Flood control officials announced disappointing news Tuesday, but they say they have found a silver lining for the nine year-old project.

Flood project officials said they failed in their recent effort to get federal officials to label the project one of national significance — a designation that would have loosened federal purse strings.

But a financial maneuver may free up money to keep construction going downtown and lay the groundwork for improvements along Napa Creek and the Napa River Oxbow.

U.S. Army Corps of Engineers officials are looking over a proposed change in the agreement between their agency and the Napa County Flood Control and Water Conservation District the would allow the district to take money it is obligated to pay in yearly installments and advance it in a lump sum instead.

This would gather about $6.5 million for the 2007 construction season, allowing heavy equipment to remain in Napa and avoid having to break down the construction camp and burden taxpayers with the cost of rebuilding it again.

“Mobilization and demobilization, that’s a very costly endeavor and obviously it slows down your construction,” said Heather Stanton, local project manager.

The project has faced continual funding setbacks from the federal government, making a projected 2011 end date wishful thinking. Stanton said within six months the district — with the help of the Corps of Engineers — will come up with an updated schedule. That’s become something of a tradition with a project that was originally sold to Measure A voters in 1998 as something that would be finished by 2007.

But flood officials are doing everything in their own power to keep the project from falling further behind.

For example, if the flood district can advance the $6.5 million to keep construction going on downtown flood defenses along the river from the Hatt building to the First Street Bridge, that places the project in a more favorable position to use whatever federal money comes this year to handle engineering work for the Wine Train tracks and the Oxbow bypass channel.

More importantly for residents in the Napa Creek area, it also sets the flood project in a better position to use federal money to build flood defenses along that waterway.

One thing flood district officials want to make clear is the advance money is not a loan, Napa County Supervisor Bill Dodd said, but a tactic to keep the ball rolling.

“When you have to tear down construction sites and then build them back up again it costs a lot of money,” he said. “Ultimately, this was seen as a way to save the taxpayers money.”

In the meantime Stanton said the flood project’s environmental benefits still make it a candidate for national significance in the next fiscal year. There are nine projects of national significance, including the Florida Everglades and various harbors.

“We will keep pounding at it,” Stanton said. “We believe because this project embodies the future of what flood projects should be — that includes restoration — that it should jump over the hurdles.”