February 28, 2025
Fellow Swimming Hole Members:
Invoices for fees related to the upcoming 2025 season (and any guest fees from the last) were sent to everyone this week. That’s the last invoice you should receive in 2025 until November, when we invoice any guest fees for the upcoming season.
This letter to all members is something your Board believes to be important because insight into our business accompanied by previous year financials is something we feel every member may not read – but every member deserves. We believe this should be done each year after taxes are filed. As members, we should be reminded that we are invested as fellow members in a business. The health of that business matters to our membership. We might enjoy membership more knowing the state of our business.
If you’ve lost interest already and would rather just hear the summary, know this:
For the first time of which we are aware, our organization’s annual financial reporting is now accessible to all members via our website with a password you can receive via email, as long as your email address is one of the email addresses registered under your member account. (If someone in your family needs to subscribe an email address, please see the bottom of our website’s homepage.)
Just about every piece of information regarding our pool can be found on our website: bylaws, news posts, pool rules & guest policies, and even job applications to apply for a lifeguard or attendant position. Your Board now shares financial reporting with members. We believe a more informed member makes for a more active, understanding and involved membership. Here are a few key takeaways if you do not choose to read further:
- The Swimming Hole is financially healthy with a clear forecast for sustained health.
- Your Board has developed the financial statements and forecasts to demonstrate its financial health to lenders, vendors and members alike.
- Members will have brand new facilities, parking lot and property improvements this year, and these capital improvements will last for decades following properr ongoing maintenance plans.
- Your Board is contracted with outside professional help that provides valuable financial, administrative and operational counsel and work.
- Modern information systems utilize technology applied to written standard operating procedures for Board members in committee chairs to assume accountability for their work.
- Board succession plans and processes can now follow prior standards set by the current Board.
Assuming future Boards stay the current course for years to come, there no reason why annual fees should exceed current levels or why membership would be assessed another one-time fee related to future capital improvements. We cannot predict the future, but we can forecast it based on a number of factors made obvious through these shared reports and years of historical data.
Read on for more by section heading.
Finance & Capital Structure
We operate a relatively simple business as a fiscally responsible, not-for-profit organization. We are not a federal 501c non-profit organization, but we are looking into that classification with the help of a legal professional that just happens to be a dedicated member and former Board President. More to come on that in the near future when we know more about what that entails.
Financially, last year was a year unlike any other due to the capital planning associated with the first capital improvement project of its kind, our Reimagine Project. The successful membership vote in November of 2023 “for”the capital improvement plan was the procedural culmination of over five years of careful financial planning, fiscal management and study, numerous Board communications and discussions, as well as countless instances of member feedback.
Assuming we complete our capital project as currently budgeted, we move forward in sound financial health. Importantly, we have achieved this, together, without changing who we are as an organization.
- Tracking attendance closely for several years, we do not believe we have overcrowded our pool by adding too many members.
- The ongoing annual costs for a family to be a member have been kept affordable. While higher, annual family dues are only a little over $100 higher than they were ten(10) seasons ago. They remain <$500. There is no foreseeable reason why they should exceed that amount.
- Initial year membership costs are within approximately 20% of pre-COVID levels.
- Guest fees remain unchanged at $3.
- We continue to help those who requested and qualified for financial assistance.
- We continue to serve a waitlist of Davidson residents stretching beyond two(2) years.
Financial Highlights from Prior Year(s)
Without including capital assessments or fees, we have slowly yet consistently increased our annual operating income (the income from which we intend to pay for the day-to-day operations of our pool and cover our debt) from approximately $100,000 to $180,000.
Offsetting operating cost increases over the years have been driven by sharp hikes in labor and chemicals: our pool management company’s two largest expense categories. A 2x increase from $40,000 in 2018 to $80,000 last year was mostly associated with simply providing membership the most basic services of lifeguards and chemically treated water for swimming. Seems exorbitant, but it’s a nationwide issue. These costs have put many community pools across America out of business. Either they closed their pool altogether, or if they didn’t have a deep end, they changed to swim-at-your-own-risk with no lifeguards (not an option for us).
At the gross profit line, it’s a simple story to tell: Our revenue increases were necessary to both keep us in the black, but also create a business model that would pass muster with a bank so we could acquire a lending facility for capital improvements, mitigating the cost of a one-time assessment to all members.
