ittle Norway has a big problem with a tiny answer. The Petersburg Borough is facing mounting pressure to address a lack of affordable and available housing, a challenge that threatens local growth and stability.

Petersburg is known for its natural beauty, rich Norwegian heritage, and strong commercial fishing roots. The quintessential island community is a residential draw for people seeking small-town life amid stunning Southeast scenery. But the limited availability of homes has capped the population at about 3,000.

In 2023, the Petersburg Borough took a bold step by introducing the Permit-Ready Accessory Dwelling Unit (PRADU) program. This initiative provides pre-approved designs for tiny homes, offering a streamlined path for residents to create additional housing—and generate income—on their properties. The innovative program has the potential to positively alleviate the small town’s housing crunch, one tiny home at a time.

Petersburg’s housing shortage is not new. For decades, the market has been tight, with limited rental and purchase options. According to the Petersburg Borough Housing Needs Assessment, prepared by Agnew::Beck Consulting in 2023, the borough needs 316 housing units over the next decade—133 new constructions and 183 rehabilitations—to meet demand across all income levels.

The study revealed several critical challenges facing Petersburg’s housing market. With a vacancy rate of just 1.2 percent, finding available housing is almost impossible, creating significant hurdles for residents looking to relocate and for employers attempting to recruit workers. Compounding the issue is the borough’s aging population and housing stock, which is dominated by single-family homes, making up 72 percent of all housing. This leaves limited options for younger families and transient workers.

Affordability is another major concern, as more than 40 percent of renters and 15 percent of homeowners are cost-burdened, spending more than 30 percent of their income on housing. Adding to the crisis are barriers to development, including high construction costs, a shortage of skilled labor, and a lack of developable land. Together, these factors paint a challenging picture for the borough’s housing landscape.

“Just like most of Alaska, Petersburg is experiencing a shortage of available housing,” says Liz Cabrera, Community and Economic Development Director for the Petersburg Borough. “We don’t really have anyone building spec homes; instead, it’s almost always one house at a time for a specific family. It takes quite a while to build up any surplus housing stock.”

The limiting factor isn’t land, says Hildie Cain, one of the architects who worked on the tiny home designs.

“There’s plenty of land available,” Cain says. “It’s buildable land. But it’s expensive to build here. Getting materials in and out of here is expensive. It’s getting better, and you can certainly do it. But there’s no attraction for a developer to come in and build ten houses.”

Cain says much of the new construction is recreational properties that are only occasionally used, or new homes for retirees.

“For retirees, it’s their second homes, third homes—and they’re nice homes,” Cain says. “They’re beautiful, they’re huge. The last one I looked at had its own wine cellar. But what they’re for is for people to spend two to three weeks here. The people who really need the housing, like transient hospital workers, families moving here—there’s nothing to buy.”

Cain has seen firsthand how tough it is for newcomers to find housing. Some people end up staying in hotels for long spells. Cain says, “We have a Petersburg buy/sell/trade site online, and every once in a while we’ll see someone saying, ‘Hey we’re moving there, what’s available to rent?’ And there’s this long silence. Our realtors are really good at finding people housing, but you have to know to go ask them.”

The PRADU program emerged from the borough’s Housing Task Force and the findings of the Housing Needs Assessment. Cabrera played a pivotal role in researching potential solutions, drawing inspiration from similar programs in the Lower 48.

“Our department is small and certainly couldn’t take on the job of developing new housing,” Cabrera says. “I began to research communities down south that have been facing housing issues for years to see what types of programs they used. Eventually, I came across this idea of permit-ready plans and thought it might be a good fit for us.”

The program offers four pre-approved tiny home designs ranging from 360 square feet to 650 square feet. Named Hemlock, Cedar, Spruce, and Alder, these designs cater to various needs, including accessibility features for elderly residents and layouts suited for transitional housing or rental units.

Homeowners can download the designs for free and save time and money on the permitting process. The only requirement is a building permit and compliance with zoning codes. The building of the accessory dwelling unit on their property is otherwise free. It can be a stand-alone unit or adjacent to their existing house.

Cain, who designed two of the home prototypes, emphasizes the importance of creating homes that fit Petersburg’s aesthetic and practical needs. She worked alongside Petersburg architect Linda Millard to produce the four distinct tiny home designs. Each have unique features, are different sizes, and have optional decorative elements.

“We wanted to avoid all the houses looking the same,” Cain says. “In our minds, we might build hundreds of these, and we didn’t want everyone’s backyard to look the same. The idea was to make it affordable, make it look nice, make it fit in with the community, and make it as attractive and easy as possible for people to say, ‘I can do that.’”

