The developer behind the £50million Seaway leisure scheme in Southend says it is financially sound, after concerns were raised.
Opposition councillor Dan Nelson and Southend Seafront Traders questioned the solvency of Turnstone Southend Ltd, a subsidiary company set up by Turnstone Estates Ltd to deliver the Seaway project on the car park off Lucy Road, Southend.
Consultants CBRE looked into the viability of the scheme ahead of Southend Council signing off on a £10million cash injection to get it off the ground after the developer failed to find a financial backer.
A report from CBRE found while the parent company is financially sound, with an Experian Credit score of 95 out of 100, Turnstone Southend scored just five out of 100. This was said to be because it was set up solely to do the Seaway leisure scheme and there had been no financial activity because work had not begun.
Cllr Nelson, (Con Southchurch), said: “What is clear is that the parent company has a very good credit record but Turnstone Southend hasn’t.
“They say this is because it hasn’t had any money spent on it but this is contradictory because they say they already spent £1,7million. It doesn’t stack up.”
The CBRE report recommends mitigating factors being put in place before the agreement goes ahead. These include setting up a fund to cover unforeseen costs.
Cllr Nelson added: “Right through the CBRE report they talk about things the council needs to do to mitigate any risk to the council but the council doesn’t seem to be doing this mitigation so the council is at risk.”
Paul Thompson, a member of Southend Seafront Traders Association said: “Commercial banks and the developer itself has said this scheme is unviable. The council’s own report has highlighted Turnstone Southend Ltd’s shocking credit rating.
“There is a huge financial risk to Southend Council with this deal. They are gambling with public funds. It is unacceptable.”
Cllr Ron Woodley, deputy leader of the council, said all suggested mitigation was being adhered to and the council would profit. He said: “I’m not unduly worried about Turnstone Southend. The money Southend is putting in is for a multi-storey car park so we will get all the revenue from that and from business rates. Our 151 officer has been through it all with a fine tooth comb and totally trust that.
“Mitigating factors are being taken on board and will be adopted.”
The scheme includes an 11-screen Empire Cinema complex with IMAX, a 20-lane Hollywood Bowl, an 80-room Travelodge hotel and 555 public car parking spaces, with three restaurants and a new public square.
Tim Deacon, managing director of Turnstone Estates said: “It is quite simple, most developers work with special performance vehicles set up to run the project. The performance of that group is guaranteed by Turnstone Estates.”