N.Y. Not-for-Profit Corporation Law § 1506-e: Lease of cemetery lands

§ 1506-e. Lease of cemetery lands.

(a) Cemetery board approval. Except as set forth in paragraph (i) of

this section, no cemetery corporation shall lease any portion of its

land without notice to and approval of the cemetery board.

(b) Requirements for approval of a lease of cemetery land. The

application to the cemetery board for approval to lease cemetery land

shall meet the following requirements:

(1) The cemetery's lot owners or board of directors have approved the

lease.

(2) If the cemetery has any existing leases of land, it must disclose

them so the board can consider the impact of existing leases on cemetery

operations.

(3) In addition to its submission to the cemetery board, the cemetery

corporation shall, no earlier than ten days prior to such submission,

post notices in the immediate proximity of the land proposed to be

leased, the cemetery office and, in a manner so as not to violate local

zoning ordinances or to create a traffic hazard, all entrances. Each

such notice shall provide information written in plain English

concerning the proposed lease and, if the proposed lease includes

construction of new structures or buildings, include a drawing, which

shall be an accurate rendition of the proposed construction. In

addition, such notices shall state the telephone number and address

where comments may be received and the last date on which such comments

will be accepted, which shall be no earlier than sixty days following

the date the notices are posted.

(4) The proposed lease has been negotiated at arm's length for a fair

market rent and contains all of the agreements between the parties.

Where the proposed lease would be a related party transaction under this

chapter, the cemetery shall disclose this fact and demonstrate

compliance with restrictions related to such transactions, as set forth

in section seven hundred fifteen of this chapter, and the cemetery board

may require that the lease contain a clause by which the cemetery board

may set reasonable reporting requirements that would disclose any

financial relationship between the lessor and lessee related to the

leased property.

(5) The initial lease term is not greater than forty-nine years, and

the cemetery demonstrates that such a term will not interfere with land

needed for burial purposes. Notwithstanding the provisions of this

subparagraph, the cemetery board may approve a lease with extensions of

the initial term not to exceed ninety-nine years from the date of the

initial lease, provided that the security shall be updated at year

forty-nine and every twenty years afterward during the term of the lease

and all extensions thereof, if applicable, and approved pursuant to

paragraph (h) of this section.

(6) If the proposed lease involves land adjacent to cemetery

operations, the proposed lease requires the tenant to construct and

maintain a physical or visual buffer approved by the cemetery board,

which may be vegetative, and that protects visitors to the cemetery, and

that otherwise complies with the requirements of this section.

(7) The proposed lease requires the tenant to be responsible for any

and all taxes, assessments, and charges related to its occupancy and use

of the land, whether imposed against the tenant or the cemetery

corporation.

(8) If the proposed lease includes permission to construct any

infrastructure, buildings or other structures, the application to the

cemetery board shall provide for the removal of such infrastructure,

buildings or other structures after the cemetery retakes possession of

the land, unless the infrastructure, buildings or other structures are

to be retained by the cemetery pursuant to paragraph (f) of this

section.

(9) The proposed lease shall include an agreement to pay for the

removal of any proposed infrastructure, buildings and structures, except

any that are approved to be retained as set forth in paragraph (f) of

this section, and return the land to a condition suitable for cemetery

use upon the expiration or termination of the lease and such agreement

shall be secured by a fund, bond, letter of credit or other security

sufficient to pay for such future removal. The application shall include

a written description of the proposed funding mechanism for the

establishment of a fund, written evidence of a bond, or other security

to the cemetery board for payment of the cost of restoring the leased

premises to a condition suitable for use for cemetery purposes at the

end or earlier termination of the term of the lease, including but not

limited to the cost of removing any and all buildings and structures

that may then be located on the leased premises and will not be

retained. Any such bond shall be issued by an entity authorized to do

business in the state of New York, and any irrevocable letter of credit

or a certificate of deposit shall be from a New York state or federally

chartered bank, trust company, savings bank or savings and loan

association that is qualified to do business in the state of New York

and insured by the federal deposit insurance corporation.

(10) The land proposed to be leased will not be used for any activity

that would be disruptive to cemetery operations or that would have a

significant impact on cemetery traffic.

