With costs rising for everything from insurance to elevator repair, Catholic Charities informed residents of St. Christopher Place last year that they’d have to pack up and leave. The last tenant in the 71-unit rooming house moved out at the end of January, ending an era for the dorm-like structure at 268 Marshall Ave. in St. Paul, which the nonprofit has owned and operated as single-room occupancy housing for the impoverished since the mid-1990s. The four-story building, constructed in 1965, remains on the market.

Prior to closure, Catholic Charities subsidized the affordable housing program at St. Christopher Place by about $500,000 annually, a cost the nonprofit found unsustainable.

“As buildings age, it becomes harder to maintain them,” said Elizabeth Lyden, vice president of engagement with Catholic Charities, which maintains more than 900 units across the Twin Cities, most of them targeted to especially vulnerable populations like the recently homeless. She called financial challenges widespread across the affordable housing industry. “The math doesn’t math anymore.”

St. Christopher Place isn’t the only affordable rental housing likely to be sold off to new owners who may have less interest in providing homes for the poor. A new report commissioned by a coalition of 36 housing providers finds that since 2020, rising inflationary costs, skyrocketing insurance, staff shortages and the demands of housing a community hard hit by the fentanyl crisis, among other post-pandemic challenges, have left housing for very low-income residents in tough fiscal and maintenance shape.

That raises the likelihood that more of it will be sold at a time when affordable housing is in growing demand. The challenges of maintaining affordable units in the regulated, charitable market are especially prevalent for older buildings, which tend to need more tender loving care, putting them at particular risk of shuttering.

The 42-page “Distressed Property Data Project,” authored by O’Neil Consulting, studied the financial records behind more than 26,000 housing units situated in more than 450 housing developments across the state, with data culled from 2018 to 2023. The authors noted that while the study focused mostly on residential units run by nonprofits, many for-profit housing providers that serve low- to moderate-income residents are feeling the same stresses. The report included data from at least 88 regulated properties owned by for-profit entities, spanning more than 4,100 units.

Cash flow falls below break-even point

Among 11,400 housing units that provided data, the average cash flow fell to $1,226 per unit below a break-even point in 2023. At properties where all units were eligible for permanent supportive services like counseling, cash flow fell to $1,600 below a break-even point.

“That’s happening to small providers and large ones,” said Kizzy Downie, chief executive officer of Model Cities of St. Paul, which maintains about 75 units of affordable housing in and around the Summit-University and Frogtown neighborhoods. “The story is across the board. We’re all seeing the impacts of what’s happening across the industry.”

The report — which urges financial action by the state Legislature — was commissioned by the Family Housing Fund and the Greater Minnesota Housing Fund. Consultants analyzed various types of affordable housing by category.

All property types showed operating and maintenance cost increases that far surpassed the rate of inflation between 2018 and 2023. The increases by property types ranged from $1,100 to $1,760 per unit, numbers that would have only grown by $500 to $680 per unit had they kept pace with inflation alone. In other words, rising operating costs grew far faster than inflation even at a time of rapid inflation.

For low-income housing tax credit properties that did not offer counseling and other permanent supportive housing services, the report found that annual expenses grew by more than $2,000 per unit, or 33%, during the five-year study period.

“This is clear evidence of substantial operating cost distress, and consistent with interview comments about rapid wage increases for staff of all types, costlier insurance, and higher costs for all types of supplies and services,” reads the report.

Insurance was a major driver of expenses. Across the portfolio of Catholic Charities properties alone, property insurance premiums increased by 30% from 2023 to 2024. And multiple Catholic Charities properties saw water damage deductibles alone climb to $100,000 or even $250,000, meaning flooding from a damaged sprinkler or broken water pipe would likely force the nonprofit to pay cash for repairs, according to a spokesperson for the nonprofit.

Vacancies grow even as cost of housing climbs

At the same time as expenses have climbed, vacancies have grown.

