In this post, I explain why you are unable to buy a private pool membership in Vienna VA. In the sense that, if you got an urge to buy one today, the best you could do is put your name on a waiting list for one. And wait a few years.
There is a clear answer to this question, but there is no short, simple answer. These pools exist at the intersection of tax law, zoning law, and land ownership.
Walk through the points in red below, step by step, to work through the logic of the answer.
Details follow.
Why you are unable to buy a private outdoor pool membership in Vienna VA
There’s huge unsatisfied demand for private pool memberships in the Vienna area. As shown above, our four local membership pools have ~2200 names on their waiting lists (though surely there’s considerable duplication across lists). These pools are all outdoor, summer-season, “fun” pools, each supports a kids swim team. This situation is not unique to Vienna, but is typical of the DC area. Decade-long wait times for a pool membership are common throughout the region (reference Washingtonian Magazine).
But what an odd situation. We live in an aggressively capitalist society. You name a service, from handling your infant’s diapers to handling your parent’s diapers, and anything in between, and you’ll find somebody willing to take your money to provide that service,
And yet, nobody’s trying to make a buck by filling this obvious unmet need for outdoor membership pools. We’ve got a wealthy population, holding out a big wad of cash, asking somebody to take it. And nobody’s stepping up? Then you look closely at the table above and realize that there hasn’t been a new membership outdoor pool built in the Vienna area for well over half a century.
This demands an explanation. As they taught me in Economics School, one of two things is supposed to happen: Either somebody should offer more pool memberships for sale, or the price of those memberships should be bid up until there’s no longer a line of willing, waiting buyers.
But in fact, we get neither of those outcomes. We have permanent ridiculously long waiting lists, and stable pool membership prices.
How is this possible?
For completeness, I should note that two of these are pool and racquet/tennis clubs, the rest are just pool clubs. I’ve excluded the local country club, for which I judge the pool to be secondary to the main amenity, the golf course. As one does, in this neck of the woods.
1.1 to clarify, these are private pools with totally unselective pool membership
Let me start by clarifying “private”, in these private membership swim clubs. For those of you unfamiliar with these things.
These are private, as in, private property. Only those who pay their share in the upkeep get to use the pool. That’s what an ownership/membership share is. The pool I belong to costs about a quarter-million-dollars a year to run. Roughly speaking, that’s paid for by 500 memberships at $500 per year.
But any member of the public can join. The selection mechanism literally consists of taking names off the waiting list in the order they signed up. If you have the cash and the patience, you’re in. Eventually.
So, they are private pools in the sense that they are private property. But they are public in the sense that literally any member of the public can buy a membership, subject to availability. The only exclusivity is the location and the price tag. And the price tag is entirely determined by each member paying an equal share of costs.
1.2 Organized as tax-exempt non-profit social clubS in accordance with IRS rules.
And then, why are all these pools tax-exempt? What’s up with that?
After studying on this a while, here’s the shortest description I can come up with, to describe the tax and zoning basics for private outdoor pools in my area:
In terms of taxation and zoning law, our local membership private pools are treated the same as churches, schools, and public parks. This not only makes the land they sit on tax-free, but allows them to locate on land not zoned for business use. (That is, with the appropriate “conditional use permit”, they can be (and typically are) located in residential areas, where a public-facing for-profit business would be forbidden from locating.)
To receive that preferential tax and zoning treatment, they have to be organized as non-profit social clubs, under the IRS regulations. (Like, say, the Moose.)
But in addition, the Vienna area private pools all date to the desegregation era (or just after it, in the case of Cardinal Hill). Make of that what you will. But in terms of the market, this also means that they were formed in an era when local land prices were about a fifth of what they are today, in real (inflation-adjusted) terms.
I think this explains most of what I observe in the private outdoor membership pool market.
1.2.1: These private membership pools MUST be organized as non-profit social clubs, for zoning reasons, in order to be located where they are — tucked into local neighborhoods, that is, on land zoned as residential. Allowable uses of land with residential zoning includes things like churches and parks. And along with that, non-profit social clubs. (Think, VFW, BPOE, Moose, and the like).
