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HomeMy WebLinkAboutCSD-09-060 - Cemeteries Joint Services ReviewKjTcFff_NER Community Services REPORT TO: Community Services Committee DATE OF MEETING: October 26, 2009 REPORT SUBMITTED BY: Kim Kugler, Interim Director Enterprise, 2544 PREPARED BY: Lorelei Eckel- Braun, Manager Cemeteries, 2964 WARD(S) INVOLVED: All DATE OF REPORT: October 20, 2009 REPORT NO.: CSD -09 -060 SUBJECT: CEMETERIES JOINT SERVICES RECOMMENDATION: That the Kitchener /Waterloo Cemeteries Joint Services Initiatives Report as presented by Hilton Landmarks Inc. be received and; That staff of the cemetery unit continue to work with their City of Waterloo counterparts on the following initiatives: the potential development of a new jointly- operated cemetery, the integration of pricing, bylaws, and record keeping, expand the joint marketing effort and join or delegate the operation of Mount Hope Cemetery. That Staff provide Community Services Committee with annual status updates with respect to the joint cemetery initiatives. --five] life] 091110 1 G In June 2006, City Council received report CSD -06 -016 and recommended the actions relating to project oriented recommendations as outlined in the Cemeteries Operational and Strategic Business Alternative CSD -05 -125, be undertaken by staff. One such recommendation was that the Cemetery staff work with the City of Waterloo to examine various strategies which could promote integration of cemetery services. Staff has been working with the City of Waterloo Cemetery Unit to plan and have implemented a number of integration strategies. A Joint Services report has been prepared by Hilton Landmarks Inc. with the purpose of identifying further potential strategic and operational efficiencies through a strengthened relationship between the respective two cities' Cemetery units. REPORT: Staff completed a review and assessment of the Cemeteries Joint Services Report. Staff support focusing on the initiatives showing potential for integrating cemetery services. These include: 2 -1 CSD -09 -060 -2- • New cemetery land expansion. • Uniform operating and regulatory standards (including bylaws). • Joint marketing endeavours. • Amalgamated computer technology (particularly burial records). • Cemetery onsite visitation /funeral homes. • Crematorium operation and facilities. • Cemetery product and service sales. • Purchasing of product, materials and equipment. • Cemetery operations (burial, inurnment, equipment, etc.). • Cemetery perpetual care maintenance including pro -rata pooled Perpetual Care Funds. • Ideas information and best practices. Solving problems together. • Significant event (i.e. pandemics, disaster) coping strategies. Sharing staff and resources. Some initial activity on these initiatives has already taken place including: • A full service costing review resulting in the aligning of prices and some bylaws. • Joint holiday newspaper advertising. • Redesign of the Mount Hope Cemetery map to show both Waterloo and Kitchener Mt. Hope Cemeteries on one map. • Reduction in the competitive `edge' strategies through the sharing of information and best practices. It is suggested within the report that the greatest opportunity for shared services exists in the development of a new joint cemetery. Both cities will need additional cemetery lands in the future. The purchase of joint lands would provide the greatest opportunity for successful integration on most of the stated initiatives. FINANCIAL IMPLICATIONS: None at this time as future considerations would require the development of business cases to move forwa rd. CONCLUSION: The key recommendation is that staff of both cemetery units continues to work jointly on service sharing opportunities and models of operation. The Hilton Landmark Inc. report identifies that the most significant benefit may be derived from the future consideration of the purchase of joint cemetery lands. Staff will report back to committee annually with updates on the joint services initiatives. ACKNOWLEDGED BY: Pauline Houston, General Manager, Community Services Pauline Houston 2-2 A �r r� 11 - ,� � �'w , yr' � `°�. .. ' •• " -•y , ".�0�17 4 �� � AV Lam. K-E qX s � a THE CITY ©F watiiic* I` w 5 7 " 0`7 6 " 4 I P Final Report Joint Services Initiatives Prepared by: �} Hilton LANDM RKSInc. c yco,- hw,u,rh,„bec,dn-�- May 20th, 2009 HLI Ref. # 99039 / 97059 -06 -SS 2 -3 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page i of ix EXECUTIVE SUMMARY 1.0 BACKGROUND Kitchener and Waterloo's cemeteries are morally, historically, fiscally and environmentally community -based facilities and services which are regulated legislatively and are typically managed or influenced by multiple entities /departments and various governmental agencies including provincially, regionally and municipally. Under these constraints and opportunities the Cities of Kitchener and Waterloo contracted Hilton Landmarks Inc. to evaluate options, possibilities and potential benefits that might arise from sharing of services and joint operations with respect to their cemeteries. In 2006 the Cities of Kitchener and Waterloo cemeteries units commenced dialogue on areas of enhanced cooperation, including': • Standardization of by -laws • Shared genealogical records /informational websites • Joint marketing endeavours • Service costing review Some initial activity on these initiatives has already taken place including2: • A full service costing analysis collaboratively reviewed prices in 2007 to reflect the true cost of operations as enterprises. • Some joint marketing efforts including a joint holiday newspaper advertisement. • Reciprocal sharing of crematorium capacity during maintenance shutdowns. • Redesign of the Mount Hope Cemetery map to show both Waterloo and Kitchener Mount Hopes on one map. • Joint planning for pandemic preparedness. 2.0 CURRENT SITUATION / FORECAST The Cities of Kitchener and Waterloo own and operate between them ten (10) cemeteries: City of Kitchener Cemeteries • Mount Hope Cemetery — Kitchener (mature, few sales, some operations) • Woodland Cemetery (active sales, negligible developable land) • Williamsburg Cemetery (active sales, developable land) ' City of Kitchener website — Joint Services Initiative 2 Ibid as well as cemetery staff personal communication. C 2009 Hilton Landmarks Inc. 2 -4 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page ii of ix • Strasburg Lutheran pioneer Cemetery (operations /maintenance only) • St. Peter's Lutheran Cemetery (operations /maintenance only) • Bridgeport Memorial Cemetery (operations /maintenance only) • Beth Jacob Jewish Cemetery (contract interment operations only) • First Mennonite Cemetery (contract interment operations only) City of Waterloo Cemeteries • Mount Hope Cemetery — Waterloo (mature, few sales, some operations) • Parkview Cemetery (active sales, limited developable land) The demand for cemetery services and products is increasing as the population rises. This trend is accelerated by the aging of that demographic bulge known as the "Baby Boomers ". In 2007 that portion of the area population that is 60 years of age or older made up 16% of the population. By 2031 that group will comprise 26% of the population. As a result of these two factors, (increased population base and aging demographic), annual deaths in the KW region will rise by about 1.9% annually from an anticipated 3,400 in 2009 to 5,100 in 2030, growing by almost 50% over that period. Total demand for cemetery land in the K -W area between 2009 and 2030 is thus projected to be 73 net useable acres. This will require development of new cemetery facilities in the region. In order to continue to serve community needs and ensure for the fiscal sustainability of the two cities' cemeteries it will be necessary for the Cities of Kitchener and Waterloo Cemeteries to expand their cemetery lands in the relatively near future. 3.0 SERVICE SHARING OPPORTUNITIES / MODELS There are a number of means by which the sharing of cemetery services between the Cities of Kitchener and Waterloo might be effected. These include: • New cemetery land expansion. • Uniform operating and regulatory standards (including bylaws). • Joint marketing endeavours. • Integrated computer technology (particularly burial records). • Cemetery onsite visitation/funeral home(s) facilities. • Crematorium operation and facilities. • Cemetery product and service sales. • Cemetery operations (burial, inurnment, etc.). C 2009 Hilton Landmarks Inc. 2 -5 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page iii of ix • Cemetery perpetual care maintenance including pro -rata pooled CMFs. • Other (pet cemetery facilities ?). Alignment of operating and regulatory standards at both Cities' cemeteries will pave the way for future cooperation. As cemetery operations are governed by the Provincial Cemeteries Act (to be replaced by the Funeral, Burial and Cremation Services Act, 2002 (FBCSA) when it is proclaimed in force), the cemetery bylaws could be aligned with moderate effort. Even easier would be the coordination of operational procedures as well as fees and tariffs to support future initiatives. A joint marketing effort could benefit both Cities cemeteries strategically, reflecting the real cost of doing business. Of the above -noted methods and including potential future initiatives for the sharing of cemetery services, three were highlighted in this report, in particular; (a) joint crematorium operation, (b) new cemetery land expansion and (c) on -site visitation/funeral homes. a) COLLABORATIVE CREMATORIUM OPERATIONS Both Cities own and operate crematoria sited on their primary operating cemeteries; Williamsburg Cemetery in Kitchener and Parkview Cemetery in Waterloo. Both crematoria are very active and contribute significantly to the operating budgets of the two Cities' cemetery budgets. Indeed, without their contributions it is most likely that the two operations would require municipal tax roll support. Both crematoria operate independently and would still require staff to operate in a shared services environment. There is no duplication of operational effort. The two Cities' crematorium operations currently offer each other `backup' support in the event of operational downtime. Any new crematorium facility that might be contemplated (particularly on a newly developed cemetery) would be most beneficially organized as a joint venture cooperative effort. However, it should be noted that the two existing municipal facilities already have the capacity to handle current and forecast cremation demand. The largest concern facing the two crematoria is the impending changes brought about under the new FBCSA when it is proclaimed in force. It will allow the construction of a crematorium anywhere (subject to zoning approval) as opposed to only on cemetery property currently. This might allow the introduction of a corporately -owned crematorium to compete directly with the two municipal operations possibly hindering their revenue- generating potential. C 2009 Hilton Landmarks Inc. 2 -6 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page iv of ix b) NEW CEMETERY LAND EXPANSION This area perhaps represents the best opportunity for collaboration between the two Cities' cemetery operations. New cemetery development is both costly and time - consuming. It would be in the best interests of both communities if any new cemetery development be undertaken on a joint venture basis. The alternative, of developing two independent municipal cemeteries would cost approximately twice as much in both capital costs (land acquisition, permitting, development and capital infrastructure) and operating costs (operations, sales, maintenance and administration). A joint cemetery would serve the citizens of both communities equally and provide the best opportunity to achieve adequacy in its CMF to ensure its future sustainability, particularly on a site with, if feasible, a shared municipal boundary location (akin to the adjoining Mount Hope Cemetery facilities /operations). In addition a development of this nature may afford the best opportunity, least fraught with political issues, to develop an onsite Visitation/Funeral Home complex. c) ON -SITE VISTATION CENTRE / FUNERAL HOMES In considering Funeral Home development in correlation to Kitchener - Waterloo municipally owned cemetery facilities there are currently six (6) primary