A timely illustration that demand for neighborhood amenities might be more inelastic than commonly assumed in the YIMBY community:
BETHESDA, Md.—Olympic swimming champion Katie Ledecky has broken records in pools around the globe. But in this affluent Washington, D.C., suburb, not even gold medals are enough to win quick entry into the Little Falls Swimming Club.
Using an arcane set of rules, the club each spring welcomes a few newcomers into its membership, which is capped at 377 families. Competition is so intense that residents have been known to choose homes based on proximity to the facility.
The annual selection process uses a numerical formula that gives would-be members points based on 10 concentric rings of increasing distance between an applicant’s residence and the exact center of the pool. The closer they are to the club, the better.
Other considerations include time notched on the waiting list and whether a family owns or rents. Most applicants spend six to eight years in pool purgatory.
In other words, the rules have been carefully tailored to capitalize the value of this neighborhood amenity into home values. It is literally a “club” amenity.
Ms. Ledecky’s family first applied about 15 years ago, before the swimming icon joined a team. Like all other hopefuls in the area, they had to wait.
The Ledecky family was still on the waiting list after Katie won her first gold medal at the London Olympics in 2012. In Rio, Ms. Ledecky won four gold medals and became only the second swimmer to sweep the 200, 400 and 800 free swim in a single Olympic Games.
“It’s kind of humorous that the fastest female swimmer couldn’t get into our pool,” said Bob Scribner, a local schoolteacher and the pool’s board member in charge of membership this year. “But I don’t think it’s funny enough that we should change the rules.”
Translation: “Demand is inelastic. We’re not increasing the quantity no matter how dumb it makes us look.” [See update. The County apparently has capped membership at 377 families.]
For decades, the modest, tree-lined pool has been a magnet to families looking for relief from Washington’s hot, humid summers, in a neighborhood where most don’t have pools of their own. More than 60 years old, it is slated for renovation starting next month.
“This isn’t some high falutin’ country club,” said board president Craig Piercy.
I guess “country” is the critical qualifier there. The pool is a (partially) non-rivalrous good, membership is restricted, and entrants are charged a fee. It’s even got “club” in the name. Ergo, the pool’s a club good, and as the rest of the article shows, a highly desirable one.
The crowded wait list is in part a function of local county zoning rules that cap the pool’s membership. Currently more than 260 applicants are in line to join the pool, according to its website. Those who join now pay $3,000 in equity that is returned when they leave the club, in addition to an annual fee that will be $700 starting in 2017.
Does the “in part” line mean the club’s board has authority to increase membership if it wants to? Given the discretion the board has to set the byzantine membership requirements, I’d be surprised if county zoning rules limit membership specifically to 377 families.
First, wannabes must contend with Article II of the Little Falls bylaws, which establish how many points applicants accrue as they vie for membership.
Those with the quickest route to membership live within 400 feet of the pool, the tightest of the 10 concentric rings that earns the applicant 10 points. Those at the farthest edge, who live between 3,601 and 4,000 feet of the club, earn a measly one point.
“People who live beyond the outer ring…will never get into the pool, so we do not accept applications from those people,” the club’s website notes.
Applicants accumulate one point every six months they have been on the wait list. Homeowners immediately get five points, while renters receive the same number of points only after they have been on the list for three years.
Crucially, an applicant’s standing on the list can change if they move closer to or farther away from the pool. Trademark lawyer Laura Geyer missed that wrinkle when she combed the bylaws ahead of her family’s 2003 move to a house located in a lower-scoring ring, she said.
“We would not have moved if I had known,” said Ms. Geyer. The move cost them dearly: they fell from 40th on the wait list to about 180th.
Her family was eventually successful. Now they won’t even consider leaving the neighborhood, since those who joined after 2004 must relinquish their pool membership if they do.
Local real-estate agent Dana Rice, also a Little Falls member, said many of her clients will only move within the rings established by the pool’s bylaws.
“If somebody’s moving from one part of the neighborhood to another, they’ll ask me, ‘Can you make sure this falls within the Little Falls boundaries?’ ” she said. “I will double check with the [pool board] membership just to make sure.”
Rather than move into a bigger house, Penny Dackis’s family built an addition to remain safely in the club’s proximity. “I just didn’t want to mess with the pool membership,” she said.
I cannot imagine that a mere 377 families cause congestion or crowding of the pool. The rational economic response to all this would be to sell more memberships until the membership fee equals the marginal crowding and congestion costs caused by each new member.
But perhaps there is a hard cap on membership. [Update: apparently there is.] The club members have meticulously and explicitly capitalized the price of a club membership into their home values. Given the desperate striving for membership, demand for the pool might be highly inelastic. If the club members/property owners did have the opportunity to expand the number of membership slots, would they?
There are a lot of neighborhood amenities just like this — schools most of all — that engender the same sort of striving and jockeying for the “right” home. We’re so used to these amenities being being bundled with ownership in a specific neighborhood, though, that a newspaper article focusing on that fact wouldn’t be very interesting. What made this story interesting enough for the WSJ (other than the Ledecky angle) is that club membership obviously is not precisely tied to a geographical area, so the club members have had to come up with a bunch of comically arcane rules to ensure that home values capture the value of club membership. With most neighborhood amenities, the zoning map does the hard work.
UPDATE: Apparently there is a hard cap on membership. The pool is a conditional use subject to all sorts of tailored regulations by Montgomery County, as comically detailed as the club’s residence rules. Here is an 11-page opinion of the County Board of Appeals laying down detailed regulations of parking, screening, noise and so forth. Here are the club bylaws.
Obviously, there is no important public welfare issue here. Someone who wants to swim can probably find a place to swim. Ledecky, who couldn’t get into Little Falls, wasn’t deprived of the opportunity to swim; instead, she joined Palisades Swim & Tennis Club, and the rest is history. I doubt that the residents of Montgomery County’s tony suburbs have trouble finding swimming clubs to join.
So the takeaway here (for me) is that demand can be quite inelastic for a neighborhood amenity even if there are substitutes; once the value of the amenity is capitalized into home prices, homeowners will go to seemingly silly lengths to make sure it stays that way.