BILL NUMBER: SB 436 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JUNE 22, 2011
AMENDED IN SENATE MAY 31, 2011
AMENDED IN SENATE MAY 2, 2011
AMENDED IN SENATE MARCH 24, 2011
INTRODUCED BY Senator Kehoe
FEBRUARY 16, 2011
An act to amend , repeal, and add Section 65965
of , and to add, repeal, and add Sections 65966, 65967, and
65968 of, the Government Code, relating to land use.
LEGISLATIVE COUNSEL'S DIGEST
SB 436, as amended, Kehoe. Land use: mitigation lands: nonprofit
organizations.
The Planning and Zoning Law authorizes a state or local public
agency, if the agency requires a property owner to transfer to the
agency an interest in real property to mitigate an adverse impact
upon natural resources caused by permitting the development of a
project or facility, to authorize a nonprofit organization to hold
title to and manage that interest in real property, provided that the
nonprofit organization meets specified requirements.
This bill would revise these provisions and would ,
until January 1, 2022, authorize a state or local public agency to
provide funds to a nonprofit organization to acquire land or
easements that satisfy the agency's mitigation obligations, including
funds that have been set aside for the long-term management of any
lands or easements conveyed to a nonprofit organization if
the nonprofit organization meets certain requirements
, as specified . This bill would require a
nonprofit organization that holds funds on behalf of the Department
of Fish and Game for the long-term management of land to comply with
certain requirements, including certification by the department, and
oversight by the Controller under specified circumstances
. The bill would also state the findings and declarations of the
Legislature with respect to the preservation of natural resources
through such mitigation, and would state that it
is in the best interest of the public to allow state and local public
agencies and nonprofit organizations to utilize the tools and
strategies they need for improving the effectiveness, cost
efficiency, and durability of mitigation for California's natural
resources.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) State and local laws protect a variety of natural resources,
and also require permits to be issued for the development of certain
projects or facilities.
(b) In furtherance of these laws, state or local public agencies
may require a project proponent to transfer an interest in real
property to mitigate any adverse impact upon natural resources caused
by permitting the development of a project or facility.
(c) It is a widespread practice that funds are set aside for the
long-term stewardship of the property protected for mitigation
purposes by the project proponent at the time the property is
protected.
(d) Lands and real property interests that are protected to
achieve the mitigation may be held by public agencies, special
districts, nonprofit organizations, or other entities, including
for-profit corporations.
(e) Many state and local agencies work with special districts,
nonprofit organizations, and property owners in valuable and cost
effective public-private partnerships to identify properties that
meet the mitigation requirements and to hold and provide long-term
stewardship of the real property interests.
(f) There are tools and strategies available for improving the
effectiveness, cost efficiency, and durability of mitigation for
California's natural resources.
(g) Identifying mitigation needs on a regional basis may expedite
the planning and mitigation processes, as well as ultimately result
in consolidated mitigation areas that can be managed more
cost-effectively.
(h) It is in the best interest of the public, project proponents,
and local communities to ensure that the public benefits of
mitigation are achieved and enduring.
(i) It is in the best interest of the public to allow public
agencies, special districts, nonprofit organizations, and property
owners to utilize the tools and strategies they need for improving
the effectiveness, cost efficiency, and durability of mitigation for
California's natural resources.
(j) It is important that entities that are qualified as to
experience, capacity, and knowledge hold and manage property for
mitigation purposes and any accompanying funds.
(k) There are numerous benefits, including decreased financial
risk, creation of efficiencies, and maintaining partnerships, for the
real property and associated long-term funding to be held and
managed by the same entity.
(l) The state recognizes that it is widespread practice for the
holder of a mitigation property to also hold and manage the long-term
funding dedicated to the property.
(m) The state seeks strategies that allow and provide for this
practice to continue while providing appropriate standards and public
oversight to ensure that the funds endure for the long-term
stewardship of the protected property and its associated natural
resources.
