The economy appears to have delivered a heavy blow to the proposed residential development of 750 acres north of Freeland.

Two notices of foreclosure and trustee sale were posted Thursday at the entrance to Estates at Whidbey, formerly called Trillium Woods.

The property is west of Highway 525 about a mile north of Mutiny Bay Road. It was being developed by Dogwood Whidbey Development, created by Jesse Molnick and managed by The Molnick Group, his development, investment and brokerage firm based in Arlington.

The notices said Molnick is in default on two loans, one for about $3.3 million, the other for about $1.6 million, both from Shoreline Bank.

The notices also said an auction of the property would be Friday, Oct. 9, at 10 a.m. in Coupeville, and listed Everett attorney Thomas D. Adams as trustee.

“This is an attempt to collect a debt,” the notices read. They were filed in a Snohomish County court on Monday.

Molnick said he knew the posting was to occur, but insisted that negotiations with the bank are continuing.

“We don’t know what the bank’s going to do, and we don’t know what we’re going to do,” he said. “We’re trying to get them to extend the loan with more favorable terms.”

“I don’t believe the bank wants the property back, but it’s tough to say,” Molnick added. “In these times, it’s tough to sell property. There’s a substantial oversupply of lots on Whidbey Island right now.”

The property has a boisterous history that dates back more than 20 years.

In 1988, the land was the site of controversy when Trillium Corporation of Bellingham, owners at the time, clearcut the area.

Protesters gathered at the property and blocked an entrance in an attempt to stop the logging. It was one of the first major campaigns of the Whidbey Environmental Action Network, a local ecological watchdog group, which helped to organize the protest.

Molnick has proposed “three-star green” construction of planned residential developments (PRDs). The first phase of the project would include clustered housing on three 50-acre parcels of 10 building lots each, a 12-lot PRD on about 60 acres, and a 5-lot PRD on about

24 acres.

The parcels are contiguous, and each would have 85 percent open space,

15 percent of which can be community common areas, according to the application submitted to the county.

Just last fall, the county granted permits for the PRDs and the clearing and grading on 234 acres of the property, and approved the cancellation of a moratorium on selective logging in the area.

“We’ve got a fair amount done, but the rest is on hold until we work something out with the bank,” an optimistic Molnick said.

The Molnick Group has developed 14 projects throughout the Puget Sound region since 2004, all of them with a green emphasis, Molnick said.

Jerry Lloyd of Greenbank, a member of South Whidbey’s backcountry horse-riding group, worked with Molnick for more than three years on the hiking and riding trails that wind through the property.

His group signed off on the development after Molnick promised to keep as many of the trails as possible.

“I think he had a pretty good plan,” Lloyd said Thursday. “My sense is that if the project goes under, that property will stay pretty much the same as it is for a long time.”