PEABODY - City councilors praised the concept but last night wouldn't relax building restrictions to pave the way for senior citizen housing off Route 1 that supporters called "innovative" and "the first of its kind" in the state.

Developer Robert DeNisco wants to build a "multigenerational independent-living facility" for seniors and their caregivers behind a 40,000-square-foot sports complex that's under construction. But he needs the City Council to amend a special permit that prohibits residential housing on his 13-acre property.

The proposed development includes 40 three- or four-bedroom, two-bathroom apartments that several senior citizens would share with a caregiver. There would be a common space for socializing, cooking and dining in each unit.

DeNisco's lawyer, Jack Keilty, said the development, named Newbury Village, would provide an affordable alternative to assisted-living and independent-living facilities for seniors.

"It allows (seniors) to age in a place with dignity, with independence," said Carol Suleski, executive director of the Elder Service Plan of the North Shore, one of the elder service agencies DeNisco collaborated with on the proposal.

It's a concept that has recently been implemented in three single-family homes in Peabody neighborhoods. Newbury Village would be the first attempt on a larger scale.

"This is the exact direction we need to go," said Mike Trigilio, president of Associated Home Care in Beverly. He said the demand for senior housing is steadily growing and people are looking for an alternative to nursing homes.

"This is just the beginning of the baby boom," Trigilio said.

Councilors acknowledged the need for senior housing and lauded the concept. But they stopped short of amending the permit, citing concerns over the development's impact on an area of the city vulnerable to flooding and the lack of detailed plans showing what the facility would look like.

"To me, it all comes back to flooding," Councilor Barry Sinewitz said. "During normal rainfall, (that area) looks like an ocean. ... It's not the right place (for the development)."

Councilor Anne Manning said the proposed amendment undermined the purpose of a permit the council approved just last winter. In June 2006, the council also rejected a plan that included condominiums at the Route 1 site.

"I can't help but think of this as an attempt to move around our requirement," Councilor Edward Bettencourt said.

Keilty informed the council that John Grossi had joined Robert and Mark DeNisco and signed on as the manager and controlling partner of the sports complex. With Grossi, who operates Latitude Sports Clubs, the price of the complex, which originally included soccer fields, basketball courts, batting cages, weight rooms and dance studios, has increased from $9 million to $12 million.

"Build the sports complex and then come back and talk about the other parts of the land," Councilor James Liacos said.

The proposed housing development would also provide training to caregivers and members of the community. DeNisco is banking that the educational component would satisfy the qualifications of a state law that would exempt the development from some local zoning.

The city's building inspector determines if the development qualifies. Keilty said the inspector would be more inclined to provide relief if the council waived the restriction on residential building.

The council decided to recess its hearing until April so the developer could resolve flooding-related issues with the state and the city's Conservation Commission and generate more detailed plans.

"It fulfills a desirable local need with minimal impact as far as flooding," said David Gamache, the councilor of the ward where the development would be located and its sole supporter last night. "I hope we see it as a positive for the neighborhood and allow it to move forward."