Lobsang Dargey, developer of the proposed Potala Village south of downtown Kirkland, is taking the city to court rather than accepting new zoning that slashes the number of apartments he can build.

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The developer of the proposed Potala Village apartment complex south of downtown Kirkland is taking the city to court rather than accepting new zoning that slashes the number of units he can build.

Lobsang Dargey filed a suit in King County Superior Court on Thursday, claiming the new zoning is an uncompensated taking of his property and unlawful spot zoning.

Dargey claims the right to build under zoning that was in effect when he applied for a permit nearly two years ago — not the more restrictive standards the City Council adopted last month.

City officials, who imposed a development moratorium while reconsidering the zoning, say Dargey’s earlier application for a shoreline permit didn’t “vest” the project under the older standards.

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New zoning would allow 48 residential units per acre, or a total of 58, instead of the 143 units Dargey has proposed for a four-story building with first-floor commercial space facing Lake Washington.

Neighbors objected to the scale of the project on Lake Street South, saying it was out of character with the maximum density of 12 units per acre on most nearby properties.

The old zoning had no cap on the number of residential units that could be built in the neighborhood business zone.

Dargey said he submitted a development proposal based on what city officials told him was allowed at the time. “I just want to build what they allowed me to build before they changed the zoning,” he said.

If he could build only 58 housing units, Dargey said, “I would lose money. There is no way I would build that.”

But City Attorney Robin Jenkinson said Dargey’s shoreline-permit application doesn’t entitle him to have the project evaluated under the old zoning. “As to the city’s enactment of the moratorium, we think the city followed the law in every respect. The City Council has given this very careful consideration throughout, as has our Planning Commission,” she said.

After citizens rose up in opposition to Dargey’s plans, the city required him to do an environmental-impact study. The City Council imposed a development moratorium — now expired — while considering more restrictive zoning.

Dargey filed a lawsuit last year over the moratorium, which prevented him from applying for a building permit.

The council voted last month to allow no more than 48 units per acre on the Potala Village property and other neighborhood business zones. That vote came after members spurned a negotiated settlement under which Dargey could have built up to 100 units and the city could have paid him to further reduce the size of the project.

Those negotiations, involving the city, Dargey and neighborhood opponents of the project, failed largely because some council members balked at paying the developer.

Mayor Joan McBride said the parties “came very, very close” to an agreement but that she opposed paying the developer to reduce the scale of the project. “Given our budget, given that we’ve just asked the citizens of Kirkland to support a park and a roads levy, it didn’t fit with what I thought we should be doing,” McBride said.

Opponents of Potala Village supported the council-initiated limit of 48 units per acre as preferable to the higher densities likely to result from a settlement with the developer, said neighbor Chuck Pilcher.

“At least we citizens feel we and the city are on the same side now,” Pilcher said. “That’s a really positive step. We want to support the city in their defense of any challenges to their zoning change. We want to be part of the city, not a plaintiff.”

Keith Ervin: 206-464-2105 or kervin@seattletimes.com

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