Today I sent the following, in plain-text form, to Town Council, via Council@vienna.gov.
Edit: And had it returned by the Town’s email system, for an incorrect address, because the mail-to link on the Town’s Annex Reimagined web page literally addresses the mail to mailto:council@vienna.gov.
So now I’ve re-sent it, manually overwriting the address to remove the mailto:.
I have a decrepit old computer and old software, but so maybe it’s my fault. Or, maybe if you know HTTP, you can figure out what’s going on, as the mailto link looks like this, when page source is shown: I note that ASCII 109, 97, 105, 108 spells out “mail”, so yeah, their mailto link, if you want to send something to Town Council, is mal-configured.
to <a href="mailto:mailto:council@viennava.gov?subject=Community Feedback: Annex / Meals Tax Increase">council@viennava.gov</a>
That doesn’t give me a warm fuzzy with regard to the upcoming decisions.
Dear Town Council:
This letter is about the Town of Vienna’s proposal for a pool/gym on the site of “The Annex”.
I aim to make just four points regarding cost and revenues for that proposed pool/gym complex. These are the numbered headings below, with supporting detail supplied below each heading.
Some of the uncertainty around the revenue side of the a proposed Vienna gym/pool might be resolved by a simple, systematic intent-to-purchase survey of the Town population. Ask a simple, unambiguous, unbiased question. Would you be willing to purchase a $1K/year family membership to this facility, as described, yes or no.
If it’s clear from the results that you appear to have a lot of demand for these memberships, you can just take this letter and throw it away. And I’ll post an apology to the Town’s contractors, over their estimate of demand, on my blog.
But if it’s clear that you don’t have a lot of takers at $1K/year, eh, maybe stop and reconsider.
Even if the results of such a survey are ambiguous, you’re no worse off than you are now, from the standpoint of making this decision.
Point 1: This decision-making process is clearly flawed in this case.
1.1: The 2014 Town Council’s “no” vote on a Town of Vienna pool was largely based on the presence of the three nearby Fairfax County REC Centers. Those are at the core of comments from 2014 Town Council members Kelleher and Polychrones, based on contemporaneous reporting (Article by Brian Trompeter, from 2014 insidenova.com).
1.2: Town Staff’s 2024 response to that major issue — competition from the three nearby REC Centers, and the presence of those REC Centers being the reason for at least two “no” votes in the 2014 Vienna pool discussion — was to bury it.
Inadvertently, perhaps. But buried is buried.
The Town’s consultant’s analysis of the market for the proposed pool (9/30/2024 Town Council Work Session reference), fails to note (in any meaningful way) the three large nearby Fairfax County REC Centers. In particular, the demand-estimation portion of this proposal — how much will the Town likely collect in user fees — seems to ignore the 2014 Town Council’s main concern about the nearby REC Centers. Near as I can tell, in that analysis, within the boundaries of the Town of Vienna, the presence or absence of those REC Centers makes absolutely no difference to the estimated demand for a Vienna pool.
Town Council’s valid 2014 concerns were simply ignored in the 2024 proposal.
No matter how you slice it, whether the presence of those local REC Centers matters or not (I think it does), ignoring the 2014 Town Council’s reasoning for saying “no” before is a decision-making flunk. This should have started from the 2014 decision, addressed those concerns, and moved forward.
Point 2: I think the projected annual operating deficit is substantially under-estimated.
I think the estimate of user-fee revenues for a Vienna facility is not merely too high, but materially too high. And that, as a result, the estimate of ongoing taxpayer liabilities to keep this Vienna pool operating is materially too low.
That’s not merely due to the cavalier treatment of the three nearby REC Centers. There’s more to it than that. I believe that, in effect, the estimate assumes that this new pool is the only pool option available to Town of Vienna residents. (Or something close to that, I found it hard to tell from what’s in the proposal.) Restated, it seems to assume that the new Vienna pool attracts all of the pool purchasing power present within Town boundaries. Plus some from outside the Town.
In any case, that’s my best guess for reconciling the consultant’s high contract and revenue estimates for this new facility with a series of common-sense benchmarks (below), based largely on metrics that I ginned up from our existing pools.
Crude benchmarks.
First, the projected revenue is far higher than I would expected based on an extrapolation of Fairfax REC Center revenues per square foot or per facility. E.g., taking one-third of average Fairfax typical revenue per REC Center (about $2.8M per each, as I recall), something about one-third the size of a REC Center should get ~$0.9M in revenue. At the contractor’s estimated annual cost of $2.2M for the Vienna facility, that would leave a $1.3M annual deficit.
Second, the revenue is far higher than I would project from the the Reston pool experience, where that pool is about the same size as that proposed for Vienna. Reston only covers about 40% of its operating cost (source: long division, using numbers from Fairfax budget fund 40050). Again, based on the projected operating cost of the Vienna facility, that would yield (0.4 x $2.2M cost estimate from from the contractor = $0.84M). Leaving a smidge over a $1.3M deficit.
It’s coincidence that these numbers are as close as they are to one another. But I don’t think it’s a coincidence that these both well under the Town’s contractor’s projections of likely Vienna user-fee revenues.
Third, the high projected annual membership sales for the gym/pool seems completely out-of-proportion to the 5,500 square foot size of the pool. Our local private pools all maintain somewhere around 1 contract per 16 square feet of pool surface, which, in my experience, more or less results in a pool at capacity during peak use times. If I use that as a benchmark for “pool capacity”, I note that, at the high end of the contractor’s estimates, the apparent “contract density” of the proposed Vienna pool (memberships per square foot of pool surface) is eleven times higher than the local private-pool average.
I know they’re going to schedule use and all, but that’s a lot of bodies for a small pool.
