Discussions to be held over future of Exmouth's Ocean Blue building

The future of Exmouth's Ocean Blue building is set to be discussed by East Devon councillors after questions were raised as to why the council bought it.

The purchase of the site on Queen's Drive was made back in March, but the reasoning and the process behind the acquisition was only presented to councillors last week.

East Devon District Council's cabinet agreed to note the report explaining the reasons why the building was bought – and said they wanted a further meeting where the future of it could be debated.

The acquisition of the Ocean Blue leisure complex on Exmouth seafront cost £2,700,000 and was funded using the council's Commercial Investment Fund. Ocean Blue consists of a bowling alley, soft play area, two restaurants, and is also set to become a wedding venue.

Tim Child, Senior Property & Estates Manager, explaining the decision, said that the council also own adjacent land and having and that this generates wider opportunities to unlock potential of the wider area encompassing Queens Drive, Harbour View Café and Ocean Blue into one 'offering'.

He added: "The Business Case to invest was based on the income stream from LED but for the reasons mentioned, other opportunities are open to EDDC that would not have been open to other purchasers and hence the investment is worth more to EDDC than other purchasers.

"There is a forecast net income in year 1 of £79,000 which represents a return of 2.79% increasing to £99,000 (est) and 3.47% in year 2 and if a more cautious approach is taken to EDDC maintenance liabilities then a net income of £49,000 representing 1.73% increasing to £68,000 (est) and 2.40% in year 2.

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

Cllr Kevin Blakey, who at the time of the purchase was the portfolio holder for economy, said that the decision was taken quickly under the agreed commercial investment frameworks to avoid the opportunity for commercial competitors to come in and 'gazump our position'.

He added: "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 sounds reasons, and I would not do anything different now."

Cllr Geoff Pook, the then portfolio holder for asset management, 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."

But Cllr John Loudoun said that it was disappointing that seven months after the acquisition, this was the first time they had the chance to find out what they have done and for what reason.

He said: "I don't know if it was the right or wrong thing to do and accept it was done in due process, but in future, we don't need to find where we spend nearly £3m and it takes seven months to find out that we have done it and for which reason."

Cllr Paul Arnott, leader of the council, 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 Nick Hookway, who represents the Exmouth Littleham ward, said 'we are where we are' with the building and that they have to try and look forward and find some benefit from the building, and called for and the future of the building needs to be considered as part of the wider Queen's Drive redevelopment.

He added: "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 possibly 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."

Mark Williams, the council's chief executive, said that having some 'breathing space' to discuss what the issues are and what the council wanted to achieve was needed.

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

The cabinet agreed to note the report around the process of the acquisition, and that a further report over the future of the Ocean would come back before the cabinet at a later date.