Development Application Board -- despite a last ditch appeal from the Director of Tourism.

Planning documents show developers hoped to make "internal conversions'' to the Hamiltonian Hotel and Island Club at Langton Hill, Pembroke.

And Tourism Director Gary Phillips warned a rejection of the application would financially ruin the Hamiltonian, reflect badly on Bermuda, and leave Government holding the bag.

In a May 11 letter to the Director of Planning, Mr. Phillips outlined the reasons for the unusual governmental intervention.

"You will be aware that the Ministry of Tourism has been working with Messrs.

Harold Stavisky and Douglas Burgess to create an `exit plan' for the timesharing operation at the Hamiltonian,'' the letter began.

"One such plan involves encouraging the remaining timesharing club members to accelerate their weeks in Bermuda until they have used up their 25-year allocation and in the meantime, as the number of timeshare members declines, to convert the unused timesharing units to residential condominiums.

"It is anticipated that this would generate sufficient capital to ensure the orderly operation of the remaining units until all intervals have been used up.

"The Ministry of Tourism views such a plan as preferable to simply waiting for the Hamiltonian to close its doors due to bankruptcy...'' "The sale of the Hamiltonian Hotel and Island Club to a local real estate developer is conditional upon approval being granted to convert the timesharing units in an orderly and phased manner to residential use.

"There is no question that if the application is denied, the sale will not go through and the Hamiltonian and Island Club is likely to fail financially.

"We have gone to extraordinary lengths to keep both the Hamiltonian Hotel and St. George's Club in operation as we believe the failure of either property will reflect badly on Bermuda worldwide.'' St. George's Club chief Alastair Woolf -- who said he was unaware of Mr.

Phillip's remarks -- declined to comment.

The Tourism Director further stated: "... we understand that the consummation of the sale will allow Messrs. Stavisky and Burgess to pay off all their creditors, of which the Bermuda Government is one of the largest.'' Hamiltonian plan rejected And in another May 11 letter sent to the Finance Secretary, Tax Commissioner, and Chief Immigration Officer, Mr. Phillips wrote of a meeting held the previous week with Mr. Burgess and Mr. Stavisky.

"I was reminded once again why it is that the Ministry of Tourism has for such a long time resisted the suggestion to `pull the plug' on the Hamiltonian; reasons which have several times been communicated to Cabinet, and which have received Cabinet support, are the same reasons why we have worked so assiduously to keep the St. George's Club afloat.'' Mr. Phillip's second letter concludes: "...the Director of Planning has advised...that the Ministry of the Environment could justify a decision to allow this conversion.'' But the DAB refused the Hamiltonian proposal -- which calls for 16 of the 32 timesharing units to become residential units -- because the development would exceed maximum density limits.

"Technical officers are of the opinion that the site is too small and overly constrained by its topography to accommodate the density of the units proposed while properly fulfilling the open space, amenity space and parking needs for a mix of permanent residents and temporary visitors,'' stated the DAB's refusal.

Yesterday, Mr. Phillips admitted he was unaware that the proposal had been rejected.

But he said the Department of Tourism had "an obligation to ensure'' the protection of "dedicated repeat (timeshare) visitors'' who had made an investment in Bermuda.

"We'll do whatever we can do to assist in a programme to ensure that the property remains viable,'' said Mr. Phillips.

However, he declined to comment on "some outstanding debts'' owed to the Government by the parties involved in the Hamiltonian site.

And the Hamiltonian Hotel's application representative William Linthwaite of MBP Ltd. also had no comment when contacted.