Negotiations over the clean up of the former US Naval Annex at Southampton stand in the way of an ambitious leisure project at the site.

Currently talks are ongoing between developers and Government over indemnity for the $12.5 million restoration of the Morgan's Point land.

And once a deal is thrashed out, work could start on the golf, village and marina project costing $90 million by the end of the year.

Morgan's Harbour Investment Ltd. has said it will foot the bill for the cleaning up of residue oil, asbestos and other debris left by the departing US forces.

But it would like to see some form of pledge that the cost of any unforeseen problems will not land on their doorstep.

They have already spent $4 million on groundwork, surveys, studies and a remedial action plan for the clean-up.

Environment Minister Arthur Hodgson had previously pledged that his Government would press both the UK and US governments to take responsibility for the reparation of the site.

But the developers, which are made up of overseas and Bermudian shareholders, are keen to move along with the project which has been more than two years in the pipeline.

Bermuda shareholder Edward Lawrence said discussions with the Government and site managers, Bermuda Land Development Company, were ongoing and it was hoped they will come to a successful conclusion.

"We are discussing many issues with the Government and they have to be satisfactorily concluded for both parties,'' he said.

"We all believe in the project, but it is a lot bigger and more complex than most realised.

"If the project hinged on somebody else doing the clean-up, nothing would ever be done.'' Mr. Lawrence said the capital was in place to start work, which would be phased in over a number of years to include a cottage colony, shops and homes.

And, he said, a much hyped concern over Government requests for affordable housing was not even on the agenda.

"Affordable housing has not really been an issue,'' he noted. "They haven't really said they want affordable housing. They want a range of housing, which our project allows for.

"Our houses range from $400,000 to $2 million, and 50 percent is below $700,000.'' Development and Opportunity Minister Terry Lister did not return calls yesterday.

ENVIRONMENT ENV