AN INQUIRY is to be held into a North Yorkshire restaurateur's plans to build homes at a riverside beauty spot.

Leo Campagna wants to demolish his restaurant, Da Mario's, on Waterside, in Knaresborough, and the nineteenth century cottage next door, in which he lives. He then wants to build two houses and six flats in their place.

Now - in the latest development in a bitter two-year row with some residents of the town - Mr Campagna is taking his project to an appeal, after Harrogate Borough Council rejected the plans.

An inquiry overseen by an independent inspector will begin on January 14, at 10am, at the council offices, in Crescent Gardens, Harrogate.

Mr Campagna says Knaresborough is a town which is "against business," and claimed its people "want to see me die."

The restaurateur claims he cannot survive under present conditions.

"Last night no one came to my restaurant - American tourists are my best customers now," he said. "Do you know what they call Waterside? Hateside. Nobody comes here.

"Every business has gone bankrupt in Knaresborough," he added.

Mr Campagna also claims the council had its opinion swayed by intimidation at a previous meeting, where he says he was "victimised by a screaming mob".

Leading the opposition against his proposals is David Rance, chairman of the Knaresborough Action Group, who lives opposite Mr Campagna.

Mr Rance believes the planned building would spoil the area.

"The restaurant and cottage are part of a group of buildings where no one style dominates.

"The building's not listed, but guidelines in conservation areas are quite clear," he said.

The action group has collected more than 1,000 signatures protesting against the plans, and is funding its latest appeal with its own money.

Mr Rance denies that there has been any boycott of the restaurant organised by his group.

"This is not a personal issue, although I think Mr Campagna is trying to make it one. We're just running an awareness campaign."

He also denies the town is anti-business, saying: "Quite the reverse is true. The chamber of commerce has been extremely active here."

Both the council and English Heritage have previously opposed Mr Campagna's plans. The council objected to the loss of a visitor facility, the vehicle access plans and the inappropriateness of the development.

A spokeswoman for English Heritage said: "We didn't oppose the demolition per se, but did oppose the design of the scheme because it didn't contribute to the character of the surrounding area."

Updated: 12:14 Monday, December 30, 2002