Chicago high-rise falls flat, marks largest muni default of the year

A housing development for retirees in Chicago with about $229 million of long-term debt became the largest municipal bond default this year when it missed a Sept. 1 payment. The Clare at Water Tower, a 53-story apartment building with Lake Michigan views and near luxury retailers north of downtown, won't make further payments until debt-restructuring talks are done, the Illinois Finance Authority said Sept. 20 in a disclosure statement. The developer, Franciscan Sisters of Chicago Service Corp., said it skipped the September payment. The default marks the largest in the $2.9 trillion municipal-bond market this year, said Richard Lehmann, publisher of the Distressed Debt Securities Newsletter in Miami Lakes, Florida. Including it, this year's total topped $1 billion, while still trailing 2010's $3.6 billion. “In a typical year, we have about $1 billion of defaults,” Lehmann said. The Clare bills itself as Chicago's first and only high- rise retirement community. The building, on Loyola University's Water Tower campus near Chicago's Magnificent Mile, has 248 apartments in 600,000 square-feet of space and offers common dining rooms, three chapels and fitness and aquatic centers. Kara Nystrom-Boulahanis, a finance authority spokeswoman, and Judy Amiano, president and chief executive officer of Franciscan Sisters of Chicago, based in Homewood, Illinois, didn't immediately respond to messages left by telephone and e- mail seeking comment on the tower's financial situation. --Bloomberg News--