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LOCKPORT – The city’s development agency went to court Tuesday seeking to foreclose on the Tuscarora Inn because it has stopped making payments on the $100,000 in loans the restaurant received six years ago.

Dominick DeFlippo, owner of the eatery at 128 Walnut St., protested that he and his attorney, A. Angelo DiMillo, have been trying since October to work out a restructuring of the debt without response from the Greater Lockport Development Corp.

Corporation Counsel John J. Ottaviano said there hasn’t been a payment since August 2012, a claim DeFlippo denied. He said the city and DiMillo have been trying to work something out, unsuccessfully.

The restaurant, in the former Tuscarora Club, remains open for business. Ottaviano noted that the restaurant’s first mortgage, a $155,000 loan from First Niagara Bank, is current.

That means the city’s corporation would have to pay that bank mortgage if it succeeded in foreclosing on the Tuscarora Inn. Ottaviano said the corporation would auction the restaurant if it wins title.

According to court papers, Niagara Lazy Lakes Campground is also a creditor of the inn, for $3,072.

Ottaviano said the city development board decided not to take a payment of the amount in arrears and instead called the whole loan for immediate payment.

As of August 2012, according to court papers, the restaurant owed the city agency $64,850.

“The GLDC has refused to let me restructure my loan,” DeFlippo said. “They’ve refused any repayment plan that my lawyer, Ange DiMillo, has proposed.”

DiMillo did not return a call seeking comment Tuesday.

The development corporation acted slowly on trying to enforce the mortgage it holds on the restaurant, Ottaviano acknowledged.

He said, “It’s a local business. It’s a local family, and the board wanted to give him every opportunity to turn it around.”

Dominick DeFlippo is the son of Gerald DeFlippo, a former alderman and county legislator who owns DeFlippo’s, a long-popular Italian restaurant on West Avenue in Lockport.

Ottaviano said the city did receive one loan payment a few months ago, but the check bounced. Dominick DeFlippo said the city held the check for two weeks, and this was about the time of his mother’s unexpected death in February. He said he wasn’t in the office to transfer funds because of the death.

The development corporation gave DeFlippo and his wife Nancy two loans in 2008: one for $80,000 in April and another for $20,000 six months later because of cost overruns on the refurbishing of the building, a century-old former social club.

The mortgages were in Nancy’s name, although Dominick signed personal guarantees of repayment. The couple is now divorced.

The two loans, which were combined into one, were for 10 years with an interest rate of 4 percent for the first five years and 6 percent thereafter. Monthly payments were supposed to be $990.34 until October 2013 and $1,039.61 thereafter.

email: tprohaska@buffnews,com