The Kirkland City Council did not approve a proposed Potala Village settlement agreement last night put forth by developer Lobsang Dargey and his wife Tamara Agassi Dargey.

When it was time to address the resolution during the Nov. 20 council meeting, no council members made a motion. The same inaction occurred when the mayor asked for a motion to halt the current moratorium on the Neighborhood Business (BN) zones.

This is the fourth moratorium against development on the Lake Street BN zone.

When Dargey initially submitted the project proposal last year, it sparked a controversy between more than 1,000 nearby residents, the developer and the city over the project’s scale and neighborhood impacts. Potala Village is a proposed 143 apartment unit project on a 1.2 acre lot with a view of Lake Washington in the Moss Bay neighborhood. The building would have 6,000 square feet of retail space, plus retail parking.

The Dargey’s agreed to a settlement on Nov. 2 that would have called for the council to lift the moratorium, currently set to end on Dec. 31, and allow for the developers to submit a building permit application for the property of no more than 100 residential units with commercial space on the bottom, which is allowed under the current BN zone laws.

Additionally, the plaintiffs agreed in the settlement to specific design elements, but asked the city to forgo the design review process.

The settlement asked the city to process their substantial development permit and environmental impact statements in a quick manner and refrain from any changes on the BN zones before the plaintiffs could submit their building permit application. Under current law, the property would be eligible for 1.7 parking spaces per multi-family residential unit.

Among other terms, both parties would have had to agree to stay the current litigation.

Although the council did not approve the settlement agreement, they did pass a motion to bring back a zoning ordinance for the Dec. 11 meeting, which calls for a residential zoning density of 48 units per acre in the BN zones, according to city attorney Robin Jenkinson.

Lake Street area resident Tom Grimm, Peter Powell and View Pointe board president Jack Arndt praised the council for listening to citizen’s concerns and urged them to pass the 48 units per acre zoning ordinance, despite their initial wish for 12 units per acre.

“We ask you to reject the settlement proposal,” Grimm said, “and adopt the zoning ordinance of 48 units per acre. We really are here to reach a compromise.”

Arndt pointed out the law would allow for 58 units on the 1.2 acre property. Anything larger would reduce the property value of the surrounding homes, he says.

If this ordinance passes, Jenkinson said the Potala project would be “subject to the next new zoning” after the moratorium was lifted at the end of December.

Jenkinson said the plaintiffs still have a pending lawsuit against the city and have the opportunity to add additional claims.