The Archdiocese of Philadelphia has signed an agreement to outsource management of 13 Catholic cemeteries through a 60-year lease to StoneMor Partners L.P., it was announced Sept. 26.
Under the terms of the lease, the cemeteries will remain Catholic in nature and still be owned by the archdiocese. All current full-time employees of the Catholic Cemeteries Office will become StoneMor employees.
The lease of the cemeteries is the latest step to address the archdiocese’s financial challenges, in particular numerous balance sheet liabilities that have been building up for decades and total in excess of $350 million, as cited in the 2012 audited financial statement of the archdiocesan Office for Financial Services.
(See related story: What the Catholic Cemeteries arrangement means to the big picture of the archdiocese)
This new arrangement is the latest in a series of actions taken by the archdiocese since the arrival of Archbishop Charles Chaput two years ago that are designed to restore financial stability to the archdiocese.
Among measures taken to date are the 25 percent reduction in staff at the Archdiocesan Pastoral Center last year, the sale of the archbishop’s residence in Overbrook and the sale of the Ventnor, N.J., summer residence used by the priests of the archdiocese.
“This arrangement serves the people of the Archdiocese of Philadelphia well by maintaining our cemeteries as sacred, dignified places of burial while offering employment and important protections for our dedicated staff,” Archbishop Chaput said in a statement. “This is not a decision I came to lightly. It is being entered into only after considerable discussion, prayer and approval by the Holy See.
“As I’ve said many times before, I’m committed to continuing an open and honest dialogue regarding our financial situation and the steps we take to fix it. With a stronger, more stable financial position, we will be able to best fulfill the Church’s mission of evangelization and service to all of those in need.” — Archbishop Charles Chaput
“It allows us to retain ownership of the Catholic Cemeteries while creating immediate and long-term benefits to help us rebuild a strong financial footing. StoneMor is a local company with a deep experience in the management of cemeteries. This factor, combined with their willingness to maintain the Catholic identity of our cemeteries, made them the logical choice.
“As I’ve said many times before, I’m committed to continuing an open and honest dialogue regarding our financial situation and the steps we take to fix it. With a stronger, more stable financial position, we will be able to best fulfill the Church’s mission of evangelization and service to all of those in need.”
The affected cemeteries to be leased are All Souls Cemetery, Coatesville; Calvary Cemetery, West Conshohocken; Cathedral Cemetery, Philadelphia; New Cathedral Cemetery, Philadelphia; Holy Cross Cemetery, Yeadon; Holy Sepulchre Cemetery, Cheltenham; Immaculate Heart of Mary Cemetery, Linwood; Resurrection Cemetery, Bensalem; St. John Neumann Cemetery, Chalfont; St. Michael Cemetery, Chester; SS. Peter and Paul Cemetery, Springfield, All Saints Cemetery, Newtown and Holy Savior Cemetery, Penn Township.
Parish cemeteries are not affected by the agreement.
StoneMor (STON on the NYSE) is based in Levittown and is the nation’s second largest owner and operator of cemeteries. It operates 277 cemeteries and 92 funeral homes in 27 states and Puerto Rico. Among the cemeteries, 42 are in Pennsylvania, including three in the Archdiocese of Philadelphia.
Among the details of the agreement signed by the archdiocese and StoneMor:
• Upon closing, subject to satisfaction of certain conditions, StoneMor will provide an initial lease payment of $53 million to the archdiocese. An additional total $36 million lease payments will be paid in future years as follows:
– Years 6-20: $1 million annually;
– Years 21-25: $1.2 million annually;
– Years 26-35: $1.5 million annually;
– There will be no payments for years 1-5 and years 36-60.
• The current perpetual care fund of approximately $30 million and all future earnings from the fund will remain with the archdiocese in a separate trust. StoneMor will be responsible for providing perpetual care during the lease and also will establish a perpetual care fund for its sales of interment rights during the lease period.
• All current, full-time archdiocesan cemetery employees (approximately 160) will become StoneMor employees at their present base salary and will be offered health insurance by StoneMor. Should StoneMor terminate them for any reason other than cause within two years, it must pay them the balance of their base salary for the two-year period. The archdiocese remains liable for retirement benefits earned and vested during their archdiocesan employment.
Some of the cemeteries to be leased do not have remaining plots available, and only accept interments for burial rights already owned. Others have varying numbers of still-available plots — for example All Saints in Newtown and All Souls in West Brandywine were reserved for future use.
If any of the available land were to be sold, the net proceeds would be divided 51 percent to the archdiocese, 49 percent to StoneMor.
The archdiocese cannot unreasonably withhold consent for the sale of up to 150 acres at All Souls; 100 acres at Holy Savior, Penn Township and 100 acres at All Saints, Newtown, if StoneMor proposes to sell these portions.
In all three instances, sale of the approximately 200 acres remaining could only be sold at the absolute discretion of the archdiocese.
In most cases StoneMor acquires properties through outright purchase, not lease, according to Lawrence Miller, StoneMor’s CEO, president and board chairman.
“We thought it was really important for the Catholic community to have the archdiocese retain ownership,” he said. “It is just good business to have the Catholic Church as our partner. The community has to feel comfortable that the archdiocese is still providing overall governance.”
This is something of a new venture for StoneMor although it did have a short-term relationship with the Archdiocese of Detroit, according to Miller.
“We hope that once this gets out will have an opportunity to buy or lease cemeteries from other dioceses,” he said.
StoneMor’s cemetery products, which are sold on a pre-need or at-need basis, include burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials and other services. Although they operate funeral homes in some areas, they do not plan to do so in the Philadelphia area.
Miller himself is a Philadelphian by birth, originally from the former Corpus Christi Parish and Cardinal Dougherty High School, and has relatives buried in archdiocesan cemeteries.
He sees leasing the cemeteries as a good business proposition. At this time his company does between 45,000 and 50,000 burials nationwide annually and this should add another 7,000 or so.
StoneMor focuses especially on pre-need cemetery plot sales, and they hope to bring this expertise to the archdiocesan cemeteries. Also, because of the company’s size, it can purchase equipment and goods in bulk and operate the cemeteries more efficiently, Miller believes.
“I think this will help the archdiocese and it will be great for the Catholic community. It will remain a Catholic property,” he said.
Lou Baldwin is a freelance writer in Philadelphia.
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