planning restrictions to make way for a housing complex -- part of a $65 million plan to save Marriott's Castle Harbour Resort from closure.

Last week, the Hon. Gerald Simons, backed by Cabinet, gave planning permission in principle to Bermuda Properties Ltd. -- a foreign controlled company to build 46 luxury homes, a shopping complex and tennis club to be built on sites zoned as woodland, open space and coastline at the Castle Harbour property.

Environmentalist say the decision means woodlands rich in endemic shrubs and plants are to give way to tennis courts while caves in the area could be damaged by foundation work and polluted by cess pits.

Permission from the Minister follows threats earlier this year that the hotel would be pulling out of Bermuda if accrued losses of $40 million dating back to 1986 continued.

Last night Mr. Simons claimed his decision had the approval of Government and the Ministries of Tourism and Home Affairs in particular.

"Tourism is a most important industry,'' Mr. Simons said. "There is a need to revitalise the industry. The broad proposal has significant economic benefit to Bermuda.'' Last month director of Host Marriott Corporation Mr. John Marriott put forward a "Master Plan'' together with the owners of the Castle Harbour property, BPL. The development is expected to turn the hotel into a top class resort and make it financially viable.

But objectors claim the manner in which BPL submitted their application was nothing more than a "smokescreen'' to hide a "massive residential development.'' "It has nothing at all to do with Tourism but is really about selling previously undeveloped large tracts of Bermuda's land to the world market,'' said lawyer Mrs. Georgia Marshall, representing Mr. Michael Watner who owns a house in the area. "What the Bermuda Properties want the gullible public to believe is that the development is crucial to Marriott's success and that it is being proposed in Bermuda's national interest as it relates to Tourism.

"Perhaps this alarming situation has arisen due to the fact that they (BPL) have already campaigned that if their development is not permitted, the operators of the Castle Harbour Hotel will leave Bermuda.'' Mrs. Marshall added the entire character of Ship's Hill and the Castle Harbour coastline would be lost forever.

"The very reason why people visit Bermuda is in part due to the natural beauty of the Island,'' she said. "Our client believes that BPL will do irreparable harm to the Bermuda image and will ultimately itself create a situation where tourists will not want to come to the congested Castle Harbour Resort.'' Lawyer Ms Clare Hatcher, representing Mid Ocean Club, which lodged a late objection to the project, claimed the plans would double the number of houses between Catchment Hill and Trott's Pond and increase traffic.

"The quiet, secluded, peaceful character of the neighbourhood will be lost,'' Ms Hatcher warned.

She claimed the proposed developments would obliterate both woodland reserves and green space and put restricted development on tourist sites.

"It is hard to see how the conservation of the Island's natural beauty and preservation of the Bermuda image will be served by such variations in zonings.'' Ms Hatcher added that the economic viability of building more condominiums in a market already swamped with them was questionable.

The short term boost to construction would be offset by the amount of capital that would flow out of the Island. Substantial tourism rental income would be shared pro-rata between non-Bermudian home owners and the foreign controlled Bermuda Properties Limited, she said.

In a proposal to the Development Applications Board last month, BPL General Manager Mr. Peter Parker estimated the properties would pump $13 million into Bermuda's economy annually on the basis that each householder spent $500 a day and that the occupancy rate was 70 percent. He requested that non-Bermudians as well as Bermudians be able to purchase the units.

But Ms Hatcher claimed the benefits to tourism were questionable. The homes would be self-contained with a retail shopping centre and cycle livery. The Island's existing cottage colonies and guesthouses would inevitably affected by the competition.

Mr. Simons yesterday claimed that as Minister, it was inappropriate for him to comment on specific objections but said they had been taken into account. BPL also owns the Catchment Hill property which clashed with the Bermuda National Trust over plans to build condos overlooking the golf course.

However, the Trust has shown restraint over the Castle Harbour project, saying it was "tolerable from an environmental perspective''.

The Trust has asked only that a cave survey and environmental study be carried out as well as the preservation of certain tree species where feasible.

Yesterday Chairman of the Trust's Environmental Committee Mr. Timothy Marshall admitted the Trust's hands were somewhat tied over the issue.

"The Trust would hope now the developer ... will support the public desire to see Catchment Hill saved. We hope they will be content with what they have got and not embroil the community in a long and drawn-out battle.'' But he added it was unfortunate the Castle Harbour Master Plan had not attracted more attention from the public.

"As soon as you leave it to Cabinet you are leaving it to the political whim of politicians,'' he said. "It creates an uncertain method of development where objections have really no place or weight.

"Do we want private developers to have direct access to the Government of the day? Do we want to entrust so much power to individual ministers?'' he asked.