Duluth tiny house mocked for high sales price is poised to become an affordable rental

DULUTH – The internet-famous tiny house mocked for its big price tag last summer still sits empty, but not for long.

It’s been about a year since the 205-square-foot home at 804 N. Sixth Av. E. went on the market. After a lengthy construction process led by Colorado-based Simply Tiny Development LLC, it listed at $195,000 last June — a price deemed so high for its petite size that city officials received complaints, a still-active parody Facebook account sprung up and a TikTok video was viewed 562,000 times. The price dropped to $182,500 before it was taken off the market in August.

With the company in default, the city of Duluth has worked to transfer ownership to the Duluth Economic Development Authority, its economic development arm. That’s likely to happen in a couple of months, said Chad Ronchetti, director of planning and economic development for the city. Then, the property would go to the city’s Housing and Redevelopment Authority, which would make it available as a low-income rental.

The city gave the limited liability company the small plot of eastern Duluth land as part of a program meant to encourage housing development, with an eye toward projects that make use of infill lots and have innovative construction ideas. The city also lent it $190,000 from the Housing Trust Fund.

Developer Sean Dixon said last year it was his first foray into tiny homes, which are smaller than 400 square feet. He was drawn to Duluth for its financial programs that are intended to help developers complete projects, but his was beset by delays and high construction costs during the pandemic. He said then he expected to sell the home at a loss.

Dixon, who did not return a message for comment on this story, dissolved the company this year. It had fallen out of compliance in Colorado for failure to file required reports, records show. According to St. Louis County property records, the company has been delinquent on tax payments for the tiny home property, which has an estimated market value of $55,200.

Ronchetti said the city’s Rebuild Duluth program, which Dixon used, hasn’t been a “swinging success.” But this particular project taught some lessons, including improving the city’s vetting process, Ronchetti said. It’s also become clear that “one-off” infill development is expensive, and those projects would be more successful if scaled up.

Still, the housing trust fund and similar programs are necessary to stimulate growth, he said, and “buy down some of that risk” that developers face.

The city’s contribution to the revolving trust fund — $4 million — has been depleted and replenished, with money again being lent to projects.

The city’s housing authority manages a portfolio of about 300 low-income homes across Duluth, and this would be its first tiny home. It recently completed 18 cottage homes in West Duluth that range from 620 to 750 square feet.

Since public money was used to build the tiny home, it seems fitting that it will likely end up used for a public purpose, said Jill Keppers, executive director of the city’s housing authority.

“Affordable housing in Duluth has been in crisis for quite some time,” she said, with rent and construction costs continually rising.

Adding to the city’s supply of affordable rental properties ensures that some good comes from the loss, she said.

Keppers said the authority will know more about income eligibility once it takes over ownership.

The furnished home has a sleeping loft and minimalistic space-saving features.