Aug 23 2011

Commentary: How Piedmont Lost a Free Pool

Jon Sakol Corrects the Record on Pool Takeover

I don’t want to re-argue whether the club’s lease should have been renewed, but I do think the narrative of what really happened is important.  Otherwise, it will be too easy to forget that, if the city cannot afford to keep the pool open or open full time, it will not be the members of the tax review committee or the city council that will suffer, it will be those who use the pool, who were willing to continue to fund the pool themselves, who will suffer.  To both the members of the committee and the council, this is simple a question of budgets–how much money there is and where it goes.  To the pool users, it is a question of how they live their lives–what they do for enjoyment and how they exercise to stay healthy.  If the city were to take over operation of the pool for some perceived greater public good and then renege on it’s commitment because it couldn’t afford it, the city would have solved it’s budget problem, but it would be the pool users who would be left high and dry (really dry).

So, let me correct the record.

Rent Free? . . .  No

Committee member McBain said he was “outraged” at the idea that the pool would be leased to a “private club” for 15 years at no rent.  That was the deal for all but 15 of the club’s prior 46-year existence.  And is the city really better off paying over $300,000 this year and $100-200,000 (depending on how the PST/PUSD subsidy issue is resolved), plus necessary major maintenance and capital improvements, even in the good years, indefinitely into the future, all because it couldn’t collect $20,000 or $30,000 or even $50,000 in annual rent?  The club had always paid and had agreed to continue to pay for all major maintenance and capital improvements and to cover the PST/PUSD subsidiesWhy wasn’t that sufficient rent?  The city had no problem doing a rent-free deal like that for the new arts center.

Private Club? . . .  No

The club was in no real sense a “private” club.  There was no membership committee.  Anyone in Piedmont willing to pay their share of the cost of running the pool, so the taxpayers wouldn’t have to, was free to join.  Moreover, the city told the club (or had to approve) how many members it could have, where they must reside, how much it could charge for membership, how much access it had to give which groups at what cost, and what it could charge for lessons.  No government entity dictates those things to a truly private club.  The only sense in which the club was private was that the cost of running the pool was being paid by private, rather than public funds.  That is precisely the public/private partnership that other communities are now searching for to avoid unaffordable public subsidies in this tight budget environment.  Piedmont already had it and it had worked for 46 years and it chose to throw it away.

15 Year Lease? . . .  No

The city was not locked into the lease for 15 years.  It could get out at any time it was ready to build a new pool and for any reason at all after 5 years, if it simply made the new members who paid an initiation fee during those years whole by a decreasing formula, so people wouldn’t refuse to join the club for fear it would close and they would lose their membership fee.

As for the concern expressed that the city would somehow be liable for those 15 years, I have no idea where that notion came from.  The proposed lease, as it always had, required the club to maintain the facilities in satisfactory condition at its expense and imposed all the risk on the club, requiring it to indemnify the city (except for the city’s own wrongful conduct).

More Demands – Risks – Costs  . . . The Final Straws

In fact, the club’s board had long discussions about whether it was prudent for the club to continue to take all the risk on a 46-year old facility, particularly when to make the new lease work, the club’s financial forecasts showed that it would have to add about 80 new members in each of the next six years, when it had historically averaged 50.  It would also have needed to raise its dues every year so they were around $985 after five years, $1140 after ten years and $1285 in the last year of the lease, when the club had never raised dues every year in the past.  (There was no way to know whether the club could both raise dues to those levels and add and keep members.)  Those were daunting projections and why the club said, throughout the negotiations, that there was no additional room for it to pay rent.  After long discussion, the club board decided to take on those risks to continue to operate the pool at no expense to the city.  It did so until the new city attorney added the additional risks that the city could, in its sole discretion, deny the club the use of the money it had set aside for major maintenance and capital improvements, keep that money itself as a sort of back-door rent, and force the club to raise still more money to make the improvements it was contractually obligated to make, and also that the city could decide unilaterally to have such work preformed and send the club the bill.  That was the bridge too far.  I don’t think the tax review committee would have sanctioned the city agreeing to those provisions, if the shoe were on the other foot.  Would it have found it perfectly acceptable for a third party to come in and completely redo the city’s sewer system, even though it was working well, just because it felt new sewers would work even better and then send that bill to the city, a bill it had not budgeted for and had no funds to pay?

Discussing Public Subsidies . . . After the Fact

Deciding to have a pool that is open to more people at a lower price, with the balance subsidized by tax dollars, if that is what the community wants and is willing to pay for, has always been a viable political choice.  But, the community has never had that discussion.  The city council never discussed it that way or caused the broader discussion to take place.  And to now hear people say, while the city wouldn’t let the people who were willing to finance the pool privately continue to do so, if we can’t afford to do it with public funds, we can just close it or open it for the summer or on weekends, seems completely backwards.  Shouldn’t we have had that discussion first and, if the conclusion was that the city couldn’t afford it or the taxpayers didn’t want to pay for it, we have let those who were willing to pay for it continue to do so?  Some people have said they won’t buy passes because they are afraid the pool will be closed.  When discussions like the tax review committee’s go out into the community, they simply reinforce that marketing problem.  The commitment to fund the pool should have been made at the time the decision to take over its operations was made, and if the city was unwilling or unable to make it, it should not have taken over the pool.  I don’t understand why it is so hard to get everyone on the same page.  This isn’t some Earth-shaking issue.  It’s a small community pool.  We should have either decided this is something we wanted to do as a community and then have all pulled together to make it work or concluded that we couldn’t decide that and let those willing to do it do it.  Instead, we’ve just moved the debate to a new playing field and the struggle continues.

LINK:  Comments by Jon Sakol regarding Pool Finances

(This statement expresses the personal opinions of the author. All statements made are the opinion of the writer and not necessarily those of the Piedmont Civic Association.)

Leave a Comment