Below the gross profit line on our P&L, we have kept General & Administrative costs consistent since 2018, not accounting for fluctuating costs of income taxes and expenses related to one-time projects. We found ways to save in areas like insurance, postage and office supplies. While we paid more for software subscriptions and professional fees to modernize the business and prepare for current Board leadership succession, we saved elsewhere to offset.
Meanwhile, we have continually worked to increase member services. Communicating via our new website, moving completely to electronic mail, digitizing all records, invoices and payments just starts our list of improved efficiency efforts that lower costs and still serve membership. All have been time-consuming endeavors.
In short, investing in talented, professional people outside the organization who understand finance and how technology modernizes business operations and teaching them how our business works has proven worthwhile in managing costs. Charging more for membership was inevitable. Joining our pool admittedly costs hundreds more, but ongoing membership costs remain very reasonable and relatively close to where they were a decade ago.
Financial Milestones Ahead
As we move forward, we should achieve and enjoy several very important fiscal goals:
- Initiation fees, annual dues and other miscellaneous income is forecast to cover our operating expenses and the cost of capital.
- Capital contribution fund fees from new members can be held/saved solely to invest in future planned capital improvements (not operate the pool).
- There should not be a need for another one-time capital assessment, yet there will be funds available for needed improvements, paying down debt earlier than our loan amortization schedule requires, refunding outstanding stock fees on the balance sheet &/or lowering membership costs.
- We will eventually start running a surplus as liabilities are removed from the balance sheet. The Board at that time will have a pleasant set of options from which to choose! A number of financial levers and options in the business will be at membership’s and its Board’s disposal.
The Matter of Debt
Our balance sheet will soon reflect a level of debt that requires explanation. We have secured a typical small commercial loan from a reputable bank. We are borrowing $800,000 amortized over twenty years with a fixed interest rate of 6.5% for the initial five years, after which time, the rate can fluctuate &/or we can refinance.
The cost of our capital improvement project is offset by our cash on hand, the one-time assessment existing members prior to the 2025 season paid, and lastly, the use of stock fees sitting on the balance sheet as a long term liability otherwise serving no current member. The remaining costs for the capital improvement project are covered by our loan. The loan is paid through annual dues from us all, but also by new members contributing through one-time initiation fees upon their first year of joining. Again capital contribution fund fees over the initial five years of new memberships can be held for any number of uses of this additional capital, as outlined above.
While debt is not a desirable financial position for our organization, it is our only option. It is often a predictable outcome for a membership-driven organization of insufficient long-term financial planning, especially if it maintains capital-intensive assets.
This said, our financial forecasts are clear. We are less concerned with the current debt structure than we are with ensuring our organization sticks to the financial discipline and practice of putting money aside for future capital improvements or returning it to membership in some other form.
Membership & Activities
Our Swimming Hole serves roughly 350 members and their families, the overwhelming majority of which want the same things out of their membership: A friendly, neighborhood, nostalgic swimming pool experience without the frills and costs of so many clubs. This simplicity has been the hallmark of our organization for so many decades. We belong to an institution in the Town of Davidson as much as we do a club. Nothing should ever change that.
As similar as the typical member experience may seem to be, every member profile is different. Their use of our pool; how their children are aging and valuing the pool; whether they drive, ride or walk to the pool; the extent to which membership costs represent a financial burden; how often or whether or not they check our website for news or operating hours. We are all members, but we all have differences that cause us to value our pool in different ways.
Every year, as our town, its neighborhoods and our modern lifestyles change just a little more, the traditions of our community can bring us back to center to fondly remember the simplicity of a summer afternoon experience with friends and family at our pool. This is Davidson. This is our Swimming Hole.
Open communication will increasingly be useful to an ever-changing group of members over time. The Board’s Membership Committee Chair serves to promote just that. Many members wish to learn more about their investment. Hopefully all value what makes us unique. All members should be kept aware of our organization’s financial state, the Board’s strategic direction/purpose, and its guidance on what to expect in the future years to come. Your Board is committed to providing just that.
Feedback from you generates communication from your Board allowing for an increase in shared understanding and activity. Increased activity generates a sense of community. Through our pool community, you and your family gain an increased level of value and pride in your membership. Your Board’s Activities Chair is focused on building our pool community.
