The Washington State Court of Appeals unanimously reversed a previous court ruling siding with Path America and Dargey Enterprises, the developers of Potala Village in Kirkland, in its battle with the city of Kirkland as to how many residential units would be allowed in the development. Potala Village is to be built along Lake Street near 10th Avenue South on the Kirkland waterfront.

“We are very happy with the decision,” said Karen Levenson, who has helped spearhead the neighbors’ fight against the development during the past four years. “The judge did a very thorough job.”

The ruling overturned a previous order granting Path America’s motion for a summary judgment and dismissal. It also essentially cuts in half the number of residential units allowed on the properties from what was planned. Path America was preparing for a structure with 88 residential units.

In its 25-page ruling, the court of appeals concluded that while Path America did complete the filing of a shoreline substantial development permit before the city of Kirkland imposed a moratorium on the issuance of permits in November 2011, it did not file an application for a building permit until afterwards.

During the moratorium, which the council extended numerous times, they eventually amended the business neighborhood code, placing a limit on residential density at 48 units per acre on the property. The change meant it was limited to 60 units instead of 143 as originally intended, according to the court documents.

Previously, there had been no restriction on residential density in neighborhood business zones. In other properties within the business neighborhood zone, the residential density was set to 12 units per acre.

Lawyers representing Potala Village argued that the shoreline development permit application was sufficient to vest rights to the zoning codes at the time the permit was approved, before the code amendments.

The court of appeals ruling stated a building permit application is also necessary in order to vest rights to zoning.

According to a statement on the city’s website, “Potala Village is not now authorized to conduct any tree removal, shoring, or construction activity until they receive the permits, though the installation of the ground monitoring wells under the right-of-way permit is still permitted as part of their Voluntary Cleanup with the Washington State Department of Ecology.”

City officials declined to further comment on the ruling.

Potala Village has been the source of legal battles and controversy, with local residents claiming the mixed-use building was not appropriate to the neighborhood. The structure would also included retail space plus retail parking.

“I feel so thankful for this group of neighbors,” Levenson said. “We have a lot of people who are passionate about what happens in this area.”

She said that there are about 12 residents who have very actively worked on the issue, 50-100 who are very active with the issue and more than 700 who have taken part and were concerned about the project.

“People put their checkbooks behind this,” Levenson said.

She said that she feels all the energy and money could have been used in a more productive manner.

“Funds that have been spent on attorneys, likely more than $150,000, could otherwise have been spent to support art or make time and contributions to help our needy, hungry and homeless,” Levenson said.

One of the biggest issues with the large size of the development is the increased traffic it would bring. A driveway was slated to empty onto the very busy Lake Washington Boulevard interupting the free flow of cars, pedestrians and cyclists.

The property is owned by developer Lobsang Dargey, who originally filed the lawsuit against the city of Kirkland in 2013, asserting the city used the “ongoing moratorium as cover” and “abruptly adopted” drastic zoning changes that forced major amendments to the Potala Village project, according to a lawsuit filed in King County Superior Court.

Neighbors are quick to point out that it has always been about the size of the project.

“We are very supportive of that parcel being developed,” Levenson said. “Everyone has a chance to do it right this time.”

Phone calls to the legal representatives of Path America and Dargey Enterprises seeking comment were not returned by deadline.

Kirkland Reporter editor Matt Phelps contributed to this report.