SALT LAKE CITY — Some members of the Salt Lake County Council pushed back Tuesday — for the second time in a month — against a proposal to lend $450,000 to the city of Holladay to help pay for a storm water diversion at the site of a proposed hotel-restaurant development.

As the Salt Lake County Council grapples with the potential of a hiring freeze and cuts to the general fund to offset a $17.2 million budget shortfall, some council members adamantly opposed lending money for site preparations for the complex. The proposed development at 3000 East and 6200 South would include a 121-room hotel, two sit-down restaurants, a fast-food outlet or brew pub and a ski shop.

"Should government be in the business of a lending institution?" queried Councilman Steve DeBry.

Councilman David Wilde took issue with ongoing negotiations between the city and county administrators over the details of the loan repayment. The city had proposed that it receive credit against the loan for jobs created by the development.

DeBry said questioned whether making such a loan was sound government practice.

"What about the competing hotel next door, the Residence Inn? Did we help them build it?" DeBry said.

"It boils down to a philosophy of good government. Are we setting the wrong precedent? How are we going to tell the other cities we can't do it for them but we'll do it for Holladay?"

Holladay Mayor Dennis Webb said if the County Council wasn't interested in partnering with him, "I'll find the $450,000 myself if you give me all your tax revenue you're going to get from it," he said, referring to sales, room and rental car taxes that some estimates say would provide $440,000 to the county each year.

DeBry countered, "If you can find the $450,000, why did you come to us?"

Councilmen Randy Horiuchi and Michael Jensen have both explained in the past that the county used the site of the proposed development as a place to divert flood waters. Therefore, they felt some obligation to assist Holladay's development plans.

The county has a history of providing loans to cities, albeit smaller amounts, and participating in business and retail development through redevelopment agency agreements, Jensen said. "Our coffers are better off for doing this."

Horiuchi said the county participates in a number of interlocal agreements intended to stimulate economic development and create new sources of tax revenue.

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"That is why Dale Carpenter is the economic development director. He goes out looking for opportunities that are going to make the county money," Horiuchi said.

Councilman Richard Snelgrove and DeBry voted against the proposal. "From my perspective, this a poster child for a bad use of taxpayer funds," Snelgrove said.

But seven other council members directed the administration to continue to refine the agreement with Holladay and bring it back to the council for further consideration.

Wilde said he would likely support the agreement "if there's an understanding how it will be repaid."