Councillors in Scarborough received warning about risk to public finances from Alpamare loan last year

Before the creation of the new North Yorkshire Council in April, councillors were warned about the risk to the new authority’s finances from outstanding debts related to the Alpamare water park in Scarborough.

Councillors were also told about a £5m risk management reserve for the water park and other infrastructure and capital programme contingencies.

Benchmark Leisure Ltd – the developer of Scarborough’s Alpamare water park – went into administration in October and councillors have called for answers about the £9m loan given to the company by the now-defunct Scarborough Council in 2013.

In November last year, members of North Yorkshire County Council’s audit committee were briefed about the loan that enabled the £14m leisure centre to be built, as well as a “£1m parent company guarantee put in place as security”.

The audit committee was told that £8.67m of the loan balance was still outstanding in March last year, of which £1.1m was “overdue lease payments including rents over the Covid period” which at the time led to legal proceedings.

According to the report, a “settlement agreement [was] reached with the developer in November 2022 to settle all overdue debts” with a payment of £1.252m received as part of the settlement.

It added that the £1m parent company guarantee put in place as security was “extinguished as part of the settlement”.

Last year, councillors were also told that further issues of non-payment could trigger forfeiture of the lease and could lead to the operation reverting back to the council, which has recently been confirmed by the company’s administrators.

Last month, Insolvency consultants MHA told the Local Democracy Reporting Service that the water park and other assets developed by Benchmark would revert to North Yorkshire Council.

Speaking at a full meeting of the council last month, the chair of the audit committee, Coun Cliff Lunn, said: “We have not received a statement of financial accounts from Scarborough for many years because of some legal difficulties over harbours and parking and when it comes to committee we will look at it”.

Also speaking at the meeting, the council’s executive member for finance and assets, Coun Gareth Dadd said the council was “committed to delivering the best outcome from a situation we have inherited from Scarborough Borough Council for the town’s residents and businesses as well as the wider North Yorkshire communities”.