Scarborough Waterpark audit conclusions
The council published the report in full here The report included the following conclusions: The proposal considered by Councillors on 9 September 2013 was both risky and complex in nature. The decision taken by Councillors was taken in the knowledge there were risks, but in the interests of Scarborough and its residents, and to ensure the Waterpark and wider Sands regeneration could be completed. The decision was also taken at a time when Councils were being encouraged to adopt a more commercial approach at a time of austerity. The Council recognised there were a number of risks in granting the loan to Benchmark Leisure Limited and therefore put in place various mitigations. These included only permitting the funding to be drawn down in stages linked to the construction of the Waterpark, ensuring the risk of any cost overruns would be met by Benchmark, requiring parent company guarantees and limiting the ability of Benchmark to develop other parts of the Sands until the loan was repaid. External legal advice was obtained on the proposed agreement and associated governance measures. Importantly the Council also ensured that it retained the freehold interest in the site which safeguarded the Waterpark as an asset. Officers involved the Leader, Cabinet Members and other Councillors in working groups and briefing meetings throughout the period prior to the decision being taken. The reports prepared by officers also contained sufficient information for Councillors to make a considered decision but there was a lack of clarity about key aspects of the proposed agreement with Benchmark Leisure Limited. In particular, it was not clear whether the Council was borrowing funds to part-finance the construction of the Waterpark or whether it was to enable the Council to provide a commercial loan to the company. Officers also failed to provide a recommendation to Full Council based on their professional knowledge and assessment of the risks. This was a particular omission given the complexity of the proposed agreement with Benchmark. The reports to Full Council contained details of the potential risks of the agreement but in some cases these risks were not fully and properly articulated. Insufficient attention was also given to the actions which could be taken to mitigate those risks. The key risk that the Waterpark might not be commercially viable was recognised by Councillors and officers but not adequately addressed. The projections for visitor numbers prepared by Benchmark Leisure Limited and Alpamare UK Limited were overly optimistic, but these were not properly challenged. Instead, the Council appears to have placed too much reliance on the findings of the feasibility study undertaken by Leisure Development Partners LLP but commissioned by Benchmark. This is despite the concerns expressed by GVA about the assumptions and projections used in the study. Alpamare also had no experience of operating Waterparks in the region and therefore limited knowledge of the local visitor economy. Inadequate due diligence was carried out on Alpamare to determine whether the company was a suitable operator for the Waterpark. The problems being experienced at the existing Alpamare waterpark in Bavaria were therefore not identified. Despite the obvious risk that the Waterpark might not be profitable, the Council failed to develop any contingency plans until after Alpamare entered into a company voluntary agreement in 2019. With hindsight it is apparent that the decision to approve the loan to Benchmark Leisure Limited was based on incomplete information and therefore put the Council at increased risk. Councillors understood that there were risks with the proposed agreement, but the report should have set these out more clearly. In the circumstances, it is not possible to know whether the decision by Full Council would have been different, but at least Councillors could have been better informed. No evidence has been found to suggest that Councillors or officers accepted gifts or hospitality from any third parties. The lessons from this review should inform the decision-making processes for any future regeneration projects. In particular, the need to effectively identify, report and mitigate potential risks to the achievement of project objectives, and to adequately balance potential risks and rewards.

Scarborough Waterpark audit conclusions

The council published the report in full here

The report included the following conclusions:

The proposal considered by Councillors on 9 September 2013 was both risky and complex in nature. The decision taken by Councillors was taken in the knowledge there were risks, but in the interests of Scarborough and its residents, and to ensure the Waterpark and wider Sands regeneration could be completed. The decision was also taken at a time when Councils were being encouraged to adopt a more commercial approach at a time of austerity.

The Council recognised there were a number of risks in granting the loan to Benchmark Leisure Limited and therefore put in place various mitigations. These included only permitting the funding to be drawn down in stages linked to the construction of the Waterpark, ensuring the risk of any cost overruns would be met by Benchmark, requiring parent company guarantees and limiting the ability of Benchmark to develop other parts of the Sands until the loan was repaid. External legal advice was obtained on the proposed agreement and associated governance measures. Importantly the Council also ensured that it retained the freehold interest in the site which safeguarded the Waterpark as an asset.

Officers involved the Leader, Cabinet Members and other Councillors in working groups and briefing meetings throughout the period prior to the decision being taken. The reports prepared by officers also contained sufficient information for Councillors to make a considered decision but there was a lack of clarity about key aspects of the proposed agreement with Benchmark Leisure Limited. In particular, it was not clear whether the Council was borrowing funds to part-finance the construction of the Waterpark or whether it was to enable the Council to provide a commercial loan to the company. Officers also failed to provide a recommendation to Full Council based on their professional knowledge and assessment of the risks. This was a particular omission given the complexity of the proposed agreement with Benchmark.

The reports to Full Council contained details of the potential risks of the agreement but in some cases these risks were not fully and properly articulated. Insufficient attention was also given to the actions which could be taken to mitigate those risks.

The key risk that the Waterpark might not be commercially viable was recognised by Councillors and officers but not adequately addressed. The projections for visitor numbers prepared by Benchmark Leisure Limited and Alpamare UK Limited were overly optimistic, but these were not properly challenged. Instead, the Council appears to have placed too much reliance on the findings of the feasibility study undertaken by Leisure Development Partners LLP but commissioned by Benchmark. This is despite the concerns expressed by GVA about the assumptions and projections used in the study.

Alpamare also had no experience of operating Waterparks in the region and therefore limited knowledge of the local visitor economy. Inadequate due diligence was carried out on Alpamare to determine whether the company was a suitable operator for the Waterpark. The problems being experienced at the existing Alpamare waterpark in Bavaria were therefore not identified. Despite the obvious risk that the Waterpark might not be profitable, the Council failed to develop any contingency plans until after Alpamare entered into a company voluntary agreement in 2019.

With hindsight it is apparent that the decision to approve the loan to Benchmark Leisure Limited was based on incomplete information and therefore put the Council at increased risk. Councillors understood that there were risks with the proposed agreement, but the report should have set these out more clearly. In the circumstances, it is not possible to know whether the decision by Full Council would have been different, but at least Councillors could have been better informed.

No evidence has been found to suggest that Councillors or officers accepted gifts or hospitality from any third parties.

The lessons from this review should inform the decision-making processes for any future regeneration projects. In particular, the need to effectively identify, report and mitigate potential risks to the achievement of project objectives, and to adequately balance potential risks and rewards.