On Monday, the Supreme Court is set to hear oral arguments in Grants Pass v. Johnson, a case that could determine whether cities can fine or arrest people in homeless encampments.

The case comes at a time when higher interest rates and rising insurance costs are making it more expensive to build and operate low-income housing — especially in California, home of 28% of the country’s homeless population.

It’s already pretty expensive to build low-income housing in San Francisco. The nonprofit Mercy Housing has a 220-unit complex in development where construction costs are budgeted at $522,000 per apartment. 

And the Fed’s move to leave interest rates higher for longer isn’t helping, per Mercy’s Ramie Dare.

“We, like many other real estate projects, we borrow,” she said. “We have a construction loan from a bank, and we still are pretty close to what the prevailing market is.”

Rates have gone up from about 3% to 6% over the past few years, Dare said. And at the same time, nonprofits who own and manage affordable housing properties are also getting whacked by skyrocketing insurance rates.

“We saw a premium increase of 350% last year to this year,” reported Holly Benson, CEO of Los Angeles-based Abode Communities.

Benson added that surging insurance costs are particularly acute in California, where insurance companies are withdrawing from the market.