You should contact a personal injury attorney. What has been done would seem to be both slander (by the speaker; spoken or oral defamation) and libel (by the town in posting the information; written defamation). Owing to some of the protections afforded  governments for the conduct of their business, it may be more difficult to take action against the town, but it's worthwhile discussing with an attorney in depth: you could potentially get an order forcing them to remove the material and also recover damages. You may also be able to recover damages from the neighbor.Bear in mind that only factual assertions which are false are defamation; opinions--e.g. "John Doe is a sleazy businessman"--are not typically actionable. Good luck.