By contrast, if they had been organized as for-profit businesses, they’d have to locate in the commercial district. Where, around here, there’s not nearly enough room to put one. They would be effectively made impossible. We don’t allow businesses to operate in the residential areas.
So these pools aren’t businesses, they are non-profit social clubs. That’s the only way they can locate where they do.
1.2.2: But that mandatory non-profit status means they can’t just sell their memberships to the highest bidder. They can’t raise their prices to whatever the market will bear, and rake in the profits, because it would be illegal for them to do so (except temporarily, more-or-less by accident.)
Because, in order for them to exist, at all, where they exist, they must be non-profit social clubs. They literally must set prices that cover costs, and that’s it. (Costs can include e.g. prudent reserves for eventual facility upgrades and replacements.)
Recap: At this point, we all now understand why these pools, with their huge waiting lists, don’t just raise prices as a normal business would. It’s not that they are do-gooders or socialists or whatnot. It’s that, in order to exist as neighborhood membership pools (swim clubs), they have to be non-profit. They literally can’t raise prices (to some exorbitant level, and take the resulting profits) without breaking the law.
1.3: OK, why don’t these pools offer more memberships, then?
First, no financial or other incentive to do so. Think about their private non-profit status. What do they get out of it? Ah, nothing, unless the pool is somehow in financial distress and needs more paying customers.
Second, fundamental legal impediments to expanding membership. Their “articles of incorporation” typically spell out the number of shares in the corporation — that is, memberships. They’d literally have to amend their organizational papers if they did.
And finally, capacity constraints. For most, they were designed to be an efficient size, for the way they are run. The deal is, you own a membership, you can use the pool any time open swim is available (e.g., not during swim meets). My pool, for example, gets pretty full at peak periods (e.g., opening day). Full pool, full parking lot. My take on it is that all our local pools cluster around the same average of members/square foot of pool because all are driven by the need to accommodate peak demand without rationing (without turning down some members because the pool is already full.)
The upshot of all that is that all the pools would get out of offering more memberships is problems. So don’t expect them to offer more memberships any time soon.
Recap: OK, at this point, I understand why the existing private membership pools won’t raise prices (and so “bid away” the wait lists, leaving only those with greatest willingness to pay). I also understand why they won’t (or, can’t) increase memberships. All of that arises from their legal need to be organized as tax-exempt social clubs.
1.4: Why doesn’t somebody open a new one, given this ready-made market of 1000’s of names on the local pool waiting lists?
I’m sure there are many sound practical reasons that doesn’t happen. But we can boil it down to a short list.
First, no profit motive. The only large tracts of land that likely come up for sale seem to arise from the deaths of local non-profit institutions. Schools, churches, and such. These are located in residential areas. So that, once again, if you wanted to put a membership pool on (say) the site of a former church, you’d have to be organized as a non-profit social club in order for the zoning to be legal.
So it’s not as if some national chain can swoop in an offer a for-profit community membership pool. The only place that could happen would be in a business district. And, price aside, it’s not clear there’s an appropriate piece of land that would serve, in the business districts.
Second, the price of land in this area is about five times higher now, in real terms, than it was when these existing pools were formed. Plus, all these pools have already paid off their land.
Let me just work through an example of what that does to the pricing.
My pool currently charges about 500 people, about $500 a year. If they had to purchase their five acres of land, new, now, it would likely cost (say) $10M. A (say) 30 year mortgage on that, at 5%, would cost about $750K per year. And so, by inference, the membership fee would have to increase to about $2000 per year. That’s the same $500 a year now, to cover the cost of running it. Plus $1500 a year to cover the annual mortgage payment.
The exact numbers hardly matter. The point is that the existing community membership pools, with their current low annual fees, are relics of the past. If you had to pay current land prices, you’d be talking about tripling the fees and up. Even in well-to-do-Vienna, you might get some resistance to that. Particularly if you’re offering this pool in competition with all the existing pools, with their lower annual fees.
