An unusual type of stimulus project is going to claim the largest chunk of discretionary federal stimulus money coming to the city of Minneapolis.

The City Council voted on Tuesday to spend the majority of its $3.6 million community development bonus under the federal stimulus act on the long-delayed Shubert Theater. Backers said the $2 million is the last piece of the $38 million they need to start construction as soon as this fall.

The council approved the spending over the objections of Paul Ostrow, the lone council member to vote against the recommended projects. "This is frankly not a jobs project," Ostrow said.

The Shubert, which got all of the money it applied for, will create 101 construction jobs and the equivalent of 41 full-time permanent jobs, 38 of them earmarked for applicants from low-income neighborhoods.

By contrast, a competing project to build a solar panel manufacturing facility in a low-income area of Minneapolis promised 360 jobs by 2011. But it is getting only $284,047 of a requested $1.2 million. Money to protect condemned and boarded-up properties by winterizing them also got only $200,000 of a requested $400,000.

The Shubert, on Hennepin Avenue downtown, was moved 10 years ago and the project will rehab the nearly century-old theater for dance and music events. It will also make supporting improvements in the adjacent Hennepin Center for the Arts and build a link between the buildings

The $38 million figure includes the cost of the building move, land, holding costs and related program costs. The remaining work will cost about $25 million, according to Colin Hamilton, executive director of the Minnesota Shubert Center.

"I'm thrilled to be the last money in," said downtown-area Council Member Lisa Goodman. She noted that performers at the theater are often low-to-moderate-income and that dance tickets are cheaper than live theater on Hennepin. Mayor R.T. Rybak also lauded the council decision.

But Ostrow noted that the city also put the first $5 million into the project, and that state bonding is picking up another $12 million of the tab. Hennepin County is seeking another $2.5 million for the project through competitive stimulus grants. And $19 million has been raised from private sources.

Ostrow read from federal stimulus regulations that forbid assistance to private recreational facilities that primarily serve an upper-income audience when that benefit outweighs jobs or other benefits to lower-income people.

Much of the federal stimulus money coming to Minneapolis is targeted to specific areas, such as law enforcement or energy improvements, but the community development money allows latitude within federal criteria. An overriding criterion is that the money finance economic development, housing, infrastructure and other public facilities.

Another $275,000 of the stimulus money is earmarked for the Fire Arts Center on Chicago Avenue, which like the Shubert is a project assisted by Artspace, a nonprofit developer working to preserve affordable space for arts and arts organizations.

Remaining allocations approved by the council include $260,000 toward an extension of Van White Memorial Boulevard, $200,000 for addressing lead hazards, $190,000 to reroof a fire station and $100,000 each for housing advocacy for low-income people and for minor repairs to keep low-income and elderly people in their homes.

Steve Brandt • 612-673-4438