District residents and business owners faced off Tuesday evening during an hours-long hearing on whether the D.C. Council should agree to allow bars and nightclubs to serve alcohol until 3 a.m. on weekdays and 4 a.m on weekends.

The hearing was held after Mayor Vincent C. Gray (D) proposed extending serving times by one hour to help bolster District nightlife while raising an estimated $5 million to stave off further cuts to social-service programs.

Council member Jim Graham (D-Ward 1), who has oversight over alcohol issues, vigorously opposes Gray’s proposal. On Tuesday night, Graham received backing from several Advisory Neighborhood Commissioners and civic activists. Residents raised concerns about noise, drunken driving and a belief that a city can’t become more family-friendly while also moving to extend the consumption of alcohol.

“Later closing hours will exacerbate problems that already exist in Glover Park,” said Jackie Blumenthal, vice-chairman of the ANC3B, which includes Glover Park and Cathedral Heights. “Nearly half of the businesses in our local commercial center have liquor licenses and they are a popular late-night destination for young singles…Residents are frequently awakened in the middle of the night by loud, inebriated people.”

But a coalition of business and restaurant owners showed up to support Gray’s proposal, arguing that only a few bars and nightclubs would take advantage of the new hours if the proposal is adopted. Noting that the city’s hospitality industry helps sustain the local economy, they argued an extension of hours would help with crowd control while providing more nightlife options to the city’s diversifying population.

“When you throw everyone out 3 a.m., everyone is out at the street at the same time,” said Bill Duggan, owner of Madam’s Organ in Columbia Heights. Lynne Breaux, president of the Restaurant Association of Metropolitan Washington, said the District is “not a 9 to 5 town and hasn’t been for years.”

“The ability of restaurants, bars, nightclubs and hotels to expand their alcohol service hours is consistent with the District of Columbia having become known, internationally, as a premier hospitality destination,” Breaux said.

Yet opponents outnumbered supporters at the hearing. And a growing number of council members appear skeptical of Gray’s proposal.

Council member Tommy Wells (D-Ward 6) said he supports maintaining a vibrant nightlife, but fears the proposal will clash with the city’s growing population, including an uptick in older residents moving into the city.

“It seems this goes over the line of the balance,” said Wells, who is also concerned that bar patrons won’t have a way to get home because Metro stops operating at 3 a.m.on weekends.

Still, the hearing exposed the possible outlines of a compromise. Several opponents said they could support it if the extended hours were limited to downtown or in non-residential areas.

Graham said he’s skeptical of creating segregated areas for later hours because it could give some businesses “a competitive advantage.” But Graham floated the idea of perhaps creating an application process that would allow only certain establishments that meet specific criteria – such as minimal community opposition – to remain open later.

Council Chairman Kwame R. Brown (D) may have the final say on whether the fiscal year 2013 budget can remain balanced without Gray’s proposal. At a news conference Tuesday, Brown said he remains undecided on the proposal but understands community opposition.