Minnesota cities opposed a bill allowing accessory dwelling units -- but many are permitting them

The Ramsey County suburb of Vadnais Heights recently joined dozens of Minnesota cities that permit accessory dwelling units (ADUs), also known as “mother-in-law apartments,” within city limits.

“This is ... just a very small step in the direction of helping to create more housing for people in our current housing crisis,” Mayor Mike Krachmer said after the ordinance passed last month. The move came after city staff and officials hammered out details that would work in their city, such as limiting bedrooms and determining residency and rental requirements.

A group representing Minnesota cities opposed legislation this year that would have required cities across the state to allow ADUs. The bill didn’t pass. But as baby boomers look to downsize and housing shortages plague the state, a growing number of cities are looking toward permitting ADUs on their own as a way to meet housing needs.

While Vadnais Heights is one of the latest, others including St. Cloud and Edina recently passed ADU ordinances, too. New Brighton and Falcon Heights are talking about it.

“I think it’s a positive and a cool trend. We are definitely seeing an uptick in desire to have ADUs,” said Nichol Dehmer, the founder and CEO of YardHomes, a company that builds modular ADUs. Dehmer, who has consulted for cities interested in ordinances, counts nearly 50 Minnesota cities now allowing ADUs, mostly in the Twin Cities metro area.

When Dehmer started her company in 2020, customers’ interest mostly came from pandemic fear of crowded nursing homes or the need for home office space. Now, she said, customers want flexibility.

“They have sold the family home, their kids are adults, and they maybe winter in a southern state, they maybe have a lake home up north. And they’re really just looking for a place to be a couple months out of the year,” she said.

ADUs are often characterized as a way to add “gentle density” to neighborhoods; upping the number of housing units without substantially changing an area’s character. Some cities allow them to be used as short or long-term rentals.

ADUs have taken off in some parts of the country. In California, which has an acute housing shortage and allows the structures statewide, one in five homes built in 2023 was an ADU, according to California Department of Finance data.

There isn’t data tracking ADUs in Minnesota, advocates said. Some cities have long allowed them on a case-by-case basis. The Metropolitan Council started tracking ADU permits — which cities self-report — in the seven-county metro area in 2016.

As more cities have passed ordinances allowing ADUs, the number of permits has increased gradually, from numbers in the 20s a few years ago to the 30s more recently. Some counties allow residents to go through a variance process to build them, too, Dehmer said.

While the lion’s share of accessory units are in Minneapolis, which passed its ADU ordinance in 2014, St. Paul and Twin Cities suburbs are slowly adding to the ranks. Since the Met Council began collecting data, St. Paul has permitted 25, Scandia has permitted 12, and Orono and Stillwater have permitted 11 each. Other cities have a handful.

In both Vadnais Heights and New Brighton, the ADU discussion came out concerns over housing inventory.

“Every community is dealing with the same issues of trying to increase housing supply, especially in the metro area, with lack of available land,” said Nolan Wall, planning and community development director for Vadnais Heights.

New Brighton has allowed ADUs on a very small subset of the city’s properties for years. It got a Met Council grant to study ADUs after residents cited housing inventory as a top concern in a survey. Now, the city is in the midst of a second survey asking residents about specific regulations, Planning Director Ben Gozola said. Once that finishes, the city hopes to craft an ordinance based on feedback.

Local input is important to cities, said Daniel Lightfoot, a lobbyist for the League of Minnesota Cities.

Lightfoot said his organization opposed the original statewide ADU language because it had rigid specifications that didn’t account for the needs of different communities, such as ensuring emergency vehicles access to a backyard.

“We believe that cities who are interested in accessory dwelling units and their communities should be able to pass ordinances to address some of those local concerns at the individual local level,” he said. “But we’re looking forward to continuing to work on that language, and we’ve worked pretty hard with the authors last session to try to address some of those things.”

Lightfoot said he believes the bill will be back in the upcoming session.

Cities that permit ADUs don’t necessarily expect an explosion in numbers. One reason is price. Research from Edina found the units can cost $100,000 on the low end, typically for a unit attached to the primary residence, such as in a basement. On the higher end, ADUs can cost $350,000 or more.

When it comes time to sell, there isn’t much research on what ADUs mean for property values, said Simon Opatz, government affairs director for the St. Paul Area Association of Realtors. While it’s likely not a plus for every homebuyer, “for the most part it, it would increase property values. And I think that’s another incentive for property owners to want to pursue something like an ADU.”

For families like Kari Hauger’s, an ADU can solve a problem other types of housing can’t. Her family is in the process of building a one-bedroom ADU-garage combo through YardHomes. “My husband’s parents are going to live in the ADU in our backyard,” Hauger said.

Her in-laws, now in their 80s, are looking to move back to Minnesota from Des Moines after her father-in-law was diagnosed with Parkinson’s disease. They’re not ready to move into a senior home, and Hauger’s family didn’t want to leave their beloved neighborhood near Lake Nokomis in Minneapolis.

“We looked at all the options. We looked at moving, we looked at buying them a house up here, we looked at buying a multi-family home. And this is what we landed on. This is going to be the best bet for us,” she said.

As a bonus, she said, her kids, ages 8 and 10, will be able to have a closer relationship with their grandparents.

“They’re extremely excited,” Hauger said of her in-laws. “It’s been a long process to get to where we are, so they’ve just been patiently waiting for it to be done.”