Across the spectrum of affordable housing, all types of properties suffered rent loss beginning in 2021 due to growing vacancies caused when a federal eviction moratorium ran out, staffing shortages and insufficient operating funds made it harder to get units ready for occupancy, and coordinated entry lists maintained by county social service departments suffered delays in placing tenants.

Properties offering permanent supportive housing services have been hit the hardest by vacancy trends, especially in the Twin Cities metro. They tended to experience the highest losses in rent collection as vacancy tripled from 2018 to 2023, equating to about a 15% loss in total project revenue.

As a national labor shortage bites into staffing, “it slows down, in some cases, the process of even getting people moved in,” Downie said. “If there’s a unit that’s vacant, and the costs to get someone to fix that unit up is higher because it’s more expensive to hire somebody, that’s a unit that isn’t being filled as quickly.”

While housing providers in the Twin Cities have been hit hardest by vacancies from a revenue standpoint, the highest number of vacancies in 2023 landed in rural areas in Greater Minnesota. Rural development projects also showed the most distress in terms of bad debt, a problem felt statewide.

The study also looked at the sharp rise in security costs, which began in 2021, a year earlier than many of the other factors cited, and likely related to the pandemic and unrest following the murder of George Floyd in Minneapolis. Utility costs have, in general, risen more moderately than other factors, according to the report, and vary depending upon the property type.

Rising interest rates after 2021 also put pressure on properties needing loans, such as Federal Housing Administration affordable housing mortgages.

Even nonprofit providers like Catholic Charities, which have opened newer housing developments in recent years like the Dorothy Day Residences in downtown St. Paul, “it’s a lot cheaper to preserve units than to bring new units online,” said Keith Kozerski, chief program officer for the nonprofit. “This isn’t a Minneapolis problem or a St. Paul problem. This is a statewide problem that is impacting people all over.”

Housing has been a priority recently at the Legislature.

In 2023, lawmakers and Gov. Tim Walz approved more than $1 billion in funding for a wide array of housing initiatives, on top of a new metro-wide sales tax that goes into effect on Oct. 1. The housing omnibus bill represented the largest single spending on housing in state history. It came in addition to housing efforts backed by the state infrastructure, bonding and tax bills.

Related Articles

St. Paul: One former homeless woman’s story at Dorothy Day Residence

Newspaper delivery delayed by up to four hours on Wednesday

Ramsey County probation officers, county reach tentative agreement

Eagan is aglow again as Sperry Tower returns

St. Paul Public Schools hold e-learning day on Wednesday as winter storm continues

A few years ago, you might have found Debra Gatto living in a tent in the woods near Blaine, or perhaps in the green near the Cathedral of St. Paul. She passed the time sketch-drawing bridges, with the general goal of documenting every major bridge in the capital city. Her five years of unsheltered homelessness offered her a unique vantage point, but not always a safe one.

After a month in a battered women’s shelter in Plymouth, an attorney working on her case directed her toward Catholic Charities’ Dorothy Day Residence in downtown St. Paul.

Debra Gatto. (John Autey / Pioneer Press)

Gatto, who had once managed three Dollar Tree stores at a time and before that test-fired a Patriot missile during her five years in the U.S. Army, was able to secure a small efficiency apartment of her own in late 2019 a few floors above the large Dorothy Day cafeteria that serves the city’s neediest residents. A housing voucher from the U.S. Department of Housing and Urban Development-Veterans Affairs Supportive Housing covers all but about $80 of her nominal monthly rent.

Getting back on your feet while homeless, “it’s almost too scary to try to figure out on your own,” Gatto said. “With the VA saying ‘you don’t have to pay rent,’ that was hard for me to wrap my head around. … It’s downtown St. Paul, and I’m a suburban girl. I was scared. One person told me, ‘That’s where people go to die.’ I’m like, what?”

Found her footing

Gatto, who has enrolled in online data analytics courses, said she’s found her footing at the Dorothy Day Residence, in part by knowing who to talk to and who to avoid.

