senate Bill S5370

2011-2012 Legislative Session

Relates to the regulation of cemetery trust funds and finances by the cemetery board

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Archive: Last Bill Status - Passed Senate


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Feb 29, 2012 referred to corporations, authorities and commissions
delivered to assembly
passed senate
Feb 15, 2012 advanced to third reading
Feb 14, 2012 2nd report cal.
Feb 13, 2012 1st report cal.194
Jan 04, 2012 referred to corporations, authorities and commissions
returned to senate
died in assembly
Jun 15, 2011 referred to corporations, authorities and commissions
delivered to assembly
passed senate
Jun 13, 2011 advanced to third reading
Jun 07, 2011 2nd report cal.
Jun 06, 2011 1st report cal.1015
May 13, 2011 referred to corporations, authorities and commissions

Votes

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Feb 13, 2012 - Corporations, Authorities and Commissions committee Vote

S5370
6
0
committee
6
Aye
0
Nay
0
Aye with Reservations
0
Absent
0
Excused
0
Abstained
show Corporations, Authorities and Commissions committee vote details

Corporations, Authorities and Commissions Committee Vote: Feb 13, 2012

Jun 6, 2011 - Corporations, Authorities and Commissions committee Vote

S5370
6
0
committee
6
Aye
0
Nay
0
Aye with Reservations
0
Absent
0
Excused
0
Abstained
show Corporations, Authorities and Commissions committee vote details

Corporations, Authorities and Commissions Committee Vote: Jun 6, 2011

S5370 - Bill Details

See Assembly Version of this Bill:
A7418
Current Committee:
Assembly Corporations, Authorities And Commissions
Law Section:
Not-for-Profit Corporation Law
Laws Affected:
Amd ยงยง1506 & 1507, N-PC L

S5370 - Bill Texts

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Relates to the regulation of cemetery trust funds and finances by the cemetery board.

view sponsor memo
BILL NUMBER:S5370

TITLE OF BILL:
An act
to amend the not-for-profit corporation law, in relation to regulation
of cemetery trust funds and finances by the cemetery board

PURPOSE OR GENERAL IDEA OF BILL:
This bill would modernize and
streamline provisions of the Not-for-Profit Corporation Law to
provide clear regulatory guidance to the New York State Cemetery
Board in approvals of cemetery transactions and financial oversight.
The State Cemetery Board is composed of the Secretary of State,
Attorney General and Commissioner of Health or their designees.

SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill amends paragraph
(a) of Section 1506 of Not-for-Profit Corporation Law to grant
authority for the approval of the purchase of cemetery land to the
State Cemetery Board. It eliminates the unnecessary and duplicative
step of having this approval signed off on by the local Supreme Court
after the State Cemetery Board has approved the transaction.

Paragraph (i) of Section 1506 of Not-for-Profit
Corporation Law to give the State Cemetery Board authority to approve
the sale or disposition of cemetery lands.

Paragraph (a) of Section 1507 of Not-for-Profit Corporation Law
to grant the authority of the regulation
of access to cemetery trust funds to the State Cemetery Board through
application and review.

Paragraphs (e) and (e-1) of Section
1507 of Not- for-Profit Corporation Law to modernize the process of
the designation of fiduciaries for cemeteries and require that notice
shall be provided to the State Cemetery Board for review.

Section 3 of the proposal indicates that this act shall take effect
immediately.

EXISTING LAW:
The Not-for-Profit Corporation Law regulating cemeteries
does not currently reflect a modern and streamlined regulatory
approach to cemetery regulation.

JUSTIFICATION:
Existing statutes related to cemetery regulation are
duplicative and create unnecessary delays in the proper oversight of
regulated cemetery entities. New York's regulated cemeteries are
among the most supervised in the nation. The State Cemetery Board is
already required to approve and be involved in the regulations of
cemeteries addressed by this bill.

This legislation would grant clear authority to the State Cemetery
Board to regulate these entities.


