The lawsuit filed against the city of Napa last week over its alleged failure to encourage low-income housing never mentions the words “Napa Pipe.”

Yet as the city prepares for a legal tussle with affordable housing advocate David Grabill, local leaders say the lawsuit could be good news for the mixed-use development proposed just outside Napa’s city limits.

“What it means is Napa Pipe is more likely to develop in the manner in which the developer is proposing, because we need the housing, whether it’s in the county or the city,” Napa County Supervisor Mark Luce said.

Developers are proposing a mixed-use development featuring 2,580 townhomes at Napa Pipe, the former industrial site in the south county. Environmental studies of the project are well under way, and the Napa County Board of Supervisors is scheduled to vote on the project in 2010. City leaders, however, are hoping to bring the project under city jurisdiction because they are worried about the impact of such a large project so close to town.

This past week saw a flurry of activity affecting the project.

On Tuesday, supervisors approved a housing strategy that both anticipates housing at Napa Pipe and calls for resumed negotiations with the city of Napa about annexation of the Napa Pipe . Under the proposal, the city would get jurisdiction over Napa Pipe in exchange for taking on the county’s housing mandates from the state.

Last Thursday, Grabill sued the city over its housing plans, asserting the city is doing too little to promote affordable housing and is out of compliance with state law.

Luce and others say Grabill’s suit against the city could stall housing negotiations between the city and county. The city may not be able to take on any more housing if its housing plan is under fire, Luce said, especially if city officials refuse — as they have indicated they might — to allow development at Napa Pipe.

“Assuming there’s any validity in the lawsuit at all … it does bring into question the city’s ability to really offer to provide the county housing,” Luce said. “If they get bogged down in the unknowns around this lawsuit, it may be a year or more before we actually have enough clarity about what they can or can’t do to engage in a decision, and by that time Napa Pipe development in the county could be well down the road, so it does make the in-city options less viable.”

Supervisor Diane Dillon agrees that talks with the city may be difficult. The county would hope to enter a housing agreement with the city. But, she said, “I would suspect that not having a (legal) Housing Element could preclude them from those kinds of things.”

Mike Parness, Napa’s city manager, dismissed concerns that the lawsuit could tie up negotiations. He said the suit won’t hinder talks “unless it’s successful, and we don’t think it will be.”

Napa Mayor Jill Techel said she is also confident that the city will successfully defend the suit and resume negotiations with the county.

 She added that the timing of Grabill’s lawsuit seems odd, coming just days after the county embarked on a plan to resume talks with the city.

“They may be trying to stop any potential negotiations or a deal until this gets resolved, or they may be trying to divert attention, but that’s all pure speculation,” Parness said.

Parness said some city officials have been suspicious of the motives behind recent attacks on the city’s Housing Element, including a blistering letter from former Napa County Planning Commissioner David Graves in May.

“We knew that (Napa Pipe developer Keith) Rogal is very threatened by the fact that the city has offered to incorporate some of the county’s housing stock in order to avoid massive housing outside our border,” Parness said. “Whether he is behind this or not, I have no idea.”

Rogal denied involvement in the lawsuit against the city.

“I don’t know why there is a persistent pattern where when the city receives what might be viewed as a criticism or a challenge from residents like city residents or neighbors or in this case a guy with a particular ax to grind … that public officials toss out (accusations),” Rogal said. “It seems to me unseemly and unprofessional and not very productive.”

Rogal said he has spoken with Grabill, but maintains they never discussed the lawsuit.

“I talked to David Grabill at a workforce housing meeting,” Rogal said. “He came up to me and shook my hand six months ago … and several years ago he asked me to talk about what our proposal was for Napa Pipe. The guy’s a housing advocate. That’s what he does.”

Grabill also denies that Napa Pipe developers are involved in the lawsuit.

“I don’t represent the Napa Pipe developers,” Grabill said. “Have I ever talked to them? I have talked to them. I know their concerns, but I represent the Latinos Unidos de Napa. It’s a group I’ve worked with for five years, and that’s the only group that I represent in this lawsuit.”

Grabill, who declined to name any individual plaintiffs in this suit, also represented Latinos Unidos de Napa in 2003 when he sued Napa County on behalf of two farmworkers who alleged that the county was not developing enough affordable housing. The suit led to a housing deal between Napa County and the cities of Napa and American Canyon.