S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3686
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 3, 2023
                                ___________
 
 Introduced  by  M.  of  A.  ZEBROWSKI  --  read once and referred 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
 the amount of funds to be appropriated  for  such  expenditure  and  its

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02084-01-3
              

 A. 3686                             2

 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
 A. 3686                             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,
 A. 3686                             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.