The gallery featured the giant mole last year
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A £150,000 loan of public money offered to a modern art gallery is criticised as "obscene".
Councillor John Pitt said Conwy council was struggling to find money for public services without offering cash to Oriel Mostyn in Llandudno.
But the gallery said the loan would only be needed if it failed to raise the £3.5m needed for its redevelopment.
Director of the gallery Martin Barlow added that any loan would be paid back at commercial rates.
Mr Pitt made the criticism following his resignation as a trustee of the gallery in October.
He said how although he enjoyed some of the more unusual exhibitions, including one of a giant mole by artist Mark Dion last summer, he was concerned about the use of tax payers money.
"I'm not worried about the art, but about the spending of public money," he said.
Mr Pitt said he had lobbied the Welsh Assembly Government to ask for more funding for Conwy council and said it was not right that the gallery was approaching the council for more money, when the council had its own financial problems.
"Arts are important but you cut your cloth according to need and times are hard," he added.
The gallery is currently closed for redevelopments with only a small exhibition space in a cabin outside the main entrance.
'Loan facility'
"We haven't been offered a loan but a loan facility," said Mr Barlow.
"If we accessed the loan, we would be paying it back at commercial rates of interest," he added.
Mr Barlow said the gallery needed to move ahead with redevelopment plans in case of a rise in building costs if there was a delay.
He said that work was ongoing to raise the last £150,000 needed for the £3.5m project.
"The council has agreed to help only if we fail to reach our target, but we should be there in six to nine months," he said.
Mr Barlow added that Conwy council would benefit if the loan was needed because the gallery would pay interest.
He said the gallery had 60,000 visitors annually, two thirds of them from north Wales.
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