Soren Schreffler (left) and Rachel Schreffler work to assemble tables at Choux Choux Bakery at Potala Place. A federal court is considering a plan to complete the commercial space at Potala Place, a 220-unit apartment building in downtown Everett. (Kevin Clark / The Herald)

Soren Schreffler (left) and Rachel Schreffler work to assemble tables at Choux Choux Bakery at Potala Place. A federal court is considering a plan to complete the commercial space at Potala Place, a 220-unit apartment building in downtown Everett. (Kevin Clark / The Herald)

Court has plan to complete troubled development in Everett

EVERETT — A federal court is considering a plan to complete the ground-floor market at Potala Place, a 220-unit apartment building in downtown Everett. The sprawling space has sat empty and unfinished for nearly a year since a lawsuit by federal regulators put it at the center of fraud allegations.

The U.S. Securities and Exchange Commission alleges that the project’s developer, Lobsang Dargey, defrauded his foreign investors and misspent millions of dollars. Meanwhile, the FBI has been investigating the monk-turned-real-estate-mogul.

Dargey, 42, of Bellevue, has denied any wrongdoing since the SEC filed suit in U.S. District Court for Western Washington. The legal action halted progress on several other projects, including a proposed skyscraper in Seattle, owned by Dargey’s myriad businesses.

The court-appointed receiver, Michael Grassmueck, wants to finish construction at Potala Place on Grand Avenue in the heart of downtown Everett. In July, he asked the court to approve completing the project essentially in line with Dargey’s original vision of upscale shops focused on food. U.S. District Judge James Robart is considering the motion.

One of Dargey’s original partners in Potala Place’s market, Steve Carlin, put together the business plan that Grassmueck asked the court to approve. The Napa, California-based developer specializes in high-end food markets. Carlin, who runs the Carlin Co., had pulled out of Potala Place prior to the SEC lawsuit. The receiver negotiated his return earlier this year.

Everett is not the ideal setting for the type of markets developed by the Carlin Co. However, it has something that helps close that gap: a city-granted property tax break estimated to be worth more than $5 million over 12 years, the business plan says.

The company expects that getting the marketplace up and running will “require a significant subsidy,” the business plan states.

The tax break, which the city approved in 2013, is tied to developing a premium food market with a focus on farm-to-fork products.

The market is the project’s defining feature, and is a major reason that Potala Place’s apartments have rented at 15 to 20 percent more than the market average. The apartments are making money, as is an adjacent 122-room hotel that was built as part of the project.

If the court approves the plan, Carlin will open and operate the ground-floor commercial space for three years. The plan’s tentative timeline has the anchor attraction — Farms &Market — opening in January 2017. Farms &Market would feature a year-round farmer’s market, a boutique grocery and prepared food. A French bakery, Choux Choux Bakery, could be opened by this fall.

Carlin proposes rebranding the space as Grand Avenue Marketplace. Whatever it is called, he estimates it will cost nearly $4.2 million to finish construction.

Dargey has endorsed the receiver’s proposal.

In May, Robart approved a deal to restart construction on Potala Tower, a 41-floor skyscraper in Seattle’s Belltown neighborhood. The deal is expected to close by the end of this month.

Dargey financed Potala Place in Everett and Potala Tower in Seattle in large part by raising money from foreign investors through a federal investments-for-visa program, known as the EB-5 program. The program offers foreign citizens and their families a shortcut to a green card in exchange for investing in projects creating jobs in the United States.

He raised at least $123.5 million from Chinese investors — $83.5 million for Potala Tower and $40 million for Potala Place.

The SEC accuses Dargey of diverting investors’ money to projects they had not agreed to back in Shoreline and Kirkland, and using it to buy a house in Bellevue and fund spending sprees and trips to casinos.

The name Potala is a nod to Dargey’s native Tibet. He arrived in the U.S. in 1997. After working in the telecom industry, he moved into real estate development. Along the way, he married the sister of tennis superstar Andre Agassi.

Dargey got his start in Everett, where the offices of his companies, including Path America and Dargey Enterprises, are located. In Everett, he renovated several properties and, in 2011, opened a smaller apartment building with ground-floor shops, Potala Village.

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.

Talk to us

More in Local News

Voyager Middle School.
Shooting threat at Mukilteo schools was a joke, student says

Four threats of violence in 48 hours were reported at Snohomish County schools in the wake of a shooting at a Michigan high school.

Prosecuting attorney, Taryn Jones gives the state's opening statement to start the trial of Ryan Leenders for first-degree murder Friday morning at the Snohomish County Superior Courthouse on December 3, 2021. (Kevin Clark / The Herald)
Trial opens for Everett man charged with killing party guest

A defense attorney claimed Ryan Leenders mistook a vape pen for a gun when he shot William Harper, who was not armed.

Girl, 1, dies from gunshot wound near Granite Falls

Snohomish County Sheriff’s Office deputies were investigating the weapons assault report Saturday night.

State officials confirm first 3 cases of omicron variant

The cases were found in Thurston, Pierce and King counties, according to the state Department of Health.

Preston "Buddy" Dwoskin served as the head referee at the inaugural Buddy Bowl football game two years ago at Everett Memorial Stadium. (Contributed photo) 20211203
Anti-bullying ‘Buddy Bowl’ game set for Saturday in Marysville

Preston Dwoskin, a public speaker with special needs, organized the football festivities. He would like you to be there.

Police: Man kills himself on I-5 on-ramp, leading to closure

Marysville police were making a traffic stop when the man pulled over near 88th Street NE, got out and fired a gun.

Man dies in 140-foot fall from Arlington cellphone tower

The man, in his 30s, fell about just after 1:30 p.m. Saturday while working.

Everett man, 83, dies in hit-and-run

Detectives are seeking public assistance to find the driver whose vehicle struck Soong H. Park on Tuesday night.

Approved Legislative District Map (Washington State Redistricting Commission)
State Supreme Court declines to draw new redistricting plan

Many Snohomish County voters are now a big step closer to having new representation in the state Legislature.

Most Read