The Issue The issue presented is whether Petitioner is entitled to a consumer certificate of exemption as a religious institution.
Findings Of Fact Petitioner, Greater Miami Jewish Cemetery Association, Inc., is a Florida not-for-profit corporation chartered on June 23, 1931, and is an exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1954. Petitioner is a non-stock membership corporation which has three constituent members, namely, Beth David Congregation of Miami, Florida; Beth El Congregation of Miami Beach, Florida; and Beth Jacob Congregation of Miami Beach, Florida, which synagogues are existing Florida not-for-profit corporations exempt from taxation under Section 501(c)(3) of the Internal Revenue Code. Petitioner maintains and operates two cemeteries in Miami, Dade County, Florida, which are dedicated to burial of members of its constituent member synagogues and other persons of the Hebrew faith, including free burial plots for indigent persons of the Hebrew faith, and, as such, have been classified under the State of Florida Funeral and Cemeteries Act as "church cemeteries." It is a religious obligation of the Hebrew faith to provide for and bury the dead. It is usual for synagogues to maintain cemeteries for their members. No synagogue is located on the premises of Petitioner because some Jews are forbidden to be on the grounds near dead bodies. Accordingly, Jewish cemeteries do not have synagogues on the premises, and, conversely, synagogues do not have cemeteries on their premises, as some churches do. Petitioner does have, however, a room or chapel area where religious services are conducted by Petitioner's constituent members, the three synagogues. Those religious services and activities conducted there include burial services, services on religious holy days, and memorial services.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered granting Petitioner's application for a consumer certificate of exemption. DONE AND ENTERED this 24th day of September, 1998, in Tallahassee, Leon County, Florida. LINDA M. RIGOT Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 24th day of September, 1998. COPIES FURNISHED: Max R. Silver, Esquire Silver & Silver 150 Southeast Second Avenue, Suite 500 Miami, Florida 33131 William B. Nickell, Esquire Department of Revenue 501 South Calhoun Street, Suite 304 Tallahassee, Florida 32301 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399 Larry Fuchs, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399
Findings Of Fact The Respondent John Competiello currently holds Funeral Director's License No. 1468, and Embalmer's License No. 1656, both of which were issued by the Petitioner. Mr. Competiello is the licensed funeral director and embalmer in charge of the Respondent Home for Funerals, Inc. The Respondent Home for Funerals, Inc. holds Establishment Operating License No. 994 issued by the Petitioner. The Respondent Competiello has been a licensed funeral director for approximately eight years. Prior to his employment with the Respondent Home for Funerals, Inc., Competiello had never served as the general manager of a funeral home. Competiello was hired as the general manager of Home for Funerals, Inc., and he commenced work on August 8, 1976. Home for Funerals, Inc. was an operating funeral home and crematory when Competiello became general manager. Home for Funerals, Inc. had been properly licensed with the Petitioner as a crematory. Prior to September 1, 1976, the license of Home for Funerals, Inc. expired, and no application was made on behalf of Home for Funerals, Inc. for inspection and licensing of the crematory. From September 1, 1976 until approximately September 23, 1976, approximately 54 cremations were performed at Home for Funerals, Inc. by John Competiello. Competiello did not know that Home for Funerals, Inc. had not been properly inspected and licensed by the Petitioner, and as soon as he was advised of that fact he immediately ceased all cremation activities at Home for Funerals, Inc. Competiello was never formally advised by the Petitioner that Home for Funerals, Inc. was not properly licensed, but this fact was communicated to him orally by a representative of the Petitioner. Petitioner issued a permit for a crematory at Home for Funerals, Inc., on October 23, 1976. From the date that Competiello was advised of the licensing failure until the date that a new permit was issued, no cremations were performed at Home for Funerals, Inc. The permit for a crematory at Home for Funerals, Inc. was issued by the Petitioner with full knowledge that cremations had been performed at Home for Funerals, Inc. during a time when Home for Funerals, Inc. was not properly licensed with the Petitioner as a crematory. There was no evidence offered at the hearing from which it could be determined that any of the cremations performed at Home for Funerals, Inc. during the time that it was not properly licensed with the Petitioner were performed in other than a proper manner. During the time that Competiello has been the licensed funeral director in charge of Home for Funerals, Inc., Home for Funerals has had a business relationship with an entity known as the National Cremation Society, Inc. The National Cremation Society, Inc. is a membership organization. Members of the public pay a fee to become members of the society. The fee entitles members to certain services including cremation upon death at a set price which cannot be increased. National Cremation Society, Inc. utilized the services of Home for Funerals. If a member of the Society died within the service area of Home for Funerals, the member's family would first notify the National Cremation Society, which would in turn notify Home for Funerals. Home for Funerals would conduct the cremation. The National Cremation Society has been Home for Funerals' largest account. There was evidence offered at the hearing which would appear to indicate that Home for Funerals and the National Cremation Society have more than merely a close business relationship. For example, one employee of National Cremation Society was paid on checks from Home for Funerals. The evidence would not, however, support a finding that Home for Funerals and National Cremation Society were alter egos of one another, or were other than separately operating entities. The National Cremation Society maintains an office in Miami Beach, Florida. Ms. Martha Lewis is the office manager. Ms. Lewis is not a licensed funeral director nor an embalmer. Martha Lewis' duties with the National Cremation Society were generally as follows: (a) to receive incoming calls regarding the deaths of Society members or other persons who desired cremation services; (b) to contact a removal service to pick up the deceased's body; (c) to obtain information required for the death certificate from the deceased's family or friends, and to collect money owing to the National Cremation Society; (d) to obtain the necessary medical certification required for the death certificate; (e) to deliver the completed death certificate and burial transit permit application to the Bureau of Vital Statistics for filing and to obtain the necessary burial transit permit; and (f) after cremation, if desired by the deceased's family, to pick up the deceased's remains from the funeral home and to deliver them to the family. Prior to November 1, 1976 Martha Lewis obtained the information for death certificates, signed the certificates herself, and filed them with the Bureau of Vital Statistics in Miami. Subsequent to November 1, 1976, Ms. Lewis was advised by an employee of the Bureau of Vital Statistics that they would no longer accept death certificates that were signed by her, but rather that the death certificates would need to be signed by a licensed funeral director. During this period the National Cremation Society was utilizing the services of Slade Funeral Home in Dade County, Florida to conduct cremations of Society members. The director of the Slade Funeral Home did not wish to sign the death certificates. The National Cremation Society arranged with Mr. Competiello to sign the certificates. Ms. Lewis would prepare the certificates, and forward them by bus to Mr. Competiello. Mr. Competiello would pick up the certificates at the bus terminal, sign them, and return them, also by bus, to Ms. Lewis. This pattern was followed in connection with the deaths of Leonard Schmidt, Joseph Miller, Leonard Scott, Winifred Piepper, Lina Bracher, Elizabeth Spray, James Halpin, Gertrude Keller, and others. The deaths occurred in Dade County, and the cremations were performed at the Slade Funeral Home. Neither Competiello nor Home for Funerals ever had any connection with the deceased persons other than through Competiello's signing of the death certificates. Neither Home for Funerals nor Competiello ever had custody of the bodies. Competiello did not gather any of the information that was set out on the death certificates and he made no examination as to the accuracy of the information. Competiello performed this service as a favor to Home for Funerals' largest account in order to facilitate the filing of death certificates by the National Cremation Society. Neither Competiello nor Home for Funerals had any formal relationship with Slade Funeral Home. Mr. Competiello testified that Slade Funeral Home acted as the agent for Home for Funerals in performing the cremations; however, insufficient evidence was offered to establish that Slade Funeral Home was in fact the agent for Home for Funerals for these purposes. In fact, Slade Funeral Home did not consider itself Home for Funerals' agent. Barbara Reynolds was employed by the National Cremation Society from October 12, 1976 through March 30, 1977 at its Sarasota office. Barbara Reynolds' duties with National Cremation Society were essentially as follows: the secretary or office manager would advise her that a death had occurred, and she would contact Home for Funerals to make arrangements to remove the body; she would contact the deceased's relatives, and obtain information for the death certificate which was not already in National Cremation Society's files, and fill out the death certificate; (c) obtain the required medical certification for the death certificates (d) file the completed death certificates and the burial transit permit applications and receive the burial transit permit; (e) at the request of the deceaseds family, she would pick up the deceased's remains at Home for Funerals, and deliver them to the family; (f) at the deceased's family's request she would place newspaper obituary notices; (g) she would handle paper work for application for the deceased's Social Security benefits or Veterans Administration benefits. Death certificate forms utilized were signed by Mr. Competiello. Mr. Competiello signed the forms in blank and provided them to National Cremation Society. Ms. Reynolds would file the completed death certificate when she obtained all of the information. Since the certificates had already been signed by Mr. Competiello, she would not need to obtain any further signature from him. Mr. Competiello did not gather any of the information for the death certificates and he made no independent examination of the facts set out on the certificates. In fact, Mr. Competiello never saw the death certificates after he signed them in blank. Mr. Competiello provided National Cremation Society a supply of signed blank burial transit permit applications in the same manner. There was no evidence offered at the hearing from which it could be concluded that either Home for Funerals, Inc. or John Competiello received any direct compensation from the National Cremation Society in connection with cremations of Society members conducted by the Slade Funeral Home in Dade County. It does not appear from the evidence that any of the cremations were performed in other than a proper manner, or that any member of the public was directly injured by the activities of Competiello and Home for Funerals, Inc. It does appear that the office of the Bureau of Vital Statistics in Dade County was uncertain as to the necessity for having death certificates signed by a licensed funeral director. Prior to November 1, 1976, the office accepted death certificates for filing which were not signed by a licensed funeral director. At no time did the Bureau of Vital Statistics either in Dade County or any place else complain to Competiello about his practices in connection with the signing of death certificates or burial transit permit applications.
