Source: http://www.cuthbertsonlaw.com/cemetery_law_blog?page=5
Timestamp: 2018-12-18 21:17:32
Document Index: 638929377

Matched Legal Cases: ['art 1', '§ 553', '§1507', '§1507', '§1507', '§ 200', '§ 200', '§201']

Proposed Rulemaking Published in Register: Part 1, How Cemeteries are Categorized
This post will be the first in a series looking at the rulemaking proposed on December 9, 2015 on “Cemetery Annual Financial Reports; Commercial Crime Coverage; and Permanent Maintenance Fund Contributions.” Today’s post looks at the changes to how cemeteries are categorized.
From the very first clauses, this proposed rulemaking makes some major changes, the first of which is how small, medium, and large cemeteries are categorized. Currently, small cemeteries are those with under $400,000 in total funds, medium cemeteries have between $400,000 and $1 million in total funds, and large cemeteries are those with more than $1 million in total funds. The proposed rulemaking changes this in two significant ways: it significantly raises the dollar amount of each category, and no longer bases that value on “total funds.” Instead, valuation is based upon “Total Financial Assets,” which includes “all general funds, permanent maintenance funds, perpetual care funds, special trust funds and other funds under the control of the cemetery, including both restricted and unrestricted funds, regardless of the form in which they are held.”
Thus the new categories are:
(1) Small cemeteries will now be those with under $1 million in total financial assets in the preceding calendar year;
(2) Medium cemeteries will be those with between $1 million and $10 million in total financial assets and less than $1 million in total receipts for the preceding calendar year; and
(3) Large cemeteries will be those with either (i) over $10 million in financial assets or (ii) more than $1 million in total receipts for the preceding calendar year.
Finally, this section defines non-traditional cemeteries as “any cemetery corporation which does not offer and has not in the past offered full body ground burials,” and excludes such cemeteries from the size categories discussed above.
Draft Net Appreciation (Total Return) Policy Guidance Issued by the Division of Cemeteries, Part III
This is the third and final post in our continuing discussion of the draft guidance issued by the Division of Cemeteries. It will provide a brief summary of some of the more minor but notable provisions included in the guidance. These include:
• An emphasis that only net appreciation of the Fund and not Fund principal can be spent;
• A cemetery must be in “good standing” (this term is explained in the draft regulations) to apply;
• Net appreciation can only be used for maintenance and preservation of cemetery grounds and not directly or indirectly for any other purpose;
• Net appreciation is a last resort and general funds and income from the Fund must be maximized before making an application to use net appreciation;
• A cemetery must show a calculation of “net appreciation” that indicates a positive balance. If the calculation indicates a zero or negative calculation, no net appreciation exists; and
• Only a portion of that appreciation that is “prudent” under PMIFA can be appropriated. An appropriation of 20% or less of net appreciation is presumptively prudent. An appropriation of 20% or more will be objected to and disapproved absent unusual and exigent circumstances.
By requiring cemeteries to apply the PMIFA instead of the little understood prior formula, it is hoped that cemeteries will have increased tools to aid their maintenance and preservation. Numerous concerns have already been raised about how net appreciation is calculated under the proposed guidance particularly the choice of 12/31/99 as the starting date for the market value of the Fund. As such, cemeteries are being encouraged to offer their input on how the draft guidance can be improved.
Draft Net Appreciation (Total Return) Policy Guidance Issued by the Division of Cemeteries, Part II
This is the second post in our continuing discussion of the draft guidance issued by the Division of Cemeteries. It will look at Prudent Management of Institutional Funds Act Analysis.
Under the PMIFA, in deciding whether to appropriate net appreciation, a cemetery must act “in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances,” and must consider, if relevant, the following factors:
(7) Where appropriate and circumstances would otherwise warrant, alternatives to expenditure of the endowment fund, giving due consideration to the effect that such alternatives may have on the institution; and
(8) The investment policy of the institution.
NPCL § 553(a)(1)-(8). If you wanted to know more about how these provisions are applied, the full copy of the draft regulations have a helpful explanation of how the above eight factors work in context of a cemetery.
Draft Net Appreciation (Total Return) Policy Guidance Issued by the Division of Cemeteries, Part I
Section 1507 and its amendment
§1507 allows a cemetery to appropriate any percentage of the net appreciation in its permanent maintenance fund or perpetual care funds (“Fund”) provided it gives sixty days advance notice to the Cemetery Board in addition to its normal reporting requirements. Previous to the passage of this amendment to §1507, a cemetery that wanted to make such an appropriation was required to utilize a formula that, according to the sponsor’s memorandum for the legislation, was “difficult for cemeteries to utilize or understand.” As a result, there were almost no reports of cemeteries using this provision.
The amendment to §1507 provides that, in deciding whether to appropriate a percentage of net appreciation, it must follow the Prudent Management of Institutional Funds Act (“PMIFA”), which is the standard set forth in Article 5-A of the NFPCL.
