• It is inevitable that a cemetery will run out of graves (and revenues) and eventually become the ward of taxpayers.
• For cemeteries with ample inventory of graves, the public’s embrace of cremation translates to declining grave sales and the acceleration of the cemetery’s demise.

For several years, the media have been making these dire predictions about cemeteries.  If accurate, it can only be a matter of time before cities, towns, counties and townships are required to step in and take charge of each cemetery that lies within their boundaries.  But, municipalities are pushing back and creating  a different narrative that suggests there are alternative paths for cemeteries.  Municipalities are advising that they are poorly suited to operating a cemetery because they lack the expertise and personnel to run a cemetery efficiently.  Rather than waste tax payer funds, municipalities are exploring joint enterprises, special committees and even the privatization of cemeteries.  We offer Glendale Memorial Park as an example of the latter.

Glendale Memorial Park “failed’ in 1962, and the city of Glendale Arizona stepped in to assume control and operation of the cemetery.  The cemetery did not have a care fund trust.  The City operated the cemetery for 23 years before implementing an ordinance requiring grave sale revenue to be deposited to a care fund trust.  For the next 15 years, the cemetery accrued all income to the trust.  Eventually, the cemetery’s care fund grew to $4.5 million and the City began to apply grave sale proceeds and the care fund interest income to the cemetery’s upkeep.  Despite a very healthy care fund, the cemetery began operating at a deficit and the City hired consultants in 2018 for advice.

The consultants provided two recommendations: make significant investments in columbariums and staffing, or sell the cemetery to a private death care firm with the expertise to properly operate the cemetery.   The consultant’s recommendations reflect the reality all cemetery operators face:  adjustments and investments must be made for a clientele that wants cremation and memorialization.  If you are unable or unwilling to adapt to cremation, then you better sell the cemetery.

For the reasons stated in the attached report, the City of Glendale chose to sell the cemetery rather than make the recommended investments.  Reading between the lines of that report, we can also predict some of the buyer’s motivations.

• The buyer negotiated for $3.8 million of the cemetery’s care fund. The City likely directed the care funds into very conservative investments.  The buyer understood that with diversified investments, the fund could generate a greater return and offset more of the maintenance costs.
• The cemetery had been operated by the City for 55 years without a proactive sales program. That would mean that the majority of living lot owners probably have not purchased merchandise such as markers, vaults or urns.  The cemetery’s lot book would provide a reliable lead list for marketing merchandise sales.
• The cemetery probably has sections that could be re-developed for cremain interments or scattering gardens.
• The purchase prices of interment spaces were probably below “market”.  The buyer could generate higher revenues by simply raising prices to those charged by competing cemeteries.
• The cemetery may also have had facilities that could be used for other revenue generating purposes (life celebration events or memorials).
• If the cemetery had acreage that had not been platted and dedicated, that land could be sold for other commercial purposes.

Depending on the facts and circumstances, municipalities may look to explore the ‘privatization’ alternative.  But, municipalities need to perform due diligence on each prospective buyer.  Selling a cemetery to an inexperienced or under financed death care firm could work to exasperate the cemetery’s condition.  The municipality could be forced to take over the cemetery again, with a condition worse than when it was ‘privatized’.

In subsequent posts, we will look at how some municipalities are taking proactive steps to keep a cemetery viable (and thus avoid it becoming abandoned).