All a member needs to do to realize the current momentum we have towards activity is come to a Storm Swim Team practice. In 2014, select Board members started the Storm Swim Team. As time moved on and Board terms expired, the team was dissolved due to a lack of participation. New volunteers and parents alike now support this wonderful activity contributing to the increased sense of community building within our membership, and therefore our Town. Membership activity is a beautiful thing at our Swimming Hole. This year, we believe we can enjoy it more than ever!
Waitlist
Our waitlist remains a major contributing factor to how we operate our pool. No business ever has unlimited demand because things change over time, and no Board should ever take the desire people have for membership for granted. However, as long as we continue to provide a unique experience that fits with the way families in Davidson choose to spend their recreational and leisure time, communicate well, treat our neighbors with the respect they deserve, and manage the business according to our Mission & Core Beliefs, it is difficult to imagine a time where demand does not meet supply.
Your Board follows strict guidelines for how the membership waitlist is served on a first-come first-served basis. The only exception we have made is to offer neighbors membership on a one-time basis due to the enormous amount of disruption our landscaping and construction has caused over consecutive years. Some accepted the invite to become members. Some respectfully did not.
Lastly, know that your Membership Committee Chair works with everyone on our waitlist, communicating in advance predicted costs to join so families can plan and save for that time when their name is called. We provide assistance for those that request and qualify. While we understand that having a waitlist is healthy for our organization, we recognize the time limits presented by family dynamics and we adjust where and when we can without sacrificing standard operating procedures for fairness to all waiting patiently.
Operations
Our pool provides a safe, fun, family-oriented neighborhood swimming pool open to members and their guests, respectful of its neighbors within the heart of the Town of Davidson.
Another pool season without a significant recordable safety issue is always the most important goal for our Board and pool management company. The professional pool management staff that maintains our pool, makes repairs and maintains equipment, and most importantly, trains members’ teenagers to become lifeguards and pool attendants is to be thanked and commended.
We are fortunate to have such a pool management partner, as we cannot swim without lifeguards due to our water depth, cannot maintain our pool ourselves, and cannot recruit, train and manage lifeguard and attendant staff ourselves. It is difficult to imagine serving Swimming Hole membership without the right outside management company under contract and dedicated Operations Committee Chair to oversee such work with fellow Board members.
We are served by both capable third-party vendor partners, active members who volunteer to serve on committees, and members who volunteer as engaged Board Directors committed to providing the best possible member experience. We adhere to the corporation’s bylaws and a pragmatic approach to amenity that promotes a simple, affordable, nostalgic experience.
We have increased revenues and controlled what costs we could control through managing the business while enhancing member services and standardizing work procedures to enable any number of members to become participative Board members of the future.
In addition to executing our capital improvement project, we have assembled a team with expertise in finance, administration, and creative solutions to help our Board manage our business. We have implemented a set of standard operating procedures (SOPs) to structure our processes.
We track data to inform our decision-making. These are the fundamental components of a healthy operation. Future Boards with a clear understanding of our business have the resources required to make informed decisions.
Governance
The Board reaffirms our commitment to responsible and transparent governance, particularly in relation to our bylaws. We view the consistent review and application of our bylaws not merely as a procedural requirement, but as a fundamental pillar supporting the equitable enjoyment of our facilities by all members. Your membership invests in a shared resource, and the bylaws are the agreed-upon rules that ensure its fair and sustainable use.
Our Board protocol explicitly includes a regular review of the bylaws, considering member feedback, evolving community needs, and best practices in pool management. This review process is not undertaken lightly. We strive to strike a balance between maintaining traditions that have served us well and adapting to new challenges. Any proposed changes are carefully researched, discussed thoroughly amongst the Board, and, when appropriate, presented to the membership for consideration and input before being enacted.
We understand that bylaws can sometimes be perceived as restrictive, but they are ultimately designed to protect the rights and well-being of every member and safeguard the long-term viability of our beloved pool. We encourage all members to familiarize themselves with the bylaws, as they were made available for the first time on our website this past year.
We welcome your constructive feedback and suggestions on how we can improve them to better serve our member community.
The Reimagine Project
Together, we are building a Swimming Hole for today (and tomorrow ) that gives a nod to the heritage of its past. We are modernizing the member experience without losing our identity. The landscaping, architecture and design of our new facility will be useful long into our future but will reflect our past. Mid-century design, for instance, speaks to exactly who we are as a membership.
