OXFORD — Residents approved a capital improvement project to extend water up Route 26 to the southern border and to build a reserve tank on Pigeon Hill, but not before a debate on the merits of the project and whether the town meeting warrant was even legal.

In a secret, written ballot, residents approved the warrant item 97-42.

It paves the way for a $1.5 million project and authorizes the town’s treasurer and the chairperson of the Board of Selectmen to issue revenue bonds to Robert Bahre, Black Bear Entertainment or both. The treasurer and chairperson are authorized to set the terms of the bonds and to enter an agreement with Bahre and Black Bear that the bonds will be repaid with tax increment financing funds.

It also allows the town to accept any gifts to reduce the principal amount. Town Manager Michael Chammings told residents that Black Bear is willing to pay $500,000 toward the project, and that Bahre would lend the town $1 million in the form of the bonds so that work can begin as soon as possible.

One resident, Austin Taylor, called the article “illegal” for several reasons, including the window of time in which the town had given notice of the meeting. Chammings said the warrant had been inspected and vetted by the town’s attorney.

Taylor and his wife, Mary Taylor, are appellants in an appeal against the Department of Environmental Protection’s site plan permit of the casino.

Resident Richard Varney, who ran for the Board of Selectmen in June, asked whether the town had referenced a previous water study commissioned when Varney was a selectmen years ago. Chammings said the new study used recent Census data and accounted for modern technology.

Chammings said the planned development will include a 500,000 gallon reserve tank. According to a recent water study, he said, the town needs 750,000 gallons in water reserves to expand service to more residents. Currently, the town has one 300,000 gallon tank.

The casino would need a 32,000 gallon tank, even if it drilled wells. Chammings said the developers have offered to let the town put the 500,000 gallon tank on casino property under a deeded easement.

The town will seek tax-increment-financing funding to pay for the project. Chammings said that if the town fails to secure a TIF, or if Black Bear fails, the terms of the agreement state that the debt will be forgiven and that Bahre and Black Bear will have given the town a water tank and a 6,500 foot extension of its water line for free.

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