Recommendation That a final order be entered adjudicating the Respondent John Competiello guilty of performing cremations at Home for Funerals, Inc., at a time when Home for Funerals, Inc. was not properly registered as a crematory; and reprimanding him for such conduct. That a final order be entered adjudicating the Respondent Home for Funerals, Inc. guilty of performing cremations at a time when it was not properly registered as a crematory, and reprimanding it for such conduct. That a final order be entered adjudicating the Respondent John Competiello guilty of violations of Section 382.081 Florida Statutes (1975), and Section 470.1D(6), Florida Statutes (1976 Supp.) as set out in Paragraphs 4 and 5 of the Conclusions of Law above, and suspending the licenses of John Competiello to practice as an embalmer and as a funeral director for a period of one year. That a final order be entered adjudicating the Respondent Home for Funerals, Inc. in violation of Chapter 470.12 (4)(a), Florida Statutes (1976 Supp.) and suspending the license of Home for Funerals, Inc. as a funeral establishment for a period of one year. RECOMMENDED this 2nd day of November, 1977, in Tallahassee, Florida. G. STEVEN PFEIFFER, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Michael J. Dewberry, Esquire 1300 Florida Title Building Jacksonville, Florida 32202 James A. Devito, Esquire Devito and Colen 5362 Central Avenue St. Petersburg, Florida 337D7
The Issue Should the application to organize a new cemetery company submitted by Trinity Memorial Gardens of Lakeland, Inc. (Trinity), be granted.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made:
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department enter a Final Order granting Trinity's application to establish a new cemetery in Polk County, Florida. DONE AND ENTERED this 2nd day of September, 1997, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6947 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of September, 1997. COPIES FURNISHED: Theresa G. Walsh, Esquire Office of the Comptroller 101 East Gaines Street, Suite 526 Tallahassee, Florida 32399-0350 Bruce Culpepper, Esquire AKERMAN, SENTERFITT and EIDSON, P.A. 216 South Monroe Street, Suite 200 Post Office Box 10555 Tallahassee, Florida 32302-2555 Chris H. Bentley, Esquire Diane D. Tremor, P.A. John L. Wharton, Esquire Rose, Sundstrom and Bentley 2548 Blairstone Pines Drive Tallahassee, Florida 32301 William E. Williams, Esquire HUEY, GUILDAY AND TUCKER, P.A. 106 College Avenue Highpoint Center, Suite 900 Tallahassee, Florida 32302 Harry Hooper, General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350
Findings Of Fact Manasota Memorial Park is a large cemetery licensed under Chapter 497, Florida Statutes, by the Department of Banking and Finance, as a "cemetery." It is also licensed under Chapter 470, Florida Statutes, by the Department of Professional Regulation, as a "direct deposer". It is licensed by the Department of Insurance, pursuant to Chapter 639, Florida Statutes, to sell "pre-need" funeral merchandise or service contracts. Manasota has specifically reserved the right to adopt, alter, amend or repeal any of its by-laws, with or without notice to the owners of burial spaces in its cemetery. This reservation is found in paragraph 63, page 14 of Manasota's current by-laws, in evidence. Manasota has, however, agreed to prepare and distribute an updated compilation of its by-laws to its burial space owners at the conclusion of the present proceedings. Manasota is in the business of selling burial space, and conveys that in fee simple to a purchaser, rather than offering mere burial rights to property it retains title to. There are currently between 17 and 18 thousand owners of burial spaces in Manasota Cemetery. Many of Manasota's owners or "clients" have purchased their land "pre-need." Frequently, however, burial spaces are required to be purchased in the "at-need" situation. Because Manasota has already sold in excess of 17 thousand cemetery lots, many of its potential "clients" already own their lots and so Manasota only needs to provide services at the time of the funeral itself. Funeral services at Manasota, by its by-laws, can only be held in a rotunda area away from the actual gravesite. Graveside services are prohibited by a provision of Manasota's bylaws. In the conduct of its business, Manasota often obtains from the funeral directors, the name, address, telephone number and relationships to the deceased of persons making funeral arrangements. Manasota is free to and often does contact that person directly in order to make arrangements for authorization to open and close the grave, conduct the rotunda service, and for payment of the grave opening and closing charge. This charge, for opening and closing the gravesite, is a set fee which is not negotiable. Manasota often quotes this charge and otherwise secures funeral arrangements by telephone. It has produced no evidence to show that this procedure has caused any adverse effect on its business. Manasota seeks, however, in this proceeding, to enact a by-law that requires persons with "paramount authority," that is, persons who are making funeral arrangements for the deceased, to actually sign an authorization form for the service and the grave opening and closing, and to pay for the opening and closing of the grave at least 24 hours in advance of the service. Manasota does not independently determine whether the persons who execute authorization forms and pay grave opening and closing charges, actually have "paramount authority" to do so, but rather, relies upon the assurances of such persons that they have such authority, or upon assurances of the funeral director who is otherwise in charge of arrangements. The proposed by-law requiring 24 hour advance payment and signed authorization from persons with "paramount authority" provides no standard for determining which persons, in the family, or otherwise connected with the deceased, have "paramount authority" and that term is nowhere defined in the proposed by-law or other places in Manasota's by-laws. Manasota, at present, frequently prepares gravesites without requiring a signed authorization form for such work in advance. Typically, Manasota does not presently require that an authorization form be executed when the person with alleged "paramount authority" is not available. Its present procedure, with this built-in flexibility, is especially beneficial for persons who must journey from distant parts of the country, upon hearing of the demise of a relative in the Sarasota area, and who would be unable to arrive 24 hours in advance of the scheduled service, even though such a person might indeed be the person in the deceased's family with "paramount authority" to make the arrangements. The present by-law does not allow any exception to its proposed requirement in this regard for persons who are unable, due to distance or otherwise, to go to Manasota's place of business to sign the appropriate forms and to pay the grave opening and closing charge 24 hours in advance of the scheduled service. The proposed by-law, for instance, does not have the flexibility of allowing the funeral director to act on behalf of such persons in arranging and paying for Manasota's services. By providing no standards for defining which persons have "paramount authority," the proposed by-law does nothing to alleviate any potential confusion between the funeral director and family members as to who has paramount authority to make such arrangements as purchase of a gravesite, payment of opening and closing charges, and other services and charges performed and required by Manasota. The identity of a deceased person is placed on a death certificate for that person by one who first assumes custody of the body. The information as to identity placed on the death certificate is obtained from the next of kin or the best qualified person or source available to identify the deceased. Prior to final disposition, the person who first assumes custody of the body, after the death certificate is prepared (typically, the funeral director) prepares a "burial transit permit" upon which the decedent is identified, which identification is based on the information appearing on the death certificate. Funeral directors who first assume custody of the body are not required to have personal knowledge of the identity of the decedent, but may rely upon the data provided by the next of kin or other qualified persons. Cemetery companies are entitled to rely on, and must rely upon, the information contained in a burial transit permit as to identity of the body that accompanies that burial transit permit to the cemetery premises. By sending a particular burial transit permit with a casket containing a body, a funeral director warrants that the body being conveyed is the body that was identified to them as the person whose name is reflected on that permit. However, funeral directors can make no warranty or representation that the initial identification of the body to them by other persons, upon which information both the death certificate and burial transit permits are based, is correct, unless of course, the funeral director knew the deceased personally. Once the funeral director delivers a casket containing a body to Manasota's rotunda before services, and once those funeral services in the rotunda facility are completed, the funeral director no longer has control over the casket and body, it having been delivered with its accompanying burial transit permit to the custody of Manasota. The funeral directors thus do not participate in the actual burial of the casket