(n) California has a number of strong protections in place to
ensure that nonprofit organizations properly manage their charitable
resources and assets held in trust. These protections include, but
are not limited to, the state's Nonprofit Corporations Law that
identifies the nonprofit governing body's obligations to protect the
assets and mission of the nonprofit, and the provision that the
governing body is jointly and severally liable for any failure to do
so. In addition, the Attorney General has enforcement rights and
obligations regarding noncompliance, mismanagement, or misuse of
endowment funds, including the recovery of any endowment funds.
(o) The management of endowment funds by California nonprofit
organizations is governed by the Uniform Prudent Management of
Institutional Funds Act (Part 7 (commencing with Section 18501) of
Division 9 of the Probate Code).
(p) The Uniform Prudent Management of Institutional Funds Act
recognizes the distinction between permanently restricted funds and
temporarily restricted funds and imposes requirements for each. Both
types of funds are relevant to the management of funds for the
long-term stewardship of land.
(q) The goal of managing funds held for the long-term stewardship
of land is to achieve intergenerational equity as embodied in the
Uniform Prudent Management of Institutional Funds Act and extensively
cited in the financial literature. Considerable guidance is provided
in the act about achieving this objective.
(r) While nonprofit organizations must manage endowment funds
according to the Uniform Prudent Management of Institutional Funds
Act, to the extent feasible and permissible, the same principles and
guidelines, including the goal of managing for intergenerational
equity, should guide all holders of long-term endowment funds
including public agencies and special districts.
SEC. 2. Section 65965 of the Government
Code is amended to read:
65965. (a) For the purposes
of this section chapter , the
following definitions apply:
(a) "Accompanying funds" means the funds for the long-term
stewardship of lands that may be conveyed for the long-term
stewardship of a property.
(b) "Conservation easement" means a conservation easement created
pursuant to Chapter 4 (commencing with Section 815) of Title 2 of
Part 2 of Division 2 of the Civil Code.
(c) "Department" means the Department of Fish and Game.
(1)
(d) "Direct protection" means the permanent
protection , conservation, and preservation of
natural lands , waters, or natural
resources, including, but not limited to, agricultural lands,
wildlife habitat, wetlands, endangered species habitat, open-space
areas, or outdoor recreational areas.
(e) "Exclusive department-named entity" means any entity chosen by
the department in a manner that excludes other entities from the
same activity or activities.
(f) "Mitigation agreement" means a written agreement between a
public agency, the project proponent, and the special district,
nonprofit organization, or other entity that holds the property. A
mitigation agreement shall govern the long-term stewardship of a
property and accompanying funds, and shall specify any reporting
requirements or elements, including due dates of reports.
(g) "Project proponent" means an individual, business entity,
agency, or other entity that is developing a project or facility and
is required to mitigate any adverse impact upon natural resources.
(h) "Property" means fee title land or any partial interest in
real property, including a conservation easement.
(i) "Special district" means any special district formed pursuant
to Article 3 (commencing with Section 5500) of Chapter 3 of Division
5 or Division 26 (commencing with Section 35100) of the Public
Resources Code.
(2)
(j) "Stewardship" encompasses the range of activities
involved in controlling, resource and compliance
monitoring, and managing for conservation purposes a property, or a
conservation or open-space easement, as defined by the terms of the
easement, and its attendant resources.
(b) Notwithstanding any other provision of law to the contrary, if
a state or local public agency requires a property owner to transfer
to the agency an interest in real property to mitigate any adverse
impact upon natural resources caused by permitting the development of
a project or facility, the state or local public agency may
authorize a nonprofit organization to hold title to and manage that
interest in real property, provided that the nonprofit organization
is all of the following:
(1) Exempt from taxation as an organization described in Section
501(c)(3) of the Internal Revenue Code, and qualified to do business
in the state.
(2) A "qualified organization" as defined in Section 170(h)(3) of
the Internal Revenue Code.
(3) An organization that has as its principal purpose and activity
the direct protection or stewardship of natural land or resources,
or cultural or historic resources, including, but not limited to,
agricultural lands, wildlife habitat, wetlands, endangered species
habitat, open-space areas, and outdoor recreational areas.
