Blaine, MN Moves to Ban Backyard Tiny Homes, Sparking Lawsuit Over Homeless Housing

What started as a straightforward permit application for a 600-square-foot backyard dwelling has turned into a federal lawsuit, a citywide building ban, and one of the more pointed tests of how suburban zoning handles the collision between ADU-friendly ordinances and affordable housing intentions.

Alex and Lynda Pepin wanted to build a detached backyard tiny home on their Blaine, Minnesota property and rent it to a family coming out of homelessness. The city said no. Now the Pepins are suing, backed by the Institute for Justice, a national nonprofit public interest law firm based in the D.C. area. "Alex and Lynda want to help those in need. The way they propose to do that is perfectly safe and legal," said Matt Liles, an attorney with the Institute for Justice, whose team has called the city's denial unlawful.

Blaine's history with ADUs is short and complicated. The city approved an ADU ordinance in 2021, motivated in part by pandemic-era thinking about expanding housing options. But officials later imposed a yearlong moratorium on the units to reconsider the policy. The City Council then moved to consider prohibiting detached, backyard ADUs outright while still allowing attached units, such as basement apartments or above-garage spaces.

Council Member Terra Fleming captured the city's evolving position plainly: "The ADU ordinance was first introduced with such great intentions, because of COVID and the desire to get some additional housing options. But until somebody does it, you don't realize where the problems lie, and that's when you tighten it up."

Alex Pepin's proposal, described by the Star Tribune as potentially the city's first backyard tiny home, was what made those problems visible. Several council members concluded his plan didn't meet the intent of the ordinance. Neighbors voiced opposition at city meetings, and a "No ADU" sign appeared on the property next to the Pepins'. Those who expressed concerns to CBS Minnesota cited worries about home resale values and safety, specifically that they wouldn't know who would be living in the structure. Most declined to speak on camera.

Pepin pushed back on the characterization of risk. "The plan is to build the ADU and then help families that are coming out of homelessness, so it's not bringing people off the street or anything like that," he said. "It's they've gone through a program typically and they've been vetted through that."

The city has not backed down. A spokesperson said officials stand by the council's denial and that the decision followed Minnesota law and Blaine city code.

One analysis quoted in the Star Tribune, attributed to someone identified only as Larson, framed the underlying policy question without taking sides: "The two create distinct occupancy patterns, traffic impacts, utility demands, and density effects. Whether those differences are significant enough to justify a prohibition is legitimately a municipal judgment call."

That judgment call now lands in court. The Pepins announced the lawsuit on July 8, 2025. The outcome will carry weight well beyond Blaine's city limits, as suburbs across the Twin Cities metro continue wrestling with how much flexibility their ADU policies actually extend when a homeowner tries to use one for affordable housing.