Potential development of a historic resort remains in limbo after legislation stalled in the House of Assembly last night.

A private bill lifting restrictions on Bermuda Properties Limited's ability to dispose of golf course lands at Marriott's Castle Harbour Resort was under debate when Opposition Leader Jennifer Smith launched a surprise move.

Ms Smith put forward an amendment calling for BPL to seek approval from both Houses of Parliament if it wished to dispose of golf course lands for any purpose other than tourism.

Through the Castle Harbour Redevelopment Act 1998, BPL is seeking to have a section removed from its incorporating Act that required it to have any golf course changes approved by both Houses.

The development firm says it needs the restriction lifted to secure a potential financial partner who does not wish to go through Parliament every time it wants to do work at the site.

If BPL cannot secure Donaldson Lufkin Jenrette's financing, which it says will provide the necessary capital to revamp the resort, then the hotel may close.

Ms Smith said the PLP wanted to accommodate growth but wished to make sure the land would be used for "the greater good of the people''.

She proposed the amendment saying it was an attempt to find "middle ground''.

But Government backbencher Ann Cartwright DeCouto said the amendment was ineffective since virtually anything could constitute "tourism purposes''.

She said BPL needed to convince the House that any development would be in the best interests of the Country, and warned: "We're not stupid ... let's not get into this back-room deals thing.'' Government backbencher Leonard Gibbons, who introduced the bill, responded by saying he was not in the position to accept any amendment on behalf of the BPL.

On his suggestion, the Committee rose to report progress. It will sit again next Friday when the House meets.

Ms Smith's gambit came after members from both sides had spoken on the bill.

Mr. Gibbons noted that the clause BPL wanted to remove was put in the firm's incorporating Act when there was no planning department in place to control the use of the land.

"Those controls are now in place,'' he noted.

And he pointed out that the joint venture would see between $60 and $90 million injected into the hotel and other physical plant improvements. Hotels needed capital investment and companies willing to put forward this kind of money should not be turned away, he added.

But Works & Engineering Minister C.V. (Jim) Woolridge claimed that BPL was threatening Parliament by saying the hotel would close if the bill did not pass.

The former Tourism Minister said: "These people are seizing the moment and trying to play one hand against the other because they know an election is coming.

"Are we going to allow ourselves to be hoodwinked by people who thought they were dealing with a bunch of dumb bunnies? We are being asked to sell our souls.'' Government backbencher Trevor Moniz echoed Mr. Woolridge's comments and claimed BPL was reluctant to come before Parliament in an effort to avoid public scrutiny.