S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3264
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             January 28, 2021
                                ___________
 
 Introduced  by  Sen.  COMRIE -- read twice and ordered printed, and when
   printed to be committed to the Committee on Corporations,  Authorities
   and Commissions
 
 AN ACT to amend the not-for-profit corporation law, in relation to ceme-
   tery trust funds
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subparagraph 2 of paragraph (a)  of  section  1507  of  the
 not-for-profit corporation law, as amended by chapter 509 of the laws of
 2014, is amended to read as follows:
   (2)  The permanent maintenance fund is hereby declared to be and shall
 be held by the corporation as a trust fund, for the purpose of maintain-
 ing and preserving the cemetery, including  all  lots,  crypts,  niches,
 plots,  and  parts thereof. The principal of such fund shall be invested
 in such securities as are permitted for the investment of trust funds by
 section 11-2.3 of the estates, powers and trusts law. The income in  the
 form  of  interest and ordinary dividends therefrom shall be used solely
 for the maintenance and preservation of the cemetery grounds. [In  addi-
 tion, the governing board of the corporation may appropriate for expend-
 iture  solely  for  the  maintenance  and  preservation  of the cemetery
 grounds a portion of the net appreciation, in the fair market  value  of
 the principal of the trust, as is prudent under the standard established
 by  article  five-A  of this chapter, the prudent management of institu-
 tional funds act. In the event that  a  cemetery  corporation  seeks  to
 appropriate  any  percentage  of  its  net appreciation in its permanent
 maintenance fund in accordance  with  this  subparagraph,  the  cemetery
 corporation  shall  provide  notice  of  such  proposed appropriation by
 certified mail to the cemetery board not less than sixty days in advance
 of such proposed appropriation and shall disclose such appropriation  as
 part  of  and  in  addition  to  their  annual reporting requirements as
 defined in section fifteen hundred eight of this article, setting  forth