PRIOR LEGISLATIVE HISTORY:
New bill.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
This act shall take immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5370

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                              May 13, 2011
                               ___________

Introduced  by  Sen.  RANZENHOFER -- read twice and ordered printed, and
  when printed to be committed to the Committee on Corporations, Author-
  ities and Commissions

AN ACT to amend the not-for-profit corporation law, in relation to regu-
  lation of cemetery trust funds and finances by the cemetery board

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. Paragraphs (a) and (i) of section 1506 of the not-for-pro-
fit corporation law, paragraph (a) as added by chapter 871 of  the  laws
of 1977 and paragraph (i) as amended by chapter 292 of the laws of 1999,
are amended to read as follows:
  (a)   Purchase of land; notice to CEMETERY board [and court approval].
No cemetery corporation, in purchasing real  property  hereafter,  shall
pay or agree to pay more than the fair and reasonable market value ther-
eof.   The terms of the purchase, including the price to be paid and the
method of payment,  shall  be  subject[,  upon  notice]  to  NOTICE  AND
APPROVAL  OF  the cemetery board[, to approval by the supreme court in a
district where any portion of the land is located].  In determining  the
fair  and  reasonable  market value, the [court] CEMETERY BOARD may take
into consideration the method by which the purchase price is to be paid.
  (i) Sale or disposition of cemetery lands. (1) No cemetery corporation
may sell or dispose of the fee of all or any part of its lands dedicated
to cemetery use, unless it  shall  prove  to  the  satisfaction  of  the
[supreme  court  in the district where any portion of the cemetery lands
is located] CEMETERY BOARD,  either:  (A)  that  all  bodies  have  been
removed  from  each and every part of the cemetery, that all the lots in
the entire cemetery have been reconveyed to the corporation and are  not
used  for  burial purposes, and that it has no debts and liabilities, or
(B) that the land to be sold or disposed of is not used or is not  phys-
ically  adaptable  for  burial purposes and that the sale or disposition
will benefit the cemetery corporation and the owners of plots and graves

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11001-01-1

S. 5370                             2

in the cemetery, and (C) that the sale or disposition is not to a funer-
al entity as defined in paragraph (c) of section fifteen  hundred  six-a
of  this  article.  (2)  If  the sale or disposition is made pursuant to
subparagraph  (A)  of  subdivision  one  of this paragraph, the cemetery
shall satisfy the [court] CEMETERY BOARD that it is in the public inter-
est to dispose of such cemetery land in the manner  proposed;  that  the
subject land is not suitable for cemetery purposes or is no longer need-
ed  by  the  community  for such cemetery uses or purposes; and that the
subject land is being sold for its current market value. (3) If the sale
or disposition of the land is  made  pursuant  to  subparagraph  (B)  of
subdivision  one  of  this  paragraph,  the [court] CEMETERY BOARD shall
order that the consideration received by the cemetery corporation,  less
the  necessary  expenses incurred, shall be deposited into the permanent
maintenance fund established by the  cemetery  corporation  pursuant  to
paragraph  (a)  of  section  fifteen  hundred seven of this article. (4)
Notice of any application hereunder shall be given IN  ADDITION  to  the
cemetery  board, to the holders of certificates of indebtedness and land
shares of the cemetery  corporation,  and  to  any  person  [interested]
HAVING  INFORMED THE CEMETERY BOARD BY PETITION OR NOTICE OF INTEREST in
the proceeding [pursuant to section five hundred eleven of this  chapter
(Petition for leave of court)].
  S 2. Subparagraph 2 of paragraph (a), paragraph (e) and subparagraph 2
of  paragraph  (e-1)  of  section 1507 of the not-for-profit corporation
law, subparagraph 2 of paragraph (a) as amended by chapter  679  of  the
laws  of 2004, paragraph (e) as added by chapter 871 of the laws of 1977
and subparagraph 2 of paragraph (e-1) as amended by chapter 111  of  the
laws of 2000, are 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, realized (with respect to all
assets) and unrealized (with respect only to readily marketable assets),
in the fair market value of the principal of the trust in excess of  its
adjusted  historic  dollar value, as defined in this subparagraph, as is
prudent under the standard established by section seven  hundred  seven-
teen  of this chapter (duty of directors and officers) and as limited by
the maximum annual appropriation defined in this subparagraph.  For  the
purposes of this subparagraph, the adjusted historic dollar value of the
trust  principal  shall  be the market value of the principal three full
calendar years prior to the effective date of  the  amendments  made  to
this  subparagraph,  plus  all  subsequent  additions thereto, minus all
allowable deductions therefrom, adjusted by the  rate  of  inflation  as
measured  by  the  applicable  consumer  price index. The maximum annual
appropriation shall be sixty percent of the average of the net  appreci-
ation in the fund for the immediately preceding three years, but only to
the  extent  that it exceeds the adjusted historical dollar value of the
fund in the current year.  Cemetery  corporations  shall  keep  complete
records  of  the adjusted historic dollar value of the permanent mainte-
nance fund. In the event that a cemetery corporation seeks to  appropri-