in the grave. Manasota, under the present practice, can easily identify caskets delivered to it with the information contained in the accompanying burial transit permit delivered with the casket, so as to ensure that the casket is properly identified. The funeral directors themselves who perform services at Manasota's premises, have no actual, personal knowledge whether the casket containing the body identified in the accompanying burial transit permit, will actually be buried in the correct grave, since they do not participate in the actual burial and leave the premises at the conclusion of the funeral services themselves. Manasota proposes that plastic identification tags be attached to the surface of the casket, but the permanency of this attempted identification method is not reliable because the tags have, in some instances, become unattached. Although the cost is minor, there is an additional cost to funeral directors if they are required to utilize such tags and insure that they remain permanently attached to the caskets, and this additional cost, however small, will be reflected in additional charges made to the public for such services. Further, information concerning identity of the deceased is contained in the burial transit permit which accompanies the casket. The repetition of the same identity information on a plastic tag to be attached to the casket would accomplish nothing, in the way of enabling Manasota to identify caskets in its possession, that the burial transit permit does not already accomplish. The point is that if the funeral director has information concerning who the decedent placed in the casket is, and records that on the burial transit permit, and then "publishes" that same information again by placing the identity information on a plastic tag attached to the casket, it will not serve to better identify the remains inside the casket and will not do anything to forewarn Manasota, the cemetery company, if a mis-identification has occurred by either the funeral director or by the person executing the death certificate, or otherwise informing the funeral director of the identity of the decedent's body placed in his custody. Finally, with regard to the proposed by-law concerning payment for Manasota's services at least 24 hours prior to the scheduled funeral service and its requirement that a person with "paramount authority" sign the necessary agreements with Manasota to initiate their services, at least 24 hours prior to the funeral service, it must be remembered that prior to burial, family members who are typically the group from which the person with "paramount authority" is chosen, are usually in a state of severe bereavement and are not in a proper state of mind to be conducting business transactions, especially during the particularly harrowing time for a family between the point of the decedent's death and the point of that funeral service and burial. It seems especially callous to require full payment for Manasota's services in advance, at least 24 hours before the service, right in the middle of this particularly acute period of bereavement between the death and the burial of a family member, with the implication being that if payment were not made and the appropriate agreements not signed timely, that Manasota might elect to delay or otherwise hinder the performance of the funeral services and burial. Certainly Manasota can provide its services when needed by bereaved parties with "paramount authority" over the remains of the deceased person but require payment at a later date, albeit a date certain, as is done in most other business transactions. The family member or other person with "paramount authority" could be billed at a later time just as easily. Manasota, like any other business, which IS not timely paid for outstanding goods or services rendered, has civil remedies available to it, and it would be beneficial to bereaved persons for Manasota to provide its services when needed, but not to mandatorily seek payment before it performs the funeral service or the burial.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, the candor and demeanor of the witnesses, the evidence of record and the pleadings and arguments of the parties, it is, therefore RECOMMENDED that the proposed amendments to the by-laws of Manasota Memorial Park, Inc. be disapproved, except that the proposed requirement that 24 hour advance notice by the person in paramount authority, of the need to schedule a funeral service and the proposed limit on Manasota's liability concerning quality of burial merchandise purchased "off-site", be approved. DONE and ENTERED this 27th day of August, 1984, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of August, 1984. COPIES FURNISHED: Douglas L. Stowell, Esquire MANG and STOWELL Barnett Bank Building Suite 740 Tallahassee, Florida 32302 Lee E. Hayworth, Esquire ISPHORDING, PAYNE, KORP, MUIRHEAD and GAY 601 South Osprey Avenue Sarasota, Florida Clyde A. Willard, Esquire The Capitol Suite 1302 Tallahassee, Florida 32301 Honorable Gerald Lewis Comptroller The Capitol Tallahassee, Florida 32301
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Background Respondent, Department of Banking and Finance, Division of Finance (Division), is the state agency charged with the responsibility of administering and enforcing the Florida Cemetery Act, as amended, which regulates the operation of cemetery companies in the State of Florida. Among other things, the Act prohibits, with certain exceptions, any person from operating a cemetery company in this State without first obtaining a license from the Division. On August 1, 1990, respondent, Cedar Wood Memorial Park (Cedar Wood or applicant), a partnership consisting of Charles L. Overturf, Jr. and C. Ben Bates, Jr., filed an application with the Division for a license to organize a new cemetery company to be located on State Road 20 in Palatka, Florida. The application was deemed to be complete on October 9, 1990. Although the application was initially denied by the Division on December 28, 1990, on the ground the existing facilities were adequate to meet all reasonable needs, on January 24, 1991, the Division reversed its earlier action and gave notice of its intention to approve the application. Thereafter, on February 21, 1991, petitioner, Masters Memorial Gardens, Inc., d/b/a Palatka Memorial Gardens (PMG), which holds a license to operate a cemetery company in Putnam County (County), filed its protest and request for hearing. In its protest, as amended, PMG contended that the addition of a new cemetery company in the County would be harmful to the cemetery industry and not benefit the public. The parties agree that PMG has standing to initiate this action. Statutory Criteria To demonstrate entitlement to a license, an applicant must first create a legal entity to operate the cemetery, propose a site containing not less than fifteen contiguous acres, and demonstrate that it possesses the ability, experience, financial stability, and integrity to operate the company. In this regard, Cedar Wood proposes to establish a cemetery site containing not less than fifteen contiguous acres. Also, Cedar Wood has created a legal entity to operate the cemetery site, and the parties agree that the applicant has demonstrated that it possesses the ability, experience, financial stability, and integrity to operate a cemetery. Besides the above criteria, the Division also considers other factors to determine need, including the adequacy of existing licensed and unlicensed facilities, the solvency of trust funds of existing facilities, and certain statistics concerning population, death rates, and rate of growth. However, the Division may waive these criteria in order to "promote competition" so that each county may have at least "six cemeteries operated by different licensees." In this case, the Division has proposed to waive these criteria in order to promote competition. It is noted that at the present time, there are three licensed cemeteries in the County, including PMG, Evergreen Cemetery (Evergreen), and Resthaven Cemetery and Memorial Park (Resthaven). In addition, there are a number of unlicensed cemeteries in the County, including two operated by the City of Palatka. Applicant's Proposed Cemetery Applicant's partnership was formed two years ago for the purpose of establishing a new cemetery in the community. According to Overturf, who also operates a funeral home, he views the venture as a good investment, particularly since the community now has only three licensed cemetaries, two of which are used primarily by the black community. The facility will be fifteen acres in size and contain an estimated 18,000 burial spaces. It will also offer substantially the same services and charges as PMG. Neither partner has had any prior experience in operating a cemetery. However, the parties have stipulated that the applicant has sufficient experience to satisfy the statutory criteria of "ability" and "experience". The applicant intends to make an initial capital investment of $500,000, of which $149,200 will be kept in reserve. After the venture is ten years old, the applicant expects to make a profit on its investment. However, this projection is based on several incorrect assumptions. First, the partners have assumed that every lot sale will be a cash transaction for the full amount. Most sales, though, are financed and this will significantly reduce the projected cash flow. Second, after year five, it will be necessary to deduct ten percent of all lot sales revenues for maintenance and trust fees which will further reduce the projected income. Third, although