A cemetery that desires to appropriate a portion of net appreciation of the Fund must complete a Fund Notice. A cemetery can only make application once a year and failure to accurately and completely fill out the form will result in an objection to and disapproval of the application.
Progress Made on Financial Reporting Regulations Involving Commercial Crimes Coverage
At the Cemetery Board’s February 12, 2015 meeting, it was announced that there had been significant progress made on converting fidelity bonding requirements to a commercial crimes coverage provision. Concerns had been raised about the cost of commercial crime coverage required by proposed cemetery regulations. A change to commercial crime coverage was necessary because the fidelity bonds required by 19 NYCRR § 200.5 were no longer available and had been replaced by commercial crime coverage. Large cemeteries, in particular, had balked at the requirement that coverage be $15,000 or 10% of total financial assets, whichever is greater. Cemeteries with substantial assets would incur great expense in obtaining coverage in such large amounts and the coverage may not even be available. A compromise was reached that provides for an overall cap of $500,000 in coverage but allows the Division of Cemeteries to increase the amount of coverage if circumstances warranted it. If the Division of Cemeteries did order an increase, this order is still subject to challenge by a cemetery that was aggrieved by such an order pursuant to 19 NYCRR § 200.2(b). The Division cannot, however, require coverage greater than 10% of total financial assets. The Cemetery Board unanimously approved a resolution to publish a notice of proposed rule-making with the compromise language on commercial crime coverage.
The proposed rulemaking related to this was published on December 9, 2015. Starting in the next week or so, will have a five part series to discuss the final rulemaking proposal and the various provisions included therein.
Regulations for Pet Cemeteries and Financial Reporting
The Division of Cemeteries and the Cemetery Board continue to grapple with comments on new regulations in these two areas. At its February 2014 meeting, the Cemetery Board indicated that it is in the process of drafting a response to pet cemetery regulations. These regulations would allow pet cemeteries to bury human remains but would also require that they not charge a fee for human burials and do not advertise burial services. The New York State Association of Cemeteries (“NYSAC”) has offered comments to these regulations and opposes these regulations on the grounds that the Cemetery Board is acting outside of its authority to allow pet cemeteries to bury human remains. The Cemetery Board also continues to address comments to new financial reporting regulations. While many issues have been addressed, there continues to be concern with §201.19 of the proposed regulations because of what appears to be a requirement that the deposit of the entire Permanent Maintenance Fund contribution be made at the initiation of sale.
That concludes our discussion of Oakwood Cemetery. From everyone here at Cuthbertson Law, we hope you found it to be informative, and encourage you to continue checking the Cuthbertson Law Cemetery Blog, as well as our other postings on land use and civil rights law, in the future.
Crematory Gets Zoned Out: Oakwood Cemetery Part III, The Appeal
This post is the third part of our Oakwood Cemetery series. If you haven’t been reading thus far, scroll down to read the earlier posts on this case. If you have, let’s pick up where we left off.
As previously discussed, a trial court in Westchester County thwarted a cemetery’s attempt to build a crematory by upholding a village zoning ordinance prohibiting such construction on cemetery land. On March 12, 2014, the Appellate Division, Second Department rendered a decision that, in all material aspects, affirms the lower court’s ruling. Oakwood Cemetery v. Village/Town of Mount Kisco, 115 A.D.3d 749, 981 N.Y.S.2d 786 (2d Dep’t. 2014). The appellate court in Oakwood Cemetery, like the trial court, rejected the argument that Article 15 of the Not-For-Profit Corporation Law, which regulates the operation of corporations that own and manage cemeteries, prohibits local land use regulation of cemeteries. Therefore, according to the court, the Village of Mt. Kisco was free to pass zoning laws addressed to the use of cemetery land. While the lower court merely dismissed the Cemetery’s claim addressed to Article 15, the appellate court went further, holding that a judgment should have been entered declaring the restrictive zoning law valid, and not barred by Article 15.
Check back soon for our final post on Oakwood Cemetery, which will cover the importance of administrative appeal and conclude our discussion of this case
Crematory Gets Zoned Out: Oakwood Cemetery Part II, Why It Matters
Welcome (or welcome back) to the second of our Oakwood Cemetery series. Today’s post looks at the importance of the Oakwood decision, which upheld a zoning ordinance that blocked a cemetery’s planned construction of a crematorium.
Prohibition of the building of crematoriums on cemetery lands via local zoning regulations can foreclose an important source of revenue for operators of cemeteries. As noted by the New York State Division of Cemeteries, this is of special concern to those facilities which, in the absence of new sources of revenue, are in danger of falling into disrepair and becoming a burden to the community. Indeed, zoning ordinances that interfere with the right to build crematoriums on cemetery land can also interfere with the ability of financially sound institutions to offer a service that is complementary to what is increasingly becoming the internment of choice. After the district court’s ruling, the Oakwood case was appealed to the Appellate Division. The appellate court granted the application of the New York State Division of Cemeteries to participate in the case as amicus curiae. The Appellate Division, Second Department, held argument in the case on January 21, 2014.
Check back soon for our next post, which will discuss how Oakwood Cemetery fared on appeal.