(11) If the proposed use or activity arising therefrom could disturb

normal and usual cemetery activities, the proposed lease limits the

hours of activity.

(12) The proposed lease will not include the manufacture or disposal

of hazardous material or the use or storage of hazardous material in

violation of any law or otherwise create a significant risk of

environmental harm to the cemetery property.

(13) The proposed lease may permit assignment or sub-leases, including

sub-leasing and assignment of space on cell towers to communications

providers, provided the original lease remains in effect and the use

remains the same.

(c) The following uses are deemed to comply with subparagraph ten of

paragraph (b) of this section:

(1) Communications service facilities, also known as cell towers;

(2) Solar panels; and

(3) Energy storage equipment, as defined in section four hundred

ninety-nine-aaaa of the real property tax law.

(d) For any lease involving related party transactions pursuant to

section seven hundred fifteen of this chapter, the cemetery board may

set reasonable reporting requirements that would disclose any financial

relationship between the lessor and lessee related to the leased

property.

(e) Any material modification, alteration or expansion of the lease or

additions of any infrastructure, structures or buildings outside the

scope of the prior approval requires cemetery board approval.

(f) If the cemetery corporation intends that any infrastructure,

structures or buildings proposed under the lease be retained and used

for cemetery purposes after the lease terminates or expires, the

application to approve the lease shall also include an application for

approval of such infrastructure, structures or buildings as intended to

be used by the cemetery. The board shall render decision on the

application for a major alteration in conjunction with the decision on

the application to lease cemetery land. If that application is approved,

such infrastructure, buildings or structures shall be excluded from the

requirements of subparagraph nine of paragraph (b) of this section.

(g) The application shall include at least two written estimates of

the cost of removing the infrastructure, buildings and structures

excluding retained infrastructure and associated structures and

returning the land to a condition suitable for burial purposes at the

conclusion of the lease.

(h) (1) The cemetery board shall approve the type and amount of the

security which shall be maintained in full force and effect, in an

amount not less than that which was approved by the cemetery board,

until: (i) the leased premises shall have been restored to a condition

suitable for use for cemetery purposes at the end or earlier termination

of the term of the lease, (ii) any and all buildings and structures then

located on the leased premises shall have been removed, (iii) proof in

form acceptable to the cemetery board demonstrating that all costs of

such restoration and removal work have been paid in full and that no

person or entity performing labor or furnishing materials for such work

has filed a notice of mechanic's lien that shall have been delivered to

the cemetery board, provided however that a cemetery may contest such

lien as long as such contest prevents the foreclosure of a lien, and

(iv) if applicable, each governmental unit or agency that issued any

permit for such restoration and removal work shall have issued a

certificate of compliance or other similar instrument indicating that

such work has been completed in a due and proper manner. The parties

directed to perform the restoration and removal work contemplated by

this paragraph and as approved by the cemetery board shall not be

limited by the amount of the bond, letter of credit, or certificate of

deposit or by any inability to recover all or any part of such bond,

letter of credit, or certificate of deposit from the issuing surety,

bank, trust company, savings bank, or savings and loan association.

Neither the cemetery board nor the department of state shall be liable

to the tenant, the cemetery, or any other person or entity by reason or

any determination or approval made under this paragraph.

(2) Prior to the commencement of construction, the cemetery shall

submit proof to the cemetery board that such security in such amount is

in place.

(i) Leases for the following uses do not require cemetery board

approval:

(1) A lease or license to grow and harvest crops with a term less than

five years;

(2) A lease of a dwelling to the caretaker or other officer or

employee of the cemetery that is actually used and occupied as that

person's residence; and

(3) A renewal or assignment of an existing lease of existing

structures on land owned by the cemetery, not dedicated to cemetery

purposes and that was subject to a lease, provided that such purchase or

acquisition was approved by a court or the cemetery board, if such

renewal does not change the scope of the existing lease.

(j) All lease payments and other 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, except that upon a showing of a need to

fund specific projects, maintain and preserve, or expand current

cemetery operations, the cemetery board may permit any portion of the

lease payments or other consideration to be used for such purposes, with

the remainder to be deposited to the permanent maintenance fund.