(c) If a state or local public agency, in the development of its
own project, is required to transfer an interest in real property to
mitigate an adverse impact upon natural resources, the agency may
transfer the interest to a nonprofit organization that meets the
requirements set forth in paragraphs (1) to (3), inclusive, of
subdivision (b).
(d) The recorded instrument that places title with a nonprofit
organization pursuant to subdivision (b) shall include, at a minimum,
a provision that if the state or local public agency that authorized
the nonprofit organization to hold the title, or its successor
agency, determines that the interest in real property that is held by
the nonprofit organization is not being held, monitored, or managed
for conservation purposes in the manner specified in that instrument
or in the mitigation agreement between the state or local public
agency and the nonprofit organization, the interest in real property
shall revert to the state or that local public agency, or to another
public agency or nonprofit organization qualified pursuant to
subdivision (b), approved by the state or local public agency.
(e) A state or local public agency shall exercise due diligence in
reviewing the qualifications of a nonprofit organization to
effectively manage and steward natural land or resources. The state
or local public agency may adopt guidelines to assist the agency in
that review process.
SEC. 3. Section 65966 is added to the
Government Code , to read:
65966. (a) Notwithstanding any other provision of law, if a local
agency requires a project proponent to transfer property to mitigate
any adverse impact upon natural resources caused by permitting the
development of a project or facility, the local agency may authorize
a special district or a nonprofit organization to hold title to and
manage that property. If the local agency authorizes a nonprofit
organization to hold title to and manage the property, the nonprofit
organization shall meet all of the following requirements:
(1) The nonprofit organization shall be exempt from taxation as an
organization described in Section 501(c)(3) of the Internal Revenue
Code.
(2) The nonprofit organization shall be qualified to do business
in the state.
(3) The nonprofit organization shall be a "qualified organization"
as defined in Section 170(h)(3) of the Internal Revenue Code.
(4) The nonprofit organization shall have as its principal purpose
and activity the direct protection or stewardship of land, water, or
natural resources, or cultural or historic resources, including, but
not limited to, agricultural lands, wildlife habitat, wetlands,
endangered species habitat, open-space areas, and outdoor
recreational areas.
(b) If a local agency, in the development of its own project, is
required to protect property to mitigate an adverse impact upon
natural resources, the agency may do either of the following:
(1) Transfer the interest to a special district or to a nonprofit
organization that meets the requirements set forth in subdivision
(a).
(2) Provide funds to a nonprofit organization or special district
to acquire land or easements that satisfy the agency's mitigation
obligations.
(c) A local agency shall exercise due diligence in reviewing the
qualifications of a special district or nonprofit organization to
effectively manage and steward land, water, or natural resources, as
well as the accompanying funds. The local agency may adopt guidelines
to assist it in that review process, which may include, but are not
limited to, the use of or reliance upon guidelines, standards, or
accreditation established by a qualified entity that are in
widespread state or national use.
(d) The local agency may require the special district or nonprofit
organization to submit a report not more than once every 12 months
and for the number of years specified in the mitigation agreement,
that details the stewardship and condition of the property and the
accompanying funds. The mitigation agreement shall specify any
reporting due dates and the elements of the report.
(e) The recorded instrument that places the title of the property
with a special district or nonprofit organization pursuant to
subdivision (a) or (b) shall include a provision that if the local
agency or its successor agency reasonably determines that the
property is not being held, monitored, or stewarded for conservation
purposes in the manner specified in that instrument or in the
mitigation agreement, the property shall revert to the local agency,
or to another public agency, special district, or nonprofit
organization qualified pursuant to subdivision (a) and approved by
the local agency.