funeral service providers in Kitchener and Waterloo. Three (3) are independents (Erb & Good Family Funeral Home Ltd., Henry Walser Funeral Home Ltd., David MacLeod Funeral Home Ltd.) and three (3) corporately owned by SCI, Service Corporation International based in Houston, Texas (Ratz- Bechtel Funeral Home & Cremation Centre, Shreiter - Sandrock Funeral Home & Chapel and Westmount Funeral Chapel). Two of these funeral homes exist in Waterloo and four are located in Kitchener (see Dwg 5.0). Market share for area funeral homes is (almost) entirely contingent upon area deaths in the greater Regional context. Similarly, market share specific to Kitchener and Waterloo's six (6) funeral homes is (almost) solely provided by the deaths (growing about 1.9% annually) within these cities' boundaries. There is no unsatisfied demand for funeral services as the six funeral homes in the twin cities can easily service these after death care demands. On average these funeral homes will potentially receive about 340 -520 `calls' per year between 2009 and 2030. This suggests, going forward (to 2030), any new funeral home C 2009 Hilton Landmarks Inc. 7 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page v of ix will `pirate' market share from existing operations rendering `stiffer' competition for all funeral service providers, posing risks to their financial viabilities. However, that acknowledged and where allowed, the corporate sectors commonly build cemetery /funeral home complexes because of the associated ability to enhance revenue streams. Of greater immediate concern to the cemetery operations of the cities of Kitchener and Waterloo will be the ability of corporate entities to build crematoria anywhere (not just on cemetery property as is the case under the current Cemeteries Act). Thus, well located, jointly acquired /developed cemetery lands afford some potential to capitalize on some aspect of a `shared' funeral home endeavour for Kitchener and Waterloo. Such `new' cemetery lands would accommodate `best siting' principles to develop (or participate in the development of) a funeral home complex. Ideally, funeral homes locate on major traffic thoroughfares with excellent visual profiles in the community setting as well as excellent physical accessibility, parking, servicing and other site - related parameters /characteristics. Kitchener's Williamsburg site has subsequently developed its Westmount Road (formerly Fischer - Hallman) frontage negating good opportunity for siting a well positioned funeral home from the siting ideals noted above. Waterloo's Parkview Cemetery has to date maintained a highly visible land base fronting on busy University Avenue East, which could physically position a funeral home facility as a potentially financially viable endeavour. It is strongly recommended, however, that an in -depth market analysis be conducted prior to either a Kitchener - Waterloo joint endeavour or either one of the cities undertaking development of a funeral home facility on its own accord. 4.0 RECOMMENDED DIRECTION Going forward there are a number of initiatives that will generate some benefits for both Kitchener and Waterloo as corporate entities and their respective ratepayers at large. These include: 4.1 Development of a New Jointly- Operated Cemetery The City of Waterloo is in need of new cemetery lands presently in spite of its recent endeavours to expand somewhat at the Bechtel Lands/Parkview site. The City of Kitchener has some available inventory at its Williamsburg Cemetery site. C 2009 Hilton Landmarks Inc. 8 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page vi of ix The search for suitable land should commence immediately although the land may be "banked" for several years as the approvals process commences and cemetery demand catches up. 4.2 Integration of Pricing, Bylaws and Record - Keeping Efforts have already commenced in this area between the managements of the two municipal cemetery operations with the full- costing analysis and alignment of cemetery prices in 2007. The next step might be the review and integration of cemetery bylaws to standardize the procedures in both organizations. Finally, the integration of the computerized record - keeping would facilitate greater coordination between the two cemetery systems. This last might be encouraged by the proclamation of the pending Funeral, Burial and Cremation Services Act, 2002 with its mandated increased record complexity. 4.3 Expanded Joint Marketing Effort An expanded joint marketing effort would enhance the image of both municipalities' cemeteries, encourage their use as sacred places of interment and memorialization (particularly for those who made cremation their choice). Many consumers do not realize that the cemeteries are municipally operated and end up electing to go where there is a family history /connectivity with a given cemetery facility. This effort might also be used to encourage citizens to use the local crematoria. 4.4 Joint or Delegated Operation of Mount Hope Cemetery Given the contiguous location of Mount Hope Cemetery and its mature (i.e. very low sales) status it might more efficiently be operated jointly or by one municipality's staff rather than having two sets of staff responsible for the two halves. Costs may be distributed equitably on the basis of activity (dispositions and operations) and acreage (perpetual care maintenance). Hilton L � 1 ND1 Vl / �'l �l�► , � In c . Cemetery Consultants, Planning and Design C 2009 Hilton Landmarks Inc. 2 -9 7 KJ TUH I VF.R THE CITY OF Y Wat&-1C* Final Deport .point Services Initiatives Table of Contents 2 -10 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page viii of ix EXECUTIVE SUMMARY TABLE OF CONTENTS 1 INTRODUCTION ..................................... ..............................2 1.1 BACKGROUND ........................................................................................ ............................... 2 1.2 ISSUES in CEMETERY MANAGEMENT .............................................. ............................... 2 1.2.1 Municipal Responsibility for Cemeteries ................................................ ............................... 2 1.2.2 Care and Maintenance Trust Funds ( CMFs) .......................................... ............................... 3 1.3 SHARED SERVICES REPORT SCOPE ................................................... ..............................3 2 K -W EXISTING CEMETERY INFRASTRUCTURE ......... 6 2.1 INTRODUCTION ...................................................................................... ............................... 6 2.2 CITY of KITCHENER CEMETERY SERVICES .................................... ............................... 6 2.2.1 Introduction ............................................................................................. ............................... 6 2.2.2 Mount Hope Cemetery (Kitchener portion) ........................................... ............................... 6 2.2.3 Woodland Cemetery ................................................................................ ............................... 7 2.2.4 Williamsburg Cemetery .......................................................................... ............................... 7 2.3 CITY of WATERLOO CEMETERY SERVICES ..................................... ..............................8 2.3.1 Introduction ............................................................................................. ............................... 8 2.3.2 Mount Hope Cemetery (Waterloo portion) ............................................ ............................... 8 2.3.3Parkview Cemetery .................................................................................. ..............................9 2.4 COMPETITIVE COMPARISON ............................................................. .............................13 3 K -W AFTER -DEATH CARE DEMAND ............................16 3.1 INTRODUCTION ...................................................................................... .............................16 3.2 DEMOGRAPHICS .................................................................................... .............................16 3.2.1 Population Age Distribution & Growth .................................................. .............................16 3.2.2 Deaths ...................................................................................................... .............................18 3.3 CREMATION ............................................................................................ .............................19 3.4 FORECAST DEMAND and LAND NEED ............................................. ............................... 21 4 CEMETERY SHARED SERVICES ....... .............................24 4.1 BACKGROUND ...................................................................................... ............................... 24 4.2 PROGRESS in SHARED CEMETERY SERVICES ................................ .............................25 4.2.1 Corporate Culture ................................................................................. ............................... 25 4.2.2 Equity ...................................................................................................... .............................25 4.2.3 Levels of Service ...................................................................................... .............................25 4.2.4 Potential Benefits ................................................................................... ............................... 25 4.2.5 Potential Challenges ................................................................................ .............................26 4.2.6 Areas with Potential for Shared Services .............................................. ............................... 26 4.3 POTENTIAL SHARED SERVICE STRUCTURES ............................... ............................... 27 4.3.1 Introduction ........................................................................................... ............................... 27 4.3.2 Municipal Department .......................................................................... ............................... 27 4.3.3 Independent Business Unit .................................................................... ............................... 28 4.3.4 Board Run ............................................................................................. ............................... 29 © 2009 Hilton Landmarks Inc. 2 -11 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page ix of ix 4.3.5 Examples from Kitchener Market ........................................................ ............................... 29 4.3.5.1 Delegation of Powers ....................................................................... ............................... 29 4.3.5.2 Municipal Service Boards ............................................................... ............................... 29 4.3.5.3 Establish a Corporation .................................................................. ............................... 29 4.3.5.4 Designation of an Improvement Area ............................................. ............................... 29 5 COLLABORATIVE CREMATORIUM OPERATIONS-32 5.1 BACKGROUND ...................................................................................... ............................... 32 6 COMMUNITY NEEDS for CEMETERY LAND EXPANSION.......................................... ............................... 36 6.1 BACKGROUND ...................................................................................... ............................... 36 6.2 NEW CEMETERY DEVELOPMENT ISSUES ...................................... ............................... 37 6.2.1 Timing ................................................................................................... ............................... 37 6.2.2 Location /Land Availability ................................................................... ............................... 37 6.2.3 New Cemetery Criteria ......................................................................... ............................... 38 7 VISITATION CENTRE / FUNERAL HOME .................... 