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD02074-01-1

 S. 3264                             2

 the  amount  of  funds  to  be appropriated for such expenditure and its
 effect on the permanent maintenance fund.  Such  proposed  appropriation
 shall  become  effective sixty days after receipt of such notice, unless
 the  cemetery  board  within such sixty-day period notifies the cemetery
 corporation that  the  board  objects  to  the  proposed  appropriation.
 Notwithstanding the foregoing provisions of this subparagraph, all prin-
 cipal  of  the permanent maintenance fund shall remain inviolate, except
 that, upon application to the  supreme  court  in  a  district  where  a
 portion  of the cemetery grounds is located, the court may make an order
 permitting the principal or a part thereof to be used for the purpose of
 current maintenance and preservation of the cemetery or  otherwise.]  IN
 ADDITION,  IN  ANY YEAR, THE GOVERNING BOARD OF A QUALIFIED CORPORATION,
 AS DEFINED BELOW, MAY APPROPRIATE FOR EXPENDITURE SOLELY FOR THE MAINTE-
 NANCE AND PRESERVATION OF THE CEMETERY GROUNDS, AND TREAT AS INCOME  FOR
 ALL  PURPOSES, AN AMOUNT OF TRUST PRINCIPAL EQUAL TO THE EXCESS, IF ANY,
 OF A PERCENTAGE OF THE FAIR MARKET VALUE OF THE PRINCIPAL OF THE  TRUST,
 AS  OF THE LAST DAY OF THE CEMETERY'S IMMEDIATELY PRECEDING FISCAL YEAR,
 AS IS PRUDENT UNDER THE STANDARD ESTABLISHED BY ARTICLE FIVE-A  OF  THIS
 CHAPTER, THE PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT OVER INTEREST
 AND ORDINARY DIVIDENDS RECEIVED IN SUCH YEAR; PROVIDED, HOWEVER, THAT AN
 APPROPRIATION  OF  AN AMOUNT (THE SAFE HARBOR AMOUNT) OF TRUST PRINCIPAL
 EQUAL TO THE EXCESS OF UP TO FOUR PERCENT OF THE FAIR  MARKET  VALUE  OF
 THE  PRINCIPAL  OF THE TRUST, AS OF THE LAST DAY OF THE CEMETERY'S IMME-
 DIATELY PRECEDING FISCAL  YEAR  OVER  INTEREST  AND  ORDINARY  DIVIDENDS
 RECEIVED  IN  SUCH  YEAR  SHALL BE DEEMED TO BE PRUDENT IN ALL EVENTS. A
 "QUALIFIED CORPORATION" MEANS A  CEMETERY  CORPORATION  WHICH  ADOPTS  A
 WRITTEN  INVESTMENT  POLICY  SETTING FORTH GUIDELINES ON INVESTMENTS AND
 DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS  IN  ACCORD  WITH  THE
 STANDARDS  OF  ARTICLE FIVE-A OF THIS CHAPTER. IF A CEMETERY CORPORATION
 SEEKS TO APPROPRIATE ANY PERCENTAGE OF THE PRINCIPAL  OF  THE  PERMANENT
 MAINTENANCE  FUND  IN  ACCORDANCE  WITH  THIS SUBPARAGRAPH, THE CEMETERY
 CORPORATION SHALL PROVIDE NOTICE  OF  SUCH  PROPOSED  APPROPRIATION  AND
 PROVIDE A COPY OF ITS WRITTEN INVESTMENT POLICY BY CERTIFIED MAIL TO THE
 CEMETERY  BOARD  NOT  LESS  THAN  SIXTY DAYS IN ADVANCE OF SUCH PROPOSED
 APPROPRIATION AND SHALL DISCLOSE SUCH APPROPRIATION AS PART  OF  AND  IN
 ADDITION  TO  THEIR  ANNUAL REPORTING REQUIREMENTS AS DEFINED IN SECTION
 FIFTEEN HUNDRED EIGHT OF THIS ARTICLE, SETTING FORTH THE AMOUNT OF PRIN-
 CIPAL TO BE APPROPRIATED FOR SUCH EXPENDITURE  AND  ITS  EFFECT  ON  THE
 PERMANENT  MAINTENANCE  FUND.   SUCH PROPOSED APPROPRIATION SHALL BECOME
 EFFECTIVE SIXTY DAYS AFTER RECEIPT OF SUCH NOTICE, UNLESS  THE  PROPOSED
 APPROPRIATION  EXCEEDS  THE SAFE HARBOR AMOUNT OR THE WRITTEN INVESTMENT
 POLICY IS NOT PROVIDED OR IS NOT PREPARED IN ACCORDANCE WITH THE  STAND-
 ARDS  OF  ARTICLE  FIVE-A OF THIS CHAPTER, AND THE CEMETERY BOARD WITHIN
 SUCH SIXTY-DAY PERIOD NOTIFIES THE CEMETERY CORPORATION THAT  THE  BOARD
 OBJECTS TO THE PROPOSED APPROPRIATION. EXCEPT TO THE EXTENT THAT PRINCI-
 PAL  IS  UTILIZED  AS  THE RESULT OF THE FOREGOING, ALL PRINCIPAL OF THE
 PERMANENT MAINTENANCE FUND SHALL  REMAIN  INVIOLATE,  WITH  THE  FURTHER
 EXCEPTION  THAT,  UPON  APPLICATION  TO  THE SUPREME COURT IN A DISTRICT
 WHERE A PORTION OF THE CEMETERY GROUNDS IS LOCATED, THE COURT  MAY  MAKE
 AN  ORDER  PERMITTING THE PRINCIPAL OR A PART THEREOF TO BE USED FOR THE
 PURPOSE OF CURRENT MAINTENANCE  AND  PRESERVATION  OF  THE  CEMETERY  OR
 OTHERWISE.  Such application may be made by the cemetery board on notice
 to the corporation or by the  corporation  on  notice  to  the  cemetery
 board.  Unless the cemetery can clearly demonstrate that it lacks suffi-
 cient future revenue to make repayment,  any  such  allowance  from  the
 permanent maintenance fund shall be in the form of a loan, and the court

