Instead of Restricting Development, One Minnesota City Just Approved Flurry of ‘Experimental’ Housing Types

New Ulm, Minnesota, a town of roughly 14,000 residents, is  saying yes to innovative housing types, approving a project for two dozen ‘shed houses,’ over a dozen tiny homes, and a 148-unit apartment complex. According to reporting by Jp Lawrence in The Minnesota Star Tribune, “It’s a deliberate choice to hear out real estate developers proposing projects that could be seen as ‘out there’ or experimental, said City Manager Chris Dalton.” 

Although small, the city is struggling with a similar housing crisis as the rest of the country. Its vacancy rate is below 1 percent, and high property prices are keeping many local locked out of homeownership. As Lawrence explains, “New Ulm has a record-low supply of housing for sale, and there’s a chokepoint in the real estate ecosystem due to the city’s aging population staying in their family homes with few independent living options to downsize into.” City leaders hope building more diverse housing types such as apartments and tiny homes can held relieve some of that pressure and offer smaller, more affordable options. 

One project, a development of 22 metal-sided homes that would combine storage with living quarters, required zoning it as a Planned Unit Development, a legal instrument that can make things like changing use easier.  Roughly half of new housing projects approved this year were permitted as PUDs, Lawrence adds. 

In another instance, a 148-unit apartment building was approved for a site zoned agricultural, facing some strong opposition from neighbors. The city nevertheless approved it unanimously, with officials saying new housing is needed for the city’s survival.