the new cemetery plans a mausoleum, no expense for this item has been set aside. Fourth, the cemetery intends to hire an experienced cemetery operator but has set aside only $22,500 in commissions and management fees for this purpose. Finally, because of these protracted proceedings, certain recurring expenses such as legal and accounting expenses have been underestimated. After making the foregoing corrections to the pro forma statement, it is clear that the new cemetary would not be profitable during its first decade of operations, and contrary to applicant's projection, would not achieve a profit in the tenth year. Existing Facilities in the Community For purposes of determining the need for a new cemetary, the Division is obliged to consider the existing facilities in the community to be served, or the area from which 75% of sales of burial spaces are expected to be derived. In this case, the parties have agreed that the "community" is a fifteen mile radius around the City of Palatka. As noted above, there are presently three licensed cemeteries in the community. From a geographical perspective, all are within six miles of the proposed cemetary. More specifically, PMG and Evergreen are three and two miles, respectively, from the proposed site of Cedar Wood's cemetery while Resthaven is approximately six miles away in the small community of San Mateo. Besides the licensed cemetaries, there are also a number of unlicensed cemeteries within the community. They are operated by various cities, towns, churches and families. Two of them, Oakhill and Westview Cemeteries, are operated by the City of Palatka and are open to the general public. Conversely, several church and family-operated cemetaries are restricted to family or church members while one is dedicated primarily to members of the Masons and their families. Even so, the unlicensed cemetaries have the potential to take customers away from licensed cemeteries, and all have the ability to expand without the Division's approval. All cemeteries offer the public the option of buying their burial spaces "pre-need". This means that a lot can be sold to a customer prior to his or her death. Money from pre-need sales must be deposited into a perpetual trust account and cannot be used by the licensed cemetery company for day-to-day operations. In addition, pre-need sales are generally at low, discount prices which are substantially below the price charged for an "at-need" sale, which is made at the time of death. The evidence establishes that PMG offers discounted, pre-need spaces, and while its other charges are higher than those of its two licensed competitors, they are not unreasonable or excessive in relation to the charges at other cemetaries around the state. Projected Need and Unused Spaces As a part of its preliminary investigation, the Division prepared a need survey in accordance with Rule 3D-30.015(4), Florida Administrative Code. The purpose of the survey was to ensure that there is sufficient space available for burials in the community for the next thirty years or conversely to determine if no need is projected. In developing the need survey, the Division used data from the three licensed cemetaries in the community, the two cemetaries operated by the City of Palatka, and one by a small church in the community of Peniel, which lies three miles from applicant's property. The parties have stipulated to the accuracy of the survey. It reflects that during the next thirty years, a total of 23,270 burial spaces will be needed for the community, assuming that 100% of all people cremated are buried in cemetery lots. However, if only 15% of the cremations are buried in cemetery lots, the projected need is reduced to 18,823 burial spots. The three licensed cemeteries in the community have a combined total of 35,889 unused burial spaces, some of which are already sold. However, there are currently 28,052 and 2,740 unsold spaces at PMG and Resthaven, respectively. It is noted that in November 1989 PMG purchased an additional 8.6 acres of land adjacent to its facility and in August 1991 dedicated that property to the cemetary business. The new property is included in the Division's need survey. Evergreen has 495 total unused spaces, of which the number of unsold spaces is not of record. In addition, Oakhill Cemetery, which is operated by the City of Palatka, has 1,004 unused spaces of which 746 are unsold. PMG considers Oakhill to be its primary competitor. However, at its current rate of sales, Oakhill will have no more unsold spaces within the next four and one-half years to six years. The other city-operated cemetary is now virtually filled. Although Peniel Baptist Church has only four unsold spaces, two other unlicensed facilities within the community but not counted in the Division's survey, Pinelawn and Pineview Cemetaries, which are thirteen and fifteen miles from Cedar Wood, respectively, have approximately 31,000 unused spaces. Thus, the amount of space currently unsold and available far exceeds the projected need in the community during the thirty year period from the date of Cedar Wood's application. Despite this lack of need, the Division proposes to grant the application for the purpose of promoting competition. If the application is approved, Cedar Wood intends to add 18,000 more spaces to the community's already existing inventory. Will the New Cemetery "Promote Competition"? The term "promote competition" is not defined by statute, and there are no agency rules which clarify the term or provide guidance in making this determination. However, three experts presented testimony on the existence or lack of competition in the Putnam County area and whether the addition of a new cemetary in the community would promote the same. As might be expected, the experts reached different conclusions regarding this issue. In resolving this conflict, the undersigned has accepted the more credible and persuasive testimony and this accepted testimony is embodied in the findings below. Despite its dominance in the community in terms of unsold spaces, PMG is only burying approximately twenty percent of the people interred in the County in a given year. Thus, around eighty percent of the people interred in the County are buried in other cemetaries. Some of this may be attributable to "heritage", which means that once someone is buried in a cemetary, that person's relatives will likely want to be buried within the same cemetary. Because of heritage, all of the cemetaries in the community compete with PMG. For the years 1987 through 1990, PMG sold only 65, 71, 216 and 202 spaces, respectively. The increase in sales during the last two years may be the result of an aggressive sales campaign recently initiated by PMG. Indeed, PMG is the only cemetary company in the County that actively advertises for new business. Since Cedar Wood will offer the same services as PMG, this will undoubtedly cause PMG to lose some of its sales. A loss of even one-half of its business to a competitor would have a serious financial impact on PMG. Petitioner's experts established that it would not be financially feasible to establish a new company in the Palatka area given that area's population of around 60,000, the number of existing licensed and unlicensed competitors, and the fact that several cemetary companies have recently failed in other areas of the state. These findings are corroborated by the applicant's own financial projections. The balance sheet of PMG as of December 31, 1990, reflected that it had only $2,500 in the bank as of that date. In addition, after receiving a $60,000 refund from the Internal Revenue Service and reclassifying certain items on the balance sheet, PMG's retained earnings approximated only $125,000 after fifteen years of operation. It is also noted that since the business was purchased by its present owners in 1977, no dividends have been paid to the stockholders of the corporation. At the present time, there are several factors which indicate the presence of an oligopoly in the Putnam County cemetary business. First, there are a small number of sellers (existing licensed cemetaries) in the community. Of the three, PMG is clearly the most dominant for it now controls around 89.7 percent of the unused spaces among licensed cemetaries. This degree of dominance has enabled PMG to set a price for its services without regard to the prices charged by the two other licensees. In making this finding, however, it should be remembered that PMG considers Oakhill, a city-owned, unlicensed cemetary as its chief competitor. At the same time, there are a number of barriers to entry into the cemetary business. These include a requirement for governmental approval (a license) to enter the market, a $25,000 initial fee for the perpetual care and maintenance fund, and a minimum of fifteen acres of unencumbered, contiguous land. Where such barriers as these exist, the effect is to lessen the potential competition. However, even if an oligopoly or pure monopoly exists, this does not mean that the community can support another cemetary. Indeed, the evidence shows that if Cedar Wood's projected lot sales over the next decade are achieved, it would still operate at a loss. In addition, most, if not all, of such sales would be made at the expense of PMG. Given these circumstances, it is found that competition will not be promoted by granting the application.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the agency enter a final order denying the application of Cedar Wood Memorial Park. DONE and ENTERED this 2nd day of June, 1992, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of June, 1992.
