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; Twitter: @rachel_m_riley.

Talk to us

More in Local News

Staff are evaluating two more light rail alternatives for the Everett Link extension. One would follow Interstate 5 north of 128th Street SW to the Everett Mall and back to the freeway. Another would go west of 128th Street SW to Highway 99 and north to Casino Road. (Sound Transit)
Snohomish County leaders reject light rail routes bypassing Paine Field

Those options weren’t what voters approved — and would be like “butchering” the plan, the Snohomish County executive said.

A Sound Transit train arrives at Westlake Station in downtown Seattle. (Sue Misao / Herald file) May 2019
Should light rail skip Paine Field and Boeing? We asked, you answered

More than 300 Herald readers responded to an online poll. Here are the results.

Logo for news use featuring the municipality of Lake Stevens in Snohomish County, Washington. 220118
Highway 9 work could disrupt travel through Lake Stevens

Construction is set for roundabouts on South Lake Stevens Road and one at North Davies Road and Vernon Road.

Lynnwood City Council members, from left: Jim Smith, Shirley Sutton, Shannon Sessions, Josh Binda, George Hurst, Julieta Altamirano-Crosby, and Patrick Decker. (City of Lynnwood)
No penalty for Lynnwood council member’s ‘underinformed’ views on racism

The City Council didn’t censure Jim Smith after a report found he discriminated against a Black city employee.

All ears: Mukilteo couple provides surgery for kids born without ears

Dr. Prabhat and Trish Bhama are part of a HUGS volunteer team providing treatment for microtia in Guatemala.

(Mt. Baker-Snoqualmie National Forest - US Forest Service)
U.S. 2 reopens east of Index as Bolt Creek wildfire moves north

The highway was blocked off earlier this week as the fire spread.

People gather outside of the new Northwest Carpenters Institute building prior to a grand opening celebration Thursday, Sep. 29, 2022, in Burlington, Washington. (Ryan Berry / The Herald)
Building a workforce: Northwest Carpenters expand training center

About 160 Snohomish County tradespeople take the apprentice classes in Burlington center. There’s ample room to grow.

A Coast Guard cutter searches for a crashed chartered floatplane near Mutiny Bay Monday afternoon in Freeland, Washington on September 5, 2022.  (Kevin Clark / The Herald)
5 more bodies recovered from floatplane crash off Whidbey

About 80% of the plane, including the engine, was recovered using remotely operated vessels.

Conceptual rendering for a future section of Smokey Point Boulevard between 174th Place NE and 200th Street NE. (City of Arlington)
Plan seeks to transform Smokey Point Blvd. into ‘neighborhood corridor’

City officials hope roundabouts, sidewalks and more will turn 2 miles of busy road into a neighborhood street.

Most Read