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PROPOSED PURCHASE OF PARK VIEW CEMETERY
March 24, 2015 and March 28, 2015
SUMMARY OF PRESENTATION
• Overview
• Reasoning
• Details
• Questions/Comments
OVERVIEW OF PROPOSED TRANSACTION
• Park View Cemetery: Historic Medford Village (Odd Fellows) and Kirby’s Mill locations
• Purchase price: $10,875,000
• Source of funds: Bonds to be issued by the Township
• Targeted closing date: December 30, 2015
• Operation: Cemetery to be operated by a Cemetery Management Company
• Anticipated revenue stream: More than $80 million over 50 years(after payment of all expenses, debt service and trust fund contributions)
• Expected to be completely self-sufficient
REASONING
• Purpose: To generate new, annual source of revenue for the long term
• Why? Each year the Township must supplement the funds raised by taxes with other sources of revenue to balance budget
• Proposed 2015 budget (as of 3/23/15)
-Total projected revenue: $20,164,079
-Projected amount to be raised by taxes: $12,223,521
-Difference: $7,940,558
-Virtually no guaranteed sources of annual revenue
• Goal: Reduce dependence on one-time revenues
PARK VIEW CEMETERY AT HISTORIC MEDFORD VILLAGE
PARK VIEW CEMETERY AT HISTORIC MEDFORD VILLAGE
• Formerly known as Odd Fellows and previously operated by Odd Fellows Lodge
• Acquired by Medford Cemetery Association, Inc. in 2008
• Coates and Filbert Streets; behind Braddock’s Tavern
• Approximately 4.2 acres
• 3,740 graves
-97 unsold
-775 interments in graves remaining (sold but not occupied)
• 320 cremation niche spaces
-243 unsold
PARK VIEW CEMETERY AT KIRBY’S MILL
PARK VIEW CEMETERY AT KIRBY’S MILL
• 25 Fostertown Road
• Approved by State Cemetery Board in March 2010; opened in October 2013
• Approximately 9.5 acres
• Upon initial construction completion:
-4,592 double depth graves
-104 cremation lots
-13 private mausoleum sites
-Single building equipped for a 1,588 casket/crypt space community mausoleum, 600 cremation niche spaces and a fully operational crematory
• Potential for additional development:
-7,274 casket/crypt spaces
-4,710 cremation niche spaces
PARK VIEW CEMETERY AT KIRBY’S MILL
PARK VIEW CEMETERY AT KIRBY’S MILL
CURRENT OWNER: MEDFORD CEMETERY ASSOCIATION, INC. (“MCA”)
• President: Earl Stahl
• General Manager: Karen Hoyt
• Certificate Holders:
-Earl Stahl
-Robert Donovan
-Robert Farrington
-Keri Pyse
-Kennard and Barbara Pyse
-Philip and Kathleen Russo
-George Snyder
HOW DID MCA COME TO OWN ODD FELLOWS CEMETERY AND DEVELOP THE PARK VIEW CEMETERY AT KIRBY’S MILL LOCATION?
• Acquired from Odd Fellows Lodge
• Harry Sutton Nursery
• Land for Kirby’s Mill location owned since 1987
• Reeves Station Road solar farm
WHY DOES MCA WANT TO SELL TO THE TOWNSHIP?
• Eliminate debt, fund construction and return on investment
• Opportunity to continue to manage cemetery; intends to respond to RFP
• Township is uniquely positioned to benefit from
ownership due to ability to bond
-Interest rate on bonds
-Unsecured loan
APPROXIMATE BREAKDOWN OF $10,875,000 PURCHASE PRICE
• $5,000,000 to pay holders of certificates of indebtedness (equivalent to stock)
• $160,000 for accrued interest to certificate holders
• $1,550,000 to repay unsecured notes to Earl Stahl
• $1,015,000 to repay unsecured notes to other certificate holders
• $370,830 to repay secured note
• $2,779,170 to partially reimburse construction costs
WHY DOES MEDFORD TOWNSHIP WANT TO PURCHASE THE CEMETERY?
• Township able to achieve greater revenue than private investors
• Total net revenue of $82,755,892 projected over 50 years
• This projection is after:
-Expenses
-Repayment of the Bonds
-Maintenance & Preservation fund payments
-Additional development cost
• Cash flow analysis includes construction of additional development in year 10
-Construction paid for from cemetery pre need sale revenues
-Built into cash flow projections
• Tax Exempt – no loss of real estate taxes
WHY DOES MEDFORD TOWNSHIP WANT TO PURCHASE THE CEMETERY?
• Actual operations to date Year 2014:
-Projected gross income = $340,419
-Actual gross income = $516,444
-Actual income exceeded projected income by over 50%
• Year 2015 (through February):
-Actual gross income = $79,268
-Same period last year = $43,895
-80% increase over last year
• Cemetery Management Company will fund reserve for potential revenue shortfalls in initial years
-$1,585,000 held in escrow for 48 months
-Interest at bond rate accrues after first year
-Reduced as Township determines not needed
BASIS FOR PROJECTIONS
• Prepared in connection with the approvals for the Kirby’s Mill location
• Submitted in November of 2009 and approved by the State Cemetery Board in March 2010
• Used actual revenue reported by other NJ cemeteries on their tax returns
-Harleigh Cemetery in Camden-Locustwood Cemetery in Cherry Hill-Lakeview Memorial Park in Cinnaminson-Holmdel Cemetery in Holmdel
• These cemeteries chosen because each has a pre-need program and at least one of the following:
-Cemetery of similar size to Kirby’s Mill location-Community where cemetery located of similar size to Kirby’s Mill location-Average household income within community is similar to Medford’s-Cemetery provides same type of services planned for Kirby’s Mill location
• Examined total population of Burlington County by age groups to determine amount and rate of services purchased per year
TOWNSHIP INVESTIGATION TO DATE
• Began discussions in September 2012
• Site visits
• Subcommittee of Jeff Beenstock, Chuck Watson, and Dennis Kildea
• Complete review and analysis of all financial information and projections
• Considered worst case scenario
• Consultation with attorney
• Appraisal
• Discussions with Cemetery Board officials
STATE REGULATION
• Cemetery companies required to obtain Certificate of Authority
• Municipalities do not need Certificate of Authority (but State Cemetery Board approval needed for dissolution)
MAINTENANCE AND PRESERVATION FUND
• New Jersey law requires all regulated cemeteries to maintain in perpetuity an irrevocable trust fund for the preservation of the cemetery
• Purpose is to provide for funds to maintain and preserve the cemetery after revenue generations stops
• Stated mandated contributions:
-15% of the revenue from each grave sale
-10% of the revenue from each headstone foundation, crypt and niche sale
-3% of the revenue from each interment
• Cemeteries permitted to contribute additional funds in excess of required amounts
• MCA requires customers to contribute an additional $500 at the time of purchase of each grave, casket space within a crypt, and niche
• Interest income used for operation of cemetery
MAINTENANCE AND PRESERVATION FUND
• One fund for both locations
• Current trust fund amount = $717,645.28
• Projected trust fund amount upon sale of all products and services = $25,742,724
• Projected trust fund amount without additional $500 contribution = $15,821,224
• Critical to long term ownership and operation of cemetery
SUMMARY
• Unique investment opportunity
• Completely self-sufficient
• Opportunity to generate revenue to support general Township operations and reduce dependence on one-time revenue
QUESTIONS/COMMENTS