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S05111 Summary:

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S05111 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         5111--A
            Cal. No. 248
 
                               2013-2014 Regular Sessions
 
                    IN SENATE
 
                                      May 10, 2013
                                       ___________
 
        Introduced  by  Sen.  RANZENHOFER -- read twice and ordered printed, and
          when printed to be committed to the Committee on Corporations, Author-
          ities and Commissions -- recommitted to the Committee on Corporations,
          Authorities and Commissions in accordance with Senate Rule 6,  sec.  8

          -- reported favorably from said committee, ordered to first and second
          report,  ordered  to  a  third reading, amended and ordered reprinted,
          retaining its place in the order of third reading
 
        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:
 
     1    Section  1.  Subparagraph  2  of  paragraph (a) of section 1507 of the
     2  not-for-profit corporation law, as amended by chapter 679 of the laws of
     3  2004, is amended to read as follows:
     4    (2) The permanent maintenance fund is hereby declared to be and  shall
     5  be held by the corporation as a trust fund, for the purpose of maintain-
     6  ing  and  preserving  the  cemetery, including all lots, crypts, niches,

     7  plots, and parts thereof. The principal of such fund shall  be  invested
     8  in such securities as are permitted for the investment of trust funds by
     9  section  11-2.3 of the estates, powers and trusts law. The income in the
    10  form of interest and ordinary dividends therefrom shall be  used  solely
    11  for  the  maintenance and preservation of the cemetery grounds. In addi-
    12  tion, the governing board of the corporation may appropriate for expend-
    13  iture solely for  the  maintenance  and  preservation  of  the  cemetery
    14  grounds  a  portion  of the net appreciation, [realized (with respect to
    15  all assets) and unrealized (with  respect  only  to  readily  marketable
    16  assets),]  in  the  fair  market value of the principal of the trust [in
    17  excess of its adjusted historic dollar value, as defined in this subpar-

    18  agraph], as is prudent under the standard established by [section  seven
    19  hundred  seventeen  of this chapter (duty of directors and officers) and
    20  as limited by the maximum annual appropriation defined in this  subpara-

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD10878-03-4
        S. 5111--A                          2

     1  graph.  For  the  purposes  of  this subparagraph, the adjusted historic
     2  dollar value of the trust principal shall be the  market  value  of  the
     3  principal  three  full calendar years prior to the effective date of the

     4  amendments  made  to  this  subparagraph,  plus all subsequent additions
     5  thereto, minus all allowable deductions therefrom, adjusted by the  rate
     6  of  inflation  as  measured  by the applicable consumer price index. The
     7  maximum annual appropriation shall be sixty percent of  the  average  of
     8  the  net  appreciation  in  the fund for the immediately preceding three
     9  years, but only to the extent that it exceeds  the  adjusted  historical
    10  dollar  value  of  the  fund  in the current year. Cemetery corporations
    11  shall keep complete records of the adjusted historic dollar value of the
    12  permanent maintenance fund] article five-A of this chapter, the  prudent
    13  management  of  institutional  funds  act.  In the event that a cemetery

    14  corporation seeks to appropriate any percentage of its net  appreciation
    15  in  its permanent maintenance fund in accordance with this subparagraph,
    16  the cemetery corporation shall [send a notice] provide  notice  of  such
    17  proposed  appropriation by certified mail to the cemetery board not less
    18  than sixty days in advance of  such  proposed  appropriation  and  shall
    19  disclose  such  appropriation as part of and in addition to their annual
    20  reporting requirements as defined in section fifteen  hundred  eight  of
    21  this  article,  setting forth the amount of funds to be appropriated for
    22  such expenditure and its effect on the permanent maintenance fund[,  and
    23  certifying that such amount does not exceed the maximum annual appropri-

    24  ation  defined  in this subparagraph]. Such proposed appropriation shall
    25  become effective sixty days after receipt of  such  notice,  unless  the
    26  cemetery board within such sixty-day period notifies the cemetery corpo-
    27  ration  that  the  board objects to the proposed appropriation. Notwith-
    28  standing the foregoing provisions of this subparagraph, all principal of
    29  the permanent maintenance fund shall remain inviolate, except that, upon
    30  application to the supreme court in a district where a  portion  of  the
    31  cemetery  grounds is located, the court may make an order permitting the
    32  principal or a part thereof to be used for the purpose of current  main-
    33  tenance  and preservation of the cemetery or otherwise. Such application
    34  may be made by the cemetery board on notice to the corporation or by the
    35  corporation on notice to the cemetery board.  Unless  the  cemetery  can

    36  clearly  demonstrate  that  it  lacks  sufficient future revenue to make
    37  repayment, any such allowance from the permanent maintenance fund  shall
    38  be  in  the form of a loan, and the court shall determine the method for
    39  repayment of such a loan by the cemetery to the fund. [Any loan from the
    40  permanent maintenance fund shall be ignored for the purpose of computing
    41  the adjusted dollar value of the fund.  In  the  event  that  the  court
    42  determines  that an outright grant of principal from the permanent main-
    43  tenance fund is necessary, the amount of such grant  shall  be  deducted
    44  from  the  adjusted historic dollar value of the trust principal for the
    45  purposes of this subparagraph.]
    46    § 2. Subparagraph 2 of paragraph (c) of section 1507 of  the  not-for-

    47  profit  corporation  law, as amended by chapter 111 of the laws of 2000,
    48  is amended to read as follows:
    49    (2) The principal of such funds, whether kept in  the  perpetual  care
    50  fund  or  otherwise, and unless already so invested when received, shall
    51  be invested within a reasonable time after  receipt  thereof,  and  kept
    52  invested,  in  such  securities  as  are permitted for the investment of
    53  trust funds by sections 11-2.2 and 11-2.3 of  the  estates,  powers  and
    54  trusts  law.  The  income arising therefrom shall be used solely for the
    55  perpetual care and maintenance of the lot or plots or parts thereof  for
    56  which such income has been provided. In addition, the governing board of
        S. 5111--A                          3
 
     1  the corporation may appropriate for expenditure solely for the perpetual

     2  care and maintenance of the lot or plots or parts thereof for which such
     3  income  has been provided, a portion of the net appreciation in the fair
     4  market value of the principal of the trust as is prudent under the stan-
     5  dard  established by article five-A of this chapter, the prudent manage-
     6  ment of institutional funds act. In the event  that  a  cemetery  corpo-
     7  ration  seeks  to  appropriate any percentage of its net appreciation in
     8  its perpetual care fund in accordance with this subparagraph, the  ceme-
     9  tery corporation shall provide notice of such appropriation to the ceme-
    10  tery  board  not less than sixty days in advance of such proposed appro-
    11  priation and shall  disclose  such  appropriation  as  part  of  and  in

    12  addition  to  their  annual reporting requirements as defined in section
    13  fifteen hundred eight of this article setting forth the amount of  funds
    14  appropriated  for  such expenditure and its effect on the perpetual care
    15  funds. Such proposed appropriation shall  become  effective  sixty  days
    16  after  receipt  of  such  notice,  unless the cemetery board within such
    17  sixty day period  notifies  the  cemetery  corporation  that  the  board
    18  objects to the proposed appropriation.
    19    § 3. This act shall take effect immediately.