42 7.1 BACKGROUND ...................................................................................... ............................... 42 7.2 ONSITE FUNERAL HOME BUSINESS MODELS ............................... ............................... 44 7.2.1 Fully -owned Funeral Home ................................................................... ............................... 44 7.2.2 Leased Funeral Home Facility .............................................................. ............................... 45 7.2.2.1 City- Financed Facility ..................................................................... ............................... 45 7.2.2.2 Joint Venture Financed Facility ..................................................... ............................... 45 7.2.3 Leased Land .......................................................................................... ............................... 45 7.2.4 Sold /Severed Land ................................................................................. ............................... 46 7.3 ONSITE FUNERAL HOME CHALLENGES ........................................ ............................... 46 7.3.1 Shared Services Equity .......................................................................... ............................... 46 7.3.2 General Cemetery /Funeral Home Organization ................................... ............................... 46 7.3.3 General Cemetery /Funeral Home Challenges ...................................... ............................... 47 8 SUMMARY .............................................. .............................50 8.1 INITIAL PROGRESS .............................................................................. ............................... 50 8.2 RECOMMENDED DIRECTION ............................................................ ............................... 50 8.2.1 Development of a New Jointly- Operated Cemetery .............................. ............................... 50 8.2.2 Integration of Pricing, Bylaws and Record - Keeping ............................ ............................... 51 8.2.3 Expanded Joint Marketing Effort ......................................................... ............................... 51 8.2.4 Joint or Delegated Operation of Mount Hope Cemetery ...................... ............................... 51 9 ASSUMPTIONS/ LIMITATIONS ........... .............................54 © 2009 Hilton Landmarks Inc. 2 -12 l Kr1,(] 1E AF R THE CITY OF TA Watirloo Final Report Joint Services Initiatives 1.0 Introduction 2 -13 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 2 of 54 1 INTRODUCTION 1.1 BACKGROUND The Cities of Kitchener and Waterloo contracted Hilton Landmarks Inc. to evaluate the options and possibilities for sharing of services and joint operations with respect to their cemeteries. 1.2 ISSUES in CEMETERY MANAGEMENT 1.2.1 Municipal Responsibility for Cemeteries Under the current provincial Cemeteries Act (Revised) (R. S.O., 1990, Chapter CA), cemeteries are ultimately a municipal responsibility once they are abandoned. Upon a declaration that a cemetery is abandoned being registered in the appropriate land registry office, the municipality becomes the owner of the cemetery with all the rights and obligations in respect to the cemetery and the assets, funds and trust accounts related thereto that the previous owner had. Cemeteries Act (Revised) R.S.O. 1990, c. C.4, s.60 (7). It is expected this intent will continue under the new Funeral, Burial and Cremation Services Act, 2002, when it is proclaimed in force. Furthermore, cemetery owners are required to maintain their cemeteries in perpetuity. Every cemetery owner shall maintain, without charge to interment rights holders, the grounds of the cemetery, including all lots, structures and markers, to ensure the safety of the public and to preserve the dignity of the cemetery. Cemeteries Act (Revised) R.S.O. 1990, c. C.4, s.44 (1). Hence, cemeteries are, and will continue to be, a municipal responsibility. In fact, this responsibility will only increase as abandoned pioneer and other cemeteries ultimately become municipal property. One need only consider the City of Hamilton which is currently responsible for the maintenance of 67 cemeteries to understand the direction and legislated implications of cemetery ownership. In essence, in the longest term, eventually all cemeteries will come to municipal ownership. The important question is whether they will have an adequately- funded (or indeed any) Care and Maintenance Trust Fund (CMF) to fund required maintenance needs going forward. C 2009 Hilton Landmarks Inc. 2 -14 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 3 of 54 1.2.2 Care and Maintenance Trust Funds (CMFs) Since 1955 all cemeteries in Ontario have been required to contribute a portion of the revenue from the sale of ground lots, columbaria niches, mausoleum crypts and memorials into a Care and Maintenance Trust Fund, known generically as a Perpetual Care Trust Fund. Under current and pending legislation3, the principal of this fund is inviolable; only the interest may be withdrawn to offset the annual cost of cemetery care and maintenance. Once a lot, crypt, niche or monument is sold then the only further revenue that it will generate is the opening /closing or installation. The revenue from those follow -on services should be (but is not in this cases) adequate to offset the associated operations and does not contribute to the CMF. Consequently, if insufficient funds are deposited to the CMF at the time of sale then the cemetery is fated to require additional funding in perpetuity. As CMFs were not mandated until 1955 and most Ontario cemeteries are older than that it is not surprising that virtually all CMFs in Ontario are underfunded. When combined with prices that often are not adequate to fund the future this is an impending crisis for most municipalities. Over the long term, the only relevant measure of a cemetery's success and its ability to operate without municipal tax roll support is the (future) financial adequacy of its CMF. It is therefore critically important that the future adequacy of the CMF should be central to the planning of operations within and between the Kitchener and Waterloo's municipal cemeteries. 1.3 SHARED SERVICES REPORT SCOPE The primary objective of this overview report is to analyze the opportunities for sharing services in cemetery operations and management in Kitchener and Waterloo. To achieve this end it is imperative that the following analyses occur as background to properly assess options and opportunities which might benefit both communities in meeting their financial, moral, social, fiduciary, legislative and environmental obligations. 3 Currently, the Cemeteries Act (Revised) R. S.O. 1990; pending, Funeral, Burial and Cremation Services Act, 2002 4 The sale of cemetery products (lots, crypts and niches) is actually the sale of the "right to inter" within that product rather than title to the product itself. s As reported by cemetery staff. This is often the case in municipal cemeteries. C 2009 Hilton Landmarks Inc. 2 -15 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 4 of 54 This report examines several aspects of the municipal cemetery operations in Kitchener and Waterloo at an overview level, with particular respect to: a) Assimilation, collation and analysis of available and new background data. b) Assessment of physical cemetery existing amenities and development potentials for Kitchener and Waterloo properties. c) Overview demand /needs analysis for cemetery lands, funeral homes, etc. d) Establish K -W's market capabilities for after -death care services as it relates to cemeteries and funeral homes. e) Review of strategic plans /corporate cultures of Kitchener and Waterloo to integrate with joint cemetery facilities /operations. The preceding analyses accommodate formulation of insights /recommendations to address the following primary objectives /opportunities for shared or joint cemetery services for Kitchener and Waterloo. 1. Options to work collaboratively to protect and enhance revenue streams associated with the crematorium facilities including a balanced and consistent approach to the delivery of crematorium services and opportunities and surrounding the new Funeral, Burial and Cremation Services Act, 2002. 2. Options to work collaboratively in the acquisition of lands to support future cemetery development with consideration for the current strategic plans for both municipalities, cemetery service business case objectives and land needs (current and future). 3. Opportunities to partner with the private sector in the establishment of a funeral home or visitation centre on City of Waterloo cemetery property, City of Kitchener cemetery property or both properties. Market analysis, potential locations and potential revenue streams. C 2009 Hilton Landmarks Inc. 2 -16 F� T(�.NF THE CITY OF I � W C 1101C* Final Report Joint Services Initiatives 2.0 K -W Existing Cemetery Infrastructure 2 -17 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 6 of 54 2 K -W EXISTING CEMETERY INFRASTRUCTURE 2.1 INTRODUCTION The Kitchener - Waterloo region as defined by the Waterloo Census District includes the Tri -City area (Kitchener, Waterloo and Cambridge) as well as the surrounding counties of Woolwich, Wellesley, Wilmot and North Dumfries. This area contains approximately 90 active cemeteries and about 23 inactive cemeteries. Most of these latter are small pioneer or religious cemeteries which will likely ultimately end up under municipal responsibility (refer to Item 1.2.1). Each of the three large municipalities has municipally owned and operated cemeteries. The following sections outline some of the main cemetery infrastructure in the region. 2.2 CITY of KITCHENER CEMETERY SERVICES 2.2.1 Introduction The City of Kitchener Cemetery Services owns and operates six (6) cemeteries: Mount Hope Cemetery, Woodland Cemetery, Williamsburg Cemetery, Strasburg Lutheran pioneer Cemetery, St. Peter's Lutheran Cemetery and Bridgeport Memorial Cemetery. The City also operates two (2) other cemeteries on a contractual basis: Beth Jacob Jewish Cemetery and First Mennonite Cemetery. 2.2.2 Mount Hope Cemetery (Kitchener portion) • Opened in 1865, this is Kitchener - Waterloo's "heritage" cemetery where many early residents are buried. • Straddles the border between central Waterloo and Kitchener. • 271/2 acres total size, 16 acres belong to the City of Kitchener. • An all- denominational mature cemetery with few sales and little inventory remaining. • Extremely limited opportunity for development. • Handles full casket and cremation into casket lots (both upright monument and flat marker). C 2009 Hilton Landmarks Inc. 2 -18 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 7 of 54 • No facilities for cremation inurnment (i.e. columbarium niche) or scattering. • No sales or inventory statistics are available for this cemetery. • Activity is primarily interments into previously sold lots and maintenance. 2.2.3 Woodland Cemetery • This cemetery, opened in 1924, was built when the Kitchener portion of Mount Hope Cemetery was reaching capacity. • 50 acres in extent, there is very little (less than an acre) of development land remaining. • All- denominational. • Mature cemetery, still selling, some inventory remaining. • Limited opportunity for development. • Full- featured cemetery with ground lots, columbaria and community mausoleum. 2.2.4 Williamsburg Cemetery • Opened in 1995, this is Kitchener's newest cemetery. • 54 acres in total; 23 acres developed in Phase I, 31 acres being planned for development. It appears only about 18± acres will be available for development owing to environmental constraints. • An active cemetery, this is where the majority of City of Kitchener Cemetery sales occur. • Full- featured, all- denominational cemetery with ground lots indoor and outdoor columbaria and a crematorium. • Modern diversified cemetery with interments for all denominations including dedicated sections for the Serbian Orthodox Church, Muslim faiths and St. Mary's Coptic Orthodox Church. • Provide a wide selection of options for inground and aboveground interment and memorializations, some of which are unique to the region and the province, an indication Williamsburg and the City of Kitchener are trendsetters in this profession. • Variety of memorialization options including trees, benches, landscaping stones and plaques. C 2009 Hilton Landmarks Inc. 2 -19 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 8 of 54 • Award winning dedication centre / Chapel (Mike Wagner Heritage award) which has been utilized for family gatherings and religious ceremonies including over 20 weddings since its construction. • Preserved naturalization areas, wet lands which encourage community functions such as the bird watching program. • Man made pond and walking trails which allow for both peaceful reflection and contribute to opportunities for enhancing an active lifestyle for area residents. 