Mitigation 2011-2016

September, 2016 – Update

Since the SEC filed fraud charges against Lobsang Dargey and Path America (and some 13 affiliated enterprises), progress on Potala Kirkland has been halted. The receiver on the case has focused primarily on disposing of Potala Tower, the high-rise project in Belltown (Seattle), which has been purchased by a Las Vegas developer working in concert with a Chinese company. Not surprising is the fact that there is a background relationship between the family of Mr. Dargey’s wife Tami Agassi and the Las Vegas developer, Irwin Molasky, and that the deal includes $1.8 million to Dargey for legal expenses.

As of this date, word on the  street is that the Grassmueck Group (the receiver) has hired a real estate broker to shop the Kirkland property to potential purchasers, and that the field has been narrowed to 2 firms. One of those firms is a known and respected high-end Kirkland company and the other is unknown but suspected to also be a Kirkland firm. The former is expecting to reconfigure the project. The plans of the other firm are unknown. Disposition of the property by the receiver, which would begin a new phase of citizen involvement, is expected to occur in a matter of weeks.

November 24, 2015 – Update

Progress in the past year has been slow because of ongoing litigation. Still, a lot has been happening behind the scenes, most of which has been periodically reported to the ~800 involved citizens of Kirkland and nearby communities via the mass e-mails used by STOP.  For others interested in this project, here’s an update:


  • In February, 2015, the Washington State Supreme Court denied review of the developer’s late 2014 petition appealing the decision at the Court of Appeals that overturned Judge Benton’s Superior Court ruling that a Shoreline Permit creates vesting.
  • Also in late 2014,the developer filed another lawsuit claiming that the City of Kirkland should have given him a building permit during the period when Judge Benton’s erroneous ruling was in effect.
  • In May, 2015, the City was granted a Motion for Summary Judgement (MSJ) by Judge Lum on the second lawsuit.
  • The developer appealed the MSJ to the Court of Appeals.
  • In November, 2015, the City of Kirkland filed its response to the appeal of the MSJ, claiming the appeal is frivolous and asking for attorneys fees as well.
  • Since the same appeals court ruled against the developer on the appeal of his first lawsuit, and since the Superior Court’s rationale was extremely well supported, the appeal of the MSJ dismissing Mr. Dargey’s lawsuit is believed to have almost no merit.


  • On August 24, 2015, the SEC announce that Mr. Dargey, Path America and other affiliated companies were being sued for fraud. The charges involved fraudulently using millions of dollars of EB-5 investors’ funds for such things as non-EB-5 projects, casino gambling, purchase of a $2 million home and a $200,000+ Bentley.
  • On September 23, 2015, the SEC began steps to appoint a receiver for all assets of Dargey and Path America.
  • By October 24, a receiver had been appointed and charged with managing and/or disposing of all assets of Lobsang Dargey, Path America and affiliated companies, including the Potala site on Lake Street, for the benefit of the defrauded investors.
  • In the meantime, a dozen or more Chinese investors have sued to have their $500,000 investments returned.

Until the Court of Appeals finally rules on the appeal of the MSJ and until all of the litigation related to the SEC case is settled and/or the assets sold, STOP remains committed to seeing that the property at the corner of Lake Street and 10th Avenue South is developed in keeping with Kirkland’s Comprehensive Plan. Our goal is that any development be in keeping with the neighborhood character and be of an appropriate size, scale and mass.



October 1, 2014 – Update:

The leadership team and supporters held a pizza rally on September 27 to celebrate the hard work of the hundreds of Kirkland citizens over 4+ years. STOP has been successful because of passionate leaders, hard work, a large team of direct supporters, and the outspoken encouragement of hundreds of Kirkland citizens and others who seek more appropriate development of this property in keeping with the scale and density of the neighborhood. Thanks to EVERYONE for being a part of our success!

Our next goals (assuming neither of the new lawsuits progress) is to assure that revised plans result it appropriate density, scale, traffic mitigations, and especially “Design Review.” The latter is included under the new zoning, which generously allows up to 48 units per acre on this property.

August 25, 2014

Court of Appeals rules in favor of Kirkland

City prevails. Court overturns Judge Benton

Ruling says 48 units per acre zoning change is legal

There’s not a lot to be said other than “We won!” At least we’re a lot better off than we were 4 1/2 years ago.

* Remember in 2009 the developer proposed 183 apartments on the Lake and 10th site? * Remember that in 2010 he and the City agreed that he could build 143 units – because there was unlimited density allowed on our BN zones? * Remember that in 2011 he obtained a Shoreline Substantial Development Permit? * Remember that in 2010, 2011 & 2012 the “Red Shirts” attended a LOT of Council and Planning Commission meetings? * Remember that in 2012 the zoning was changed to 48 units per acre? * Remember the failed mediation in late 2012 – some 10-20 hours of meetings resulting in no compromise by Potala? * Remember that in June, 2013, Judge Benton said Potala’s SSDP constituted “vesting,” and the City had to accept his application for a Building Permit under the old zoning? * Remember that in 2014, in fact this week, the project was to be granted a Building Permit for 88 units?