Finally, at the high end, the Town’s contractor’s estimate of memberships in the Vienna pool (4000) exceeds not only the total annual memberships for our four local “swim club” pools combined, (2450), but it’s almost as high as that plus all the names (regardless of level of duplication) on all the waiting lists for those pool (a further 2175). Hard to say, but to me, that’s coming close to an estimate of what I suspect this is, something akin to all the known pool membership purchasing power in Vienna.
When I load that into my magic 8-ball, I’m guessing that the ongoing annual taxpayer-paid operating losses are more likely to be in the range of, say, $1M to $1.5M. Materially more than what the Town’s contractor has suggested.
If nothing else, think about it this way. The big player in government-run gyms in this area is the REC Centers. We’re proposing to put in a inefficient-scale REC Center clone, surrounded by three Fairfax REC Centers. As noted ten years ago by then Council Member Kelleher, average cost per member for a small Vienna facility is going to be much higher than that of the large-scale REC Center facilities. But in addition, you have only limited ability to raise prices above the rates charged by your dominant competitor, Fairfax County.
Looked at dispassionately, that’s a dismal economic scenario, unless somehow proven otherwise. This extraordinary claim — don’t worry, you have so much demand you’ll be just fine, you’ll only make small losses going forward — requires, I don’t know, some more convincing level of proof.
Particularly because of the next part.
Point 3: You are a price-taker in this market. If this pool turns out to be a money pit, there’s nothing this or subsequent Town Councils can do about it.
As Town Council, you have considerable freedom in setting payment rates.
For example, if there’s a projected shortfall in the Water/Sewer fund, you can raise water rates. If there’s a projected shortfall in the General fund, you can raise property tax rates. If you need more money to fund bond purchases, you can raise meals tax rates.
That’s not the case here. If this facility makes large losses, you won’t have the option to fill that budget gap by raising membership rates for this pool. Let me lay out the logic, focusing on the critical “economies of scale” point raised ten years ago by then-Council Member Kelleher.
Linearly:
- You are proposing to build a small-scale version of a Fairfax REC Center.
- Obviously, you will be in direct competition with (at least) the three nearby REC Centers, for the consumer pool/gym dollar.
- Because of that, Fairfax’s REC Center membership rates set a cap on what you can charge. (That’s a simplification, but the point is, you can’t raise your rates much above the Fairfax rate, or people who have an interest in use of a facility of this type will simply choose to use a REC Center.)
- Key point 1: Per 2014 Council Member Kelleher’s comments, these pool or pool/gym facilities exhibit strong “economies of scale”: Bigger facilities have much lower average cost per user (or per membership). Fairfax’s average costs are going to be considerably lower than yours, due simply to the small size of your facility. (How much lower? My guess is about half, based on an average cost of $2.8M/year to run a REC Center, versus a contractor-projected $2.2M to run a Vienna facility about one-third the size of a REC Center. If users scale up with the size of the facility, the simple arithmetic says that your average cost per user is going to be about twice the Fairfax REC Center costs per user).
- Key point 2: Fairfax explicitly sets its rates to cover its costs. That’s by the enabling statute. My understanding is that the only way those REC Centers were passed is with the condition that they must cover their own operating costs.
- The upshot of all this is that, by deciding to enter a market where your much larger direct competitor has costs that are half of yours, and prices its product accordingly, and effectively dictates a maximum for what you can charge, not only will you make significant losses up front, you will be unable to raise your prices to cut your losses later. (Or, with less drama, you may find that you lose a significant fraction of membership if you do.)
The upshot is as stated above. If this turns out to be a money pit, your sole option will be to keep shoveling money in. And that’s because unlike your other major revenue sources, you are not a price-setter in this market, you are a price-taker. The Big Dog — Fairfax County — sets the price level to meet its needs. All you can do is follow along.
Point 4: If you proceed with this, please follow Fairfax’s example and establish, in the authorizing language, the requirement that a separate accounting fund be established to track the operating costs and revenues of this recreational facility.
Recall for a moment recent (?) Town Council discussions and decisions regarding the cost of leaf collection and mulching. Initially, Town staff provided you with a cost estimate showing that those services were virtually free. (Which was obviously nonsense, by comparison to the average costs derived from data available from other governments in this locality.)
The reason that these services appeared to be “free” is that the Town’s books are bookkeeping-style accounts. They commingle the costs and revenues of various government services along broad department-level lines. They rarely function as a “management information system” that is, a system of financial and other information flexible enough to match the accounts to specific functions or tasks about which the Town (e.g.) need to make a big decision.
In other words, the cost of leaf collection and mulch distribution were buried in the overall Public Works budget. Because, there was no fund or account specifically for leaf collection, and so, no way to separate those costs out of the budget of the Public Works department.
Unless Town Council is proactive on this issue, the same thing will happen with the costs and revenues of this proposed facility. Its costs and revenues will be commingled with the overall Parks and Rec budget, and nobody will ever be able to tell just how much money this proposed facility loses every year.
I realize that those who want to see this pool built, regardless of the modest financial consequences for the Town, probably view that as a feature, not a bug.
But in the interest of transparency, good government, and accountability, if you decide that building this pool/gym facility is the right thing for Vienna, you really should allow yourselves and the citizens to see how it all turned out, in terms of total taxpayer burden.
Based on how the Town keeps its books, the only way you are going to get that government transparency and accountability is by requiring, up front, in the official language authorizing the expenditure, that operating cost and revenues for this facility all must pass through single, designated fund within your accounting system.
If you make the decision to proceed with a pool, then own it. Ensure that annual financial consequences of your decision are clearly and plainly calculated, for all to see.
If you hesitate to do that, then you know everything you need to know about how you really feel about the small operating losses projected under the current proposal.
Respectfully,
Christopher Hogan, Ph.D.
226 Glen Ave SW
Vienna, VA 22180