2.3 CITY of WATERLOO CEMETERY SERVICES 2.3.1 Introduction The City of Waterloo owns and operates two cemeteries, Mount Hope and Parkview Cemeteries. 2.3.2 Mount Hope Cemetery (Waterloo portion) • Opened in 1865, this is Waterloo's "heritage" cemetery where many early residents are buried. • Straddles the border between central Waterloo and Kitchener. • 271/2 acres total size, 11' /z acres belong to the City of Waterloo. • An all- denominational mature cemetery with few sales and little inventory remaining. • Extremely limited opportunity for development. • Handles full casket and cremation into casket lots (both upright monument and flat marker). • No facilities for cremation inurnment (i.e. columbarium niche) or scattering. • About 8,447 (94 %) of the total of 9,033 casket lots have been sold. • Activity is primarily interments into previously sold lots and maintenance. • 586 remaining casket lots at January 15th, 2009. C 2009 Hilton Landmarks Inc. 2-20 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 9 of 54 2.3.3 Parkview Cemetery • In the 1950's, the City of Waterloo purchased the Bechtel lands, totaling 155± acres, for cemetery purposes. • Opened in 1966, approximately 27 acres have been developed to date for cemetery purposes on the Bechtel lands. • There are approximately 4 acres of undeveloped land left within the current cemetery boundaries although some of that land (approximately 1' /z acres) may be underlain by landfill and hence is unsuitable for casket burial. • Waterloo City Council has recently made available 7 -8 acres of adjacent development lands by reclaiming existing sportsfields on the cemetery's south border. This will provide sales /interment inventory until approximately 2022. • Conveniently located, highly visible site, north -east Waterloo. • Near the intersection of two major routes leading east -west (University Avenue) and north -south (Conestoga Parkway). • Modern, diversified, all- denominational cemetery, this is Waterloo's most active cemetery. • Well- maintained, full- service cemetery with a full selection of casket and cremation interment /inurnment and memorialization alternatives. • The City cemetery operations /facilities are acknowledged as a desirable benchmark within the industry — particularly by municipal peers. • Provides a wide selection of conventional and innovative options for both inground and aboveground interment and memorialization. Casket and cremation lots — both upright monument and flat marker. • Indoor (chapel) niches, outdoor columbarium wall and dome niches as well as scattering gardens. • Offer a wide variety of memorialization alternatives (including trees, benches, rocks and plaques). • Roman Catholic expansion section has space allocated for family estate mausoleums lawn crypts. • Created an enhanced environment available to the public with water features, ponds and an arboretum approach to the memorial tree program. C 2009 Hilton Landmarks Inc. 2 -21 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 10 of 54 Table 2.4: Selected Waterloo Area Cemeteries City of Waterloo Cemeteries Cemetery Size Remaining Name Type (Ac.) Developable Activity Facilities Acreage Mount Hope Municipal 11' /2 None Interments maintenance Casket &cremation (Waterloo) & some sales ground interments only Woodland 4 Ac. Sales Ground lots, Parkview Municipal 31 (2'/2 Ac' interments & columbaria, cremation Cemetery casket) maintenance gardens, reception + 7 -8 Ac. maintenance centre & crematorium City of Kitchener Cemeteries Cemetery Size Remaining Name Type (Ac-) Developable Activity Facilities Acreage Mount Hope Municipal 16 None Interments & Casket & cremation (Kitchener) maintenance ground interments only Woodland Sales, Ground lots, Cemetery Municipal 50 < 1 Ac. interments & columbaria & maintenance community mausoleum Sales, Ground lots, Williamsburg Municipal 51 18± Ac. net interments & columbaria, cremation Cemetery gardens, reception maintenance centre & crematorium St. Peter's Religious/ 4 None Interments & Ground interment only Lutheran Municipal maintenance Bridgeport / Religious/ Maintenance Casket &cremation Free Church Municipal , 2V2 None some ground interments only Cemetery interments Strasburg Historic Pioneer/ 11/, None Maintenance Maintenance only Pioneer Municipal only Cemetery Beth Jacob Jewish Religious/ 3 1 /4 None Interments Ground interment only 6 Cemetery Municipal only First Mennonite Religious/ None Interments s Ground interment only Cemetery Municipal only 6 Interment operations only by City of Kitchener (i.e. no maintenance). C 2009 Hilton Landmarks Inc. 2-22 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 11 of 54 Corporate Cemeteries Cemetery Size Remaining Name Type (Ac-) Developable Activity Facilities Acreage Memory Corporate Sales, Ground lots, Gardens (Arbor) 1 76V2± 17± Ac. interments & columbaria & (Breslau) maintenance cremation gardens Cambridge Munici al Cemeteries Cemetery Size Remaining Name Type (Ac.) Developable Activity Facilities Acreage Mountain Interments, Ground lots, View Municipal 52 None maintenance columbaria & Cemetery & some sales community mausoleum Parklawn Sales, Ground lots & Cemetery Municipal 40 8 Ac. interments & columbaria maintenance New Hope Municipal 18 5 Ac. Sales, interments & Ground lots & Cemetery columbaria maintenance Preston Interments Casket &cremation Cemetery Municipal 9 None maintenance ground interments only & some sales St. Mary's Municipal 1 None Interments & Casket & cremation Cemetery maintenance ground interments only Freeport Municipal Cemetery ' Much of the remaining undeveloped land at Memorial Gardens Cemetery is interpreted to be wetlands /woodlot hence unavailable for cemetery development. C 2009 Hilton Landmarks Inc. 2-23 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 12 of 54 Other Area Cemeteries Cemetery Size Remaining Name Type (Ac.) Developable Activity Facilities Acreage King Street Interments North Religious 4', %7 Unknown maintenance Casket & cremation Mennonite & some sales round interments only g y Cemetery Erb Street Interments, Casket &cremation Mennonite Religious 2 Limited maintenance ground interments only Cemetery & some sales St. Agatha Sales Roman Religious ^ _ % Unknown interments & Casket & cremation Catholic ground interments only Cemetery maintenance St. Matthews Religious 3',. Unknown Sales interments & Casket &cremation Cemetery ground interments only maintenance C 2009 Hilton Landmarks Inc. 2-24 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 13 of 54 2.4 COMPETITIVE COMPARISON The following tables show selected 2009 prices at City of Kitchener and City of Waterloo cemeteries. City of Kitchener I City of Waterloo Casket Lots Single Adult Casket Lot $1,263 - $2,696 $1,375 - $2,250 Double Adult Casket Lot $2,663 - $3,932 $2,820 - $4,500 Triple Adult Casket Lot $3,994 - $4,550 $4,230 - $6,750 Quad Adult Casket Lot $6,067 $5,640 - $9,000 Estate Feature Adult Casket Lot $7,3889 $9,500 - $13,900 Single Veteran's Casket Lot $624'0 $1,175 Double Veteran's Casket Lot $2,670 Single Flush Marker Youth $527 Single Child Casket Lot $249-$488 $250 - $1,150" Single Infant Casket Lot $121-$122 $140 Cremation Lots Cremation Lots $121 - $2,371 $775 - $2,400 Veteran's Cremation Lots $506 $675 Columbarium Niches Outdoor Columbarium Niches $2,135 - 4,831 $1,850 - $4,750 Indoor Columbarium Niches $2,490 - $4,500 $1,750 - $4,650 Scattering Garden $6,567 $1,995 - $2,100 Scattering Garden $505 $500 Scattering Garden w/ Bronze Plaque $656 $700 Cemetery Products Memorial Products Memorial Bench with bronze plaque $2,025 $1,995 +12 Memorial Tree with bronze plaque $1,128 $1,095 Memorial Stone with bronze plaque $6,567 $1,995 - $2,100 Cemetery Services Openings /Closings Adult $842-93 013 $850 Child $265 $240 Infant N/C $130 Cremation $300 $300 Scattering of Cremated Remains $207 $160 9 Pillow or flush markers only in `Green Burial' area. '0 Flush marker only. " Infant/child casket lot - preferred; upright monument permitted. 12 Redwood bench (granite will cost more). 13 Double depth interment. C 2009 Hilton Landmarks Inc. 2-25 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 14 of 54 This page intentionally blank C 2009 Hilton Landmarks Inc. 2-26 l Kr1,(] 1E AF R THE CITY OF TA Watirloo Final Report Joint Services Initiatives 3.0 K -W After -Death Care Demand 2-27 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 16 of 54 3 K -W AFTER -DEATH CARE DEMAND 3.1 INTRODUCTION The at -need demand for after -death care products and services is predicated upon the annual number of deaths in a community. Every death requires some level of after -death care service from the simplest direct cremation disposition to the most elaborate funeral and memorialization practices. Annual deaths are dependent upon the size of the local population and the mortality rate of that population. Each of these factors is described in turn below. 3.2 DEMOGRAPHICS 3.2.1 Population Age Distribution & Growth The population of Waterloo Region (as defined by Statistics Canada's Waterloo Census District) is anticipated to grow by just over 1.0% annually over the next 23 years, increasing by 28% from 496,380 in 2007 to 637,190 in 2031. The growth will be concentrated in the elderly population, the target demographic for the use and purchase of after -death care products and services. Fig. 3.2.1a: Waterloo Region Age Distribution: 2007 & 2031 50 y C LC y 040 t H c X30 LC sZ O a- ,20 0 a� 010 L 0 'Baby Boomers' in 2007 _ 'Baby Boomers' in 2031 The 60+ age group will see the greatest growth of any age group over the next 25 years II Source: Ontario Ministry of Finance v rn v rn v rn v M v rn IT M IT M IT M IT M+ O Lf� i i N N M M V V L? L? (O (O I,� 1,� 00 00 O L�O LO O LO O LO O LO O LO O LO O LO N N m m 'T V Lo Lo (O (O I� 00 00 Age Ran a Years e Population Age Distribution 2007 ! Population Age Distribution 2031 C 2009 Hilton Landmarks Inc. 2-28 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 17 of 54 The previous graph (Fig. 3.2.1a) shows the age distribution of the Waterloo region population in 2007 and forecast to 2031. Note particularly the area on the right -hand side representing the population aged 50 and over. While the growth in the younger population ( <60 years of age) is very modest (12 %), the elderly population (60+ years of age) will more than double (113 %). The population of the Waterloo region (Waterloo CD) is anticipated to grow at a rate of about 1.1% annually from 496,370 in 2007 to approximately 632,530 in 203 014 The following graph (Fig. 3.2.1b) shows the change in population by age group in Waterloo Region between 2007 and 2031 in both absolute numbers and as a percentage. This shows quite clearly the growth in the primary target market for the sale of after -death care products and services (i.e. those aged 50 and over). This is the group towards which most marketing efforts should be targeted. Fig. 3.21.1b: Waterloo Region Age Distribution Change: 2007 -2031 25,000 M20,000 O N o r�15,000 N Average increase in population aged 60 years and older between 2007 and 2031 is forecast to be 113% Source: Ontario Ministry of Finance - 125% o 100% M O o 75% ti O 0 Average increase in population less than 60 years old between 2007 and N 10,000 2031 is forecast to be 12% 50% c L L 5,000 25% O p R � 0 0% a IT 0') v IT 0') IT 0') v� v� v� v� v�+ N N M M V V I? V? (O (O I� 00 00 O a° Lf� i i � CD O Lf O LO O LO O LD O LO O LO O LO O LO r N N CO M V V LO LO 0 0 W W Age Group (years) Growth in Population 2007 -2031 ( #) -0 - 59 Year Age Group ( %) X60+ Year Age Group ( %) 14 Ontario Ministry of Finance demographic forecast for Waterloo census district. C 2009 Hilton Landmarks Inc. 2-29 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 18 of 54 In 2007 people aged 60 years of age and older made up 16% of the population. By 2031 that portion of the population will make up more than 26% of the total. If we look at the portion of the population that is 50 years of age and older it will rise from 28% of the total in 2007 to 39% in 2031. 