 S. 3264                             3
 
 shall  determine the method for repayment of such a loan by the cemetery
 to the fund.
   §  2.  Subparagraph 2 of paragraph (c) of section 1507 of the not-for-
 profit corporation law, as amended by chapter 509 of the laws  of  2014,
 is amended to read as follows:
   (2)  The  principal  of such funds, whether kept in the perpetual care
 fund or otherwise, and unless already so invested when  received,  shall
 be  invested  within  a  reasonable time after receipt thereof, and kept
 invested, in such securities as are  permitted  for  the  investment  of
 trust  funds  by  sections  11-2.2 and 11-2.3 of the estates, powers and
 trusts law. The income arising therefrom shall be used  solely  for  the
 perpetual  care and maintenance of the lot or plots or parts thereof for
 which such income has been provided. [In addition, the  governing  board
 of  the  corporation  may  appropriate  for  expenditure  solely for the
 perpetual care and maintenance of the lot or plots or parts thereof  for
 which  such  income has been provided, a portion of the net appreciation
 in the fair market value of the principal of the  trust  as  is  prudent
 under  the  standard  established by article five-A of this chapter, the
 prudent management of institutional funds act. In the event that a ceme-
 tery corporation seeks to appropriate any percentage of its net appreci-
 ation in its perpetual care fund in accordance with  this  subparagraph,
 the  cemetery  corporation shall provide notice of such appropriation to
 the cemetery board not less than sixty days in advance of such  proposed
 appropriation  and  shall  disclose such appropriation as part of and in
 addition to their annual reporting requirements as  defined  in  section
 fifteen  hundred eight of this article setting forth the amount of funds
 appropriated for such expenditure and its effect on the  perpetual  care
 funds.  Such  proposed  appropriation  shall become effective sixty days
 after receipt of such notice, unless  the  cemetery  board  within  such
 sixty  day  period  notifies  the  cemetery  corporation  that the board
 objects to the proposed appropriation.] IN ADDITION, IN  ANY  YEAR,  THE
 GOVERNING BOARD OF A QUALIFIED CORPORATION, AS DEFINED BELOW, MAY APPRO-
 PRIATE  FOR  EXPENDITURE  SOLELY FOR THE MAINTENANCE AND PRESERVATION OF
 THE CEMETERY GROUNDS, AND TREAT AS INCOME FOR ALL PURPOSES, AN AMOUNT OF
 TRUST PRINCIPAL EQUAL TO THE EXCESS, IF ANY, OF A PERCENTAGE OF THE FAIR
 MARKET VALUE OF THE PRINCIPAL OF THE TRUST, AS OF THE LAST  DAY  OF  THE
 CEMETERY'S  IMMEDIATELY  PRECEDING  FISCAL YEAR, AS IS PRUDENT UNDER THE
 STANDARD ESTABLISHED BY ARTICLE FIVE-A  OF  THIS  CHAPTER,  THE  PRUDENT
 MANAGEMENT  OF  INSTITUTIONAL FUNDS ACT OVER INTEREST AND ORDINARY DIVI-
 DENDS RECEIVED IN SUCH YEAR; PROVIDED, HOWEVER, THAT AN APPROPRIATION OF
 AN AMOUNT (THE SAFE HARBOR AMOUNT)  OF  TRUST  PRINCIPAL  EQUAL  TO  THE
 EXCESS  OF  UP TO FOUR PERCENT OF THE FAIR MARKET VALUE OF THE PRINCIPAL
 OF THE TRUST, AS OF THE LAST DAY OF THE CEMETERY'S IMMEDIATELY PRECEDING
 FISCAL YEAR OVER INTEREST AND ORDINARY DIVIDENDS RECEIVED IN  SUCH  YEAR
 SHALL  BE  DEEMED TO BE PRUDENT IN ALL EVENTS. A "QUALIFIED CORPORATION"
 MEANS A CEMETERY CORPORATION WHICH ADOPTS A  WRITTEN  INVESTMENT  POLICY
 SETTING FORTH GUIDELINES ON INVESTMENTS AND DELEGATION OF MANAGEMENT AND
 INVESTMENT  FUNCTIONS  IN ACCORD WITH THE STANDARDS OF ARTICLE FIVE-A OF
 THIS CHAPTER.  IF  A  CEMETERY  CORPORATION  SEEKS  TO  APPROPRIATE  ANY
 PERCENTAGE  OF  THE  PRINCIPAL  OF THE PERPETUAL CARE FUND IN ACCORDANCE
 WITH THIS SUBPARAGRAPH, THE CEMETERY CORPORATION SHALL PROVIDE NOTICE OF
 SUCH PROPOSED APPROPRIATION AND PROVIDE A COPY OF ITS WRITTEN INVESTMENT
 POLICY BY CERTIFIED MAIL TO THE CEMETERY BOARD NOT LESS THAN SIXTY  DAYS
 IN ADVANCE OF SUCH PROPOSED APPROPRIATION AND SHALL DISCLOSE SUCH APPRO-
 PRIATION  AS  PART OF AND IN ADDITION TO THEIR ANNUAL REPORTING REQUIRE-
 MENTS AS DEFINED IN SECTION  FIFTEEN  HUNDRED  EIGHT  OF  THIS  ARTICLE,

 S. 3264                             4
 
 SETTING  FORTH  THE  AMOUNT  OF  PRINCIPAL  TO  BE APPROPRIATED FOR SUCH
 EXPENDITURE AND ITS EFFECT ON THE PERPETUAL  CARE  FUND.  SUCH  PROPOSED
 APPROPRIATION  SHALL  BECOME  EFFECTIVE SIXTY DAYS AFTER RECEIPT OF SUCH
 NOTICE, UNLESS THE PROPOSED APPROPRIATION EXCEEDS THE SAFE HARBOR AMOUNT
 OR  THE  WRITTEN INVESTMENT POLICY IS NOT PROVIDED OR IS NOT PREPARED IN
 ACCORDANCE WITH THE STANDARDS OF ARTICLE FIVE-A OF THIS CHAPTER, AND THE
 CEMETERY BOARD WITHIN SUCH SIXTY-DAY PERIOD NOTIFIES THE CEMETERY CORPO-
 RATION THAT THE BOARD OBJECTS TO THE PROPOSED APPROPRIATION.
   § 3. This act shall take effect immediately.