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PROPOSED PURCHASE OF PARK VIEW CEMETERY March 24, 2015 and March 28, 2015.

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Presentation on theme: "PROPOSED PURCHASE OF PARK VIEW CEMETERY March 24, 2015 and March 28, 2015."— Presentation transcript:

1 PROPOSED PURCHASE OF PARK VIEW CEMETERY March 24, 2015 and March 28, 2015

2 SUMMARY OF PRESENTATION Overview Reasoning Details Questions/Comments

3 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

4 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

5 PARK VIEW CEMETERY AT HISTORIC MEDFORD VILLAGE

6 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

7 PARK VIEW CEMETERY AT KIRBY’S MILL

8 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

9 PARK VIEW CEMETERY AT KIRBY’S MILL

10 PARK VIEW CEMETERY AT KIRBY’S MILL

11 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

12 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

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14 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

15 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

16 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

17 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, % 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

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19 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

20 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

21 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)

22 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

23 MAINTENANCE AND PRESERVATION FUND One fund for both locations Current trust fund amount = $717, 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

24 SUMMARY Unique investment opportunity Completely self-sufficient Opportunity to generate revenue to support general Township operations and reduce dependence on one-time revenue

25 QUESTIONS/COMMENTS


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