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The Queenstown Lakes District Council yesterday approved a $50,000 interest-free loan to Coastguard Queenstown towards its planned headquarters.
The coastguard had asked the council for a grant of the same amount for the proposed $575,000 headquarters.
But councillors discussing whether to approve the loan were concerned about setting a precedent for other community organisations.
Wanaka councillor Lyal Cocks said it was ''a real dilemma'' whether to grant the money, considering the importance of other groups such as the Wanaka Coastguard.
Queenstown councillor Craig Ferguson said although he wanted to support them, he also wanted to ensure an even playing field for the whole district.
Mayor Vanessa van Uden said Coastguard Queenstown also had a dilemma in that to enable it to advance the long-running project at the current fixed building price, it needed secure funding.
The report discussed by councillors said the charity had raised $388,985 - meaning there was a shortfall of just over $186,000.
At the beginning of the meeting, Wanaka councillor Ella Lawton said the amount Coastguard was spending on the building ''seems like a huge amount'', before she was told the proposalhad been much grander and had been scaled back.
Coastguard presently operates from a small storage shed at the back of a scouts building at Frankton Marina and in 2012 was granted consent from the council for a lease on a vacant neighbouring site.
''It's an extremely valuable service,'' Ms van Uden said, but she added there were ''an awful lot'' of passionate people and community groups which benefited the district.
No representatives from Coastguard were present at the meeting.
Eventually, councillors decided to approve a $50,000 interest free loan to be paid back over 10 years and resolved to encourage Coastguard to apply for a grant through the annual plan.
A statement from Coastguard Queenstown following the meeting said the organisation appreciated the loan offer.
''We await the proposed terms of the loan so that our board can consider it. In the meantime we continue with our fundraising efforts to raise the balance needed to commence building.''