THE APPRAISAL OF CEMETERIES¹

In order to assess a cemetery, the following information must be obtained and reviewed.

Acreage:

1. Total acreage
2. Developed acreage - sold
3. Developed acreage - unsold
4. Undeveloped acreage
5. Acreage used for commercial purposes

Income:

1. The number and price of all sites sold in a normal year.
2. The number and price of all crypts sold in a normal year.
3. Income from the sale of memorials in a normal year.
4. Income derived from internments in a normal year.
5. Income derived from Perpetual Care Fund investments in a normal year.
6. Any miscellaneous income.

Expenses:

1. Sales Costs (sites, crypts, etc.) annually
2. Perpetual Care Reserve
3. Administration
4. Development Costs
5. Insurance
6. Miscellaneous Expense

Construction Data:

Size, quality, and grade of all improvements, with the exception of mausoleums, which are worked as part of the income approach.

The "Cemetery Income and Expense Questionnaire" should be used to contact the cemetery owner. A "normal year" can be the average of the three years prior to the next date of finality listed on this form. Due to the importance of the data requested, a subpoena may be required. If, after a reasonable period of time, the property owner has not supplied the necessary data, contact the Supervisor of Assessments for the jurisdiction in which the cemetery exists about issuing a subpoena. The supervisor must approve and sign any subpoena from his/her jurisdiction.

The assessment of a cemetery is made using the Income Approach to value the unsold sites and crypts, and the Cost Approach to value the improvements and their associated land. Using the data requested from the cemetery owner, several factors must be established before the assessment can be completed. These include:

1. The number of sites per acre. This figure is normally between 1,000 and 1,200 per acre.
   
2. The remaining economic life. Multiply the number of sites per acre by the remaining unsold developed acres. Divide the answer by the number of sites sold in a "normal" year. Undeveloped acreage is usually platted at approximately 30,000 sq. ft. per acre for sites (Ency. of Real Estate Appraisal).
   
3. The net income from the sale of sites and crypts.
   
4. Size, quality, age, type, and class of all improvements except mausoleums
   
5. Size and use of all land associated with these improvements.
   
6. Effective tax rate. The actual tax rate, including all rates which are applied to the assessment (county, state, municipal, sanitary, parks, etc.) multiplied by the growth factor.
   
7. The capitalization rate. The rate used in the area for capitalizing the income on income producing land plus the effective tax rate. Using the Present Worth of One per Period table, select the proper multiplier indicated by the remaining economic life and the capitalization rate.

With the above data, multiply the net income by the Inwood factor to arrive at the site and crypt value. Use the cost approach to value the improvements and associated land. The total value of the property is the sum of the site/crypt value and the improvement/associated land value. All land which consists of sold sites is to be assessed at no value or exempted.

¹E. J. Friedman, ed., Encyclopedia of Real Estate Appraising. Third Ed. (Englewood Cliffs, N.J.: Prentice Hall, 1978), pp. 1043-1053

The example given is an actual cemetery, consisting of 178.76 acres of land. There are 32.7244 acres of unsold and undeveloped land, 20.0006 acres of land used by the administrative and maintenance buildings, 120.035 acres which have been developed and sold and 6.0 acres of potential sites (Undeveloped).

32.7244 acres x 1,100 sites per acre = 36,000 potential sites

There are approximately 1,000 site sales per year.
Remaining economic life is:

36,000 potential sites divided by 1,000 sales per year = 36 yrs.

Gross Income (1984):	4 crypts in chapel @ $400 ea.	= $	1,600
	746 grave sites @ $495 ea.	=	369,270
	250 garden plots @ $1,700 ea.	=	425,000
	TOTAL GRAVE SITES	$	795,870

Expenses:	Grave Sales
	Sales costs (including 45% the administrative and development costs associated with the sale of the sites)
Net Income (1984):
Graves:	$795,870 - $358,140 (795.870 x 45%) = $437,730
Effective Tax Rate:	$3.45 x 43.4925% = 1.5%

Capitalization Rate:	Cap Rate for income producing land	=	9.0%
	Effective Tax Rate	=	1.5%
	Cap Rate	=	10.5%

Present Worth of One Per Period (10.5%) @ 36 yrs.) = 9.262

TOTAL SITE VALUE: $437,730 X 9.262 = $4,054,250

Associated Acreage
5.0 Acres needed for imps. @ $120,000/acre	= $	600,000
5.0006 Acres in Roadways @N/V	=	0
10.0 Acres in undevelopable slopes and floodplain	=	20,000
TOTAL ASSOCIATED ACREAGE	= $	620,000

Total Value of Cemetery

32.7244 Acres developed to be sold	$4,054,250
20.0006 Acres associated w/cemetery	620,000
6.0000 Acres of potential sites @12,000	72,000
120.0350 Acres sold @ no value	0
Improvements - worked by the cost approach	500,000
TOTAL PROPERTY VALUE	$5,246,250

The above income and expense percentages should be accepted as "example only". Actual numbers will have to be calculated from data provided by cemetery owners in your jurisdiction. Comparisons should be made from one cemetery to another to test the numbers used.

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