Findings Of Fact By application not presented at this hearing, Garden of Memories, Ltd., Petitioner, seeks a license to establish a perpetual care cemetery in Springfield, Florida, a community with a population of approximately 7,500 located just east of Panama City, Florida. Intervenors are owned by Cem-A-Care of Panama City, Florida, are operated as one cemetery with one manager, and services are offered at the same price at both cemeteries (Exhibit 2.) These are the only private, perpetual care cemeteries in Bay County. Several cities in Bay County have cemeteries but in almost all of these cemeteries no spaces are available for sale. In others, the lots available are restricted to the residents of the community where the lot is located, while one city charges non-resident 150% of the fee for lots charged to residents. In the city-owned cemeteries east of Panama City, no additional lots are available. The population of Bay County is growing and, although specific demographic projections were not submitted, the county planners estimate a 100% increase in residential acreage in unincorporated areas by 1990, with most of this growth to the east of Panama City. The evidence of need for an additional private cemetery in the proposed location, which was attested to be at least six witnesses, was unrebutted. Likewise, the testimony that the introduction of another perpetual care cemetery in Bay County will create needed competition, and thereby improve service, was not rebutted. People generally prefer to bury their loved ones reasonably close to their homes. For those residents in the eastern part of Bay County, there is no cemetery available to allow this preference. Opening the proposed cemetery will alleviate this problem.
Findings Of Fact James E. Collison is a licensed embalmer and funeral director, and Collison Memorial Chapel, Ltd., is a licensed funeral home holding licenses issued by the Board of Funeral Directors and Embalmers. Orange County Memorial Society (OCMS) is a nonprofit corporation. OCMS exists for the purpose for providing information and assistance to its members on low-cost funeral arrangements. OCMS has approximately 750 members and is funded through their small initial membership or transfer fee. Thomas E. White, who is employed full-time as an engineer by Stromberg Carlson was president of OCMS at all times relevant to this complaint. His wife, Helen, was secretary of this organization. At the time White assumed the presidency of OCMS, OCMS had existing arrangements with two local funeral homes. Upon joining, members were assigned to one or the other of these establishments, based upon the members' geographical residential location. Both the establishments provided the same services at essentially the same prices. Prices for various services from these homes had been made available to the members of OCMS. Mr. White was concerned about the geographic assignment of OCMS members and desired to alter this arrangement and allow members to choose the funeral home which they desired. In approximately August of 1976, James Collison contacted Mr. Harris, the attorney for OCMS, one of the original incorporators, and a former president of the organization. Collison advised Harris that he desired to participate with OCMS in providing services to its members. Mr. Harris wrote Mr. White, who eventually contacted Collison to discuss Collison Memorial Chapel's participation. In this regard, Collison provided Mr. White a list of funeral services which Collison Memorial Chapel could provide together with cost in a letter dated September 4, 1976. Mr. White and another member of the Board visited with Collison and inspected Collison Memorial Chapel. Thereafter Mr. White presented Collison's proposal to the Board of Directors of OCMS. Collison's offer was accepted, and this fact was subsequently communicated to Collison by White. At this time, Collison was advised that OCMS would advise its members of Collison Memorial Chapel's participation by letter when the notice of the organization's annual membership meeting was mailed. An earlier mailing could not be made by OCMS due to a lack of funds. Collison desired to make Collison Memorial Chapel's participation immediately known to the membership of OCMS, and offered to White to pay for the additional mailing. Mr. White accepted this offer, feeling that this was in the best interest of the membership of OCMS and permitted earlier implementation of his plan to permit members to choose the funeral home with which they desired to make their arrangements. The mailing was handled solely by White and his wife, and at all times, OCMS, through its president, maintained total control of the content of the materials sent to its members. This mailing contained a letter from Mr. White to the members, a comparative list of services and prices offered by the three participating funeral homes, a stamped, self-addressed envelope to Collison Memorial Chapel, and a form indicating that members desired to change his or her selection of a funeral home to Collison Memorial Chapel. The letter to the members was composed by Mr. White. The comparison of services and prices was prepared by Collison at Mr. White's request. The change form was prepared by Collison; however, both Mr. and Mrs. White stated that they had made some minor changes in its format after they received Collison's draft copy. White, in response to the specific question regarding why the form had not been prepared to permit a member to change between the two other participating funeral homes, stated that he had not mailed the form in that format because he did not believe any of the members would elect to change their membership among the two original participating homes. The fact that Collison obviously wanted communicated to the OCMS members was the fact that his funeral home was participating with OCMS because the prices which were quoted to OCMS members were the same being advertised to the public generally. White, as president of OCMS, desired to implement his project of permitting freedom of selection among members of OCMS, and to advise members that Collison's funeral home was now a participating home. Collison's offer was a means to both White's and Collison's objections. The Whites had the material printed, prepared the mailing, and sent Collison a statement of cost of the mailing. Collison paid these costs in the amount of $191.87 directly to OCMS. As a result of this mailing, approximately thirty (30) of the 750 members elected to change their arrangements in favor of Collison Memorial Chapel, Ltd. Several others elected to make other changes by contacting White and having new forms sent to them.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer recommends that the Administrative Complaint against James E. Collison and Collison Memorial Chapel, Ltd. be dismissed. DONE and ORDERED this 1st day of February, 1978, in Tallahassee, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: W. Thomas Lovett, Esquire Lovett, Kreuter and Salvagio 1210 Pan American Bank Building Orlando, Florida 32801 Michael J. Dewberry, Esquire Rogers, Towers, Bailey, Jones and Gay 1300 Florida Title Building Jacksonville, Florida 32202 Mr. R. C. Blanton, Coordinator Funeral Directors and Embalmers Suite 208, Building B 6501 Arlington Expressway Jacksonville, Florida 32211
The Issue The issues in this case are whether the issuance of a license to Abbey Hills to operate a perpetual care cemetery would promote competition and whether Abbey Hills' application is complete and truthful.
