The city is seeking $100,000 from the state Office of Parks, Recreation and Historic Preservation to build a bicycle path connector.
The trail would be built between the city's William O. Smith Recreation Center and East Avenue, extending to the Olean High School and Middle School recreation complex now under construction.
The Common Council on Tuesday approved the funding application.
If the grant is awarded, Mayor James P. Griffin said, he wants the path to be routed over one unused lane of the Norfolk Southern Railroad trestle bridging the Allegheny River. He said he hoped to meet soon with railroad officials to seek their permission for the plan.
The path would add another leg to the already completed portion of the Allegheny River Recreation Trail on the city's western end.
Griffin said he hopes to then receive the go-ahead to pave dikes along the Allegheny River as a connector from East Avenue to the existing trail at 20th Street.
If the city receives the funding, a $20,000 local match is required.
"A recreation trail is one of our greatest investments," Griffin said. "This will make it more useful to all of the community."
The Council then voted to assist two businesses with $75,000 in revolving loan funds.
Dennis and Karen Cornell will receive $50,000 toward their $750,000 Forness Family Fun Park proposal. If the project is approved by the Planning Board, a seasonal 18-hole miniature golf course will employ 10 full-time workers during the recreation season at the park, said Community Development Director John Sayegh.
Insurance broker John Petruzzi, who is building a $100,000 office building on East State Street adjacent to the office he currently leases at 1315 E. State, will borrow $25,000.