The Meridian development was a new concept for Bainbridge Island – luxury condominiums on the top floors, hotel-like concierge service to the residents, and medical offices on the ground floor, possibly even a clinic to rival Virginia Mason.

Since last July, that vision has been nothing but a hole in the ground, an interrupted excavation on the north side of Knechtel Way next to Helpline House.

But the project will go forward, according to Bruce McCurdy, CEO of Bainbridge-based developer Malibu Corporation.

“We’re ready to get started,” McCurdy said this week. “Our financing stopped after the 9-11 attacks, but we’re set to move forward.”

Tuesday, City Planning Director Stephanie Warren agreed that construction may resume shortly.

“Their permits are ready to go,” Warren said. “The site-plan review is done. We understand it has been a matter of getting their financing together.”

Before the project re-starts, though, Malibu must square itself with the city – which will involve paying more than $200,000 in various impact fees, together with some $18,000 in fines and enforcement charges for what the city calls unpermitted excavation.

Last spring, Malibu applied for a permit to do site-clearing and foundation work on the L-shaped parcel. The permit that was issued allowed clearing only, and specifically excluded any reference to foundations.

The contractor, though, began doing excavation work on the portion of the tract fronting Knechtel Way, until the city issued a stop-work order.

Generally, the next step is a notice of violation. But because the project had been reviewed and approved, city code-enforcement officer Will Peddy was directed to work with the applicants to get their excavation permit, according to an April 22 memo Peddy wrote to Warren on the status of the project and related fines.

What stood between Malibu and the necessary permit was money to pay for extra density for the project – some $200,000.

In lieu of making a cash payment, Malibu had offered to install a water line at its expense that could be used by others in the area, but the city council rejected that offer last summer.

At that time, city officials were reportedly led to believe the money would be coming shortly.

“We had no idea it would take them months to accomplish this, and as of this time their funding is still not available, although I have been assured again that it will be available within a few weeks,” Peddy said in his memo.

McCurdy this week denied any intent to do work without a permit, calling the question a matter of confusion.

“When there was a dispute about what we could and couldn’t do, we voluntarily stopped working,” he said. “By the time that we got that cleared up, the Sept. 11 thing happened.”

According to the city, the project’s difficulties continued throughout the fall. Malibu missed deadlines to stabilize the incomplete excavation to guard against erosion before fulfilling those requirements in December.

And in February, the company was told that it faced cancellation of its permits for failure to move forward.

Malibu requested and received a six-month extension in March.

The city council is expected to get an update on the project at an upcoming meeting.

To some of the project’s neighbors, the episode suggests that city takes code violations too lightly.

“The lack of enforcement has added to a culture of ‘anything goes’ with regard to land use,” neighborhood activist Jeff Moore wrote in a correspondence on the Meridian project.

“We need enforcement. More than that, we need to reorient city budget priorities by enacting meaningful impact fees to reinvest public resources in public priorities.”

During the hiatus in work, McCurdy says Malibu has re-oriented the project’s priority away from a traditional medical emphasis and more towards a health emphasis.

“After the (Health Maintenance Center) collapse, we think there is more of a demand for a health club and spa facility,” he said. “We are planning a sports-medicine emphasis, and have arranged with the Seattle Athletic Club to operate the facility.

“We will market this as ‘a healthy place to live.’”