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

Caption: South Whidbey High School students Annie Philp, left, and Maggie Nattress lead a climate change demonstration in Freeland on Nov. 29, 2019. The two friends are founders of United Student Leaders. (Linda LaMar)
From worriers to warriors, they’re fighting climate change

Local environmental groups are forming, growing and attracting new members, young and old.

Brett Gailey
Lake Stevens’ first full-time mayor will make $80,000 a year

The city council voted in September to convert the mayoral position from part time to full time.

Everett man arrested in Las Vegas for 2019 shooting

After the killing on Aurora Ave. in Seattle, the suspect relocated to several different states.

Rescuers find lost Marysville hunter near Leavenworth

They reached him over the radio, so they asked him to fire a round of his rifle to help locate him.

Man shot while pumping gas in Everett

A man in his mid-40s refused another’s demand for his wallet. The victim was hospitalized.

Cassandra Lopez-Shaw (left) and Robert Grant.
Lone local judge race: Defense attorney vs. deputy prosecutor

Cassandra Lopez-Shaw would be the county’s first Latina judge. Robert Grant is endorsed by retiring judge Eric Lucas.

Two teens shot near Mill Creek, taken to hospitals

The males, 17 and 18, were in a vehicle when two males approached and got into an altercation.

Norton Playfield, a three-acre play field owned by Housing Hope on Thursday, July 23, 2020 in Everett, Wa. (Olivia Vanni / The Herald)
Vote nears on Housing Hope’s Everett playfield project

The Everett City Council will deliberate Wednesday on the multi-family, supportive housing proposal.

Puddum the guinea pig in a Halloween costume. (Jessi Loerch)
Get your guinea pig costumed for trick-or-treat — if you can

Dressing up pets is no longer just for cats and dogs. Rodents can be mermaids and superheroes, too.

Most Read