3.2.2 Deaths The primary determinant of demand for at -need after -death care products and services is the annual number of deaths. The first component of those deaths is the absolute size of the population. This is anticipated to be growing at about 1.0% annually in the Waterloo Region for the next 23 years. The next component of annual deaths is the age distribution of that population. The largest single factor affecting the age distribution and hence the mortality of the population going forward is the aging of the cohort known as the `Baby Boomers'. This segment of the population born between 1946 and 1964 will have a disproportionately large effect on the age distribution of the population for the next 25+ years. As shown in the previous section the population that is 60 years of age and older will expand in the Waterloo Region. This will have a pronounced effect on the annual death rate 15 (ADR) which is the number of people per thousand population that will die each year. Annual mortality rises with age dramatically above age 50. The following chart (Fig. 3.2.2) shows the annual number of deaths in Waterloo Region by age group. It illustrates that although 60+ age group comprises only 15% of the total population they contribute over 82% of the total annual deaths. Total annual deaths in the region are anticipated to rise at about 1.9% annually from 3,420 in 2009 to 5,070 in 2030. i s Annual death rate (ADR) equals the annual number of deaths per thousand of a given population. C 2009 Hilton Landmarks Inc. 2-30 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 19 of 54 Fig. 3.2.2: Waterloo Region Age Annual Deaths by Age — 2003 -04 500 450 p 400 w a� 350 E 300 z 250 200 a 150 100 50 7 Population over 60 years old accounts for only 15% of the total population but 82% of the annual deaths! Source: Statistics Canada Population less than 60 years old accounts for 85% of the total population but only 18% of the annual deaths. rn rnqqt Mqqt Mqqt Mq�t Mqqt Mqqt Mqqt M+ O N N M M qT qT T T ti ti 00 00 CD US O O US O US O US O US O US O US O N N M M qqt LO LO (O (O ti ti M M Age Range (Years) of Decedent 19 Deaths in 2003 -2004 3.3 CREMATION The most important trend in the after death care industry in North America in the last 25 years has been the growth in the public's acceptance of cremation. Cremation has supplied virtually all of the growth in the after death care market during that period and is forecast to be the engine of growth for the next 25 years. The following graph shows how the total number of deaths in Waterloo Region is estimated to be divided between traditional full body casket dispositions and cremations. C 2009 Hilton Landmarks Inc. 2 -31 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 20 of 54 Fig. 3.3a: Waterloo Region Dispositions by Type — 1993 - 2030 4,000 3,500 s 3,000 M v S2,500 c 0 2,000 0 CL 1,500 m c Q 1,000 500 0 —,--r; Ln M M O O O� r_q r(V N M M M O O oYear O O O O r4 r4 r4 r4 Burials — Cremations It should be noted that the sale of casket lots, particularly upright monument casket lots, will continue as many people choose those even for cremation dispositions as they provide a broader range of memorialization alternatives in an attractive setting. The following graph shows the annual number of cremations performed at the two municipal crematoria in Kitchener and Waterloo since 1995. The crematoria have been successful in marketing their services to the surrounding areas raising their market share from 115% of the local annual cremations to about 130 %. This results from performing cremations for citizens of the areas surrounding the Waterloo Census District. The graph shows the rise in annual cremations due in part to the annual increase in the choice of cremation by consumers and in part due to the increased effectiveness of the marketing effort of the crematoria. The ability to gain even greater market share will be hampered by the entrance of new players into the crematoria market, specifically Milton Evergreen Crematorium in Milton and the Hamilton Catholic Diocese Crematorium in Paris. Nonetheless, the 3.9% annual growth in cremations should benefit all participants in this market. C 2009 Hilton Landmarks Inc. 2-32 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 21 of 54 3.3b: Cremations at Kitchener & Waterloo Crematoria 2,000 1,800 0 1,600 E 1,400 v L 1,200 0 1,000 E 800 z ; 600 400 a 200 1993 1995 2000 2005 Year ■ Parkview Crematorium 0 Williamsburg Crematorium 3.4 FORECAST DEMAND and LAND NEED The annual number of deaths in the Waterloo Census District is expected to increase faster that the growth in the population, rising at about 1.9% annually from about 3,270 in 2007 to approximately 5,070 in 2030. Full body casket disposition are expected to decline slightly by about 1.5% annually from 1,620 in 2009 to 1,160 in 2030, while demand for cremation will rise by about 3.9% annually from 1,800 in 2009 to 3,910 by 2030. Although consumer demand is shifting away from traditional casket disposition toward cremation, the increasing number of annual deaths will offset the slight decline in casket burials keeping annual demand for cemetery land in the Kitchener - Waterloo region at about 3.2 acres per year going forward as shown by the following graph. C 2009 Hilton Landmarks Inc. 2-33 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 22 of 54 Fig. 3.4: Forecast Cumulative Total Annual Demand for Cemetery Land in the KW Region — 2009 -2030 80 70 L V a a, 60 D c 50 M J v 40 v E 30 v 20 E U= 10 ❑c 2010 2015 2020 Year 2025 2030 ■ Casket Land Use ■ Cremation Land Use Land need in the K -W region is expected to total about 3.2 acres annually of which about 2.5 acres is required for casket lots. Between 2009 and 2030 total cemetery land use in the region is anticipated to be 73 acres (43 acres of casket lots). C 2009 Hilton Landmarks Inc. 2-34 1 THE CITY OF 'M Watirloo Final Report Joint services Initiatives 4.0 cemetery shared Services 2-35 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 24 of 54 4 CEMETERY SHARED SERVICES 4.1 BACKGROUND This overview report examines the economic, moral, social, legislative, fiscal, fiduciary and environmental aspects of the sharing of cemetery services between Kitchener and Waterloo. In a more encompassing view, there are potentially significant benefits to the alignment and coordination of services between the two municipalities. Many of these types of arrangements are already in place. For example 16, The City of Waterloo contributes $133,000 annually to Waterloo Fire Rescue Joint Dispatch, a service that would cost the City of Waterloo over $500,000 if administered separately. The Public Works departments of both cities currently share the design and construction administration of road projects that cross the K -W border with the lead going to the city with the larger portion. This is expected to save 10% of capital construction costs. The existing municipal cemeteries in Kitchener and Waterloo are permanently fixed in their locations. They will all require perpetual maintenance. While they are active (as are Williamsburg and Woodland Cemeteries in Kitchener and Parkview Cemetery in Waterloo) they will require operational support. As they pass maturity (as has Mount Hope Cemetery extending into both Kitchener and Waterloo) they require less daily operational support (sales and burial activity) but still require ongoing maintenance. This means that cemeteries like Mount Hope do not need to have sales or operational staff on site at all times. The perpetual care maintenance of this cemetery could be undertaken by one municipality or the other on a pro -rata cost - shared basis. Each of the `active' cemeteries, that is, those that still have lots or niches for sale, require an onsite sales staff for effective sales. These local municipal cemeteries include Parkview Cemetery in Waterloo and Woodland and Williamsburg Cemeteries in Kitchener. As the activity levels are quite high in these cemeteries they each require a dedicated staff for onsite sales and operations (burials and inurnments) as well as perpetual care maintenance. The less active cemeteries, specifically Mount Hope Cemetery in Kitchener and Waterloo require virtually no sales staff (due to the limited remaining sales inventory), only intermittent operational support (i.e. burials) and regular perpetual care maintenance. This circumstance is also true for the smaller properties Kitchener currently operates /maintains. 16 As reported on the City of Kitchener website — Joint Services Initiative C 2009 Hilton Landmarks Inc. 2-36 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 25 of 54 4.2 PROGRESS in SHARED CEMETERY SERVICES 4.2.1 Corporate Culture • This might manifest itself in differing manners and levels of perpetual care maintenance between the two municipalities. • The corporate culture assimilation would be ideally managed both internally among staff and externally as impacts citizens' expectations of cemetery products and maintenance standards. 4.2.2 Equity • The costs and potential rewards for any joint activity must be equitably distributed for it to be successful. • In the case of new cemetery development this could be readily apportioned. • Within the operation of existing facilities, the equitable division of costs and rewards under a fully integrated system will require further coordination. 4.2.3 Levels of Service • Both municipalities desire that levels of cemetery service be minimally maintained at the status quo and desirably enhanced in both communities. • Any perceived drop in service associated with a sharing of services would likely motivate public opposition to the sharing of those services. 4.2.4 Potential Benefits • Development of a joint new cemetery versus two individual cemeteries would minimize capital expenditurel', some associated operating costs" and prevent unnecessary duplication of municipal services. This is likely to represent the largest potential benefit from integration of cemetery services for Kitchener and Waterloo. " In addition to the actual capital cost of land acquisition must be added the associated capital costs of the search for the land, associated legal, technical and other costs for determining suitability, the costs for rezoning, designing, surveying and preparing the cemetery. Development costs include: land preparation, the building of roads, fences, sales and operations buildings, features, cemetery products and other cemetery infrastructure. " Each new cemetery will require dedicated sales and operational staff and associated infrastructure. C 2009 Hilton Landmarks Inc. 2-37 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 26 of 54 • A uniform and visible presence for consumers to access information and after -death care products and services would enhance the profile of the joint City Cemeteries. • The opportunity to improve the financial situation of the Cities' cemeteries, hence reduce the risk of the need for future municipal financial support. • Development of a coordinated framework master plan for all of the Cities' cemeteries that would maximize utility and efficiency and minimize expenditures. • Harmonization of pricing on products and services allows for a competitive - neutral framework that allows each municipality's cemetery business to progress in a reciprocal nature and position itself strategically for the future. • In addition to strategically aligned pricing, coordinated capital and budget planning would allow appropriate development and maintenance of facilities. • It is important to acknowledge that while there might be some opportunity for the reduction of duplicated services and associated costs, both Cities' main cemeteries would still require full -time dedicated staff 4.2.5 Potential Challenges • Public opposition if there is a perceived reduction in the level of service. • Public opposition to a perceived loss of local control. • Staff resistance to corporate culture change and the sense of corresponding need to manage perceived threats to respective livelihoods. • Differing priorities in the two municipal cemetery systems. The City of Waterloo has expressed an urgent need for new cemetery expansion land while the City of Kitchener's stated priority is development of Williamsburg Cemetery. 