Housing success story

The old adage, “where there’s a will, there’s a way,” may hold true in many cases, but when it comes to housing in northern Minnesota, all the will in the world isn’t enough. It also takes money, and lots of it.
That was the message that came through loud and clear at last month’s groundbreaking for Ely’s new 37-unit Wilderness Escape housing project, located on the city’s southwest side.
City and HRA officials deserve credit for persevering despite financing setbacks that had left the project in doubt for a time. Fortunately, Iron Range Resources and Rehabilitation came through with a $4.5 million grant that helped fill the funding gap and encouraged other agencies, like Minnesota Housing, and private lenders like Frandsen Bank and Trust, to participate as well.
The bottom line is pretty simple, at least for a housing developer. It takes more money to build new houses in a non-metro part of the state that can be justified from viable rents or purchase prices.
Back in the 1970s and early 80s, the federal government was still investing real money in housing construction, the feds played a key role in making new housing possible. That’s the era that brought most of the affordable housing to communities across our region. Back in that era, the federal government spent the 2025 equivalent of about $110 billion annually for new housing, most of that for construction of new units. Funding for new construction was virtually eliminated by the end of the Reagan administration, and our shortage of affordable housing has grown ever since.
Today, we’re not only suffering from the lack of new housing construction in most of the country, but from the lack of reinvestment in the housing that was built back in the day. That 1970s-era housing stock (now half a century old) is in pretty tough shape in many cases, if it’s even still in service. Affordable rents may be enough to pay for basic maintenance but are not enough to fund the major repairs that add up over the years. Yet even as the federal government was eliminating funding for new construction, it’s provided mere token funding for renovations that most of that 1970s-era housing stock badly needs. Just ask the nonprofit Vermilion Housing Corp., which is working to revamp apartments in Tower and Soudan, some of which are currently not habitable, but has struggled to find the funding to make that happen.
The federal government’s failure to provide funding for upgrades and renovations means we’re actually losing housing stock in many communities at a time when we’re desperately short of supply.
The Minnesota Legislature has certainly done more to fund housing outside the metro area in recent years, but it’s unrealistic to think state resources alone can replace the accumulated impact of the federal government’s virtual abandonment of housing construction.
That leaves developers who want to be part of the solution scrambling to assemble the resources to make it happen. After last week’s groundbreaking, we spoke to Skip Duchesneau, the owner of D.W. Jones, the company that is serving as developer on the Ely development. While Duchesneau has been largely successful in finding grants and other innovative financing options, it can be a slow process, sometimes taking years to assemble the funding for projects. In virtually every case, he said, it’s a different mix of funding sources that must be uncovered to make it happen. In the case of the Ely project, it was IRRR’s newfound willingness to invest in housing construction in a major way that made the difference. Without that change of policy by the Eveleth-based agency, the Wilderness Escape would still be a vision without a funder.
If there is encouraging news, it was noted by Sen. Grant Hauschild at last week’s groundbreaking. And that’s that housing has finally broken through as a critical issue for politicians across the political spectrum. We’ve already seen bipartisan support in St. Paul for new investments of state funds in housing.
The need to address the issue has even managed to break through the usual shilling for the already rich in Washington. While a new housing bill won overwhelming support from both sides of the aisle recently, it’s not clear how much new housing it will actually help create. It’s mostly a mix of policy changes, many that will require further action at the state and local levels. There’s not a dime to help finance new housing construction. It seems as long as there are billionaires in need of tax cuts, Washington has only a marginal interest in addressing the needs of working families.
Which means success stories like the new project in Ely will continue to be the exceptions, not the rule.