She now has her own small kitchen, from which she’s prepared a Thanksgiving meal for all the residents on her floor. That alone has been a small blessing, compared to the meals she once ate on the fly while living in tents or on friends’ sofas.

“Homelessness is the most expensive thing anybody could go through,” Gatto said. “We all get food stamps, but none of us have refrigerators. You have to buy gas station food you can eat right away. You can’t put stuff away.”

Her first day in her apartment, she washed every piece of clothing she owned and soaked in the bathtub for four hours. “It’s my zen thing,” she mused, recalling how passersby once avoided her because of her disheveled appearance. “I couldn’t catch a ride across the street from someone if my hair was on fire.”

Homelessness is “more embarrassing for females,” Gatto added. “Nobody wants to sit behind a tree and pee. Guys, they don’t care.”

Art therapy

At the Dorothy Day Residence, Gatto took art therapy classes when they were offered, and led some sessions of her own.

“I’ve learned a lot about myself,” she said. “You have people who are here to help you, or not, because all the services are voluntary. I don’t have to go to my case manager. You have to initiate that stuff.”

“A lot of drama comes with this environment,” she added, noting she’s seen people who own nothing take from others who own nothing. “I don’t understand that, when homeless people steal from each other. It works for you if you want it to.”

She’s hoping someday to relaunch a career and move to a small apartment in Lowertown, like a loft, somewhere near the Mississippi River, with her Mastiff dog Minnie.

‘Until you experience it’

Now her thoughts go toward her four adult children, each of whom have had their own successes and setbacks. Two of them strike her as stable. One son has been in and out of prison — the COVID pandemic upended his progress — but has promised to avoid further trouble. A daughter seems almost unreachable, dead-set on living life on her own terms.

“She’s out there, and she’s just not getting it,” Gatto said. “We’re batting about 75%. I fear for her all the time because I know what it’s like out there, and I worry. She knows she doesn’t have to listen to me because she’s an adult.”

“Everybody in the world knows about homelessness,” Gatto said. “But nobody really knows it until you experience it.”

Related Articles

Newspaper delivery delayed by up to four hours on Wednesday

Jean-Efflam Bavouzet, Garrick Ohlsson and Pablo Ferrández are guests for the 2025-26 Schubert Club International Artist Series

Robbinsdale man who said he stabbed St. Paul light-rail rider in self-defense sentenced to probation

Contest for St. Paul City Council’s Ward 4 seat draws Cole Hanson, Molly Coleman, Cristen Incitti

St. Paul man admits to throwing fatal punch outside East Side bar

By DANICA KIRKA and STEFANIE DAZIO, Associated Press

NUUK, Greenland (AP) — Greenland’s prime minister declared Wednesday that “Greenland is ours” and cannot be taken or bought in defiance of a message from U.S. President Donald Trump, who said his administration supported the Arctic island’s right of self-determination — but added that the United States will acquire the territory “one way or another.”

Greenlandic Prime Minister Múte Bourup Egede said the island’s citizens are neither American nor Danish because they are Greenlandic. The United States needs to understand that, he wrote in a post in Greenlandic and Danish on Facebook Wednesday.

The future of Greenland will be decided by its people, he wrote.

His post came hours after Trump made a direct appeal to Greenlanders in a speech to Congress on Tuesday, a week before islanders head to the polls for parliamentary elections.

“We strongly support your right to determine your own future, and if you choose, we welcome you into the United States of America,” Trump said.

“We will keep you safe. We will make you rich. And together we will take Greenland to heights like you have never thought possible before,” he added.

But Trump also said his administration was “working with everybody involved to try to get it,” referring to his wishes to acquire Greenland from Denmark, a longtime U.S. ally.

“We need it really for international world security. And I think we’re going to get it. One way or the other, we’re going to get it,” Trump said.

Many in Greenland, a vast and mineral-rich island that is a semiautonomous territory of Denmark, are worried and offended by Trump’s threats to seize control of homeland.

