It found that the need for rental houses for older people was projected to increase 81 per cent over the next 12 years, from 2120 houses to 3830.
One in threeolder people rented from social housing providers, the rest from private landlords.
The council owned 246 units in nine villages across Tauranga - four in Mount Maunganui, three in Tauranga and two in Greerton. Combined, the villages were thought to be worth more than $30 million.
The villages provided affordable housing for people aged 65 and over who would otherwise struggle to find a home.
The review found the units were small and poorly designed by modern standards. There also were too few to meet forecast demand.
More than a third of the units were more than 50 years old, and none less than 25.
One village was likely to need redevelopment within five years, with another three within 10 years. The potential cost of upgrading or redeveloping those houses was a major factor in the foundation's recommendation.
The council had no long-term plan or funding set aside for upgrading or replacing units.
The council's general manager of community services, Philip King, said the needs of tenants were the council's 'primary consideration".
"The broader benefit of the review is that tenant wellbeing is enhanced, with tenants no worse off than before and receiving the best possible service to meet their needs, now and in the future."
Tauranga and Western Bay Greypower president Jennifer Custins said she was open to any solution that would benefit older renters but it had to be long term.
She recognised that times were changing and it may no longer be as appropriate for a council to provide housing for older people.
Something needed to be done to improve the housing stock, and, if there was an organisation that could take it out of the council's hands without disadvantaging renters, she was open to hearing about it.
"We just badly need warm, dry homes for people to live in. It can be done well. I know of other regional towns where pensioner housing has been taken over by a trust and done up. They provide lovely homes for people and it's a real asset."
She expected Greypower members would have a range of views on the subject, and that for some the prospect of change would be unwelcome.
Good communication would be needed from the council, and she said the organisation would be keeping an eye on developments.
The review and its recommendations will be presented to the council's Community and Culture Committee meeting next Tuesday.
Resident: I'll be keeping an eye on it
Brookfield Retirement Village resident Dorothy Finlay, 72, said she received a letter from the council yesterday afternoon on the future of pensioner housing.
She had not had a chance to read it in full but said her first thought was that the potential sale might be a concern.
"It certainly is an issue that would worry me, though on the whole, I find them, the council, helpful.
"But I got the feeling that they might be trying to offload their obligation. I'll be disappointed if they take that attitude. I'll definitely be keeping an eye on it."
She liked having her home owned by the council and said the service had generally been "excellent".
"I feel really secure knowing that I will be able to have that help if I need it."
She was open to the idea of an NGO owner, if it was well run, but said she would not be happy if it was just a stepping stone to private ownership.
Ms Finlay said she spent most of her working life overseas volunteering as a nurse and never owned a home or built a nest-egg.
While still active, she had not been able to work for some years, and moved into the village in 2003.
She paid $278 per fortnight from her pension in rent for her one-bedroom unit. While not stylish looking, it was functional and she was quite happy with it.
"I'm used to making do. Most older folk don't care about style. It might not look fancy but it's quite adequate.
"I am very grateful to get this place. I would be completely unable to manage if I had to pay market rates."