S. 5370                             3

ate  any percentage of its net appreciation in its permanent maintenance
fund in accordance with  this  subparagraph,  the  cemetery  corporation
shall  send a notice of such proposed appropriation by certified mail to
the cemetery board, setting forth the amount of funds to be appropriated
for  such  expenditure and its effect on the permanent maintenance fund,
and certifying that such amount  does  not  exceed  the  maximum  annual
appropriation  defined in this subparagraph. 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] CEMETERY BOARD,
THE CEMETERY BOARD may make an order permitting the principal or a  part
thereof  to be used for the purpose of current maintenance and preserva-
tion 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  demon-
strate  that  it  lacks sufficient future revenue to make repayment, any
such allowance from the permanent maintenance fund shall be in the  form
of  a  loan,  and  the court shall determine the method for repayment of
such a loan by the cemetery to the fund. Any  loan  from  the  permanent
maintenance  fund  shall  be  ignored  for  the purpose of computing the
adjusted dollar value of the fund. In the event that the  [court]  CEME-
TERY  BOARD  determines  that  an  outright  grant of principal from the
permanent maintenance fund is necessary, the amount of such grant  shall
be deducted from the adjusted historic dollar value of the trust princi-
pal for the purposes of this subparagraph.
  (e)  Designation  of fiduciary corporation by directors or trustees of
cemetery corporation to act as custodians of funds. Notwithstanding  the
provisions  of  any  other  law,  the  directors or trustees of cemetery
corporations are hereby authorized to designate a bank or trust  company
to act as custodian and trustee of any or all of the respective funds of
such  cemetery corporation received by it for the perpetual care of lots
in the cemetery thereof pursuant to subdivision (b),  of  this  section,
the  permanent  maintenance of such cemetery pursuant to subdivision (a)
of this section, and for special purposes pursuant to subdivision (f) of
this section. Such corporate trustee shall be designated by a resolution
duly adopted by the board of directors or trustees [and  approved  by  a
justice of the supreme court of the judicial district in which the ceme-
tery  of  said corporation is located]; and the directors or trustees of
such cemetery corporation may[, with the approval of the justice of  the
supreme  court,] revoke such trust, and either take over such trust fund
or name another trustee to handle the same, but if not so revoked,  such
trust  shall  be perpetual. NOTICE OF SUCH A CHANGE IN DESIGNATION SHALL
BE PROVIDED TO THE CEMETERY BOARD WITHIN SIXTY DAYS OF SUCH  DESIGNATION
BY  THE  BOARD OF DIRECTORS OR TRUSTEES OF THE CEMETERY CORPORATION. Any
bank or trust company accepting any such cemetery fund  shall  keep  the
same  separate from all other funds, except that it may, irrespective of
any provision contained in this article  invest  the  same  in  a  legal
common  trust  fund  or  in  shares of a mutual trust investment company
organized under the banking law, and shall pay over the  net  income  to
the  directors  or trustees of the cemetery corporation by whom it shall
be expended and applied to the purpose for which  such  trust  fund  was

S. 5370                             4

paid  to  the cemetery corporations and accounted for in accordance with
such subdivisions (a), (b) and (f) of this section.
  (2)  The principal of the fund shall be invested in securities permit-
ted for the investment of trust funds by sections 11-2.2 and  11-2.3  of
the  estates,  powers  and  trusts law. The principal of such 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] CEMETERY BOARD, WHICH may make an order permitting the  principal
or  a  part  thereof  to  be used for the purpose of restoring monuments
damaged or defaced by an act of vandalism. The income arising from  such
investment  shall  be  used  solely for the costs and expenses resulting
from an act of vandalism against monuments in such cemetery.
  S 3. This act shall take effect immediately.

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