THE BIOGRAPHY OF CHICAGOS MARINA CITY
Written by Steven Dahlman
Bankrupt commercial owners forced to sell
Born in 1945, Ellison Trine Starnes, Jr. was the son of a Texas evangelist. He attended Abilene Christian University in Abilene, Texas.
In 1983, his financial health improved enough for Continental Savings Associates to loan him $25 million. Marina City Associates, a limited partnership led by Starnes, paid $11.6 million to Charles Swibel to buy from him the 16-story office building, which had cost at least $10 million to build. However, with no equity in the property, it was an $11.6 million profit for Swibel.
Continental may have identified Starnes to Swibel as a potential buyer. Howard Swibel says Continental loaned his father, Charles, all of the money to purchase the commercial property at Marina City in 1977, the same year in which the residential property started being sold to the public as condominium units.
Why did he want to sell? Says Howard, it was an offer he couldnt refuse.
Charles Swibel continued to manage the commercial property for Starnes for at least three years after he sold it to him. They definitely sought his advice. He gave them advice about tenants because he was the one who had most of the connections with the tenants.
In 1984, just eight years after his first bankruptcy, Starnes had rebounded, controlling 175 companies and real estate partnerships, 50 properties, and 500 employees. With his net worth estimated at $222 million, Starnes had million dollar homes in Houston, Dallas, and Vail, Colorado, a luxury skybox at Texas Stadium where the Dallas Cowboys played, and a private airplane.
One of the first things Starnes did when he took over the Marina City property was to evict many of the office and retail tenants, in order to renovate the complex. The renovation, however, ran into financial problems and Marina City Associates fell behind on its mortgage payments to Continental.
Says Howard Swibel, These people had represented themselves as being savvy operators. And then they got themselves into financial distress.
Howard thinks his father felt bad about the problems because people blamed him, even though by that time he was not involved and had no control over it.
Starness roller coaster ride tipped downward again in 1986. He defaulted on three business loans totaling $77.5 million from Silverado Savings and Loan, directors of which included Neil Bush, whose family included two U.S. presidents. The collapse of Silverado in 1988 cost taxpayers $1.6 billion. Starnes was left with enough money, however, to donate $30,000 to an organization that gave money to Oliver North, an official with the Reagan administration who was at the center of a scandal involving the clandestine sale of weapons to Iran.
Continental Savings Association of Houston, which held the $12.5 million mortgage, filed for foreclosure in 1987. But they were declared insolvent and taken over by the now-defunct Federal Savings and Loan Insurance Corporation.
Before the foreclosure could take place, Marina City Associates declared bankruptcy in 1988 and because a bankruptcy takes precedence over a foreclosure the property was put under the control of a federal bankruptcy trustee.
On November 3, 1988, it was announced that the commercial property everything except the residential towers would be sold at an auction later in the month. This included the 19-story parking ramp at the base of each tower, the commercial block below the ramps which consisted mostly of Marina City Restaurant, the marina below that, the office building which was only 15 percent occupied, and the vacant 1,350-seat theater building.
Seay & Thomas Inc., a Chicago real estate firm, was hired to sell the property. They hired an Indiana company, Kruse International, to conduct the auction. According to the prospectus sent to potential bidders, the commercial property was ideal for redevelopment with potential for over one million square feet of development.
At 11:00 a.m. on November 22, 1988, bidders gathered at the Hyatt Regency Chicago hotel a few blocks from Marina City, each bringing a certified check for $1 million as earnest money.
Kruse had said the value of the commercial property could be as high as $200 million. This was much higher than what the property actually sold for, $22.7 million.
Matas Corporation, a north suburban office development firm, was the successful bidder. It was their first venture into downtown real estate. Their most recent development had been a $90 million office park in Deerfield, Illinois.
Without going into details, they announced major renovation plans for the property. We feel the property has tremendous upside potential, Steven G. Levin, vice president of Matas, told the Chicago Tribune. A lot of things are beginning to happen along the Chicago River, and were excited that we are going to be part of it.
Rest of 1980s not kind to Starnes
In 1988, Starnes declared bankruptcy again, leaving behind more than 800 creditors, including 21 banks and savings and loans. He and his wife had 34 checking accounts with 22 financial institutions. He listed 48 pending lawsuits against him, including a suit by the FDIC that claimed he had defrauded seven failed banks. Although he listed $103 million in total debt, the Associated Press estimated his debt just to banks and savings and loans was closer to $500 million.
Since then, Starnes has kept a decidedly low profile. The most recent mention of him by any media outlet is a real estate notice in 2008 stating he had sold a condominium unit in New Orleans for $150,000.
|Last updated 24-Oct-11||