Minneapolis Mayor Jacob Frey has found money to avoid cutting $350,000 from the North Commons Park renovation, which was in jeopardy after the City Council voted to make mid-year budget cuts to save a downtown homeless shelter.

The council voted in September to cut $1.5 million from various city departments’ remaining 2024 operating budgets to help fund repairs to a homeless shelter. The Frey administration responded by saying their decision would require the city to make cuts that included suspending job classification studies, subscriptions to LinkedIn and Indeed and participation in all job fairs and recruiting events. Most controversial was a $350,000 cut to $3 million in funding for North Commons Park.

Agate Housing and Services’s century-old building at 510 S. 8th St. was slated to permanently close due to plumbing and other problems when the council stepped in, voting to allocate $1.5 million to Agate, contingent on Agate finding matching funds. An anonymous donor has since agreed to put up the match. Agate still planned to closed temporarily for construction.

Frey accused the council of making a rash decision based on fluid quarterly budget projections — which he called “completely irresponsible” — rather than working with city budget officials to find a solution. Some council members, in turn, were incensed, accusing the Frey administration of retaliating by cutting funding for North Commons Park, which the Minneapolis Park Board plans to renovate and expand for $35 million. The members vowed to restore the funding.

Frey told council members the only alternative was to lay off city employees. But he has since found another alternative.

Frey emailed City Council members Aisha Chughtai and Emily Koski Monday laying out a plan to spend down remaining federal pandemic aid approved by Congress in 2021. Minneapolis received $271 million in American Rescue Plan funds, which must be spent by the end of the year or returned to the feds.

Frey’s plan would also amend his 2025-2026 budget proposal to direct $780,000 of unspent ARPA funds toward paying down the 2025 levy collections, reducing the maximum 8.3% levy increase approved by the Board of Estimate and Taxation back down to the 8.1% originally proposed by Frey.

Internal emails show Council Member Jason Chavez emailed Budget Director Jayne Discenza in September, proposing several options to come up with the Agate money — including using nearly $250,000 in unused ARPA funding in the Community Planning and Economic Development Department.

“Do you know of any other unspent ARPA funding that will not be used for its allocated purposes?” he asked Discenza.

Discenza responded that the city didn’t yet know how much ARPA money was left unspent.

Frey wrote in his email to Chughtai and Koski that the other department cuts will remain.

The council initially proposed using contingency funds for Agate but didn’t have the 10 votes required to use those funds, which are intended for emergencies like natural disasters. City policy requires 1% of the operating budget to be set aside as an emergency fund.

Koski has pointed out that the city ended each of the last six years with an average $22 million in unspent funds. That money goes back into the general fund, where city financial policies require reserves equal to at least 17% of the overall budget. The city usually shoots for about 25%, which helps boost its bond ratings.