Libby City Council met the Cabinet View Golf Club in the middle this week, agreeing to offer the organization a $541,000 grant if it repays an outstanding $1.54 million loan.

The arrangement echoes a deal pitched by City Councilor Brian Zimmerman during negotiations with the group two weeks ago. Club officials originally asked city councilors to forgive $662,125 of the loan, but met resistance from lawmakers and residents alike.

The no-interest loan dates back to 2004. That’s when city officials, drawing upon an $8 million pot of economic investment dollars granted by the federal government, agreed to help the golf course finance construction of its back nine.

To repay the loan, club officials planned to develop nearby property and share the earnings with city coffers. The development never came to fruition and subsequent sparring over water infrastructure soured both sides.

In February, club representative George Mercer announced that the organization had reached a deal with a buyer to put up about 70 homes on the land. While light on the details — the name of the prospective buyer remains unknown, for example — Mercer said the deal hinged on partial loan forgiveness. The city holds a lien on the property.

But forgiveness was met with mixed reactions on city council. Rob Dufficy and Hugh Taylor argued for full repayment. City councilors Kristin Smith and Zimmerman expressed support for the club’s proposal.

During a series of meetings held since February, discussion has centered on the original purpose of the funds, which came from federal officials with little guidance. Mercer has noted that a chunk of the $8 million went out in grants and that a previous city council had forgiven a loan City Hall took out of the pot.

Taylor, Dufficy and others have argued that the money ought to be treated not as federal largesse, but taxpayer dollars requiring stewardship. Funds returning to City Hall from the original pot then could be invested into new ventures or public projects.

Looming over it all was a mid-May deadline. Club officials warned that unless the parties reached an arrangement by then, the sale and subsequent development would fall through. The short turnaround time drew criticism from residents like attorney Ann German, who described the approach as “unprofessional.”

Earlier this month, city councilors voted 5-1 in favor of a counter offer: The club would repay the loan in full and come back for a possible future grant. On April 21, city councilors took a slightly different tack, voting 4-2 to agree ahead of time to offer the $541,000 as a grant contingent upon repayment of the $1.54 million.

Pressed by city councilors earlier this month, club officials said proceeds from the sale would go toward a new clubhouse. The group expects to net $1.75 million in the land deal.

Mercer told city councilors on April 21 that the group needed to know whether they would receive the $541,000 grant before closing the deal.

“We can’t wait until we close and then come back,” he said. “For us to close and then come back and then [maybe] it’s a no — we would elect to not close.”

Taylor stuck to his original position, noting that the body had already made its stance clear. Dufficy agreed.

“The council voted 5-1 that this was to be paid in full to city taxpayers prior to them coming back and asking for a grant,” he said. “I’d like to basically follow what the council voted on two weeks ago. They pay us back first and — in the future — they come back to us with a grant proposal. The cart is before the horse.”

Smith argued that the end result was the same.

“We can do it all right now; it gets to the same result,” she said. “They can pay back the full amount when they close. When they pay, we can give them $541,000 for the grant.”

Zimmerman pressed Dufficy on his position regarding the grant proposal specifically.

“You’re leaving them dangling,” he said. “Are you going to guarantee them a grant right now?”

“No, I’m not guaranteeing it,” Dufficy replied.

Attempting to clarify the golf club’s ask of city council, Mercer indicated that the grant would cover construction costs, the funds drawn upon as needed. Receipts would be provided.

He shied away from providing a timeline on construction. Breaking ground might not be immediately feasible, he told Mayor Brent Teske.

Mercer also apologized for the manner in which he first pitched the debt forgiveness proposal. Miscues aside, he said the project represented a net good for Libby.

“This is a win-win for everybody,” he said. “We’ve heard enough negatives. At the end of the day, I can highlight positives [about the project] all day long.”

At the advice of City Attorney Dean Chisholm, city councilors amended the motion to allow for details of the grant administration to be worked out at a later date. Ultimately, Dufficy and Taylor cast the dissenting votes.

“The loan has not been repaid,” Taylor said. “I don’t see how we can [approve] a grant request.”

City councilors also pledged to hammer out the zoning changes on the as-yet undeveloped property. It currently is zoned as commercial, but officials — both at City Hall and the golf club — want to ensure residential development goes up on the site.