He is now having to pack up shop and leave the site after being outbid during the tender bidding process.
Every three years, the businesses on the site make a bid of how much they can pay Portsmouth City Council annually.
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Graham bid a significant amount of money, raising the money by £350 a month more than what he already paid, but he was unsuccessful.
The council then asked him to sign a contract for an extra three months because the new owner was not ready to take over until October.
Although Graham considered staying for an extra two months rather than three, he has decided not to sign the contract.
He said: ‘They are taking the mick out of me. I am just keeping the bed warm for someone who is going to be taking all of my trade.
‘I have offered £350 a month more and if that is not enough, what more do they want?’
The man from Cosham has sold over £3m worth of ice creams after working for an ice cream agent for Verrecchia for 30 years, where he then bought the van and continued for another decade.
Graham said: ‘I don’t care that they have given it to someone else, I just don’t like the fact they have said he is not up and running.
‘I think that when you get a tender, you have an obligation from the start to open up on time.’
People across the city are devastated at the loss of their iconic ice cream van on the hill, with some even saying that they will not be returning to the site.
One person said: ‘Portsmouth City Council haven’t got a clue when it comes to looking after the people of Portsmouth.’
He has seen the city change over the years and met some amazing people, but for now it is farewell to the ice cream van at Portsdown Hill.
Chris Ward, director of finance and resources at Portsmouth City Council, said: ‘We do all we can to work with and support local businesses but ultimately we have a responsibility to all residents, and an obligation in law, to make sure we get best value for money.
‘These sites generate income which is used to support the delivery of council services across the city.
‘Legally, and to ensure that all businesses have the same opportunities, we have to advertise these sites and evaluate all bids on a fair basis, on this occasion a new company made the best offer.
‘However, to ease the impact on Mr Penrose we were able to reach an agreement to give him more than three months extra trading so he could benefit from the busy summer period.’