Findings Of Fact By application dated September 9, 1992, Willard I. Timmer and his wife, Marilyn Timmer, as "proponents," applied for a license to operate a new cemetery on Denton Avenue, Hudson, Pasco County, Florida. The Timmers filed the application on behalf of Abbey Hills Memory Gardens, Inc. (Abbey Hills). By letter dated September 16, 1992, the Department of Banking and Finance (Department) requested additional information, including financial statements for Mr. and Mrs. Timmer and Abbey Hills and a copy of the sales contract for the real property on which the proposed cemetery would be located. By letter dated November 12, 1992, the attorney for Mr. and Mrs. Timmer forwarded to the Department financial statements for the Timmers and Abbey Hills and a copy of the contract for the purchase of the cemetery property. The personal financial statements, which were identical, showed, among other things, a market value for all of the Timmers' funeral homes and cemeteries of $30,000,000 and a net worth of $30,691,111. The "company report" of Abbey Hills showed assets of an initial capitalization of $2000 cash and $5000 in organizational costs. The "company report," which disclosed no liabilities, listed the purchase and sale contract as an asset worth the sales price of $200,000. The net worths of Mr. and Mrs. Timmers and Abbey Hills are overstated. The Timmers' net worth was based on gross retail sales values of all of the vacant cemetery lots in all of their cemeteries. The company's net worth treated the sales price of the land as an asset equal in value to the contract sales price. In fact, Abbey Hills is a new corporation without any net worth. In the case of Mr. and Mrs. Timmer, it is impossible to determine the extent of the overstatement, but they appear to have substantial net worth. Mr. Timmer owns and operates several well-established, profitable cemeteries in and out of Florida and has over 40 years' experience in the cemetery business. The contract to purchase the property describes the site as consisting of about 58 acres. The contract lists Memory Gardens Acquisition, Inc. as the purchaser and contains a closing date of June 25, 1992. The closing date has since been duly extended to April 1, 1994. Memory Gardens is a corporation formed by the Timmers to acquire the cemetery property for Abbey Hills. By memorandum dated December 1, 1992, Andrew Grosmaire, a Department financial specialist, informed his supervisor, W. T. Sims, a Department financial supervisor, that Pasco County contained three licensed cemeteries with a fourth "approved for licensure." After a discussion of various factors, the memorandum recommends that Mr. Sims waive the need survey. On December 8, 1992, Mr. Sims noted on a copy of the memorandum that he agreed to waive the need survey. On December 15, 1992, Mr. Grosmaire signed an internal Department form indicating his recommendation to approve the application. As a result, the Department, in approving Abbey Hills' application, waived the requirement of need based on a determination that the addition of Abbey Hills would promote competition. On December 24, 1992, the Department published in the Florida Administrative Law Weekly a notice of intent to "approve an application for a new cemetery company to Mr. Willard Timmer, the majority owner of the following cemetery company: Abbey Hills Memory Gardens, Inc." On December 31, 1992, the Department sent a letter to the attorney for the Timmers informing him that the Department has "tentatively approved the application of Abbey Hills Memory Gardens, Inc. . . . to establish a new cemetery company in Pasco County." The letter advises that, if no objections were received within 21 days of the date of publication of the notice of intent to issue, then the Department must receive, within 12 months of the date of the letter, 13 items: a legal description of the property including acreage; development plans for the cemetery; written approval from the governing zoning authority; a certified report from a registered testing laboratory concerning the water table at the site; written approval from the local board of health; designation of a general manager who must be of good moral character with not less than one year's experience in the Florida cemetery business; a trust agreement for perpetual care; evidence of a $25,000 deposit into the trust fund; a trust agreement for merchandise; certification that the real property is free and clear of any financial encumbrances; a copy of the recorded deed showing the notice required by Section 497.006(4)(f); documentation of the development of at least two acres including a paved road from a public highway; and a $250 license fee. On the day before the beginning of the final hearing, Abbey Hills supplemented its application without objection. The new information indicated that Mr. Timmer had merely attended rather than graduated from Illinois Institute of Technology. The new information also included a soils report and site development plan. There is not yet any approval from the local zoning board or the local health department. The soils report states that Geoscience & Materials Engineers, Inc. had conducted 10 standard percolation tests on the site on July 21, 1993, and reviewed other data sources. Finding a range of water table elevations on the property, which contains three lakes, the report states that the seasonal high water line at the test sites, which are characterized generally by rapidly draining soils, ranges from depths of 35" to 66". The average depth is about 52". The report concludes that the "majority of the area designated for ground burial is adequately drained and suitable for these purposes." The site development plan, which is tentative, shows initial development only for the northern two-thirds of the property, of which only five acres will be used at first for interments. The cemetery entrance and some of the space reserved for ground burials, covers, among other areas, a relatively small area characterized by a relatively high seasonal water table and poorly drained soils that may be under standing water for 6-9 months annually. However, there is no reason why this problem cannot be managed through the use of fill and careful selection of actual burial sites. The proposed cemetery would be landscaped in a garden style with numerous plantings, featuring indigenous vegetation and low density burials at a rate of no more than 900 units per acre as opposed to the more typical 1200 units per acre. The proposed cemetery would highlight the lakes and use treated wastewater effluent from a nearby source in order to irrigate the vegetation and maintain the cemetery's aesthetic appeal. Initially at least, Mr. Timmer does not plan to operate either a funeral home or a crematorium on-site, but he would sell a full range of funeral merchandise, such as caskets, vaults, and markers. Mr. Timmer owns Parklawn Cemetery in Pinellas County about 29 miles south of Abbey Hills. He intends to reduce operating expenses at Abbey Hills by sharing the sales and maintenance staff between the two cemeteries as much as possible. He is willing and able to fund the investment without short- or medium-term returns. Abbey Hills would be located about 1.5 miles east of US Rte. 19 in the northwest corner of Pasco County about 3.5 miles east of the Gulf of Mexico and 10-11 miles north of New Port Richey. US Rte. 19 is the main north-south artery through west Pasco County. Abbey Hills would be only about three to four miles south of the Hernando County line. Grace Memorial Cemetery is owned by Cemetery Investments, Inc. The closest licensed cemetery to the proposed Abbey Hills, Grace is one to two miles from Abbey Hills and is located directly on US Rte. 19 about two miles south of Hernando County. Encompassing 52 acres, Grace has 42 acres developed for cemetery use. Just over 12 miles in a direct line from Abbey Hills' proposed location, but considerably further via roads, is Florida Hills Cemetery, which is the only licensed cemetery in Hernando County. Florida Hills is located near the Hernando County Airport about two miles west of US Rte. 41, which, when it passes through Pasco County, is, with I-75, one of the two major north- south arterials running through the central part of the County. Florida Hills, which was started in 1974, consists of 84 acres, of which only 13 acres are developed for cemetery use. Florida Hills contains 54,000 unused spaces. Florida Hills markets largely in the Spring Hill area, which consists of a number of residential subdivisions mostly in south Hernando County. Meadowlawn, which is in New Port Richey, is just over 12 miles in a direct line from the proposed location of Abbey Hills and somewhat further via road. Started in 1965, Meadowlawn consists of 51 acres, of which 24 acres are developed. It has roughly a 63-year supply of burial spaces. The aesthetic appeal of Meadowlawn and, to a lesser extent, Grace is less than that planned by Mr. Timmer for Abbey Hills. Meadowlawn is presently owned by SCI Funeral Services of Florida, Inc., which is the largest owner and operator of cemeteries in Florida. The corporate parent of SCI Funeral Services of Florida, Inc. is one of the largest owners and operators of cemeteries and funeral homes in the United States. A new licensed cemetery known as Trinity is to be located about six miles east of Meadowlawn. Trinity will serve a residential subdivision known by the same name. The record does not clearly disclose the size or scope of Trinity's planned cemetery operations. The only other licensed cemetery in Pasco County is Chapel Hills, which is south of Dade City in southeast Pasco County. Chapel Hills is over 27 miles from the proposed Abbey Hills location. The cemetery market in Pasco County is divided into west and east Pasco County, so Chapel Hills does not affect, and will not be affected by, the cemeteries located in west Pasco County. More important to the west Pasco County cemetery market are cemeteries in north Pinellas County. Cycadia, which is nearly 18 miles south in a direct line from the proposed Abbey Hills location, is about two miles south of the Pinellas County line on US Rte. 19. Cycadia is a Greek cemetery and captures much of the Greek business in Pinellas and Pasco counties. Almost