The designs incorporate features such as deep eaves and covered outdoor areas to withstand Petersburg’s rainy climate. Two of the models are designed with ramps and turning radiuses, making them ideal for aging-in-place or multigenerational living.

“It’s not just about solving a housing problem,” Cain adds. “It’s about creating homes that serve the community and enhance the quality of life for residents.”

Having the same four designs on the shelf could also cut costs when it comes to building.

“The contractors around here are just so busy,” Cain says. “The hope is these plans will become so familiar to those guys that they’ll have a cost estimate and be able to do it without a whole lot of back and forth. Even building suppliers will know the plans and know the package, and that will bring down some of the cost and anxiety that way.”

Real estate broker Sarah Pawuk Holmgrain, owner of Petersburg Properties, grew up in Petersburg and returned there as an adult.

“When we moved back there was hardly anything to buy or rent,” she says. “It’s been a tight market for decades. It was tight in 1980 when my parents moved here.”

Petersburg’s comfortably small population has hardly changed in all that time.

“The school system is excellent,” she says. “I’m on the school board, and when teachers from out of state or other communities move here, they say, ‘Oh this is a private education in a public school system.’”

Petersburg’s low unemployment and crime rates are attractive. “People are able to find jobs,” Holmgrain says. “The biggest concern walking down the street at night might be a bear, not crime. It’s safe. You can leave your doors unlocked. There’s that element of rural living that still exists here.”

Little Norway’s big “but,” though, is the difficulty of finding land to build on that’s connected to utilities. Holmgrain says her father built the family a house as she was growing up, due to lack of other options.

Holmgrain adds, “When I look up licensed contractors with a residential endorsement in Petersburg, there are seven. And of those seven, only a few build new homes instead of just remodels or additions, and one of them wants to retire. We have a lot of do-it-yourselfers in town. I can’t build a 1,200-square-foot house, but I could build a tiny home with me and a friend or spouse.”

When she and her husband moved back to Petersburg, “there was hardly anything to buy or rent,” she says. “Even the rental market has been very tight for over twenty years. If you have a decent house in the $300,000s or low $400,000s, it’s gone within a week. Maybe less.”

Holmgrain sees the PRADU program as a practical solution.

“The tiny home idea is a great option for singles or couples,” she says. “You could have a child in the larger ones, or it could be a downsizing mechanism for those who don’t want to live in a 2,000-square-foot home anymore but want to stay in Petersburg.”

Funded through the American Rescue Plan Act of 2021 , the PRADU program is one of the first initiatives of its kind in Alaska. While it’s too early to measure its long-term impact, the program has already generated interest among residents.

Cabrera is optimistic. “These homes offer a cost-effective and sustainable way to boost housing availability,” she says. “We’ll just have to see how it goes, but I think we’re off to a good start.”

For residents like Cain, the program represents hope for a brighter future.

“Petersburg is a special place,” Cain says. “The PRADU program shows what’s possible when a community comes together to solve its challenges.”

Cabrera says overall feedback about the tiny home program has been very positive, especially about the designs produced by Cain and Millard. “Many people have mentioned how great they look and would like to get one or two,” she says. “A couple of residents have pulled building permits to construct, but they haven’t broken ground yet.”

Cabrera has noticed an unexpected opportunity for more conversations with residents about housing options and what they could do with their property.

Cabrera says, “I recently talked with someone who probably doesn’t have enough space for a tiny home, but then we started talking about what they could do, and now they are considering converting their existing garage into a small dwelling.”

As Petersburg navigates its housing crisis, the PRADU program serves as a model of innovation and collaboration. By leveraging existing infrastructure and providing accessible solutions, the borough is taking meaningful steps to ensure its residents have a place to call home.

While challenges remain, the program’s success will depend on continued community support, strategic planning, and adaptability.

“At the end of the day, people in Petersburg really care about the future of the community,” Cabrera says. “This program is just one example of how we can work together to make it better for everyone.”

With its focus on small homes and big solutions, Petersburg is proving that even the most remote communities can tackle housing challenges head-on and pave the way for a more sustainable future.

“Housing is a complex issue with no single solution,” Cabrera says. “My hope is this program is one piece of the puzzle that moves us toward better, more attainable housing for our community. Along with other efforts in our community, we will begin make some gains toward expanding the rental market, creating options for young people who would like to live here, elders who want to live closer to family, and homeowners who need another source of income.”