Well, thanks to the dedication and persistence of hundreds of citizens who really care about our signature waterfront boulevard, we are now down to less than 60 units on this 1.2 acre property – still four times what we believe the Comprehensive Plan intended, but closer to something we can live with… especially if “Design Review” is required. And many thanks to the Council, Planning Commission, and City staff for putting up with us and allowing citizen input to make a difference.

To read the entire 25 page unanimous ruling by the 3 judge panel of the Court of Appeals, click here. As you read it, note that the Court shot down every single one of Potala’s arguments that they were entitled to “vesting” under the SSDP.

To read a brief story about the ruling, go to Kirkland Views. Be sure to read the “Comments,” and post your own. The more the better.

To sign up for updates from the City on the Potala project, click here.

If you are new to this website, here’s more of the story:

In reverse chronological order (most recent first), the following are the milestones in STOP’s effort to reduce the scale and density of the Potala Village project:

  • As of February 28, 2014:
    • The City’s appeal of Judge Benton’s ruling has yet to be heard. Should the City prevail in that appeal, which the City believes strongly that it will, the project could contain a maximum of 58 units, 30 less than currently proposed. Any non-conforming structure(s) would have to be removed. STOP cannot imagine a developer beginning construction under this circumstance, even if a building permit were granted.
    • No building permit has been granted.
    • The permit application is still being reviewed, and the City just issued a 5 page letter with 14 pages of appendices to which the developer must respond to the satisfaction of the Planning Department.
    • A Demolition Permit was issued and the buildings on the site have been removed.
    • A Grading Permit has been issued for site cleanup only.
    • The Developer has experienced some negative press regarding his Everett “Pagoda Village” project.
    • There continue to be many negative online reviews of the Everett Potala Village apartment project. We have no reason to expect better were a similar project to be built in Kirkland.
  • August 20, 2013: Developer erects fence around property and posts a large (and non-compliant) “Coming Soon” sign. City asks him to remove sign the next day. STOP believes this ploy is window-dressing to impress potential investors (who probably do not know that he does not yet have a building permit, and that the project remains in litigation.)
  • Early August, 2013: Shorelines Hearings Board issues opinion. Very little in the opinion helps to mitigate STOP’s issues. Most are quite technical legal points regarding the Shorelines Management Act and how a Shoreline Substantial Development Permit is issued. The opinion of the SMHB returns them to the City for mitigation through the permit process and Environmental Impact Statement.
  • Mid July, 2013: The developer submitted an application for a building permit for 97 units. However, that application was deemed by the City to be incomplete. (See further info on the permit below.) NOTE: For “Permit Wonks,” you can view the permit application online. Go to this link. Where it says “Jurisdiction:” enter Kirkland; where it says “Permit Number,” scroll down or find “BMU;” then select the year “yr13.” Finally, enter 03290
  • Early July, 2013: Judge Monica Benton ruled that the City must accept an application for a building permit based on the zoning in place at the time the Potala “Substantial Development Permit” was submitted. The City is appealing that decision.
  • June 18-19, 2013: The Shorelines Hearing Board heard arguments regarding the impact of Potala on the enjoyment of the waterfront, including inconsistencies with the Shorelines Management Act. The Board visited the site of the proposed development. The opinions of the Hearing Board are due in early August.
  • Spring/Summer, 2013: “Traffic Concurrency” for the project expired. This requires a resubmission of new traffic data before the project can be granted a building permit.
  • December 18, 2012: City Council agrees that zoning of the Potala BN property should be limited to 58 residential units (48 units per acre). Other BN properties in City also codified/downzoned. Developer renews legal battle with City.
  • December 4, 2013: City Council refuses developer’s settlement offer of 100 units. The Council then asked staff to develop a proposal around 48 units per acre, noting that this was still 4 times higher than that originally proposed by STOP. The City felt that a consistent density of 48 units per acre (or less) on all BN zones would show the court that the City 1) had a consistent plan that made sense, 2) was not “spot zoning,” and 3) would reduce the amount of the City’s damages should the City lose a developer lawsuit, because this number is closer to the settlement agreement proposed by the developer than the 12 units per acre argued by the citizens. (That the City would actually lose such a lawsuit is unlikely, given the history of land use cases in Washington and the nation.)
  • November 14, 2012:Mediation concluded after at least 5 sessions and more than 30 hours of negotiation. Citizens, City and developer unable to reach a mutually acceptable resolution to the developer’s lawsuit.
  • November 10, 2012: Citizen group granted “intervenor” status by King County Superior Court. This means that any legal issues raised by the citizens opposed to the Potala development must be included in any settlement discussions regarding the developer’s lawsuit against the City of Kirkland. Click here to view petition for intervenor status.
  • October 16, 2012: Council votes to extend BN zoning moratorium until end of 2012.
  • October 8: Mediation talks begin. Additional meetings with two professional mediators, the City and citizens STOP group on October 15 and 16.