three miles south of Cycadia on US Rte. 19 is Curlew Hills. Two miles south of Curley Hills is Mr. Timmer's Parklawn. Sylvan Abbey, which is in Safety Harbor, is about six miles in a direct line southeast of Parklawn. Each of these cemeteries does some business in west Pasco County, especially the southern end of west Pasco County. National Cemetery is about 45 miles northeast of Abbey Hills' proposed location, via State Road 52 and I-75. Located in Bushnell, which is in Sumter County, National Cemetery is limited to military veterans and their immediate families. Although distant from the cemeteries in this case, National Cemetery has a significant impact upon their market due to the inexpensiveness of its goods and services, as described below. Less significant competition to licensed cemeteries comes from unlicensed cemeteries operating in the area. These are operated by religious or private organizations or municipalities. Funeral homes are a more important source of competition for licensed cemeteries. Funeral homes market the same goods and services marketed by cemeteries. Funeral homes even broker burial spaces that they purchase from customers who have bought them from cemeteries. There are 16 funeral homes in west Pasco County. SCI Funeral Services of Florida, Inc. owns six of them, including the funeral home located directly in front of Grace. However, two of Grace's minority owners each owns a funeral home in the area. And the funeral home located in front of Florida Hills is owned by a minority owner of Florida Hills. Licensed cemeteries also face serious competition from crematoria. Cremations are performed by some funeral homes, such as one owned by SCI Funeral Services of Florida, Inc. near Hudson, as well as cemeteries. Cremations without a service cost about $700-$800, but, with a service, may run $1600- $2000. Direct-disposers perform cremations for even less--about $500-- because they have relatively little capital tied up in equipment. By contrast, a funeral often costs over $3000. The demand for cemetery services is influenced by population growth. Pasco County has grown from 36,785 persons in 1960 to 281,131 persons in 1990. From 1980 to 1990, the County's population increased 45 percent, while the population of the entire state increased only 33 percent during the same time period. Pasco County's population is concentrated at older age levels than is the statewide population, and Pasco's growth during the past 30 and especially 10 years has been most dramatic in the age groups over 69 years old. In 1960, residents over 69 years of age in Pasco County constituted 1.34 percent of the total population of these age groups residing in Florida. By 1980, the figure had risen to 3.07 percent, and by 1990, the figure had risen to 3.77 percent. Residents aged 65 years and over are projected to be the second fastest-growing age group in Pasco County through 2010, and Pasco's share of Florida's residents over 65 years of age is projected to continue to grow through 2010. Correspondingly, the average number of deaths in Pasco County has risen from 463 in 1960 to 2835 in 1980 to 4206 in 1990, with a death rate significantly higher than the statewide death rate for each of these years. About 4500 residents of Pasco County are projected to die in 1993. Applying the same projected average death rates to projected populations, Pasco County will experience over 5200 deaths in 2000 and 6200 deaths in 2010. Overall, there will be considerable, ongoing demand for cemetery services in Pasco County for the foreseeable future. Pasco ranks sixth among counties in Florida for population aged over 65 years, eighth for projected increase in population aged over 65 years from 1990 to 2010, and seventh for projected population aged over 65 years in 2010. However, the strong demand for cemetery services driven by favorable population increases, demographics, and death rates is tempered by several factors. Not all persons dying in Pasco County are interred or entombed there. Many County residents are from elsewhere and wish to be returned after death to their homes in the north or midwest. As many as 20-25 percent of the Pasco County corpses are shipped out of the County. On the other hand, "ship-ins" of corpses into the County evidently are not statistically significant. Another factor limiting demand for cemetery services is the increasing popularity of cremation. For various cultural and personal reasons, more persons or their survivors are choosing the alternative of cremation. Increasing at the rate of 1-2 percent points annually for the past five years, the cremation rate presently is about 35 percent. It is difficult to predict where the cremation share of the market will plateau, but market shares of as much as 55-60 percent may someday be reached. Sarasota County, where only 900 burials took place in 1992, presently experiences about a 60 percent cremation rate, and Pinellas County's cremation rate is in the 50-59 percent range. Thus, after taking into consideration the 35 percent of the deaths cremated and 25 percent shipped out of Pasco County, only 40 percent of Pasco County deaths remain available for the existing cemeteries to inter or entomb. In 1991, about 14 percent of the full-casket burials in Pasco and Hernando Counties went to the National Cemetery. The National Cemetery is a federally operated cemetery offering veterans and their immediate families free burial spaces, openings and closings, vaults, and markers. Operating only since 1988, the impact of National Cemetery upon cemeteries in Pasco and Hernando counties will unlikely lessen in the foreseeable future. The effect of National Cemetery, which has been expressed as a percentage of full-casket burials, will leave something less than 40 percent of the Pasco County entombments and interments for the remaining cemeteries. After also factoring in the increasing rate of cremations, it may be estimated that about 33 percent of the deaths in Pasco County will yield interments or entombments for area cemeteries between 1990 and 2010. One-third of 4500 deaths for 1993 means 1500 local interments or entombments; one-third of 5200 deaths in 2000 means 1733 local interments or entombments; and one-third of 6200 deaths in 2010 means 2067 local interments or entombments. From 1988-92, Grace Memorial respectively had, for each year, 353, 389, 365, 378, and 426 entombments and interments. Grace Memorial performed 581, 661, 666, and 658 cremations each year, respectively, from 1989-92. From 1988-92, Meadowlawn respectively had, for each year, 811, 707, 682, 701, and 721 entombments and interments. Meadowlawn performed 151, 154, 169, and 139 cremations each year, respectively, from 1989-92. Annualizing six months' figures for entombments and interments, on the one hand, and cremations, on the other hand, Meadowlawn projects 810 entombments and interments and 226 cremations for 1993. The record does not disclose interment and entombment figures for Chapel Hills cemetery in east Pasco County, although there is a 4:1 ratio of funeral homes in west Pasco County versus east Pasco County (16 versus 4) and there would be a 4:1 ratio of licensed cemeteries in west Pasco County versus east Pasco County if Abbey Hills were approved. Given its proximity to Polk and Hillsborough Counties, Chapel Hills probably does not capture more than 20 percent of Pasco County deaths. In south Hernando County, Florida Hills performed 210 entombments and interments in 1990, 233 entombments and interments in 1991, and 236 entombments and interments in 1992. The majority of these entombments and interments are of residents of Hernando County, whose favorable demographics and population growth assure that it will be a fertile source of cemetery business in years to come. It is very unlikely that Florida Hills' capture of Pasco residents approaches in absolute numbers the number of out-of-county residents captured by Meadowlawn and Grace. It is impossible to project the market share of Trinity Cemetery, which has been approved but has not yet begun operating. The record does not disclose the scope of Trinity planned operations, but a significant part of Trinity's market will consist of a large Pasco County residential subdivision known as Trinity. Only a very rough approximation of the number of entombments and interments available to local cemeteries can be calculated. The record permits only imprecise assumptions: the number of interments and entombments of Pasco County residents performed by Florida Hills will not be greater than the number of interments and entombments performed by licensed cemeteries in Pasco County for out-of-county residents, Chapel Hills will capture 20 percent of the interments and entombments of Pasco County residents, and unlicensed cemeteries will have no significant impact on the number of available interments or entombments. Combined, Grace and Meadowlawn accounted for 1147 entombments and interments in 1992. The projected number of available deaths in 1993 is 1500. After taking away Chapel Hills' 20 percent, this would leave 53 deaths for Trinity and Abbey. As the number of projected deaths not lost to ship-outs, cremation, or National Cemetery grows to 1733 in 2000 and 2067 in 2010, the number of deaths available to Grace, Meadowlawn, Trinity, and Abbey would be correspondingly greater. From 1988-1992, the total number of entombments and interments at Meadowlawn and Grace declined 1.4 percent. If the number of entombments and interments remained unchanged at Grace and Meadowlawn through 2010, there would be, after eliminating Chapel Hills' 20 percent share, 239 available deaths in 2000 and 507 deaths available in 2010. Given the necessarily rough nature of the assumptions, it is difficult to conclude much from the figures of available deaths and projections of each licensed cemetery's share of this business. It appears, though, that the addition of Abbey Hills would have some economic impact upon Grace, Meadowlawn, and Florida Hills because there does not appear to be an oversupply of deaths available to the licensed cemeteries. However, the existing licensed cemeteries could increase their business by capturing some of the fairly large number of ship-outs. The existing licensed cemeteries could also increase business by intensifying