An O'Malley administration plan to lend $240,000 to a Towson sports bar to finance its expansion is raising questions about the role of government in promoting economic development.

This week, the Board of Public Works opted to delay deciding whether to approve the loan to the Greene Turtle in Towson, whose franchise owners want to double its size to meet an anticipated increase in competition from nearby projects.

State and local development officials called the loan necessary to keep downtown Towson vibrant, especially at a time when private financing is difficult to secure. They said the loan is similar to support the state has provided to small businesses in other commercial centers.

But two of the three board members said they don't understand why a successful restaurant needs this kind of state help.

"If they can't make a go of it without taxpayers' money, nobody can," said Comptroller Peter Franchot, a Democrat.

The loan from the Department of Housing and Community Development is part of an $893,000 financing package for the restaurant and bar, part of the popular Greene Turtle chain that started in Ocean City in 1976. The plan includes a $265,000 Baltimore County loan, which could be forgiven; a loan from Bay Bank, and contributions from the restaurant owner and landlord.

With the other sources of financing lined up, the proposed loan under the Neighborhood Business Development Program came up before the board Wednesday for what typically is routine approval. The board has approved many such bond-financed loans since the 1990s, including some for restaurants.

Carol Gilbert, assistant housing secretary for revitalization, said no loan under the program has been deferred or turned down since she came aboard in 2007. However, this time two of the board's three members raised objections.

Franchot questioned whether it was a wise use of state money to lend funds to a private business for furniture, fixtures and equipment. Franchot professed to love the Edgewater-based Greene Turtle chain but said he would vote against "this use of taxpayers' money to expand a sports bar in the middle of a college town."

Treasurer Nancy K. Kopp, also a Democrat, said she has concerns as well.

"It sounds to me like there's revitalization going on without it," she said.

Even though Towson is in his district, Republican Del. Bill Frank said he shares those misgivings. Frank, a former banker, said he has seen many cases in which public financing has been used to close a deal, but he noted that private money makes up less than half of the proposed Greene Turtle investment.

"Coupled with the county loan, the public sector portion of the financing exceeds well over half the package," he said. "This strikes me as a rather large piece of the pie coming from the public sector. I would like to see that decreased substantially."

The concerns in that district cross party lines.

"I'd rather see $240,000 being loaned to a school system to add air conditioning," said state Sen. Jim Brochin, a Democrat.

Brochin said he's aware of at least four projects worth a combined $350 million proposed or underway in downtown Towson.

"This is anything but a distressed area. I have never seen so much money go into Towson," Brochin said. "I see no need for the state to get involved in these private deals."

But Andrea Van Arsdale, Baltimore County's planning director, said the Towson picture isn't so clear-cut.

"While very good things are happening, many things are not so good," she said.

Van Arsdale said that while there has been generous private investment in large projects on the fringes of downtown, it's been more difficult for small businesses in the town's core along York Road to obtain private financing.