Plan for Bigger Castaway Restaurant Is Rejected : Burbank: Council sides with residents who fear larger facility would increase noise and traffic.

A plan to rebuild a larger version of the Castaway restaurant has been rejected by the Burbank City Council, a decision which will delay by at least four months the reopening of the popular hilltop landmark.

In a 4-0 vote Tuesday, the council sided with residents who feared a larger facility would increase noise and traffic.

Meanwhile, a federal investigation into the arson fire which destroyed the structure June 29, 1993, has produced no suspects, authorities said. The Bureau of Alcohol, Tobacco and Firearms formed an investigatory task force soon after the fire, said ATF spokesman John D’Angelo.

Built in the Verdugo Hills during the early 1960s, the Castaway became popular with Burbank celebrities and residents for its breathtaking views.

A Burbank fire investigator said flammable liquid was used to destroy the restaurant and was probably the work of several people.

Nearby meeting rooms remained standing and are still being used for weddings, company parties and high school proms.

The Castaway was insured for $5.5 million, most of which has yet to be paid to the restaurant’s Anaheim-based owner, Specialty Restaurants Corp., said corporation President David Tallichet.

An official with one of Specialty Restaurant’s insurance carriers, Wausau Insurance Cos., said, “We are looking into the claim right now and verifying the merits of the claim.”

Originally, Specialty Restaurants hoped to expand a rebuilt restaurant by 4,124 square feet, add an outdoor deck of even greater size and reopen for business in December. But opposition from residents forced the company to reconsider its plans.

The firm made last-minute changes to its proposal, forcing the matter to be postponed twice before reaching the City Council on Tuesday.

The latest proposal rejected by the council called for a restaurant that would be 2,854 square feet larger than the original, with additional space for outdoor dining and cocktails. Tallichet later remarked that the rejection was “just the cost of doing business.”

Specialty Restaurants filed for bankruptcy last year and has been beset by fires at its other restaurants nationwide. Within the past 12 years, the corporation has had restaurants in Atlanta, Tennessee, Florida, Colorado and California destroyed by fire, Tallichet said.

“I don’t know what it is,” Tallichet said. “There may be some fire bug out there that’s going against our company.”

In other developments Tuesday:

* The council voted 4 to 1 to allow merchants in the Burbank Village area to impose an annual assessment on themselves that will fund promotions and improvements in the area.

* Council members met on the playing field of the Olive Memorial Baseball Stadium for a briefing on the condition of the 48-year-old facility. The stadium was once the spring training site for the St. Louis Browns baseball team, but has fallen into disrepair and may be replaced if the council determines enough funding is available.