The developer of Potala Village Kirkland has filed a motion to dismiss an appeal of a previous appellent court’s decision regarding a disputed building permit application.

If approved by the appeals court, the Potala Village development, which was originally envisioned by developer Lobsang Dargey in 2011 as a 143 apartment development with some 6,000 square feet of street-level retail space, would be significantly downsized.

In 2011, Potala Village filed for a shoreline substantial development permit for the development. At the time, city zoning codes allowed the 143 unit complex on-site, however, Dargey’s company did not file for a building permit.

The city later enacted a zoning moratorium and new regulations in 2013, greatly reducing the size of developments on the site.

Dargey filed a lawsuit against the city, saying his shoreline permit gave him vested interest rights in the property and allowed him to continue with previous development plans. The city argued those rights only came with a completed building permit.

A trial court ruled in favor of Potala Village, but the city appealed, and the appeals court sided with the city and overturned the trial court’s decision.

In response, Dargey filed an appeal of the appeal court’s decision, which he decided to drop on April 5.

In the motion to dismiss the appeal, Potala Village officials said “the issues that were the basis for filing this appeal have been resolved, are no longer at issue and have advised respondent City of Kirkland of our decision to dismiss this appeal.”

Kirkland City Manager Kurt Triplett said he didn’t know why the appeal was dropped but said he believes the city had a strong case either way.

“The city is very pleased with the withdrawal of the appeal and we also want to be clear that the city didn’t agree to change anything in order to get the withdrawal,” he said. “We stuck firmly to our position and we believe it would have prevailed.”

Triplett said the appeal may have been dropped to make the property more desirable to a potential buyer, and that preliminary designs are still filed with the city for a downsized development.

The current designs filed with the city include some 7,000 square feet of retail space and 58 apartments.

Located at Lake Street South and 10th Avenue South, the Kirkland property is one of four which an appointed receiver recommended be sold as remediation for an alleged fraud scheme perpetrated by Dargey.

Federal authorities seized Dargey’s development company, Path America, last fall after filing a lawsuit alleging he exploited foreign investors, promising to secure them visas through the federal visas-for-investments program.

Under this program, foreign nationals who invest more than $500,000 in an approved project that creates jobs in the U.S. are given expedited residential visas.

Federal authorities claim Dargey took more than $100 million from Chinese investors and funneled it into non-approved projects, as well as funding shopping sprees and casino trips.

Dargey’s attorney, Duana Kolouskova, was contacted for this story but had not responded to the Reporter by deadline.