(f) (1) If the local agency authorizes a special district or
nonprofit organization to hold the property, the state agency may
allow the accompanying funds to be held by the same special district
or nonprofit organization that holds the property subject to this
subdivision and to subdivision (a) of Section 65968. Except the
special district or nonprofit organization that is holding the
property or the local agency, no other special district, nonprofit
organization, or entity may hold the accompanying funds if the
property is held by a special district or nonprofit organization. The
special district or nonprofit organization shall hold, manage,
invest, and disburse the funds in furtherance of the long-term
stewardship of the property for which the funds were set aside.
(2) The local agency shall determine that the holder of
accompanying funds meets all of the following requirements:
(A) The holder has the capacity to effectively manage the
mitigation funds.
(B) The holder has the capacity to achieve reasonable rates of
return on the investment of those funds similar to those of other
prudent investors over the life of the agreement.
(C) The holder utilizes generally accepted accounting practices as
promulgated by the Financial Accounting Standards Board for
nonprofit organizations or the Governmental Accounting Standards
Board for public agencies.
(D) The holder will be able to ensure that funds are accounted
for, and tied to, a specific property.
(E) The holder has an investment policy that is consistent with
the Uniform Prudent Management of Institutional Funds Act (Part 7
(commencing with Section 18501) of Division 9 of the Probate Code).
(3) The mitigation agreement that authorizes the funds to be
conveyed to a special district or nonprofit organization pursuant to
paragraph (2) shall include a provision that requires the
accompanying funds held by a special district or a nonprofit
organization to revert to the local agency, or to a successor
organization identified by the agency and subject to paragraph (2),
if any of the following occurs:
(A) The special district or nonprofit organization ceases to
exist.
(B) The special district or nonprofit organization is dissolved.
(C) The special district or nonprofit organization becomes
bankrupt or insolvent.
(D) The local agency determines that the accompanying funds held
by the special district or nonprofit organization, or its successor
entity, are not being held, managed, invested, or disbursed for
conservation purposes in the manner specified in the mitigation
agreement between the local agency and the special district or
nonprofit organization. If the funds are taken by the local agency,
the agency may also take the land pursuant to subdivision (e). If the
special district or nonprofit organization chooses to relinquish the
property, the local agency shall take title to the property or
identify an approved special district or nonprofit organization to
take title to the property.
(4) If the local agency holds the accompanying funds, the local
agency may hold, manage, and invest the accompanying funds pursuant
to subparagraph (D) of paragraph (2) and shall disburse funds in a
timely basis for the stewardship expenses of the special district or
nonprofit organization holding the property.
(g) The local agency may contract with or designate an independent
third party to do any of the following:
(1) Review the qualifications of a special district or nonprofit
organization to effectively manage and steward natural land or
resources pursuant to subdivisions (a) and (c).
(2) Review the qualifications of a special district or nonprofit
organization to hold and manage the accompanying funds pursuant to
paragraph (2) of subdivision (f).
(3) Review reports or other performance indicators to evaluate the
stewardship of lands, resources, or funds, and compliance with the
mitigation agreement.
(h) (1) If a local agency authorizes a special district or
nonprofit organization pursuant to subdivision (a) or (b), the local
agency may require an administrative endowment from the project
proponent for costs associated with reviewing qualifications,
approving holders, and regular oversight of compliance and
performance. The administrative endowment shall be held, managed, and
invested to produce an annual revenue sufficient to cover the costs
of reviewing qualifications, approving holders, and ongoing
oversight.
(2) The local agency may require a project proponent to provide a
one-time payment that will provide for the initial stewardship costs
for not more than five years while the endowment begins to accumulate
investment earnings. This one-time payment will be conveyed to the
holder of the accompanying funds by the project proponent.
(i) This section shall remain in effect only until January 1,
2022, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2022, deletes or extends
that date.
SEC. 4. Section 65966 is added to the
Government Code , to read:
65966. (a) Notwithstanding any other provision of law, if a local
agency requires a project proponent to transfer property to mitigate
any adverse impact upon natural resources caused by permitting the
development of a project or facility, the local agency may authorize
a special district or a nonprofit organization to hold title to and
manage that property. If the local agency authorizes a nonprofit
organization to hold title to and manage the property, the nonprofit
organization shall meet all of the following requirements:
(1) The nonprofit organization shall be exempt from taxation as an
organization described in Section 501(c)(3) of the Internal Revenue
Code.
