The Minneapolis City Council gave a homeless shelter $1.5 million to stay open. It’s closing anyway.

The operator of a downtown homeless shelter has decided not to renovate it even after the Minneapolis City Council stepped in with a $1.5 million injection of public funds last year to try to help keep its doors open.

Erik Hansen, director of Community Planning & Economic Development for the city, released a statement Tuesday saying the city received confirmation that Agate Housing and Services won’t be moving forward with renovations, so the city won’t “complete the funding” approved by the council.

Agate’s board of directors voted Monday night not to renovate the downtown building due to higher-than-expected construction costs, according to an email obtained by the Minnesota Star Tribune. The email from Agate Executive Director Kyle Hanson says it would need at least $7.7 million, and it’s unable to raise that much.

An Agate spokesperson declined to comment Tuesday.

The council voted in September to make midyear budget cuts in order to allocate $1.5 million to help fund repairs to Agate’s century-old building at 510 S. 8th St. It was slated to permanently close due to plumbing and other problems when the council stepped in with funding, which was contingent on Agate finding matching funds, which an anonymous donor agreed to put up. (Agate still planned to close temporarily for construction.)

The council decision caused a rift with Mayor Jacob Frey, who accused the council of making a rash decision based on fluid quarterly budget projections rather than working with city budget officials on a solution.

Frey said in a letter to the council at the time that its intent was commendable, and the city has invested millions of dollars into shelters, but the decision “lacked proper vetting” and the council should have worked with “subject matter experts” to create a competitive, fair process.

Frey released a statement Tuesday calling Agate an invaluable partner.