their marketing efforts in selling new preneed contracts and reloading existing preneed customers with more goods and services. Aggressive marketing may be able to slow down, though probably not reverse, the rising numbers of cremations, and licensed cemeteries may be able to capture a greater share of cremations. Grace already performs a large number of cremations. Although Meadowlawn performs substantially fewer, an SCI-owned funeral home in west Pasco County performs a large number of cremations. Although not as profitable as interments or entombments, cremations nonetheless represent a profit center for licensed cemeteries that can likely be more fully exploited. In addition to available marketing strategies still available to the existing licensed cemeteries, any assessment of the economic impact of a new cemetery upon existing licensed cemeteries must take into consideration their current financial health. Grace's total revenue has increased in all but one year between 1988 and 1992. The approximate figures (and annual percentage increases) are: 1988--$763,000; 1989--$740,000 (-3 percent); 1990--$775,000 (5 percent); 1991--$871,000 (12 percent); and 1992--$1,268,000 (46 percent). Meadowlawn's total revenue has increased each year between 1988 and 1992. The approximate figures (and annual percentage increases) are: 1988--$1,008,000; 1989--$1,074,000 (7 percent); 1990--$1,493,000 (39 percent); 1991--$1,742,000 (17 percent); 1992--$1,940,000 (11 percent). These revenues are important indicia of profitability given the relatively high markups that prevail in the cemetery industry, as described below. In fact, Grace has enjoyed net profits, as a percentage of revenue, of 7 percent in 1988, 11 percent in 1989, 11 percent in 1990, 16 percent in 1991, and 24 percent in 1992. Meadowlawn has, for the same years, had profits of 23 percent, 33 percent, 22 percent, 28 percent, and 30 percent. During the same time period, Grace has averaged a return on investment of 11.8 percent (with a high of 24 percent in 1992) and a return on net worth of 58 percent (with a high of 80 percent in 1992). Meadowlawn has, for the same years, averaged a return on investment of 9 percent (with highs of 11 percent and 10 percent in 1991 and 1992, respectively) and a return on net worth of 13.2 percent (with highs of 15 percent and 16 percent in 1991 and 1992, respectively). The situation is different for Florida Hills in Hernando County. Its total revenue has dropped 6 percent from about $478,000 in 1988 to about $450,000 in 1992. With net profits of 12 percent and 11 percent, respectively, in 1988 and 1989, Florida Hills' profitability exceeded that of Grace for the same period. But Florida Hills' profits were 4 percent in 1990, 3 percent in 1991, and 5 percent in 1992. And Florida Hills may face a net loss in 1993. Florida Hills' return on investment has deteriorated in the past five years, and especially the past three years: 20 percent in 1988, 12 percent in 1989, 4 percent in 1990, 3 percent in 1991, and 5 percent in 1992. A similar pattern exists in Florida Hills' return on net worth: 29 percent in 1988, 20 percent in 1989, 8 percent in 1990, 5 percent in 1991, and 8 percent in 1992. Florida Hills enjoys a low debt-to-equity ratio, which allows it to withstand a certain amount of financial adversity. Florida Hills is the closest of the subject licensed cemeteries to National Cemetery, and its losses have been exacerbated by the fact that Florida Hills is a veterans-oriented park. Florida Hills' profits have been eroded by its failure to control rising costs, which is especially troublesome during a period of flat or declining revenues. Although it might face less financial pressure in a market with less competition, Florida Hills's problems concerning National Cemetery, the trend toward cremation, and, perhaps to a lesser extent, spiraling costs would remain, even if Abbey Hills' application were denied. The key fact in this case is that, although the relevant cemetery market displays a certain degree of competitiveness through advertising and marketing campaigns, there is a clear practice among existing licensed cemeteries to refrain from price competition. The current ownership of Grace inherited its prices from its predecessor and has found no need to revisit these prices significantly in the 20 months following the acquisition. Grace sells over 90 percent of its goods and services at list price. Insensitivity to price is even more marked at Meadowlawn. Representatives of Meadowlawn, which is the price leader in the area, disclaim any knowledge of competitors' prices. Although SCI Funeral Services of Florida, Inc. insists that its funeral homes perform two annual reviews of competing funeral home prices, it does not require any review of its competitors' cemetery prices. Refusing to acknowledge the importance even of market share, Florida Hills' ownership shares the unwillingness of its more successful competitors to compete by reduced pricing. Despite its financial troubles, the ownership of Florida Hills declines to sell caskets, so as to leave such potentially lucrative business to funeral homes, as long as area funeral homes decline to sell markers to Florida Hills' customers, so as to leave such business to Florida Hills. By declining to sell caskets, Florida Hills fails to take advantage of an important profit center. Running from $1300 on up, caskets are marked up by three or four times cost. Vaults and markers are typically marked up somewhat less, but cemetery lots may be marked up by a factor of 10. When the customer is living and making pre-need arrangements, the mark-up is somewhat less, but when the customer is dead and the subject of at-need arrangements, the mark-up is greater. It is unclear to what extent Trinity will pose serious competition to Meadowlawn, which is its nearest Pasco County neighbor. Due to its superior size, location, and common ownership of six local funeral homes, Meadowlawn will unlikely be forced to redirect substantially its marketing efforts northward due to the competitive presence of Trinity. Abbey Hills would likely have a greater impact on Grace than Trinity will have on Meadowlawn due to the smaller size of Grace when compared to Meadowlawn and the closer proximity of Abbey Hills to US Rte. 19 when compared to Trinity's distance from US Rte. 19. It is likely that the addition of Abbey Hills would cut into sales in Pasco and Hernando Counties by Grace and, to a lesser extent, Florida Hills. However, Grace is in a relatively strong position to meet this competition, and Florida Hills, although lately less profitable than Grace, relies less on Pasco County business where the impact of Abbey Hills would be greatest. If the licensed cemetery market had already undergone significant price competition, the relatively greater economic impact upon the stronger Grace and relatively slighter economic impact upon the weaker Florida Hills would militate against a finding that the addition of Abbey Hills would promote competition. But, thus far, existing licensed cemeteries have not even reviewed their pricing structures in the face of the twin threats of National Cemetery and cremation, even though the appeal of both of these competitive forces lies largely in their much lower cost when compared to the prevailing costs of interment and entombment. The existing licensed cemeteries have thus far responded to the competition of National Cemetery, as well as cremation, by increasing advertising. But, at least in the case of Florida Hills, this strategy has not been enough. The record does not support any inference that reducing the cost advantage of National Cemetery would be futile. After all, National Cemetery suffers from the serious disadvantages of distance from local family and friends and unavailability of interment for members of the nonimmediate family. The same is true if the cost difference between interments or entombments and cremations were lessened. More people would likely choose the more traditional interment or entombment if it were less costly than it is at present, even though it will remain more costly than cremation. Abbey Hills has shown that the relevant market can support the presence of four licensed cemeteries in west Pasco County. The demographic data, together with the high prevailing markups, historic profitability of the local cemetery industry, and opportunity for more aggressive marketing of cemetery goods and services through lower pricing, establish that competition is best promoted and the public interest best served by approving Abbey Hills' application. Although Florida Hills is, at present, clearly more sensitive than Grace (and obviously Meadowlawn) to the introduction of new competition, Abbey Hills would have less impact on Florida Hills because fewer of Abbey Hills' sales would be in Hernando County and fewer of Florida Hills' sales are in Pasco County. Also, Florida Hills has only recently suffered reduced profits and is able to absorb a few down years due to its strong capitalization. In addition, the evidence suggests that Florida Hills may not have fully responded to the challenges of National Cemetery and cremation. Recent reductions in revenue and profits suggest that, with or without the introduction of Abbey Hills, Florida Hills probably cannot continue to conduct business as usual. Thus, even if the evidence were to have shown a greater economic impact upon Florida Hills than is likely, competition would not be promoted nor the public interest served by allowing the financial pressures presently experienced by Florida Hills to preclude the approval of a new licensed cemetery into a price- insensitive market. This is especially true when, consistent with the prevailing anticompetitive market conditions, Florida Hills resists analyzing its market share, expanding its limited product offerings to include caskets, and, most importantly, revising its pricing structure to meet the competition of, first, National Cemetery and cremations and, second, other licensed cemeteries in the area.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Banking and Finance enter a final order dismissing the petitions of Grace and Meadowlawn. ENTERED on August 30, 1993, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of August, 1993.