(2) The nonprofit organization shall be qualified to do business
in the state.
(3) The nonprofit organization shall be a "qualified organization"
as defined in Section 170(h)(3) of the Internal Revenue Code.
(4) The nonprofit organization shall have as its principal purpose
and activity the direct protection or stewardship of land, water, or
natural resources, or cultural or historic resources, including, but
not limited to, agricultural lands, wildlife habitat, wetlands,
endangered species habitat, open-space areas, and outdoor
recreational areas.
(b) If a local agency, in the development of its own project, is
required to protect property to mitigate an adverse impact upon
natural resources, the agency may do either of the following:
(1) Transfer the interest to a special district or to a nonprofit
organization that meets the requirements set forth in subdivision
(a).
(2) Provide funds to a nonprofit organization or special district
to acquire land or easements that satisfy the agency's mitigation
obligations.
(c) A local agency shall exercise due diligence in reviewing the
qualifications of a special district or nonprofit organization to
effectively manage and steward land, water, or natural resources, as
well as the accompanying funds. The local agency may adopt guidelines
to assist it in that review process, which may include, but are not
limited to, the use of or reliance upon guidelines, standards, or
accreditations established by a qualified entity that are in
widespread state or national use.
(d) The local agency may require the special district or nonprofit
organization to submit a report not more than once every 12 months
and for the number of years specified in the mitigation agreement,
that details the stewardship and condition of the property and the
accompanying funds. The mitigation agreement shall specify any
reporting due dates and the elements of the report.
(e) The recorded instrument that places the title of the property
with a special district or nonprofit organization pursuant to
subdivision (a) or (b) shall include a provision that if the local
agency or its successor agency reasonably determines that the
property is not being held, monitored, or stewarded for conservation
purposes in the manner specified in that instrument or in the
mitigation agreement, the property shall revert to the local agency,
or to another public agency, special district, or nonprofit
organization qualified pursuant to subdivision (a) and approved by
the local agency.
(f) The local agency may contract with or designate an independent
third party to do either of the following:
(1) Review the qualifications of a special district or nonprofit
organization to effectively manage and steward natural land or
resources pursuant to subdivisions (a) and (c).
(2) Review reports or other performance indicators to evaluate the
stewardship of lands, resources, or funds, and compliance with the
mitigation agreement.
(g) (1) If a local agency authorizes a special district or
nonprofit organization pursuant to subdivision (a) or (b), the local
agency may require an administrative endowment from the project
proponent for costs associated with reviewing qualifications,
approving holders, and regular oversight of compliance and
performance. The administrative endowment shall be held, managed, and
invested to produce an annual revenue sufficient to cover the costs
of reviewing qualifications, approving holders, and ongoing
oversight.
(2) The local agency may require a project proponent to provide a
one-time payment that will provide for the initial stewardship costs
for not more than five years while the endowment begins to accumulate
investment earnings. This one-time payment will be conveyed to the
holder of the accompanying funds by the project proponent.
(h) This section shall become operative on January 1, 2022.
SEC. 5. Section 65967 is added to the
Government Code , to read:
65967. (a) Notwithstanding any other provision of law, if a state
agency requires a project proponent to transfer property to mitigate
any adverse impact upon natural resources caused by permitting the
development of a project or facility, the state agency may authorize
a special district or a nonprofit organization to hold title to and
manage that property. If the state agency authorizes a nonprofit
organization to hold title to and manage the property, the nonprofit
organization shall meet all of the following requirements:
(1) The nonprofit organization shall be exempt from taxation as an
organization described in Section 501(c)(3) of the Internal Revenue
Code.
(2) The nonprofit organization shall be qualified to do
business in the state.
(3) The nonprofit organization shall be a "qualified organization"
as defined in Section 170(h)(3) of the Internal Revenue Code.
