In this study, optimal carbon-neutral designs are evaluated for grid-connected communities that include net-zero energy (NZE) homes in Boulder, CO. Specifically, the economic and environmental benefits are assessed for residential communities with various mixtures of both NZE and non-NZE homes. Optimization techniques based on life cycle costs including both capital costs and operating costs are used to design NZE homes as well as carbon-neutral communities. Using both energy efficiency measures and rooftop PV systems, the analysis estimates the capital costs required for NZE homes. Moreover, optimally sized distributed renewable systems are determined to achieve carbon-neutral operation for various types of residential communities. First, the impact of occupancy behavior in designing NZE homes as well as carbon-neutral communities is evaluated using three use patterns of appliances (i.e., refrigerator, television, dishwasher, and clothes washer) as well as domestic hot water. Then, different fractions of NZE homes are considered when designing carbon neural communities. The analysis indicates that occupant behavior can significantly affect the design of NZE homes as well as the capital costs to achieve this design. For instance, good behavior can result in 21.28% capital cost savings while bad behavior can result in a 10.42% increase in capital cost. Moreover, the analysis indicates while the communities made up partially or fully of NZE homes can attain carbon-neutral target with lower distributed generated (DG) capacities than non-NZE communities, they require high total capital costs at least based on current costs for distributed renewable technologies and utility electricity prices. Finally, it is found to be more cost-effective to share distributed power systems for communities rather than individual homes with their own rooftop PV system to attain carbon-neutral design.