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CEMETERY COMMISSION 2010/04/21 MinutesCEMETERY COMMISSION MEETING LAKE FOREST CEMETERY GATEHOUSE WEDNESDAY, APRIL 21, 2010, 5:30 P.M. MINUTES ROLL CALL/ CALL TO ORDER: The meeting of the Cemetery Commission was convened at 5:30 p.m. at the Lake Forest Cemetery Gatehouse. The following members were present: Chairman Ronald Sevcik; Commission Members Ginny Grace, John Greene, and Prue Beidler; and Staff Ken Leone, Superintendent of Public Works, and Phil Alderks, Cemetery Sexton. Also attending was Tony Hoban of William Blair and Company. Absent Member: Colin Silvester CONSENT AGENDA: Chairman Sevcik presented the following items for approval: Approval of Minutes from the Cemetery Commission Meeting held on January 20, 2010 Sales Report Member Grace moved to approve the Consent Agenda as presented. Member Prue Beidler seconded the motion, which carried unanimously. FIRST QUARTER INVESTMENT REPORT FROM WILLIAM BLAIR AND COMPANY: Tony Hoban of William Blair and Company reported that the Commission Account is now invested 61.4% in domestic equities and 19.4% in international equities. That is an increase of 5% in equity holdings over the last quarter. Fixed income investments now represent 18.9% of the portfolio, a decrease of 3.8% from last quarter. The Cemetery’s equities lagged the S & P 500 by 40 basis points in the first quarter of 2010. Since William Blair and Company became investment advisor on August 10, 2008, the portfolio is down .4%, while the S & P 500 is down 3.8% for the same period. Consumer discretionary stocks, mid-cap bank stocks, and industrial stocks performed well during the quarter. Technology, that was a leader in 2009, was up only about 1% in the first quarter. International markets lagged a bit, Europe was plagued by the sovereign debt crisis of Greece and the other “PIGS”, Portugal, Ireland, and Spain. Bond markets have settled down; yields are not very good. Corporations and municipalities are paying low rates to borrow money. Mr. Hoban summarized a report from Strategas Research Partners. Just because markets have done well does not mean this is not the beginning of a long term bull market. Stocks are moving based on earnings, not a macroeconomic event. Money is going from money market funds into bond funds, rather than stocks, even though bond yields are low. More companies are predicted to exceed revenue projections by the fourth quarter of 2010. There is a drop in dividends for the first time in decades by S & P 500 companies but there’s money on company balance sheets. This will allow them to make capital expenditures or pay it out in dividends. Companies are hoarding cash since they’re being cautious; soon they’ll have to put that money to work. Inflation is a big worry, even though it is low right now. The US stimulus money hasn’t gotten into circulation yet. Housing starts have bottomed and are starting to move upward. The Case Shiller Home Price Index shows a bottom, which is a good sign. Unemployment is still high, but initial claims for unemployment have begun to decline. It looks like unemployment has peaked and is heading down. Considering the headwind the TRII model (taxes, regulation, investments, inflation) at best stocks will stay level. With minor inflation, historically, stocks perform well, but not so in hyperinflation. When rates rise, growth stocks in general do well. Developing countries (India, China, and Russia) are in better shape than Developed countries on debt. Developing countries are consuming more goods then the US, so we can sell things to China. They have money to spend. The US is the most heavily indebted nation in the world, measured as % of GDP. The US debt to GDP ratio is getting bigger. Tax receipts are up in the US; this growth can help with revenue growth. STATUS REPORT ON VISTA TO LAKE: Phil Alderks, Cemetery Sexton reported that we’ve been in contact with Applied Ecological Services to do some spring plugging and seeding to stabilize the ravine in the area where the vista has been created. We will try to complete planting by June, otherwise it will be a fall project. The Deubler’s landscape architect, Craig Bergman, has not returned our call yet. Member Grace congratulated Phil on the work done to create the vista. STATUS REPORT ON RAVINE GRANT APPLICATIONS: Ken Leone, Superintendent of Public Works reported that the Cemetery’s application to the Sustain Our Great Lakes Grant Program was not successful. A second application was submitted on February 15th to the National Oceanic and Atmospheric Administration Great Lakes Habitat Restoration Program Project Grant (under Great Lakes Restoration Initiative). This grant would be used to restore all ravines (the shallow ravine between Section E and Saint Mary’s Cemetery and the deep north ravine that separates the Cemetery from Lake Bluff) not previously improved with an earlier grant. The estimated project cost is $1.2 million and The Cemetery’s match is $100,000. Fifty-seven grant proposals were submitted requesting $67 million of funding. $10 million is available under this program, with$8.5 million available for projects, $1 million reserved for supplemental funding to offset unexpected costs of projects and $500,000 set aside for administrative costs and project monitoring. The minimum project grant is $500,000. NOAA expects to announce grant