You cam always sue but you are probably barred from recovery by local government tort immunity. Discretionary governmental decisions such as what permits and exceptions to grant are almost always immunized. Still, it never hurts to investigate. Flood the town with Freedom of Information requests. You may have a claim against your neighbor, so consult an attorney on that. Best of luck.
I hope that this answer helps you in a general sense, but it does not constitute legal advice, nor tax advice of any kind, and does not create an attorney-client relationship between you and myself or my firm.