New Ulm Launches Experimental Housing Projects to Tackle Crisis

In an innovative approach to address its housing crisis, the city of New Ulm, Minnesota, has initiated several experimental housing projects. This southern Minnesota city, known for its rich German heritage, has seen the City Council approve multiple developments, including nearly two dozen shed houses, over a dozen 400-square-foot tiny homes, and a controversial 148-unit apartment complex. These efforts come as the city grapples with a housing shortage that has left vacancy rates below 1%.

City leaders, including City Manager Chris Dalton, emphasize a willingness to explore unconventional solutions. “It’s not saying ‘no’ to an idea right off the bat, but looking at it, seeing if it’s a fit for our community,” he stated. This proactive stance aims to attract real estate developers and create diverse housing options in a market where rising property prices have become a barrier for many potential buyers.

The housing shortage in New Ulm has been compounded by high construction costs, making it challenging for developers to build homes priced below $250,000, according to a 2022 report by Maxfield Research and Consulting. In addition, many older residents are reluctant to leave their family homes, creating a backlog in available housing.

New Housing Initiatives and Community Response

One of the standout projects includes a community of 22 residential “barndominiums” proposed by local developer Tony Gulden. Located behind a Walmart, these buildings will have the option for living quarters within metal-sided structures typically used for storage. Gulden envisions these homes catering to retirees who wish to simplify their lives, allowing them to park their recreational vehicles in the shed while maintaining a living space.

For the city to approve this project, it was designated as a Planned Unit Development, a zoning classification that allows for more flexibility in design and function. Approximately half of this year’s housing projects in New Ulm have utilized this designation, reflecting a trend towards accommodating developers. At a June meeting, Council President Andrea Boettger admitted her reservations about the shed house project but ultimately supported it, stating, “I don’t love it, but I’m not afraid to try it.”

Despite the city’s experimental approach, not all residents are on board. Some voiced strong opposition to the proposed apartment complex, arguing that rapid changes are being made without sufficient community consultation. Concerns have been raised about the potential impact of increased traffic and noise on property values. One resident expressed frustration, stating, “Changing our 20-year plan in less than a year without proper due diligence is hard to reconcile.”

Future Prospects and Broader Implications

In addition to the barndominiums, New Ulm has also approved a project for 15 tiny homes, each designed to be 20 feet wide, 20 feet deep, and 20 feet tall. These market-rate rentals aim to attract temporary workers such as traveling nurses and engineers. Steve Brown, head of the New Ulm Business Resource Innovation Center, noted that interest will be gauged through the construction of two model homes before proceeding with the remainder of the project.

The city’s willingness to experiment with housing solutions has drawn attention beyond its borders. Bradley Peterson, a lobbyist for the Coalition of Greater Minnesota Cities, remarked, “A project like what New Ulm has is going to be something that I think a lot of cities across the state will be watching.”

New Ulm officials acknowledge that this willingness to try different housing types comes with risks. “You have to be willing to take these risks to see if they work or not,” Dalton said. He noted the pressing need for diverse housing options, stating, “It’s obvious that single-family dwellings are not going to be built at a capacity to keep up with population.”

As New Ulm embarks on these experimental housing projects, the outcome will be closely monitored. The success of these initiatives could define future housing strategies, not only for New Ulm but for other communities facing similar challenges across the region.