The site of the Frognal Estates subdivision on Dec. 20, 2018 in the Picnic Point area south of Mukilteo. (Noah Haglund / The Herald)

The site of the Frognal Estates subdivision on Dec. 20, 2018 in the Picnic Point area south of Mukilteo. (Noah Haglund / The Herald)

Frognal Estates property could get new owner

The developer pushing for 112 homes near Picnic Point needs another loan to deliver finished lots.

PICNIC POINT — Backers of the controversial Frognal Estates subdivision are exploring selling the undeveloped property if they can’t work out wrinkles in the embattled project’s financing plan.

Developer John Lakhani expects the 22 acres near Picnic Point Road could go for $22 million to $27 million “as-is” if his team can’t get another loan to advance the project further, he said during a Wednesday hearing held via teleconference as part of bankruptcy court proceedings.

“We have received several inquiries. We have given the information out,” said Lakhani, of Frognal Holdings LLC, which last month filed for Chapter 11 bankruptcy in the hopes of reviving the project’s faltering financials. “We are in the process of getting ourselves organized to appoint an agent who will market the property and get as many offers as possible.”

It’s unclear what a sale now would mean for the planned 112-home subdivision, 15 years in the making. Permits for the project could also be sold to the new landowner if such a transaction were to occur, Snohomish County planning officials have said.

“The end game is to deliver finished lots,” Lakhani, the president and CEO of Everett-based Integral Northwest, said in a Friday text message. But getting the financing to deliver those lots will require cooperation from contractors, some preliminary lot sales and “all permits in hand,” he said.

“We are working concurrently on all options,” he added.

The subdivision still needs a key approval from the Alderwood Water and Wastewater District for its sewer system.

The project has been a source of controversy since the first permit applications were submitted under the name Horseman’s Trail in 2005.

The developer won a series of court battles to advance the plan, despite objections from neighbors, who have argued that Frognal Estates would create landslide risks on steep and environmentally sensitive terrain south of Mukilteo.

The land, once forested, has already been cleared in preparation for construction.

Frognal’s backers purchased the property with one loan and planned to obtain a second loan to finance construction and pay off the first loan. But the developer was unable to get that second loan after a deal fell through with a national homebuilder that was going to purchase the lots, Lakhani said during the hearing.

In accordance with Chapter 11 of the U.S. Bankruptcy Code, Frognal Holdings is formulating a plan to pay the more than $11.3 million that it owes to more than a dozen creditors. The developer intends to file that plan within 90 days, representatives said during the hearing.

Lakhani told creditors that $12.5 million to $13 million will be needed to build infrastructure on the property before home construction can begin.

A foreclosure auction of the property, which was slated for Friday, was again postponed due to the bankruptcy proceedings.

The project’s construction permits don’t expire until summer 2022, and they could be extended, according to county Planning and Permitting Supervisor Ryan Countryman.

Rachel Riley: 425-339-3465; rriley@heraldnet.com. Twitter: @rachel_m_riley.

Talk to us

More in Local News

Julie Copeland, center, with her daughters Lillian, 11, Naomi, 7 and son, Michah, 9 with their dog Pippin, 3, outside of Mary's Place on Thursday, Nov. 19, 2020 in Burien, Wa. (Olivia Vanni / The Herald)
A family of 6 pitched tent in Forest Park — then help arrived

Everett’s innovative team of a police officer and a social worker aided them in their time of greatest need.

A major fire broke out on the Everett waterfront Monday morning in an apparently difficult location. (Sue Misao / The Herald) 20181008
Everett boater gets house arrest for fraud in marina fire

He lost his boat in a 2018 fire. But valuables he claimed were destroyed weren’t burned. He sold them on OfferUp.

Port of Everett, state offer new small business grants

Port tenants and companies affected by COVID-19 health restrictions are encouraged to apply.

New Snohomish County online guide aims to boost businesses

County officials have launched an online business directory to help shoppers find local food and wares.

Man arrested after allegedly shooting at, fleeing deputies

A homeowner reportedly found the Lake Stevens man, 40, hiding in a garage and called 911.

Local economic relief programs to get $4.5 million infusion

The new cash will go to small businesses via city grant programs and Economic Alliance Snohomish County.

Auditor: Lack of oversight led to errors in Sultan finances

For a second time, the state auditor’s office urged the city to improve its financial review process.

Voters Brie Roberts, 28, and Michael Woods, 30, vote for the first time at the Robert J. Drewel Administration Building on the Snohomsish County Campus on Monday, Nov. 2, 2020 in Everett, Washington.  (Andy Bronson / The Herald)
Voters young and old put this election in the record book

Generations X and Z, and Millennials, showed up and increased their share of votes compared to 2016.

$250,000 bail for Everett man accused of firing at deputy

A five-mile chase ended with the suspect allegedly breaking into a Mill Creek home Saturday night.

Most Read