4.2.6 Areas with Potential for Shared Services • New cemetery land expansion. • Uniform operating and regulatory standards (including bylaws). • Joint marketing endeavours. C 2009 Hilton Landmarks Inc. 2-38 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 27 of 54 • Integrated computer technology (particularly burial records)19 • Cemetery onsite visitation/funeral home(s). • Crematorium operation and facilities. • Cemetery product and service sales. • Purchasing of products, materials and equipment. • Cemetery operations (burial, inurnment, equipment, etc.). • Cemetery perpetual care maintenance including pro -rata pooled CMFs. • Joint cemetery administration to optimize coordination and efficiencies. • Ideas, information and best practices. Solving problems together. Networking. • Significant event (i.e. pandemic, disaster) coping strategies. Sharing staff and resources 4.3 POTENTIAL SHARED SERVICE STRUCTURES 4.3.1 Introduction There are several different organizational structures that might be considered in the context of shared cemetery services. Any of these alternatives might be used in either or both municipalities' cemeteries with or without the sharing of services. While almost any organizational structure might be adopted, the critical success factor is the ability of the cemetery to act in keeping with its long term goals. Cemeteries, unlike any other business, have a time horizon that stretches out to perpetuity hence have a different perspective on operative and strategic needs. Cemeteries have to balance the always pressing needs for immediate action required by the demand for after death care services against the perpetual nature of cemetery properties. 4.3.2 Municipal Department A municipal department organizational structure is the typical form for municipal organization of cemeteries and it is usually included with parks and recreation to recognize the grounds maintenance aspects of cemetery management. 19 The introduction of the new Funeral, Burial and Cremation Services Act (2002) will significantly increase the complexity of record - keeping and associated computer systems. Integration might mitigate the cost of implementation of the necessary new systems. C 2009 Hilton Landmarks Inc. 2-39 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 28 of 54 While there are some superficial similarities with general Parks and Recreation programs, cemeteries have some fundamental differences from municipal parks. Most importantly is their need for perpetual care. Cemeteries must plan and prepare for the future care of their grounds stretching out to perpetuity. In order to do this, they must develop their Care and Maintenance Trust Funds (CMFs) so that the fund will be adequate to support the perpetual care once the cemetery is "sold out ". Organizing the City cemeteries under the Parks and Recreation subjects the cemeteries to the vagaries of municipal politics and can often result in any positive cash flow accruing from diligent management being removed from the cemeteries back into municipal general revenue. This invariably hinders the required development of the cemeteries by restricting their ability to finance it themselves. Any organizational structure that grants a bit more autonomy to allow both municipalities' cemeteries to take a longer term strategic view is likely preferable to the current arrangement for either municipality's cemetery operations. 4.3.3 Independent Business Unit Both The City of Kitchener Cemeteries and the City of Waterloo Cemeteries are moving toward this type of organization. The City of Kitchener Cemeteries are organized as an Enterprise under the Community Services Department. The City of Waterloo Cemeteries are organized as Cemetery Services under the Recreation and Leisure Services Department. This department is also charged with managing Community Services and Facility Services. As an independent business unit, cemetery management and staff would still be municipal employees but they would have greater autonomy over strategic direction. Control of their budget would allow them to retain any annual cash surplus in a reserve fund to be used for capital development as well as offset any (potential) cash shortfalls. This structure would recognize the fundamental differences between cemeteries and other municipal operations stemming from the very long term nature of cemetery properties. C 2009 Hilton Landmarks Inc. 2 -40 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 29 of 54 4.3.4 Board Run This structure would see the cemeteries run by a board comprised of interested citizens either elected or appointed to office. This removes the cemeteries from the (relatively) short term focus of Parks and Recreation and allows a longer term (i.e. perpetual) time horizon to guide strategic development. This has been used successfully in the City of Guelph — Woodlawn Memorial Park Cemetery — which has been operated by the not - for - profit Guelph Cemetery Commission since 1919. The board is composed of members representing the three original stakeholders: the City of Guelph, the Township of Guelph/Eramosa and the Anglican Church. Operating outside of the normal municipal structure allows Woodlawn Cemetery to focus on how the cemetery might best serve the community without having to compete with or support other municipal interests — or having its long term financial plans co -opted by short term corporate initiatives. 4.3.5 Examples from Kitchener Market With respect to the governance structure of Kitchener Market, City of Kitchener staff identified four (4) options to the City. 4.3.5.1 Delegation of Powers The Municipal Act allows for the delegation of powers to a small group of individuals or a municipal service board. The nature and amount of powers delegated are controlled by the municipality. 4.3.5.2 Municipal Service Boards A municipality may establish a municipal service board to which it devolves such control and management as it deems appropriate. 4.3.5.3 Establish a Corporation Municipalities have the authority to establish corporations under very restrictive conditions including a very specific public process. City staff regard the regulations as too cumbersome and recommend this option be avoided if possible. 4.3.5.4 Designation of an Improvement Area The City may designate an improvement area and establish a board of management although this is not intended for one site and an extra assessment would be required. C 2009 Hilton Landmarks Inc. 2 -41 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 30 of 54 City of Kitchener staff recommended that the Delegation of Powers (Item 4.3.5.1) with or without the establishment of a Municipal Service Board (Item 4.3.5.1) would be the preferred options should the City decide to relinquish day to day care and control. This page intentionally blank C 2009 Hilton Landmarks Inc. 2 -42 1 THE CITY OF TA Watirloo Final Report Joint Services Initiatives 5.0 Collaborative Crematorium Operations 2 -43 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 32 of 54 5 COLLABORATIVE CREMATORIUM OPERATIONS 5.1 BACKGROUND Both Kitchener and Waterloo operate crematoria. The City of Kitchener has its crematorium situated in the Williamsburg Cemetery with a single retort. In 2008 the crematorium handled 558 cremations. The City of Waterloo maintains its crematorium in Parkview Cemetery with two retorts. In 2008 it performed 1,305 cremations. In 2006, the latest year for which comparative statistics are available, they ranked as the 27th and 7th most active crematoria of the 54 in the province. Both crematoria operate profitably and contribute significantly to the fiscal survival of their respective City's cemetery operations. Without their contributions both Cities would be required to increase their financial support for their cemeteries' operations. There are good reasons for a high level of cooperation between the two crematoria. In particular, it is important that the two operations not try to undercut each other's prices in an effort to steal market share from the other. If this sort of aggressive "price war" were to develop it would be detrimental to both communities' crematorium operations and would drive down total revenue for both. A spirit of cooperation benefits both crematoria. Both crematoria operate in the same geographic region and cutthroat competition would reduce both of their economic viabilities. On an operational scale, there is very little duplication of effort. Both crematoria require staff to operate. There is little to no opportunity to reduce staff in either operation. It would not be feasible given the existing infrastructure to centralize the operations in one or the other location. If the Cities were to build a new crematorium it would make most economic sense to build one central facility (probably in an as- yet - undeveloped new joint cemetery) but this alternative will not likely be necessary in the near future. A basic level of cooperation between the two crematoria would benefit both. This might include: • A spirit of mutual effort to provide the best service to the overall community, for the overall community, by the overall community. In C 2009 Hilton Landmarks Inc. 2 -44 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 33 of 54 particular, it is important that each crematorium not aggressively try to `poach' customers from the other. • Providing alternate service for the other's clients during maintenance downtime. This cooperative service has already been implemented and is functioning as needed. • Perhaps a joint marketing effort promoting the crematoria. A public awareness campaign that stresses the local care of loved ones would encourage consumers to ask for local cremation. • Investigate alternatives to cremation such as Resomation and Promession as environmentally - friendly `green' solutions. These alternatives can be components of existing cremation centres or stand -alone operations. Beyond the basic level of cooperation the issues involved in a more close integration between the two crematoria would involve some negotiation of cost and revenue sharing in order to achieve equity for the two operations. Specifically, the City of Waterloo's crematorium is currently processing about twice as many cremations as the City of Kitchener's. A means for equitably dividing jobs, costs and revenues would be necessary for integration of the two operations. As there is little duplication of services there is likely to be little benefit to integrating the two crematorium operations. Both operations require staff to run and neither has a dedicated sales staff In a full sharing of services scenario, a means for the equitable division of costs and profits for both crematoria must be devised. For instance, Waterloo currently has twice the number of retorts (2 versus Kitchener's 1) and does approximately twice the annual number of cremations. Within the context of a full -scale integration of both communities' cemetery services then the revenue (and expenses) of both operations would be rolled into one. The largest concern facing the two crematoria is the impending changes brought about under the new FBCSA when it is proclaimed in force. It will allow the construction of a crematorium anywhere (subject to zoning approval) as opposed to only on cemetery property currently. This might allow the introduction of a corporately -owned crematorium to compete directly with the two municipal operations possibly hindering their revenue - generating potential. C 2009 Hilton Landmarks Inc. 2 -45 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 34 of 54 This page intentionally blank C 2009 Hilton Landmarks Inc. 2 -46 Kr P I- F,- 'R THE CITY OF Wa floo Final Report Joint Services Initiatives 6.0 Community Needs for ,Cemetery Land Expansion 2 -47 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 36 of 54 6 COMMUNITY NEEDS for CEMETERY LAND EXPANSION 6.1 BACKGROUND City of Kitchener Cemeteries have about 18± acres of net expansion land at Williamsburg Cemetery. City of Waterloo Parkview has little expansion land within its current boundary but is expanding into the Bechtel Lands originally purchased for that purpose. This phased expansion would relocate some of the current sports fields in the area and would see the subsequent development of approximately 7 to 8 acres net lands for cemetery purposes over the next 15 to20 years. Both municipal cemetery systems will need expansion land in the future. Given the increasingly intertwined nature of the two municipalities it would make sense to pursue and develop new cemetery lands on a joint basis. The twin cities would be well served by one new cemetery of adequate size as opposed to two, which promotes their entire associated infrastructure having to be duplicated. This would serve to minimize both the capital costs of land acquisition and cemetery development as well as the operational expenses associated with sales, operations, maintenance and administration. New cemetery development is important for both Kitchener and Waterloo (and indeed virtually all municipalities) due to the underfunded circumstances of their cemeteries CMF's. As the municipalities inherit cemeteries developed prior to the introduction of CMFs in 1955 in Ontario this inadequate CMF situation typically gets worse. Developing new cemetery lands allows municipalities to manage this shortfall both by providing current revenue to offset annual maintenance costs and more importantly to contribute to the cemeteries CMFs in order to achieve ultimate self - sufficiency. Total demand for cemetery land in the K -W area between 2009 and 2030 is expected to be 73 acres20. This will require development of new cemetery facilities in the region. 