East Devon representatives told why council splashed £2.7million on Ocean Blue venue in Exmouth – SEVEN MONTHS after its purchase

East Devon councillors have been told why £2.7million of taxpayers’ cash was splashed on the Ocean Blue leisure complex in Exmouth – seven months after the authority bought it. 

The seafront attraction was snapped-up by the council in March, but the rationale and process behind its acquisition was only presented to its cabinet at its October meeting.

Members noted the report and have called for further talks on the venue’s future.

The purchase of the Esplanade property was the first time the authority has used public money from a £20million Commercial Investment Fund.

East Devon District Council (EDDC) is now the landlord of Ocean’s tenant – LED Leisure Management Ltd – and will benefit from the building’s rental income.

The venue boasts a bowling alley, soft play areas, arcade machines, two eateries, and is a popular venue for parties, weddings and corporate events.

Councillor Paul Arnott, who became leader of the authority in May, said: “I had demanded this report came forward.

“It is extraordinary that the council made this purchase and the only knowledge we had of it was with a press release.

“The point is not about the process but that we didn’t know about it, and it hadn’t been reported, and I still don’t understand why we weren’t told.”

Cllr Kevin Blakey, who at the time of the purchase was the council’s portfolio holder for economy, said: “We had a chance to make a sensible investment that brings in money for the council and, had this been out in the wider world, we may have lost that.

“It was not an attempt to play secret squirrels and keep the council in the dark, but for good, sound reasons and I would not do anything different now.”

Cllr Geoff Pook, who was portfolio holder for asset management back in March, added: “It was a commercial property investment, the due diligence was done and it had a value of the income it was generating.

“We did go through the process and it was the one that was agreed.

“This is a key development on Exmouth seafront and to own it and controlling it seemed to be a good thing for EDDC to control the development that goes ahead.”

Tim Child, EDDC’s senior property and estates manager, told cabinet members: “The business case to invest was based on the income stream from LED, but…other opportunities are open to EDDC that would not have been open to other purchasers.

“There is a forecast net income in year one of £79,000 which represents a return of 2.79 per cent, increasing to £99,000 (est) and 3.47 per cent in year two.

“And if a more cautious approach is taken to EDDC maintenance liabilities, then a net income of £49,000 representing 1.73 per cent, increasing to £68,000 (est) and 2.40 per cent in year two.

“These rates of return are after borrowing costs and do not reflect possible enhancement in capital values.”

Exmouth Littleham ward member Cllr Nick Hookway said: “People were surprised that the council bought this – it was on sale for quite a long time before the council bought it, and I am certain there was no other buyer.

“The building hasn’t generated the profit and footfall and turnover that it was expected to do and, even with the present tenants, there is a possibility we can talk to them and discuss how we may adapt the building so it fits in and compliments all the other developments on the Queen’s Drive area.

“There is potential to make it work a lot better, but it is not working as a recreation and leisure building and we need to consult with residents to see what they want to see in that building.”

EDDC chief executive Mark Williams told the meeting on October 13 that having some ‘breathing space’ was needed.

He added: “It feels like there is some frustration that is coming out and [is]not helping officers understand where you want to get to. Once you are clearer, then we can advise you on it.”

Cabinet members agreed to note the report on the process of the acquisition.

They also resolved that a further report over the future of the Exmouth venue would come back before them at a later date.

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East Devon District Council splashes £2.7million on Ocean leisure complex in Exmouth

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