Sticker shock as tiny house in Duluth affordable housing program lists for 195k

The Rebuild Duluth housing initiative began with the best of intentions like so many other government programs. The idea unveiled by Duluth Mayor Emily Larson four years ago was to increase the availability of affordable housing stock by offering small, odd-sized lots free for development.

But as the News Tribune explains, city hall has gotten an earful since a tiny house built as part of the project was put up for sale with a big price — $195,000.

When a 205-square-foot house recently hit the market with a $195,000 asking price, it caught many residents’ attention and prompted more than a few choice emails to city officials, questioning how this could possibly be the intended result of a local housing initiative ostensibly meant to ease the community’s housing shortage…

The idea was to identify undeveloped and often tax-forfeited lots throughout the community that could accommodate housing, and then to offer the property at no cost to parties willing to build innovative and sustainable infill dwellings. The program would put more property on the local tax rolls without necessitating expensive utility system extensions.

The public outcry resulting from the sticker shock over the tiny house’s $195,000 price tag has clearly put Larson and other city officials on the defensive.

“I’m not surprised this has got the public’s attention,” Larson said. “This is in my neighborhood. I live about six blocks away, and that is a surprising price point for that many square feet…”

City officials should have seen the controversy coming. The developer estimated the small structure would cost about $191,000 to build back in 2019. But in the city’s world view, factors other than cost also come into play in determining the building’s true value.

In a letter to city councilors Thursday, Noah Schuchman, Duluth’s chief administrative officer, acknowledged: “The city is tracking that there is some concern in the community regarding the home.”

But he went on to explain why the project was selected. “Affordability is one factor in scoring interested applicants. Other scoring criteria for Rebuild Duluth (are): density, timeline/feasibility, landscaping and stormwater retention, and energy efficiency,” Schuchman wrote.

Besides inflation, there’s another reason for the tiny house’s apparently disproportionately high cost — the sustainable materials that went into the project.

But despite all the incredulity, Realtor Krysti Gillman said the builder, Simply Tiny Development, doesn’t stand to make a nickel on the project at the current price.

“I have seen the invoices, and they will be taking a loss at the end of the day,” Gillman said.

She said the compact dwelling is unique to the market and has been met with curiosity. “We’ve had a few showings. But there are no offers on the table yet,” Gillman said.

She explained that the home was built with a keen eye toward efficiency while using sustainable materials. ”It could really appeal to someone looking to reduce their carbon footprint,” she said.

Bottom line. As Kermit the Frog says, “It’s not easy (or affordable) being green.”