerned about the potential resale value of their home for themselves or their heirs, particularly when more and more active adult communities are under development.

“Like any other type of community or housing, if there are too many on the market and there is less demand, the value will fall, just like a typical non-age-qualified community,” Miss Rosenstein says.

“Buyers need to look for the same things they would look for in a non-age-qualified community,” she says. “There are not as many Realtors involved in purchases within an active adult community, so if buyers are choosing to buy on their own, they need to do the research on their own. Buyers should be doing a comparative market analysis on these communities, look into what amenities are in place, and look into what services will be available in the area. Working with a Realtor who specialized in senior housing would be a smart move for someone who doesn’t want to do all that research on their own.”

“There’s always a danger in over-building one type of community,” Mr. Slenker says. “Eventually, there will be a ceiling reached of demand for active adult housing, but that won’t happen for a long, long time. At that point, the home values will be higher in communities with amenities versus those without any. Our communities are always built with a clubhouse with a swimming pool, a business center, a fitness center, rooms for cards and arts and crafts, and include a program with a speaker’s bureau and classes in anything you can think of.”

Since Congress provided the exception for older people that allows them to live in age-restricted communities, builders have jumped in to meet the demand, which is expected to continue for at least the next decade.

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