recipients by early July. STATUS REPORT ON MR. CANNING’S REQUEST TO PURCHASE PRIVATE COLUMARIUM SITE: Mr. Alderks informed the Commission that Mr. Canning is still interested in purchasing a site along the edge of the ravine in Section A for a private family columbarium. Staff continued working on finding heirs of the Vail and Delava Smith families. There are no Smith heirs; Mr. Smith was buried in 1922. There was a lot co-owner, Mr. William Warren; the Warrens are buried in another lot in the Cemetery. The last Warren we can find died in Michigan in 1967. He had children, but we don’t have their names or contact information. The Vail family is not related to the Vails who currently reside in Lake Forest. There has been no activity on this lot in years. Member Beidler commented that Mr. Alderks has done enough trying to track down heirs. The Commission feels comfortable offering the unplotted spot adjacent to Vail and Smith for sale. Member Grace moved to put the lot on the market and staff is assigned to recommend pricing; the new lot is to be suitably placed away from the ravine. Member Prue Beidler seconded the motion, which carried unanimously. INFORMATION ON PRIVATE CEMETERY TRUSTS: Mr. Leone addressed the Commission’s question at the January meeting about considering allocating more of the Cemetery’s funds to equities. Since approximately 1/6 of the Cemetery’s funds are in private trusts, the Commission had traditionally assumed these funds must be in “safe” fixed income investments. This has limited the percentage of funds available for equities. Staff took a closer look at the various trust agreements. Five trusts, valued at $238,453 in April 2009, impose no restrictions on how funds can be invested and four trusts, valued at $256,571 specify safe, income bearing investments. It may be possible to invest funds from the first five trusts in equities. Only two of the private trusts do not restrict how earnings are used; seven specify that earnings must be spent on the family’s grave lot and its upkeep. Member Grace made a motion to instruct staff to pursue with the City Attorney the possibility of investing private trust funds in equities if the language of the original trust documents allows; also consider if the $950,000 in cash can be part of the base upon which the 70% for equities is calculated. Member John Greene seconded the motion, which carried unanimously. CONSIDERATION OF MR. SHAW’S REQUEST TO PURCHASE A FAMILY PILLAR: Mr. Leone reviewed Mr. Shaw’s offer to purchase one of the new Family Pillars for $50,000 plus the return of 2 niches in the Lake Garden for $5,000 each. The 2 niches were originally purchased for $3,825 each and are currently priced at $5,000 each. Mr. Shaw’s offer is less than the $70,000 Commission approved selling price for the new Family Pillars. Staff recommended this offer not be accepted as there is another potential purchaser currently talking with the Sexton about buying a new Family Pillar at full price; this could be construed as unfair and inconsistent. The Commission agreed. Member Beidler made a motion to politely deny Mr. Shaw’s request to purchase a new Family Pillar for a $50,000 and to not accept his offer to return the 2 niches for $10,000. The niches can be returned, per policy, for the amount originally paid ($3,825 each for a total of $7,650). Member John Green seconded the motion, Member Grace abstained, and 3 Commissioners were in favor. CEMETERY OVERSIGHT ACT: Mr. Alderks reviewed the State Cemetery Oversight Act that took effect in January 2010. As a government Cemetery, Lake Forest Cemetery is exempt from some parts of the law. Twelve new regulations apply to our Cemetery. Seven of these have been part of our normal operating procedures for years. The new signage requirement has been met. Two items concerning protection and supervision do not require new procedures or policies. Staff is studying our “License Agreement” to see if it meets the requirements of having a “contract” with customers. One of the Act’s requirements has not yet been established by the state; when the state’s database is ready we will enter burials within the 10 day requirements. Member Beidler asked if The City has a “whistleblower” policy, as most not-for-profits now have. Mr. Leone will check with the City Manager and City Attorney to ask if The City is considering such a policy. REPORT ON BARRELL MEMORIAL ARCHWAY: Mr. Alderks reported that the Barrell Memorial Archway, inspected this spring by the conservator who worked on it in 2002, has deteriorated over the last winter. The re-pointing done at that time is performing its intended job of helping extract salts from the limestone structure. As salts are extracted, they force the lime-based pointing material to pop out. The conservator believes several more maintenance repointing will be necessary over the next few decades. OTHER MATTERS: The Commission commented that use of the Century Gothic font for the agenda packet looks good; since it saves printer ink the Commission favors continuing its use. NEXT MEETING: JULY 21, 2010, 5:30 P.M.: The next regularly scheduled meeting of the Cemetery Commission will occur on Wednesday, July 21, 2010 at 5:30 p.m. at the Cemetery Gatehouse. ADJOURNMENT: The meeting was adjourned at 7:15 p.m. Ken Leone Superintendent of Public Works Cemetery Commission Minutes April 21, 2010 Page 5 of 5