(4) The nonprofit organization shall have as its principal purpose
and activity the direct protection or stewardship of land, water, or
natural resources, or cultural or historic resources, including, but
not limited to, agricultural lands, wildlife habitat, wetlands,
endangered species habitat, open-space areas, and outdoor
recreational areas.
(b) If a state agency, in the development of its own project, is
required to protect property to mitigate an adverse impact upon
natural resources, the agency may do either of the following:
(1) Transfer the interest to a special district or to a nonprofit
organization that meets the requirements set forth in subdivision
(a).
(2) Provide funds to a special district or nonprofit organization
to acquire land or easements that satisfy the agency's mitigation
obligations.
(c) A state agency shall exercise due diligence in reviewing the
qualifications of a special district or nonprofit organization to
effectively manage and steward natural land or resources, as well as
the accompanying funds. The state agency may adopt guidelines to
assist it in that review process, which may include, but are not
limited to, the use of or reliance upon guidelines, standards, or
accreditation established by a qualified entity that are in
widespread state or national use.
(d) The state agency may require the special district or nonprofit
organization to submit a report not more than once every 12 months
and for the number of years specified in the mitigation agreement,
that details the stewardship and condition of the property and the
accompanying funds. The mitigation agreement shall specify the
reporting due dates and the elements of the report.
(e) The recorded instrument that places the title of the property
with a special district or nonprofit organization pursuant to
subdivision (a) or (b) shall include a provision that if the state
agency, or its successor agency, determines that the property is not
being held, monitored, or stewarded for conservation purposes in the
manner specified in that instrument or in the mitigation agreement,
the property shall revert to the state agency, or to another public
agency, special district, or nonprofit organization qualified
pursuant to subdivision (a) and approved by the state agency.
(f) (1) If the state agency authorizes a special district or
nonprofit organization to hold the property, the state agency may
allow the accompanying funds to be held by the same special district
or nonprofit organization that holds the property subject to this
subdivision and to subdivision (a) of Section 65968. Except the
special district or nonprofit organization that is holding the
property or the state agency, no other special district, nonprofit
organization, or entity may hold the accompanying funds if the
property is held by a special district or nonprofit organization. The
special district or nonprofit organization shall hold, manage,
invest, and disburse the funds in furtherance of the long-term
stewardship of the property for which the funds were set aside.
(2) The state agency shall determine that the holder of
accompanying funds meets all of the following requirements:
(A) The holder has the capacity to effectively manage the
mitigation funds.
(B) The holder has the capacity to achieve reasonable rates of
return on the investment of those funds similar to those of other
prudent investors over the life of the agreement.
(C) The holder utilizes generally accepted accounting practices as
promulgated by the Financial Accounting Standards Board for
nonprofit organizations or the Governmental Accounting Standards
Board for public agencies.
(D) The holder will be able to ensure that funds are accounted
for, and tied to, a specific property.
(E) The holder has an adopted investment policy that is consistent
with the Uniform Prudent Management of Institutional Funds Act (Part
7 (commencing with Section 18501) of Division 9 of the Probate
Code).
(3) The mitigation agreement that authorizes the funds to be
conveyed to a special district or nonprofit organization pursuant to
paragraph (2) shall include a provision that requires the
accompanying funds held by a special district or a nonprofit
organization to revert to the state agency, or to a successor
organization identified by the agency and subject to paragraph (2),
if any of the following occurs:
(A) The special district or nonprofit organization ceases to
exist.
(B) The special district or nonprofit organization is dissolved.
(C) The special district or nonprofit organization becomes
bankrupt or insolvent.
(D) The state agency determines that the accompanying funds held
by the special district or nonprofit organization, or its successor
entity, are not being held, managed, invested, or disbursed for
conservation purposes in the manner specified in the mitigation
agreement. If the funds are taken by the state agency, the state
agency may also take the land pursuant to subdivision (e). If the
special district or nonprofit organization chooses to relinquish the
property, the state agency shall take title to the property or
identify an approved special district or nonprofit organization to
take title to the property.
