hazards on the Base lands that include buildings that are structurally unsafe and in need of demolition, Minister of Finance Grant Gibbons said yesterday.

And a working group of senior bankers with international experience has been appointed to determine how the entire redevelopment can be financed.

Authorities are also studying ways to "streamline'' the Planning approval process for development of the Base lands, and the Minister suggested that "innovations'' may be required for flexibility in immigration rules.

Dr. Gibbons told the Chartered Institute of Bankers over lunch at the Royal Bermuda Yacht Club that current Government thinking is that the base lands would be leased out, as opposed to being sold, but no final decision had yet been made.

Stressing that the assets of the Base lands, far outweigh the liabilities, the Minister admitted $2 million had already been spent on electrical systems at the Annex.

The committee of bankers will focus on maximising the involvement of the private sector and minimising the financial involvement of the public sector in the redevelopment scheme.

"Its deliberations, which are to be completed by the end of January, will suggest realistic options for private sector debt and equity financing of the base lands redevelopment,'' he said.

For investors, three issues of potential cost liabilities exist, including environmental clean up, a possible US military return and demolition costs for unsafe buildings. They remain the subject of negotiation, although they are being examined for their financial implications.

Article Two of the US lease agreement gives the US the right to re-enter the territory of Bermuda and surrounding waters and air spaces for military purposes.

Dr. Gibbons noted:"Any investor considering that provision undoubtedly would have some reservations. We have strong assurances that these reservations, however, are unfounded.

"The fact is that the US Government has formally stated it would not retain the right of re-entry following its abandonment of the bases on September 1.

"We have that commitment in writing from them. They have assured us that they have no interest in residual access.'' Environmental concerns, which the Minister said were manageable, include petroleum product spills, asbestos and landfill problems.

The US Government have been told they are obligated to remedy environmental damage where it exists. However, negotiations on the "sensitive'' issue are far from being concluded.

But over the next few months, perhaps by next spring, the Government will invite proposals to develop Daniel's Head and the Annex, and possibly Tudor Hill.

Dr. Gibbons cautioned: "These initiatives may well require substantial commitments of capital by financing institutions and investors.

"The question of liability for environmental damages will inevitably come up in any discussion of financing these projects. Obviously, there will be costs involved.

"Under the principle of joint and several liability in other jurisdictions, owners and operators of property are held strictly liable for remediating damage.

"In the United States, this interpretation of liability has been extended beyond owners and operators to lending agencies. The Government is currently investigating ways to reduce or eliminate unlimited liability for environmental remediation.'' One approach they believe is promising, is the Brownfields Initiatives, adopted by 19 US states. Developers and their financial backers would be given full or partial release from liability if they clean up development sites to the standards set by the governing agency.

Dr. Gibbons said: "To this end, we are in the process of setting up site specific remediation standards for the base lands. We are also considering the merit of offering financial incentives to developers to clean up sites.'' The third concern revolves around the need for the demolition of structurally unsound buildings. While the US Navy has been asked to pay for the work, developers may have to work around the cost, pending US consideration of the bill.