Legal questions raised by at least one resident won’t sidetrack plans to use possible federal stimulus funds for the Canobie Lake Phase II project if voters approve the warrant article on May 19, according to town officials.

A 15-year member of the Budget Committee, Stephen Campbell has voiced concerns over a discrepancy between the way the warrant article for the $4.1 million project has been presented to voters and how the town has applied for funding from the 2009 American Recovering and Reinvestment Act.

The Canobie project is intended to improve drainage around the lake and upgrade local roads, as well as allow for the extension of municipal water and sewer piping into area neighborhoods.

While the warrant article includes the both the sewer and water work as part of one larger project, town officials filed separate applications under different categories for possible stimulus funding.

Though neither aspect of the project is currently eligible for stimulus funds, that may change as other municipalities decide whether or not to move forward with approved projects.

That could pose legal problems if only one portion of the work receives funding, according to Campbell.

“The real question is can they go forward at all with this project if they only get money for one (aspect of it)?” Campbell said. “If one project gets funding and one doesn’t, then only one can go forward.”

The sewer work is currently ranked 41st on the state’s priority list of clean water projects – eight spots shy of receiving funding – while the installation of a water main at that site is ranked 234th on the state’s list of drinking water projects and well below the cutoff for funding.

Campbell believes town officials may have muddied the water further by wrapping both projects together on the ballot rather than separate them and use money from the water and sewer unreserved fund or go through the traditional route to hold a special town meeting.

Though the recently passed Senate Bill 39 allows municipalities to hold special town meetings without going through the courts for projects involving stimulus funding, Campbell said moving forward with both projects – were one to get stimulus funding and not the other – could be a violation even with voter approval.

Town Manager Jonathan Sistare said both the wording of the warrant article and plans to fund the overall project have been cleared by the town counsel and the town’s bond counsel, citing the broad language of SB39 as the reason, and approved by the state’s Department of Revenue.

According to Sistare, though the town has always considered the Canobie Lake water and sewer as a single entity, two applications were filed for stimulus funding because the different aspects of the project fell under different categories. Were either aspect of the project to receive stimulus funding and get a two-thirds majority vote at the May 19 special town meeting, the town would move forward with the work, he said.

“What we wanted to do is to give the town the most flexibility and put forward both parts of these projects, and if we get approved for it that allows us to bond (the remainder) and not use cash reserves,” Sistare said. “There are a lot of unknowns and a hundred different questions about what can be done and what can’t be done with two parts of a project as we have. No one really has the answers and we’re going with the best judgement we were given.”

The town could stand to receive about $1.49 million in federal stimulus funds for the sewer portion of the project, with the remainder of the cost bonded, according to Sistare.

But, if neither aspect of the project receives stimulus funding or voters reject the warrant article, then the project will not go forward, he said.

State officials with the department revenue said they will be reviewing documents submitted by municipalities like Salem on a case by case basis to ensure that the process to receive and implement stimulus funding has been followed correctly.