The northern lights appear over homes in Nuuk, Greenland, Monday, Feb. 17, 2025. (AP Photo/Emilio Morenatti)

Asked about Trump’s comments, Denmark’s foreign minister said Wednesday he did not think Greenlanders wanted to separate from Denmark in order to instead become “an integrated part of America.”

Lars Løkke Rasmussen sought to strike an optimistic tone, saying he believed that Trump’s reference to respecting Greenlanders’ right to self-determination was “the most important part of that speech.”

“I’m very optimistic about what will be a Greenlandic decision about this. They want to loosen their ties to Denmark, we’re working on that, to have a more equal relationship,” the minister said during a trip to Finland.

Løkke added that it was important that next week’s parliamentary elections are free and fair “without any kind of international intervention.”

Greenlanders will head to the polls Tuesday. Trump’s recent comments about taking over the island have ignited unprecedented interest in full independence from Denmark, which has become a key issue during campaign season.

Dazio reported from Berlin.

By PAUL WISEMAN, Associated Press Economics Writer

A Minnesota farmer worries about the price of fertilizer. A San Diego entrepreneur deals with an unexpected cost increase of remodeling a restaurant. A Midwestern sheet metal fabricator bemoans the prospect of higher aluminum prices.

Businesses knew that Trump’s import taxes — tariffs — on America’s biggest trading partners were scheduled to take effect Tuesday. But many of them assumed they’d get a reprieve. After all, the unpredictable president had delayed the tariffs on Canada and Mexico for 30 days right before they were originally supposed to kick in on Feb. 4.

No such luck this time.

At midnight Tuesday, the United States imposed 25% tariffs on goods from Canada and Mexico, starting a trade war with its closest neighbors and allies. Trump also doubled his 10% levies on Chinese imports in a series of moves that took U.S. tariffs to the highest level since the 1940s. Canadian energy was shown some mercy, getting taxed at a lower 10%.

Trucks enter the U.S. from Mexico at the Pharr International Bridge, Tuesday, March 4, 2025, in Pharr, Texas. (AP Photo/Eric Gay)

The three countries promptly announced retaliatory tariffs of their own.

Commerce Secretary Howard Lutnick said later on Tuesday that the U.S. would likely meet Canada and Mexico “in the middle,” with an announcement coming as soon as Wednesday. Lutnick told Fox Business News the tariffs would not be paused, but that Trump would reach a compromise.

The longer the tariffs stick, the more damage they can do, forcing companies to decide between eating higher costs and passing them along to inflation-weary consumers. If the tariffs and the retaliation last a year, economist Kathy Bostjancic of Nationwide estimates, U.S. economic growth will be more than 1 percentage point lower and inflation 0.6 percentage points higher than they would have been otherwise.

Manuel Sotelo, who runs a Mexican truck fleet that carries goods across the southern U.S. border, didn’t expect that Trump would roll the dice on $2.2 trillion worth of American trade with Mexico, Canada and China. Indeed, Mexico has already taken steps to address the ostensible grievances behind Trump’s Tuesday tariffs — the flow of illicit drugs and immigrants — including sending 10,000 troops to the border.

“I really did think last afternoon or last night Trump would have reversed course,’’ Sotelo, who has a Trump bobblehead behind his desk, said Tuesday.

But the president went ahead with the tariffs, and now businesses are scrambling to deal with them.

David Spatafore, who owns several restaurants in San Diego, said his businesses have already been pummeled by the surging price of eggs and dairy over the last month. Tuesday’s tariffs are just the latest blow.

“Everything across the board is impacted,” Spatafore said.

A truck loaded with produce from Mexico and Canada passes through Pharr, Texas, Tuesday, March 4, 2025. (AP Photo/Eric Gay)

One of his restaurants has also been in the middle of a remodel, which has grown increasingly expensive as tariffs hit Canadian lumber and steel.

