Glendale Memorial Park Cemetery Chris Anaradian, Assistant City - PowerPoint PPT Presentation

Glendale Memorial Park Cemetery Chris Anaradian, Assistant City Manager James Milanese, Engineering Administrator

Background • 1962 – City takes ownership from the Glendale Memorial Cemetery Corporation – The Agreement stipulated • The property shall only be used for cemetery purposes • Included transfer $12,831 in cash and $40,005 in securities • Contemplated city could use funds to support other city operations • Does not preclude the sale of cemetery or its assets 2

Background • 1985 – City created Cemetery Perpetual Care Fund (CPCF) and a Cemetery Enterprise Fund – All revenues from the cemetery would be deposited into the CPCF; all expenses to be charged out of the General Fund – A recognition that the cemetery should act as an enterprise and recover its costs 3

Background • 1998 – Council adopts Ordinance 1982 modifying use for the CPCF – Would allow for withdrawals for expansion of cemetery – Council authorizes $99,000 purchase of “caretaker” residence to be paid out of the general fund and reimbursed by the CPCF • 2001 – $265,000 approved by Council to expand cemetery; never occurred 4

Background • 2003 – Council adopted Ordinance 2330 modifying the CPCF – Revenues would no longer be deposited to the CPCF – Possible use of the CPCF expanded to include any revenue generating activities • 2018 – Consultant to review operations and make recommendations – Improvements to be near revenue neutral were possible, but expensive and time consuming – Sale of property was possible 5

Strategic Imperatives • Focus on municipal core services • Improve customer experience and service levels • Discontinue general, special revenue and enterprise fund subsidies • Improve ongoing fiscal viability of the cemetery • Ensure the historical and cultural integrity of the site • Develop successful civic partners 6

Operational Subsidy • Landfill / Solid Waste / Transportation – Annual subsidy $60,000 • General Fund – 18 years of all revenues going to the CPCF and all expenses coming out of the GF – estimated subsidy < $3.5 million – Since then, multiple years of operating loss absorbed by GF - $20,000/year – Improvements to site including 2017 repair of the perimeter masonry wall for $219,482 – Future capital repairs – unknown value 7

Fiscal Viability & Stability • The cemetery has not been operated as an enterprise • Rates have not been adjusted since 2009 • Yield from public CPCF is limited by statute • ARS Title 32 - Regulations for municipalities are minimal while private cemeteries are heavily regulated to ensure fiscal accountability and quality controls • Private cemeteries are required to place endowment fund (CPCF) in trust – principal cannot be withdrawn 8

Customer Service • Grounds are well maintained • This is a cemetery managed by Streets, with sales by remote Field Operations staff • Dated business model – Services are only allowed Tuesday – Thursday – Limited marketing 9

Historical Stability • Transition to best practices – Celebrate cultural importance • Memorial Day and Veteran’s Days are celebrated • Our cemetery is not programmed on those holidays – Encourage cataloguing – Support customer needs • Full weekly services • Investment in ash burial infrastructure 10

Civic Partnership • Instead of competing with the private sector, we welcome partners 11

The Buyer • Glendale Memorial Park Cemetery LLC – Buyer agrees to protect name of the cemetery – Managed by John Hassett • Third generation cemetery owner and native Arizonan • Owner of three Arizona cemeteries, a funeral home, crematory, and pet cemetery/funeral home. 12

The Offer • Mr. Hassett will pay the City $100,000 – Honor all contractual obligations • City will transfer assets and $3.8 M to a irrevocable endowment trust – Merchandising Trust – limited to documented pre-need – Endowment Trust – withdrawals restricted to only interest earned and uses limited to cemetery maintenance 13

Perpetual Care Fund • Current Value $5.8M with annual yield of <1% • Proposed Value $3.8M with annual yield of 5-7% • Consultant and buyer concurred $3.8M would ensure the perpetual care of the grounds • Privatized Endowment Care has significant restrictions 14

Operational Assurances • Cemetery business sector highly regulated by state: – 32-2194 (2) – Municipal cemeteries are exempt from below – 32-2194.03 – Requires demonstration of financial capability; background check for owners/management; – 32-2194.04 – Requires contract disclosures – 32-2194.09 – Allows for civil liabilities • Buyer will maintain Glendale resident discount 15

