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GROTON — The selectmen have been informed by school officials of a request for the inclusion of an article on the warrant for the upcoming special town meeting that, if approved, would give the Groton Dunstable Regional School District authorization to borrow $2.5 million.

The money, school officials said Monday, is to cover the cost of a court settlement against the district involving payment to the former owners of land taken by the district for use as the site of a new high school building.

Adding urgency to the request, said school board Chairman Charles McKinney, is an ultimatum made by representatives of the state’s Department of Revenue (DOR) that they would hold up approval of both Groton and Dunstable’s 2006 tax rates if the borrowing authorization is not approved.

According to a statement issued by the district, holdup of the rate approvals by the DOR would, in effect, prevent the towns from collecting taxes.

“We are surprised by DOR’s mandate and the timing of their communication to the towns, but we will cooperate and do as the DOR has asked,” said McKinney in the statement. “We had no indication that DOR was going to hold up tax rates, and we do not agree with the rationale underlying the directive. We have worked very hard to coordinate and cooperate with the towns on this matter, and it’s frustrating to have a new and inflexible scenario foisted upon the district and the towns.”

McKinney said that at the meeting, DOR officials, led by their director of accounts James Johnson, expressed concern about liability issues surrounding payment of the $2.5 million to the Casella family who first brought the suit against the school. State officials are worried that should the district decide to drop its appeal, it would not have the funds on hand to cover the court ruling.

McKinney said town officials vainly tried to explain to Johnson that no matter how the issue is examined, there would be no time for the payment to come up in fiscal 2006; thus, no pressing need exists to seek authorization to borrow this year.

“If you do the math, not even the interest would be due in 2006,” McKinney said Monday night.

But despite assurances to the contrary, he said Johnson refused to accept the district’s logic and kept looking at “hypotheticals” until he found one where the district could indeed be required to pay the settlement in 2006.

“He wishes us to remove all risk of liability,” said McKinney.

He said he pressed Johnson on the issue by suggesting that the district’s dropping its appeal is not a likely scenario but to no avail.

“This presents the district with a very curious scenario,” he said, pointing out that although it is not certain just how much an eventual settlement might be, the district is faced with submitting an article to town meeting with a definite number attached. Nevertheless, school officials were “given our marching orders” by the DOR.

Selectmen Chairman Fran Dillon, who also attended the meeting with the DOR, confirmed McKinney’s characterization of Johnson as being “adamant” in his opinion.

“He was just not going to move,” Dillon said.

School officials have enlisted the aid of Rep. Robert Hargraves, R-Groton, to try and influence the DOR on the issue, possibly going over Johnson’s head.

Meanwhile, McKinney sought to assure the selectmen that the district has no intention of seeking any more money than is listed in the proposed warrant article.

“We certainly wouldn’t borrow the money before we knew what the settlement would be,” he said.

Superintendent Alan Genovese said, “I would like the townspeople to understand that this motion is being brought forward for one primary reason: to allow the tax rates to be set for both towns.”

With the submittal of the proposed article to the board, the town will have 60 days in which to schedule a town meeting to vote on the measure. If no action is taken, state law kicks in and the authorization is automatically considered approved.

Special town meeting is scheduled for Monday, Oct. 24.

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