THE BIOGRAPHY OF CHICAGO’S MARINA CITY
By Steven Dahlman

August & September 1977

The end is coming: Marina City goes condo

During the first week of August 1977, residents of Marina City started receiving a letter from the property management company informing them that the rental property was converting to condominiums.

An informal survey by the Chicago Tribune showed this to be bad news to most residents but not a surprise. They preferred to pay rent and were not looking forward to moving.

Marina City architect Bertrand Goldberg, who was 64 in 1977, did not approve of this parceling. He said each entity was dependent on the other.

Condominiums would be offered to residents first. Existing leases would be honored, meaning that some residents had close to a year to decide whether to buy or move.

On September 15, 1977, Marina City Sales, Inc., a new company led by Charles Swibel, announced condominium units would be offered for between $26,000 and $80,000. Studios would be priced from $26,000 to $34,000. One-bedroom units, $42,000 to $56,000. Two-bedroom units, $74,000 to $80,000.

Chicago Sun-Times

Size Avg. Price
(1977)
Avg. Price
(2011)
Increase
Studio $30,000 $140,000 367%
1-Bed $49,000 $246,000 402%
2-Bed $77,000 $551,000 616%

Residents would be given special incentives to purchase their units, such as a three-percent discount. $4.5 million would be spent on improvements to the building, such as new carpeting in public areas and a new refrigerator in each unit. None other than Continental Illinois National Bank and Trust, which had been Marina City’s banker since 1961, was providing a special financing package.

(Left) In this 1978 Chicago Sun-Times “fisheye” photograph, workers on the west tower above Dearborn Street are preparing exterior surfaces of Marina City for a protective covering of paint. By the next spring, the paint had changed the color of the towers from gray to light tan.

October & November 1977

By November 14, 1977, more than half of the 896 units had been sold, including all of the two-bedroom units. It was not quite what owners had expected, probably because one-third of residents had organized to fight what they said were unfair terms of the condo conversion. Although they were able to get Marina City to spend more money on building improvements, the tenant group could not get sellers to lower their prices.

The group complained about high-pressure sales tactics, including sending sales literature to residents in an envelope with “THE END IS COMING” written in large red letters.

When sellers refused to release the full text of an engineering study, tenants hired their own engineer to inspect the building. Several cases of deferred maintenance were found. Marina City said the repairs were minor and they would make them, but they would not put this in writing.

Against what totaled $32 million in mortgages on the entire complex, Marina City was expected to gross $41 million from the sale of condominiums. (Today, the residential units have an estimated combined value of about $200 million.)

Howard Swibel

Still, Howard Swibel, son of Charles, does not believe the deal was profitable. “My recollection is that my father had a fixed management fee. And in effect, any excess cash flow went to the bank to pay interest on the mortgage. My father didn’t have equity, either. He, basically, borrowed all the money.”

Although interest on the loans was being paid off, the principal was not being reduced. Howard (left) suspects the bank wanted out of the deal. The condo conversion would be a type of refinancing. Proceeds from condo sales, says Howard, “went directly to the bank to pay off the bank loan.”

And that is when Marina City split into two entities, with Charles Swibel continuing to own the commercial part while being in charge of converting the residential rental property into condominium units.

Enter Fast Eddie

Three years later, on July 8, 1980, a class-action lawsuit was filed in federal court charging Charles Swibel with monkey business in the condo conversion. The suit charged that a city council ordinance, supported by 10th Ward Alderman Edward “Fast Eddie” Vrdolyak (a Republican who ran unsuccessfully for mayor in 1989 and in 2007 was indicted in a fraud and kickback scheme) allowed Swibel to make very large profits by selling 50 condo units to Vrdolyak at “bargain basement” prices.

Edward Vrdolyak

It was alleged this secret deal was made between Swibel and Vrdolyak the day before the city council approved the condo conversion. Swibel denied this was an attempt to influence the alderman.

(Left) Edward Vrdolyak, founding partner of Vrdolyak Law Group, LLC, was sentenced in 2010 to 10 months in prison.

“It required city council approval because the original Marina City was a planned development, a special zoning package,” explains Howard Swibel. “It required a change in the plan that it was going to be privately-owned apartments. So the city council had to approve it, but why would the city council not approve it?”

Swibel points out that his father was given the task of selling 896 apartments as quickly as possible. “So they were looking for investors – people who weren’t necessarily going to be individual residents but might be, basically, bulk purchasers.”

Vrdolyak, says Howard, was a friend of his father’s. “They dealt with each other all of the time. He said he’d be willing to borrow the money from the bank to buy the units. He paid the list price, there was no discount. And he got the same kind of financing package that other people were able to get from Continental Bank.”

And then there were the missing assessment records

Three days before the 1980 class action lawsuit was filed, it was learned that several assessment records from 1978 for a portion of Marina City owned by Charles Swibel were missing from the Cook County Assessor’s Office. They were found the following week. The deputy assessor, Arthur Murphy, said the assessment for that part of the building was not affected, and the missing information could have been reconstructed.

Swibel still owned the first 19 floors of both towers, which was used mostly for parking. He had sought to lower his property tax assessment, based on income statements. There were charges that Marina City was under-assessed because 25,000 square feet were missing from the total square footage noted by the assessor’s office. However, Murphy said that by basing the assessment on the property’s income, the amount of land was not relevant.

Last updated 29-Nov-11