20 IIL,I's forecast for total cumulative cemetery land use in the Kitchener - Waterloo municipal region is 23 acres in 5 years, 40 acres in 10 years, 56 acres in 15 years and 73 acres in 20 years. C 2009 Hilton Landmarks Inc. 2 -48 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 37 of 54 6.2 NEW CEMETERY DEVELOPMENT ISSUES There are a number of issues surrounding the development of new cemeteries: 6.2.1 Timing • In the current regulatory environment it may take up to ten years or more to receive approvals to develop a new cemetery. • It also takes considerable lead time to physically develop a cemetery property suitable for sales /interments. • Time is required to shift demand from an existing cemetery to a new one given the deep historical and community roots. • It is therefore important that new cemetery development begin well before (15+ years is recommended) current inventory is exhausted. • It is recommended that the search for suitable cemetery land begin immediately. 6.2.2 Location /Land Availability • In order to be economically viable (i.e. to ensure an adequately - funded CMF) and meet the area's long term after death care needs, a new cemetery should be a minimum of 50 (preferably 100 acres) acres in extent. • 50 acre parcels are in limited supply close to the urban centres of the K -W region. • The City of Waterloo has very little developable acreage within its boundaries. • The search for a suitable property should ideally begin immediately in order to allow timely development prior to exhaustion of the current cemeteries' inventory ... even if this means securing an option to purchase on a right of first refusal basis. • The location search should take into account the following criteria: o Cemetery size: as mentioned above, 50 to 100 acres is required o A location that is favourable demographically (i.e. close to a large, growing and underserved population) is preferred... especially border sharing or at least in close proximity to the shared boundary line. C 2009 Hilton Landmarks Inc. 2 -49 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 38 of 54 o Ease of safe vehicular access is important as is visibility from major thoroughfares to enhance marketability and the greater community's cemetery awareness. o It is usually wise to "bank" land for cemetery use prior to actual need. 6.2.3 New Cemetery Criteria There are several criteria that are important in the planning for acquisition and development of new cemetery land: • Any potential cemetery parcel must have a minimum of 50 acres (preferably 100 acres) of usable cemetery land. • It should be located in a demographically favorable location. • Ease of safe vehicular access is important as is visibility from major thoroughfares to enhance marketability and the greater community's cemetery awareness. • It is usually wise to "bank" land for cemetery use prior to actual need. • As previously mentioned, new cemetery development is a lengthy process and may take up to ten years or even longer to initiate. It also takes time to transfer demand to a new cemetery so it is advisable to commence new cemetery development 15 to 20 years before depletion of active sales inventory is expected to occur. • Cemetery development should be in a phased manner within the opportunities (and constraints) of an overall site master plan. o Said master plan needs to consider the demographic demand in the area (both quantity and type) as well as the planned effect on the individual or joint City Cemeteries' CMF. • Knowledgeable cemetery design is essential to create a facility that will be attractive and "market itself' within appropriate functionality requirements. • When developing pricing for new (and existing ) cemeteries it is important to consider several things: o The contribution to the CMF from each lot, crypt, niche, monument, etc. must be sufficient to adequately finance the perpetual care of that product. C 2009 Hilton Landmarks Inc. 2-50 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 39 of 54 o The remaining balance of the purchase price must support three (3) areas. • A portion must be used to offset the financing costs of the new land purchase. Ideally, that portion should be large enough to purchase the raw land necessary to replace the lot sold. • A further portion must be used to finance the cost of development and sales of that product. These costs include: design, infrastructure development, cemetery development, sales, record - keeping (another perpetual activity) and administrative overhead. • Finally, the balance should be retained in a capital reserve to finance the necessary capital and lifecycle infrastructure development that is necessary over the life of the cemetery. • For - profit cemeteries have a fourth goal in achieving a profit. While this goal is generally not relevant to municipal cemeteries it is important to strive toward that goal to avoid the unnecessary burdening of taxpayers and to assure suitable facility and service standards can be met. Given the current and anticipated demand for and availability of cemetery land within the Cities of Kitchener and Waterloo Cemeteries systems, the search for a suitable new cemetery development property should commence as soon as possible. This land need not be developed immediately but may be "banked" or reserved for future cemetery use by purchasing "first right of refusal option" on preferred cemetery lands. Development of the new cemetery should take place 15 to 20 years prior to the anticipated exhaustion of the currently available inventory. C 2009 Hilton Landmarks Inc. 2 -51 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 40 of 54 This page intentionally blank C 2009 Hilton Landmarks Inc. 2-52 Kri -(, 'I If,-N- ER THE 0TY OF Waterloo Final Deport Joint Services Initiatives 7.0 Visitation Center I Funeral Home 2-53 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 42 of 54 7 VISITATION CENTRE / FUNERAL HOME 7.1 BACKGROUND There are six (6) Funeral Homes directly serving Kitchener - Waterloo's after death needs for such services. Other facilities, perhaps most particularly those in Cambridge, (see Appendices) may also provide funereally related services to individuals /families with ultimate dispositions in either a Kitchener or a Waterloo Cemetery but research indicated this is not an influential circumstance. Of K -W's six cemeteries three (3) are independents and three (3) are corporately owned (by Houston based Service Corporation International operating under the trade logo of "Dignity "). Erb & Good Family Funeral Home Ltd. has been operating in Waterloo since 1946. Henry Walser Funeral Home Ltd. has been providing services since 2000 at its Frederick Street facilities in Kitchener. David MacLeod Funeral Home Ltd. provides services at its King Street North location in Waterloo and is the area's newest funeral services provider. The SCI facilities (Ratz- Bechtel Funeral Home & Cremation Centre, Shreiter- Sandrock Funeral Home & Chapel and Westmount Funeral Chapel) were formerly privately owned, are all Kitchener located and were acquired by the US corporation during the almost frenzied acquisition period for such endeavours in the mid 90's. The latest update to the Cemeteries Act, the Funeral, Burial and Cremation Services Act, 2002 (FBCSA), will allow for the development of funeral homes on cemetery property. The benefits of a funeral home or visitation home to the cemetery on which it is situated are increased traffic of motivated buyers which translates into increased sales hence improved CMF circumstances. Although funeral homes are not yet allowed on cemetery property until the approval of the FBCSA, many cemeteries have buildings prepared and others are positioning themselves to take advantage of this opportunity as soon as it is allowed. The City of Waterloo has temporarily and tentatively reserved a parcel of property within Parkview Cemetery near the intersection of University Avenue and the Conestoga Parkway. This is a highly visible area of the cemetery and would be a good location for a visitation center /funeral home in spite of the somewhat C 2009 Hilton Landmarks Inc. 2-54 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 43 of 54 constrained land base available in this area. This parcel may be in jeopardy of being developed for alternate cemetery use (burial purposes given the current somewhat alleviated critical interment land need at Parkview). The City of Kitchener has potential land base for a visitation center /funeral home at Williamsburg Cemetery but has negated street exposure for same. With respect to any new cemetery to be developed in the K -W area it would be prudent to examine the possibility of onsite funeral home development. A funeral home on a new jointly- operated cemetery would best serve the spirit of joint operations. If either City were to unilaterally develop a funeral home on their own cemetery property it would likely have a significant negative effect on the other City's cemetery operations. The demand for after death care services in the K -W area will increase by 1.9% annually with the majority of the growth occurring in cremation - related services. Cemetery onsite funeral homes /visitation centres bring more traffic and hence motivated consumers into the cemetery. This allows the Cities to gain more of the annual demand which will translate into improved circumstances in the cemeteries CMF which is the ultimate benefit for the taxpayers. With respect to the two cities cemetery plans and any potential integration of services there are several possible scenarios of funeral home development at City cemeteries: • A funeral home is developed at both Williamsburg and Parkview Cemeteries. • A funeral home is developed at one or the other of Williamsburg and Parkview Cemeteries. • No funeral homes are developed at any City cemeteries. • Funeral Home on joint new cemetery lands. It is the Consultant's opinion that funeral home development on cemetery lands is, in general, a positive development. This is the business model used by the corporate cemeteries where it is allowed legislatively. It is legal in all provinces except Ontario and PEI, although the Ontario legislation that will allow it is pending. Corporate facilities in Ontario have over the past number of years been "positioning" themselves with the development of Visitation Centres with most of C 2009 Hilton Landmarks Inc. 2-55 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 44 of 54 the physical characteristics of a funeral home so when this legislation permits same, any conversions can occur quickly and cost effectively. In light of the spirit of the Joint Services Initiative, it would be contrary for either City to proceed unilaterally to develop a funeral home on their own cemetery property. Such a funeral home, although potentially advantageous for the owner, would likely have a deleterious effect on the sales at the other City's cemetery properties. Alternately, a funeral home on a jointly - developed new cemetery would benefit both communities on an appropriately pro -rated basis. If a funeral home were to be contemplated on a new joint cemetery it might be structured in a number of ways as noted below. 