Our Swimming Hole was founded and the structure we just demolished was built in the middle of the last century. Design in the mid-1900s was characterized by a minimalist approach, clean lines and functional use mixed with slight ornamentation and organic shapes. Today’s take on mid-century has a fresh vibe with a retro feel. As fellow members, we are like mid-century design – for the future, but of the past.
Aesthetic design coupled with comfort and functionality makes anything timeless – We are forever in style. This is an exciting time to be a member, but the design of our facility should feel as fresh decades from now as it does this upcoming summer.
Capital Project Perspective
The main thing we might consider as members when we think about this capital project now (or twenty years from now) is this Board’s perspective.
A few short years ago, Swimming Hole, Inc. had a business operating at break-even levels on a clear path to lose money each year ahead due to rapid increases in pool management expenses driven by inflating labor and chemical costs. Major repair and replacement costs to the facility’s aging equipment were also imminent. We had the cash on the blanace sheet to sustain several years of operating losses ahead, but we did not have the operating revenues to avoid an eventual and imminent operating assessment and/or a dues increase.
While the value of the simplicity of our pool experience remained evident, member feedback made it obvious that pool amenities needed significant updates, the scope of which stretched beyond repairs. As all members of the Board began to realize its fiducary responsibility to consider and decide how to return the cash on hand to members in the most constructive manner, the Board established a set of core beliefs about our property from years of member feedback and featured the list our website as it proposed a membership vote “for” a major capital improvement project.
Before the vote in late 2023, the Board felt confident that the most revenue a one-time capital assessment to membership would generate was somewhere between $250-300k. We had a business set to lose money at current revenue levels, so how were we to get a bank loan for a recreational swimming pool at status quo? We needed to act, and we did.
Intensive financial planning and a timeline considering we were all volunteers guided us on what to do. The beliefs of membership also informed us of what not to do. So many of the mistakes many membership-based clubs tend to make when making capital improvements have hopefully been avoided. Time will tell, but we share financials now and present to future Board members so they may be good stewards of the model we have created together with membership.
Project Completion
Completion of the Reimagine Project is most likely at the top of every member’s mind as we soon head into spring. And rightly so! It is our organization’s first major capital improvement project, and it may well be the last of its kind for any of us, our children (and even our grandchildren). In one off season, we are starting and completing construction on capital improvements that members will enjoy for decades. Everyone has financially committed, and now everyone wants to know if the pool will open on time for Memorial Day Weekend.
It appears possible, but unlikely we open our pool on time in 2025. The forecast shows we are running several weeks late, but we cannot say for sure how many. At the moment, we look to be 2-3 weeks late. We are doing everything possible to make up time.
We have faced very recent challenges to timeline, budget and plan approval processes driven mostly by civil engineering, not the design or construction of the buildings themselves.
As disappointing as this is, we must accept, as a collective membership, that we have not addressed issues over decades of time such as storm water management, daylight draining of water from our own pool affecting soils, ADA compliance, and plumbing. Codes are a constant challenge as we commence construction.
Weather has not been favorable for working in the ground. If we had begun in October/November as planned, we would have been, as builders say, out of the ground and going vertical by the time the rainy days came. The time to receive costs, budget, qualify for a loan and receive code approvals pushed us into the holidays.
Regardless, we should not be discouraged. Maintaining perspective on the scale of the project and how little has been done in capital improvement to date, we are addressing matters on our property that have long needed to be addressed and were becoming operationally very expensive and unavoidable. We will keep you aware, but we won’t know when we will open until we know.
Respectfully, we request you remain patient, understanding that this is an enormous project for member volunteers to take on. Please refer to the Q&A under the Reimagine Project section of our website, and stay subscribed to the News posts you receive via email for the most recent updates as we get this huge effort over the line, together.
In Closing
We operate a relatively simple seasonal swimming pool and recreation business. Yet, nothing is simple about moving a business from one financial state to a completely different one over the course of five years’ time as volunteers lead 300+ families through a lot of change.
We thank each member for the trust you have shown in your Board. We truly do feel the fiduciary responsibility we have to our organization intertwined with our desire to improve our facility while keeping ongoing costs of membership affordable.
Let’s all look forward to our new pool experience, even though we value most what should never change.
Glenn Prillaman
Board President
If you have any questions or comments, feel free to reach out to The Swimming Hole at membership@theswimminghole.club