WOODWAY — Some voices in the packed council chambers urged the town to forge ahead. Others threatened lawsuits.

A hearing in Woodway on Monday on annexing the site of the controversial Point Wells development against the owner’s wishes ended with a rare opening for compromise — or it could devolve into costly court battles.

For the first time, developer BSRE Point Wells’ representatives signaled they’re willing to consider a smaller condo project for the industrial site. Current zoning could limit it far below the 3,000-unit proposal that stalled in the permitting process this year.

Leaders from Shoreline, which also covets the land in unincorporated Snohomish County, said they would like to sit down for mediation talks with Woodway.

“I agree that maybe we’re at a point now where maybe we can all get to the table and do some talking,” Woodway Town Councilwoman Elizabeth Mitchell said.

Mitchell and her colleagues, however, also said they hadn’t forgotten past arguments with the other parties over the future of Point Wells.

Woodway and Shoreline started discussions to find a mediator last week, both sides confirmed. Areas of conflict include the impact on Shoreline’s road system and sewer service.

BSRE —the letters stand for Blue Square Real Estate — is part of a Israel-based energy and real estate conglomerate. It submitted permits for its high-rise condo development in 2011. Plans called for numerous buildings of 90 feet or more, the tallest reaching 17 stories. The scale is beyond anything else between Seattle and the Canadian border.

The 60-acre site now hosts tanks for marine fuel capable of storing million of gallons, as well as an asphalt plant. Barges dock for fuel transfers hundreds of times every year.

This year, BSRE lost crucial key land-use decisions in Snohomish County. The project’s shortcomings include a lack of road and transit access, landslide hazards and development concerns near the shoreline.

The Town Council voted in October to consider annexing Point Wells through a novel interpretation of state law. The town would try to use what’s known as an island method of annexation, a route for municipalities that mostly or entirely surround an unincorporated area with residential properties. Woodway would have to factor in Puget Sound to reach the threshold of encircling Point Wells by more than 80 percent, as state law requires. To meet the residential requirement, Woodway counted a sliver of a residential property that’s mostly in the town but appears to extend into the unincorporated area.

“It may prove to be successful, it may not,” town administrator Eric Faison said at Monday’s hearing.

Lawyers for BSRE and Shoreline contend Woodway is using the annexation law incorrectly.

About 80 people filled the council chambers Monday, a rarity in this town that goes by the motto “The Quiet Place.” Some told the council to move to take control of Point Wells.

“As the political cliche says, if you’re not at the table, you’re on the menu,” said John Brock, 60, one of the many people who spoke at the hearing. “Woodway could have easily been divided, devoured and the quiet nature of our town disrupted forever. Annexation of Point Wells by the Town of Woodway is the only way to assure our seat at the table.”

The town has spent nearly $210,000 for legal costs related to Point Wells and a neighboring property since 2015, according to numbers provided by Faison.

Attorneys for Shoreline and the developer promised to escalate those legal costs if the town insists on a forced annexation. They would rather seek agreement.

“Like Woodway, we are tired of litigation,” said Julie Ainsworth-Taylor an assistant city attorney for Shoreline. “We would like to come to a compromise.”

Jacque St. Romain, an attorney for BSRE, said in written comments the company might be open to Woodway annexing the property — but only after a formal agreement.

“BSRE will strenuously object to any unilateral attempts by Woodway to annex Point Wells,” St. Romain wrote.

The Woodway Town Council is set to meet again at 7 p.m. Nov. 27 to revisit the issue.

BSRE has come under new corporate ownership. Local Point Wells representatives talked recently to Moti Ben-Moshe, the businessman now in charge of their portfolio.

“He is willing to negotiate,” said Steve Ohlenkamp, a BSRE consultant. “… He is willing to look at a smaller project.”

Current county zoning would allow a maximum of 2,640 housing units and a minimum of 720. Woodway’s zoning would permit half that number. Environmental factors and the surrounding road system could reduce the size further. Even so, a Point Wells development could match or exceed Woodway’s current population of 1,340.

Ohlenkamp noted the potential for landslides from the bluff east of Point Wells. It’s near where a 1997 landslide knocked five freight-train cars into the sound.

That’s a worry, Ohlenkamp said, given the approximately 20 million gallons of fuel stored there at any given time. A development that stabilizes the bluff would be preferable to what’s there now, he reasoned. A protracted legal fight wouldn’t allow that to happen.

“The status quo should not be an option, but it’s the likely outcome if we continue down that path,” Ohlenkamp said.

Point Wells experienced a serious oil spill in 2003. Nearly 4,700 gallons poured into the water while a Foss Maritime tank barge took in bunker marine fuel from the terminal, then run by ChevronTexaco. Oil drifted across the Sound and contaminated Kitsap Peninsula beaches. Foss paid the Suquamish Tribe more the $1 million in damages and faced state fines.

Noah Haglund: 425-339-3465; nhaglund@heraldnet.com. Twitter: @NWhaglund.