Attorneys representing the city of East Grand Forks are proposing an extra year to resolve an unpaid loan before deciding whether to deny a liquor license to a local establishment.

City Council member Marc DeMers suggested earlier this month that owners of the Boardwalk Bar and Grill didn't deserve to have their liquor license renewed because of a $510,000 unpaid city loan that was used to help construct the building the bar is housed in.

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The loan was made to Boardwalk Enterprises, not the bar itself, but the ownership of the two entities "meet the definition of applicant" in city code, according to a proposed resolution. Boardwalk Enterprises and the bar have similar ownership, according to the East Grand Forks Exponent.

The City Council should renew the license Tuesday, City Attorney Ron Galstad wrote in a memo, but on the condition that the loan dispute be resolved within a year. That resolution could come through a legal proceeding commenced by Boardwalk Enterprises, an agreement of mutual mediation and resolution of the dispute, arbitration of the issue or the parties negotiating a settlement.

"If the obligation is not resolved within one year, renewal of the license can be denied if the obligation still remains outstanding," a proposed resolution to be voted on Tuesday states. Galstad and Fargo-based attorney Brad Sinclair reviewed city and state law, as well previous court decisions in coming to their recommendation.

The City Council voted earlier this year to delay any legal action on the outstanding loan, citing a lack of options in dealing with the debt. The city didn't file the mortgage documents when the loan was made in 1999, and Boardwalk officials have argued the city owes money for items spelled out in a previous agreement.

The loan was first revealed in a public meeting in April 2014, and a closed meeting between the city and Boardwalk in August did not result in a solution.

Jane Moss, who applied for the liquor license renewal on behalf of Boardwalk Bar and Grill, said Friday morning she would address the City Council on Tuesday and make a statement at that time.

The liquor license expires on June 30.