FREMONT — A lawsuit aimed at blocking the construction of nearly 100 Niles district townhomes claims the city did not comply with environmental law before approving the project last month.

The lawsuit challenges Fremont’s refusal to prepare an environmental impact report for a housing-retail development at 37899 Niles Blvd., near the historic neighborhood’s southern gateway.

Protect Niles, a newly formed citizens group, filed the suit Friday, claiming the project should have required an environmental review because it will affect the Niles district’s traffic, historic resources, parking, land use, soils and aesthetics.

“The group fully supports development of … the site,” Protect Niles member Julie Cain said, “but with a less dense, lower-profile, sustainable development complying with our adopted local plans and policies, responding to site constraints, and (remaining) compatible with our historic locale.”

Fremont assistant city attorney Debra Margolis declined to comment, saying she hasn’t had a chance to thoroughly review the lawsuit because the city has not yet been served.

Valley Oak Partners’ plan would add 98 housing units, a 2,400-square-foot restaurant and a 1,200-square-foot community meeting room.

Most of the housing will be two- and three-story townhomes ranging from 1,600 to 2,100 square feet. Each will have a two-car garage underneath it, according to a staff report. The plan also includes seven live-work units, city leaders said.

The property, vacant for five years, was the site of industrial businesses for about 80 years. A cannery operated there in 1918. Later, it was the site of a chemical and metal treatment plant. When the plant needed seismic upgrades, it closed in 2002 and never reopened. The property’s remaining buildings were demolished in 2009.

Niles, one of Fremont’s five original communities, has retained a small-town charm that is celebrated by its residents. Opponents of the Niles Gateway project say it would threaten the district’s aesthetics and spirit.

Fremont’s Historical Architectural Review Board agreed, recommending denial of the development because “of its incompatibility with the Niles Historical Overlay District,” the lawsuit states.

The City Council overruled that vote, approving the development on March 3 in a 3-2 decision.

Before the development is built, Valley Oak Partners must remove almost 10,000 cubic yards of toxic dirt and refill it with clean soil before starting construction, city leaders said.

First, however, it must contend with the lawsuit Protect Niles filed in Alameda County Superior Court.

“The Niles Gateway project is rife with impacts due to density and massing that is out of scale with the community,” Protect Niles member Dave Jacobs said. “An EIR is needed to thoughtfully consider and address environmental impacts.”

Contact Chris De Benedetti at 510-293-2480. Follow him at Twitter.com/cdebenedetti.