You’d also have to bring up the practical issues in this. If you could find a piece of land that big, being sold in a reasonable location, you’d have to convince everyone involved, including the lending bank, that selling this land to a start-up not for profit social club, to be the first new outdoor community membership pool in half a century, charging far more than the other essentially-identical local pools do … that is an OK thing to do. Versus selling the land to a housing developer. The pool might be kind of a hard sell.
My pool — Vienna Aquatic Club — recently turned down a once-in-a-lifetime offer to buy the land next door. The main factor in the decision was the high price of the new land, and how that would change the organization. Ultimately, as I read it, the feeling was that they probably could make a go of it, but the result would be a completely different, and far less middle-class and affordable community pool, than what they have now. So they took a pass, and the land is now covered by new houses. Plus, grafting a new plot of land, onto the existing pool, would have resulted in … an inelegant physical campus.
The upshot is that nobody can now enter this market on anything even close to an equal footing, cost-wise, relative to the market incumbents. (And, really, it’s far from clear that anybody could enter this market, period, at any plausible price.)
Bottom line: We haven’t seen a new one of these built in more than half a century. I would not count on seeing any new ones built in the next half-century.
Summary
That’s my complete explanation of why you can’t buy a pool membership in Vienna VA. Along with my gloomy forecast that this is never going to change.
To recap:
To be one of these community membership pools, you have to be a non-profit social club. That both makes you tax-exempt, and allows you to locate (with something akin to a “conditional use permit”) on land zoned residential.
As non-profits, the existing pools have no financial incentive to do anything, more-or-less. So don’t expect any help from them, on this issue, even if they could.
Between the price of land, the lack of large suitable parcels for sale, and the requirement that any new community membership pool must be a non-profit social club … and the half-century plus that we’ve gone with out a new one around here … it’s hard for me to think that there might be new community membership pools starting up in the Vienna area. Essentially, ever again.
So, weirdly, it’s a kind of market failure. Sure, in some sense, failure because “the market” (in the form of profit incentive) is barred from this niche industry. (For good reason, given the location in a residential area.) But, also for sure, it is a market failure, because despite clear evidence of willing demand for them, the market will likely never supply any additional community pool memberships in this area.
Finally, I note that our local country club is a different beast entirely. That entity does pay local property taxes, though not in proportion to the value of the land. I’m not really sure what the legal structure of that is.
Appendix: Our community membership pools date to the desegregation era.
I can’t not mention this. Having grown up around here, and knowing a little history, you can’t look at the dates and not think about the end of legal segregation in Fairfax County.
Brown versus Topeka, throwing out the doctrine of “separate but equal”, was 1954?
For Fairfax County, 1960-1965 was officially the period during which FCPS desegregated its schools. Several of our now-prestige local private schools date their founding to around that time, or acknowledge their roots as “White flight” schools (the words of the super-prosperous-looking Flint Hill school near me, reference).
And, relevant to this, 1965 was the year that Lake Fairfax (then privately owned) was desegregated, via a lawsuit. And, I think 1968 was the year that a large part of downtown DC burned in riots. Along with a lot of other urban areas, following the assassination of Martin Luther King Jr. (reference).
Finally, it was not until 1970 that the IRS ruled that discriminatory institutions were ineligible for tax-exempt status. Not sure if that was due to recently passed legislation, or to a court case. But following that ruling, either you removed any overtly discriminatory language from your incorporating documents, or you lost your tax-exempt status.
I have no evidence about the extent to which racism is or is not entangled with the presence of private membership pools in the Vienna area. All I can say, on the facts, is that a whole bunch of them started up just as Virginia was desegregating schools and other public facilities in the wake of Brown vs. Topeka (1954) striking down the separate-but-equal doctrine.
Given the history in general, and the history of Lake Fairfax in particular, I would be remiss to publish a table with that striking cluster of start dates, and not at least pause to note the historical context.
