By Jane Smith

The controversial Midtown Delray project in Delray Beach may soon have a new owner.
The original investors, MGM Delray and Hudson Holdings, settled dueling lawsuits in July, allowing Pebb Capital of Boca Raton to resurrect its $40 million bid for the 7-acre project.
Pebb Capital could take control of the project in October. Its principals have asked to meet with the city’s Development Services staff, Delray Beach spokeswoman Gina Carter confirmed.
Pebb officials could not be reached to discuss their Midtown Delray plans despite numerous phone messages and an email request seeking a response.
Midtown Delray sits at the southwest corner of Swinton and Atlantic avenues.
The project approval came with several community requirements. One was for the developer to pay $100,000 to establish historic preservation grants before receiving its first building permit.
The agreement also required the Midtown Delray developer to establish a jobs program that includes requiring subcontractors to hire local workers, provide mentorship opportunities for local workers, provide bonding assistance to small local companies and establish jobs fairs for the northwest and southwest areas of the city. The city manager must approve the jobs programs.
The development order expires on April 19, 2022, based on extensions granted for governor-declared emergencies for the opioid epidemic, Hurricane Maria in 2017 and the 2018 algae bloom.
In March, Hudson Holdings, managed by Steven Michael, sued partner MGM Delray, managed by Rick Marshall, over the proposed project sale to Pebb Capital. Hudson claimed the $40 million price was too low.
MGM Delray — in a May counterclaim — estimated that Hudson’s share was $1.86 million if the property was sold for $37.86 million. In addition, Marshall claimed to be the major investor of the $26 million spent buying the land.
Marshall, originally from Raleigh, N.C., but now living in Fort Lauderdale, declined to discuss the project’s sale, saying “it’s not appropriate for me to comment now.”
Michael declined to reveal the amount his firm received to walk away.
Hudson Holdings has its office at 20 S. Swinton Ave. and will soon move. The exact date has not been determined, Michael wrote in an email response.
He also disagreed with Marshall’s reason given in the counterclaim of why the project needed to be sold: Neither firm had the skills “to complete such an extensive redevelopment project.”
Hudson, Michael wrote, “had a clear vision of how this project would be a center jewel on Atlantic Avenue … [and]was quite capable of taking it to completion.”
Midtown Delray was rejected twice by the city’s Historic Preservation Board in 2017, primarily because the new three- and four-story buildings would appear massive compared with the one- and two-story historic structures.
Board members also did not like that the historic homes would be moved twice: the first time to make way for an underground garage and the second time to move back to their original locations on new foundations.
In addition, they didn’t like that the lush landscaping would be stripped off the western side of a South Swinton Avenue block while the underground garage was built. The developer agreed to pay the city $124,050 to compensate for tree removal, down from a $139,800 price tag in December 2017 when the Historic Board reviewed the project.
Midtown Delray sits in the southern half of the Old School Square Historic Arts District. The area is designated a local historic district and on the National Register of Historic Places.
The development houses some of the city’s oldest structures: Cathcart House and Sundy House, built in 1902, and the Rectory, built in 1912.

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