7.2 ONSITE FUNERAL HOME BUSINESS MODELS There are several business models (i.e. ownership structures) that may be utilized in the development of cemetery -based funeral homes. These are: • Fully -owned funeral home • Leased facility • Leased land • Sold /severed land 7.2.1 Fully -owned Funeral Home This is the business model adopted by the corporate chains. They own both the cemetery and the onsite funeral home. While this is a very successful model for those for - profit businesses it is probably neither desirable nor appropriate for municipalities to compete directly per se with local businesses. It would be particularly problematic for a municipally owned cemetery /funeral home complex as competing area funeral homes would be disinclined to patronize or recommend the City cemetery, negatively impacting municipal cemetery sales. There is a substantial cost associated with developing a facility of this nature. Furthermore, there is a sizable risk associated with the economic viability of this type of funeral home. For these reasons, this is generally not regarded a feasible alternative for municipalities and specifically not recommended in the communities of Kitchener and Waterloo. C 2009 Hilton Landmarks Inc. 2-56 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 45 of 54 If in -depth consideration was to be given this development premise it would probably be best considered only for a new joint cemetery development endeavour on new lands for same. It may be, however, unlikely that this endeavour would achieve political acceptance. 7.2.2 Leased Funeral Home Facility In this case the cemetery owner (i.e. the municipalities) would own the facility and lease it to a local funeral home. There are several issues and alternatives with this structure though consideration for same could be given for such a facility at either Williamsburg or Parkview, or on both properties, or a new joint cemetery development. 7.2.2.1 City- Financed Facility In this model the municipality would finance the construction and furnishing of the funeral home facility. It would then lease the facility to a funeral home firm and extract rent either at fixed rate or on a royalty basis. The risk is that the municipality must advance all of the funds with no assurance that the lease will be financially successful. This model is generally discounted in this case due to its inherent financial risk and greater capital costs. 7.2.2.2 Joint Venture Financed Facility The financing in this model would come from a joint venture between the municipality and some other organization(s). They might be developers or funeral home owners. In the latter case there is some danger of alienating the rest of the funeral homes who currently supply the municipal cemeteries with "business ". 7.2.3 Leased Land This scenario would see the cemetery leasing a parcel of the cemetery lands to an interested funeral home owner for them to build a funeral home. In order to be attractive to the funeral home owner the term of the lease must be of sufficient length to allow them to profit from their investment. The long term nature of this type of arrangement would likely have a chilling effect on the cemetery's relationship with the other funeral homes who presently supply it "business" although this may be somewhat reasonably mitigated by careful management and transparent orchestration of any such development. C 2009 Hilton Landmarks Inc. 2-57 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 46 of 54 7.2.4 Sold /Severed Land In this case the cemetery would sell or actually sever a parcel of land from the cemetery to an interested funeral home owner. Given the extremely land - constrained situations of both Kitchener and Waterloo's municipal cemeteries this course of action is not recommended. Both cities need to add to their cemetery land holdings and reducing them would only exacerbate the current and projected long term demands for such lands. 7.3 ONSITE FUNERAL HOME CHALLENGES 7.3.1 Shared Services Equity • With respect to the sharing of cemetery services it is important that this be done on an equitable basis. • If cemetery services are fully shared then a decision must be made .regarding the first cemetery to develop a funeral home. • If one municipality were to proceed unilaterally with a funeral home on its cemetery property it would seriously hinder the spirit of cooperation in joint cemetery services going forward. • The best candidate for a potential onsite funeral home would be a new jointly- developed cemetery supported by both municipalities. 7.3.2 General Cemetery /Funeral Home Organization • An onsite funeral home could be organized in several manners: • The Cities could develop their own funeral homes but direct competition with tax - paying local businesses is not generally regarded as a good alternative. • Local funeral homes could be invited to build a private funeral home on cemetery property, paying rent to the Cities. • The Cities and /or a joint venture with local funeral homes could finance the construction of an onsite funeral home which would then be awarded to an individual home for an acceptable fixed term contract. o The Cities and /or a joint venture with local funeral homes could finance the construction of an onsite visitation centre which would then be available to any funeral home (or other group) on a rental basis. C 2009 Hilton Landmarks Inc. 2-58 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 47 of 54 7.3.3 General Cemetery /Funeral Home Challenges • There is a risk of alienating the funeral homes who do not win the contract to operate the onsite funeral home. This may be minimized by maintaining an equitable and transparent award process as outlined above. • Equity with respect to the process by which local funeral homes get access to the onsite cemetery funeral home is required. This means that the process must be: • Open • Transparent • Fair • Equitable • Of a reasonable fixed term so that other funeral homes may have the same opportunity to benefit. C 2009 Hilton Landmarks Inc. 2-59 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 48 of 54 This page intentionally blank C 2009 Hilton Landmarks Inc. 2 -60 J hrr�� THE CITY OF M Wahefloo Final Report Joint services Initiatives 8.0 summary 2 -61 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 50 of 54 8 SUMMARY 8.1 INITIAL PROGRESS In 2006 the Cities of Kitchener and Waterloo cemeteries units commenced dialogue on areas of enhanced cooperation, including2l: • Standardization of by -laws • Shared genealogical records /informational websites • Joint marketing endeavours • Service costing review Some initial activity on these initiatives has already taken place including22 • A full service costing analysis collaboratively reviewed prices in 2007 to reflect the true cost of operations as enterprises. • Some joint marketing efforts including a joint holiday newspaper advertisement. • Reciprocal sharing of crematorium capacity during maintenance shutdowns. • Redesign of the Mount Hope Cemetery map to show both Waterloo and Kitchener Mount Hopes on one map. • Joint planning for pandemic preparedness. 8.2 RECOMMENDED DIRECTION This report represents the continuing efforts of both City Cemetery operations management to work toward increased levels of cooperation between their respective organizations. Going forward there are a number of initiatives that will generate some benefits for both Kitchener and Waterloo as corporate entities and their respective ratepayers at large specific to cemetery facilities and services. These include: 8.2.1 Development of a New Jointly- Operated Cemetery The City of Waterloo is in need of new cemetery lands presently in spite of its recent endeavours to expand somewhat at the Bechtel Lands/Parkview site. The 21 City of Kitchener website — Joint Services Initiative 22 Ibid as well as cemetery staff personal communication. C 2009 Hilton Landmarks Inc. 2 -62 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 51 of 54 City of Kitchener has some available inventory at its Williamsburg Cemetery site. The search for suitable land should commence immediately although the land may be "banked" for several years as the approvals process commences and cemetery demand catches up. 8.2.2 Integration of Pricing, Bylaws and Record- Keeping Efforts have already commenced in this area between the managements of the two municipal cemetery operations with the full- costing analysis and alignment of cemetery prices in 2007. The next step might be the review and integration of cemetery bylaws to standardize the procedures in both organizations. Finally, the integration of the computerized record - keeping would facilitate greater coordination between the two cemetery systems. This last might be encouraged by the proclamation of the pending Funeral, Burial and Cremation Services Act, 2002 with its mandated increased record complexity. 8.2.3 Expanded Joint Marketing Effort An expanded joint marketing effort would enhance the image of both municipalities' cemeteries, encourage their use as sacred places of interment and memorialization (particularly for those who made cremation their choice). Many consumers do not realize that the cemeteries are municipally operated and end up electing to go where there is a family history /connectivity with a given cemetery facility. This marketing effort might also be used to encourage citizens to use the local crematoria and municipal cemeteries. 8.2.4 Joint or Delegated Operation of Mount Hope Cemetery Given the contiguous location of Mount Hope Cemetery and its mature (i.e. very low sales) status it might more efficiently be operated jointly or by one municipality's staff rather than having two sets of staff responsible for the two halves. Costs may be distributed equitably on the basis of activity (dispositions and operations) and acreage (perpetual care maintenance). Hilton LANDM#ORKSInc. Cemetery Consultants, Planning and Design C 2009 Hilton Landmarks Inc. 2 -63 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 52 of 54 This page intentionally blank C 2009 Hilton Landmarks Inc. 2 -64 I<JT(,.HF.NF.R THE CITY OF ' Watirloo Final Report Joint Services Initiatives 9.0 Assumptions 1 Limitations 2 -65 HLI# 97059 -06 -SS Cities of Kitchener and Waterloo Cemeteries Shared Services Report - FINAL May 20', 2009 Page 54 of 54 9 ASSUMPTIONS /LIMITATIONS • This Analysis and the information contained within the report's context have been prepared for the sole use of the management of the Cities of Kitchener and Waterloo Cemeteries and are intended to assist the Client in managing the Cities of Kitchener and Waterloo Cemeteries. Contrary to popular opinion, cemeteries are affected by economic conditions. Consumers can cut back on the amount spent on cemetery property and services (particularly with regard to cremation) during periods of economic uncertainty. Furthermore, deaths do not occur at a steady rate over the short term. When combined with changes in market share, the equation for forecasting an individual cemetery's sales units is subject to much uncertainty. • The cremation rate may rise higher than the anticipated maximum of 80% resulting in fewer burials. • All sales and disposition forecasts are predicated on the assumption that adequate inventory will exist. If inventory is exhausted and no new inventory is developed then new sales will cease. • All sales and disposition forecasts are based upon extrapolation of historical trends. If unanticipated changes occur in internal factors such as sales effort or inventory mix or external factors such as cremation rate then there will be a consequential effect on the demand forecasts. • The information in this report has been prepared by Hilton Landmarks Inc. (HLI) and is believed to be reliable but no representations or warranty, express or implied, is made by HLI or any other person as to its accuracy, completeness or correctness. • All opinions and estimates contained in this report constitute HLI's judgement as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. * * * * * * * * * * ** Hilton L4NDM4RKSJnC. Cemetery Consultants, Plwwwg and Design C 2009 Hilton Landmarks Inc. 2 -66