  • October 2, 7:30 PM: Council discusses PC recommendations for zoning changes. “Straw poll” indicates support for uniform density on all Residential Market areas of 36 units per acre. Click here to view the PC letter to the Council.
  • September 18, 2012: City Council received the Planning Commission recommendation of 36 units per acre plus design review (but with a zero front setback) for the Potala property. Council found it odd that the similar property on Market Street and Bridle Trails were given a density cap of 24 units per acre, and the BNA zone 18 units per acre. PC Chair Mike Miller, in attempting to explain the difference, called it “simply a gut feeling.” The latter language was promptly cleaned by the Planning Director for public consumption. Two attorneys representing STOP spoke to the Council. The Kirkland Reporter had several letters on the Potala issue in September. Check them out. Letter 1Letter 2Letter 3
  • August, 2012: Planning Commission completes the review of the BN Zones – as requested by the City Council – and recommends both a density cap of 36 units per acre and “Design Review. While an improvement, the density remains out of sync with the character of the rest of the neighborhood and the intention of the Comprehensive Plan. Interestingly, the Market Street Corridor was capped at 24 units per acre, with no pending request or citizen input. STOP believes a similar cap should be applied to the BN zones, of which Potala is one.
  • August 14, 2012: Hearing on EIS held at City Hall. Buckets of input given to planners requesting major revisions to Draft before publishing final EIS. Example: A “comparable property” was listed as having a density of 177 units per acre. County tax records show that it has only 18 units per acre and is not comparable because it is over water.
  • July 12, 2012: The Draft Environmental Impact Statement was published July 12, 2012. Since it is long, the section of greatest value is Section 3.3 “Aesthetics.” There is almost nothing in the EIS that addresses the major problem with the Potala project: Residential density of 10 times the surrounding neighborhood. The section most full of errors is Section 3.1 on “Land Use.” Click the link to view this section with many of the errors already annotated by your Leadership Team. Also, see this recalculation of the existing neighborhood residential densities, including a telling graph. Potala’s 116 units per acre is nearly 3 times higher than any existing parcel and 10 times higher than the Comprehensive Plan specifies.
  • June 28, 2012: Planning Commission Hearing on BN Zones. Dozens of citizens spoke eloquently on every reason why unlimited residential density on BN zones is wrong. The focus again was on scale, intensity of use and density. Pockets of density destroy neighborhoods. This project is completely out of character with it surroundings and does not “fit where it sits.” No action taken.
  • May 31, 2012: Planning Commission considered and rejected the Council’s suggestion to consider changing the Land Use from Residential Market to Neighborhood Center. They then, after a long and surprisingly well-reasoned if slightly divided discussion, voted to apply a density cap. The final density cap has not yet been decided, but the range is 12-48 units per acre.
  • May 15, 2012: In a bizarre meeting, the City Council recommended that the Planning Commission apply a “density cap” to the property, but also voted 4-3 to consider up-zoning the land use from Residential Market to Neighborhood Center. No specific density limit was proposed. If you want to read the actual memo from the Planning Director leading to these decisions, click here. After over a year of debate, it appears that the City Council and Planning Commission are tossing this hot potato back and forth trying to avoid being the party responsible for destroying Kirkland’s signature waterfront boulevard with ultra-high density residential development and even worse traffic.
  • May 8, 2012: The “scope” of the EIS was presented at a citizens’ meeting at City Hall. Inova is the company doing the EIS. The only options available are the original 143 units and 316 parking spaces, or “no action.” However, mitigating steps can be presented as part of the EIS. Citizens did a great job of presenting a wide range of concerns.
  • May 1, 2012: City Council votes 7-0 to extend the moratorium on development of BN zoned property. They expect the Planning Commission to continue its work and present a proposal by August.
  • April 3, 2012: City Council and Planning Commission met jointly to “check in” and see if the PC is on the same track as the Council is expecting. There appeared to be concurrence that the Comp Plan is fine as is, and that the zoning code does not reflect the language and intent of the Comp Plan. No proposal was presented and no vote taken.
  • March 8, 2012: Further modifications to the zoning chart were made by the Planning Commission, but scale and density remain an issue for neighbors.
  • February 23, 2012: After agreeing that the Comp Plan is appropriate and needs no changes, the Planning Commission refused to establish a maximum residential density on BN zoned property. A petition campaign undertaken by citizens garnered over 500 signatures asking for a residential density cap on BN zoned property.

PETITION: IT’S NEVER TOO LATE TO SIGN. A citizen petition requesting that residential density be capped on BN zoned property gathered over 500 signatures. If you have not yet signed the petition, click here to sign. Surprisingly, unlimited residential density is allowed on any commercial zoned property in Kirkland, potentially affecting every neighborhood.

  • February 9, 2012: Planning Commission determined that the Comprehensive Plan satisfactorily states the City’s vision for this property (note that the Zoning Code is not concurrent with the Comp Plan.)
  • November, 2011: City Council passed a moratorium to halt further development of BN zoned parcels, and referred the matter to the Planning Commission.

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