Shuttered TiNovo to develop restructuring plan
Did runaway lenders spoil the soup?
The way Mitchell Terriciano sees it, the recent closure of the TiNovo restaurant in the renovated GAR Hall on Pearl Street in Worcester after only one year of operation isn’t a vindication of the banks that got cold feet and pulled out of financing the $2.4 million project in the first half of 2005. Instead, the owner and long-time restaurateur says, it’s an example of the crippling effect lenders can have on a project when they go back on a funding commitment.
Terriciano blames a year and a half of delays, resulting escalating construction costs and the stagnation of his restaurant business due to balking lenders with causing him to close TiNovo and seek a restructuring plan this month. At press time, he was in ongoing talks with prospective investors and with the Digital Federal Credit Union, which financed the project in July 2005 after local banks dropped out, in hopes of reopening the 300-seat eatery.
But Terriciano does admit that business at TiNovo wasn’t what he expected "out of the gate." He says his lack of advertising dollars to promote the new place may have been a factor.
In September 2005, Terriciano’s difficulties in getting financing for the renovation of the former city building prompted some Worcester officials to warn banks that if they didn’t take a more active role in funding development by private developers downtown, they wouldn’t get a piece of the city’s $500 million in annual banking business. District 2 City Councilor Philip Palmieri told the Worcester Business Journal at the time that, while banks needed to avoid excess risk, there needed to be a "relaxation of criteria" in order to help private developers rebuild the core of downtown. Fellow Councilor Michael Perotto and Mayor Timothy Murray joined Palmieri in their call for City Manager Michael O’Brien to meet with bankers to deliver a "carrot-and-stick" message to banks on the matter.
Perotto says he’s disappointed with TiNovo’s setback but still thinks banks need to offer flexible standards to back downtown development. "It’s a risk to them, but that’s what business is all about," he says. Perotto adds that he’s hopeful TiNovo will reopen.
Terriciano closed his 15-year old restaurant, Tiano’s, in July 2004 because he planned to open TiNovo three months later. He says he thought he had the bank funding to carry out that plan. But Terriciano says one local bank backed out of the deal just one week before the scheduled loan closing for the project, which had already been put out to bid and scheduled to start. A second local bank also bailed out of a letter of commitment for the project, according to Terriciano, after the historic building was found to require more repairs than originally thought.
DCU finally step up and funded the project after city officials intervened on his behalf, Terriciano says, but not before the year-and-a-half hold up took its toll. During the delay, he says, construction costs climbed another $80,000. His personal and business debt had also mounted since he had no restaurant in operation. Once he opened TiNovo, Terriciano says, he lacked sufficient capital to properly advertise it.
Perotto says it may have been a combination of factors that led to the TiNovo setback - including perhaps not sticking with the Tiano’s name in the new location, but he’s eagerly awaiting its reopening. "I’ve got a gift certificate I’m sitting on right now."
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