Perpetual Care Assurances • Perpetual care fund highly regulated by ARS: – 32-2194.24 – Buyer will have to prove an irrevocable trust prior to operating (the city will only transfer into this acct) – 32-2194.27 (1) – Trustee can have no financial interest in the cemetery – 32-2194.27 (2) – Only the interest income from the trust can be spent; can only be spent on care of existing plots – 32-2194.28 – Requirement to deposit portion of sales of graves, niches, and crypts into trust 16

Process • August 7 th , Community Meeting held • August 13 th , Council Workshop • August 27 th , with consensus, Sale Agreement scheduled • Transition should take approximately 60-90 days • Information about the sale to be posted on the website, at the cemetery, and given to customer service teams • Copies of all records will be transferred to the buyers • We will work with the buyer to notify all pre-need customers • Repeal of Chapter 11 effective after transition 17

Exhibit A – Operating Expenses FY2018-19 Operating Expenses Cemetery Operating Description Actual Salaries and Benefits $ 131,908 Earned Spent Subsidy Deficit Professional and Contractual $ 3,970 FY2018-19 $ 199,228 $ 233,200 $ 62,301 $ (96,272) Cell Phone Charges $ 353 Utilities $ 25,006 FY2017-18 $ 198,069 $ 281,342 $ 61,367 $ (144,641) Electricity $ 13,949 FY2016-17 $ 194,730 $ 228,357 $ 279,928* $ (313,555) Telephone Utilities $ - FY2015-16 $ 187,491 $ 223,580 $ 59,540 $ (95,628) Shop Charges $ 11,414 Fuel - Shop Chargebacks $ 1,128 FY2014-15 $ 180,161 $ 199,161 $ 58,646 $ (77,647) Uniform Supplies $ 755 FY2013-14 $ 213,286 $ 189,677 $ 57,767 $ (34,158) Drygood and Wearing Apparel $ 286 Purchase for General Public $ 15,593 FY2012-13 $ 231,485 $ 195,791 $ 56,900 $ (21,207) Line Supplies $ 15,296 FY2011-12 $ 201,476 $ 239,053 $ 56,047 $ (93,624) Equipment Less $5,000/Unit $ 1,989 FY2010-11 $ 200,283 $ 201,462 $ 55,206 $ (56,385) Equipment-Vehicles $ - Fire and Liability Insurance $ 4,993 FY2009-10 $ 163,303 $ 212,529 $ 54,378 $ (103,604) Worker's Comp Premiums $ 1,580 Average Profit/Loss $ (103,672) Technology Charges $ 4,981 TOTAL $ 233,200 *Includes cost of perimeter wall 18

Exhibit B – CPCF Cemetery Subsidy Analysis Perpetual Fund FY1986-87 $ 88,935.00 Ending Balance Interest earned FY1987-88 $ 76,568.00 Principal Dollar Amount Yield FY1988-89 $ 88,936.00 FY1989-90 $ 83,152.00 FY2018-19 $ 5,815,000 $ 50,000* 0.86% FY1990-91 $ 99,174.00 FY2017-18 $ 5,810,000 $ 70,000 1.20% FY1991-92 $ 101,289.00 FY1992-93 $ 108,659.00 FY2016-17 $ 5,740,000 $ 47,000 0.82% FY1993-94 $ 110,913.00 FY2015-16 $ 5,693,000 $ 32,000 0.56% FY1994-95 $ 132,570.00 FY1995-96 $ 147,000.00 FY2014-15 $ 5,661,000 $ 24,000 0.42% FY1996-97 $ 283,207.00 FY2013-14 $ 5,637,000 $ 21,000 0.37% FY1997-98 $ 331,238.58 FY1998-99 $ 363,469.31 FY2012-13 $ 5,619,000 $ 18,000 0.32% FY1999-00 $ 349,286.27 FY2011-12 $ 5,604,000 $ 15,000 0.37% FY2000-01 $ 546,836.05 FY2001-02 $ 558,123.35 FY2010-11 $ 5,576,000 $ 28,000 0.37% FY2009-10 $ 5,540,000 $ 36,000 0.37% Total $ 3,469,356.56 * Estimate Data from CAFR is in the thousands 19