“We were in the middle of a quote for a custom oven being made,’’ he said, when the contractor added the cost of the tariffs to his estimate. Thin margins in the restaurant industry mean it’s hard to eat the higher expenses.

“Where are you supposed to absorb it?’’ he said.

At Mission Produce in Oxnard, California, which packs avocados and mangos and distributes them to supermarkets and restaurants around the world, co-founder and CEO Steve Barnard won’t need to raise prices right away. Mission Produce still has some inventory of Mexican avocados and other produce ripening in its U.S. warehouses.

But “if this thing lasts 10 days or more, our costs will be substantially different,’’ he said. “We’ll have to come to the table and figure something out.”

Barnard expects big retailers will resist price increases, while smaller, independent chains might have to raise prices sooner because they have less pre-tariff inventory on hand.

“My company will feel an immediate, detrimental impact as a result of these tariffs,” Traci Tapani, co-president with her sister of Wyoming Machine, a sheet metal fabricator in Stacy, Minnesota that relies on Canadian aluminum, said in a statement. Tapani is the vice chair of the U.S. Chamber of Commerce’s Small Business Council. “The threats and uncertainty have made it hard to make business decisions, and these kinds of tariffs will make it extremely difficult for small businesses like mine to grow.”

In Cannon Falls, Minneapolis, about 45 miles (72 kilometers) south of Minneapolis, farmer Danny Lundell is particularly worried that Trump’s import taxes will drive up the price of Canadian potash fertilizer.

“We need potash to raise healthier crops,’’ he said. “And it doesn’t matter if you’re big, medium or small, it’s going to affect you.’’

Minnesota’s Democratic governor, Tim Walz, visited Lundell’s farm Tuesday to criticize Trump for jeopardizing relationships with his state’s biggest trading partners.

Higher costs aren’t the only consequence of Trump’s trade wars. There’s also the uncertainty as the president threatens, delays and actually imposes import taxes.

“Things are unfolding so quickly,” Brian Cornell, CEO of discount retailer Target, told reporters Tuesday. “We will watch this carefully and understand: Are these long-term tariffs? Is this a short-term action? How will this unfold over time? I think all of us are speculating.’’

Uncertainty can take an economic toll as businesses delay plans to make investments and sign up new suppliers until they know which countries and which products are likely to be tariff targets.

During Trump’s first-term trade battles, U.S. business investment weakened late in 2019, prompting the Federal Reserve to cut its benchmark interest rate three times in second half of the year to provide some offsetting economic stimulus.

Adding to the uncertainty now are Trump’s plans for more tariffs, not least his call for “reciprocal tariffs” to raise U.S. duties to match higher tariffs charged by other countries. Trump could also impose more tariffs on the European Union, India, computer chips, autos and pharmaceutical drugs.

“Everything else that’s coming down the pipeline is what adds to the uncertainty,’’ said Antonio Rivera, a partner in the international trade practice at the law firm ArentFox Schiff.

The Whiskeyjack Boutique gift shop in Windsor, Ontario, has been getting some usual customers: Americans stopping in to apologize for Trump’s decision to start a trade war with Canada.

“They are mortified by what’s happening, and they don’t support what’s going on, and they don’t like how Canada’s being kind of dragged through the mud on this,” said Katie Stokes, co-owner of the shop.

In this image made from video, Whiskeyjack Boutique owner Katie Stokes holds up a shirt for sale at her gift shop Tuesday, March 4, 2025, in Windsor, Ontario. (AP Photo/Mike Householder)

Stokes has also heard Canadians planning to cancel plans to take vacations in the United States.

“It’s almost remorseful and sad, like people are upset, and they don’t love how this is playing out,’’ she said.

Associated Press Staff Writers Jaimie Ding in Los Angeles; Anne D’Innocenzio in New York;, Dee-Ann Durbin in Detroit; Mike Householder in Windsor, Ontario, Canada; Megan Janetsky in Mexico City; and Steve Karnowski in Minneapolis contributed to this report.