(4) If the state agency is the department, the following
conditions apply to the holding, managing, investment, expenditure,
disbursement, and oversight of the accompanying funds:
(A) A special district or nonprofit organization shall not hold
funds unless it is certified by the department. The department shall
adopt regulations for a process to certify special districts or
nonprofit organizations to hold accompanying funds. The department
shall not certify more than 10 special districts or nonprofit
organizations to hold accompanying funds under this section.
(B) The department may contract with the Controller to provide
fiscal expertise for the evaluation of a special district or
nonprofit organization to hold accompanying funds.
(C) A special district or nonprofit organization that holds
accompanying funds for the long-term stewardship of land may be
subject to oversight by the Controller. The Controller may annually
review independent audit or financial statements, tax filings, or any
other documents or reports the Controller determines necessary to
verify the sound financial management of funds held by a special
district or nonprofit organization.
(D) All costs incurred by the department or the Controller under
this subdivision shall be paid by the administrative endowment
established pursuant to paragraph (1) of subdivision (h).
(5) If the state agency holds the accompanying funds, the state
agency may hold, manage, and invest the accompanying funds pursuant
to subparagraph (D) of paragraph (2) and shall disburse funds in a
timely basis for the stewardship expenses of the special district or
nonprofit organization holding the property.
(g) The state agency may contract with or designate an independent
third party to do any of the following:
(1) Review the qualifications of a special district or nonprofit
organization to effectively manage and steward natural land or
resources pursuant to subdivisions (a) and (c).
(2) Review the qualifications of a special district or nonprofit
organization to hold and manage the accompanying funds pursuant to
paragraph (2) of subdivision (f).
(3) Review reports or other performance indicators to evaluate the
stewardship of lands, resources, or funds, and compliance with the
mitigation agreement.
(h) (1) If a state agency authorizes a special district or
nonprofit organization to hold property protected for mitigation
purposes, the state agency may require an administrative endowment
from the project proponent for costs associated with reviewing
qualifications, approving holders, and regular oversight of
compliance and performance. The administrative endowment shall be
held, managed, and invested to produce an annual revenue sufficient
to cover the costs of reviewing qualifications, approving holders,
and ongoing oversight.
(2) The state agency may require project proponents to provide a
one-time payment to provide for the initial stewardship costs for up
to five years while the endowment begins to accumulate investment
earnings. This one-time payment will be conveyed to the holder of the
accompanying funds by the project proponent.
(i) This section shall not apply retroactively to endowment funds
held by the state in the Pooled Money Investment Account as of
January 1, 2012.
(j) This section shall remain in effect only until January 1,
2022, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2022, deletes or extends
that date.
SEC. 6. Section 65967 is added to the
Government Code , to read:
65967. (a) Notwithstanding any other provision of law, if a state
agency requires a project proponent to transfer property to mitigate
any adverse impact upon natural resources caused by permitting the
development of a project or facility, the state agency may authorize
a special district or a nonprofit organization to hold title to and
manage that property. If the state agency authorizes a nonprofit
organization to hold title to and manage the property, the nonprofit
organization shall meet all of the following requirements:
(1) The nonprofit organization shall be exempt from taxation as an
organization described in Section 501(c)(3) of the Internal Revenue
Code.
(2) The nonprofit organization shall be qualified to do business
in the state.
(3) The nonprofit organization shall be a "qualified organization"
as defined in Section 170(h)(3) of the Internal Revenue Code.
(4) The nonprofit organization shall have as its principal purpose
and activity the direct protection or stewardship of land, water, or
natural resources, or cultural or historic resources, including, but
not limited to, agricultural lands, wildlife habitat, wetlands,
endangered species habitat, open-space areas, and outdoor
recreational areas.
(b) If a state agency, in the development of its own project, is
required to protect property to mitigate an adverse impact upon
natural resources, the agency may do either of the following:
(1) Transfer the interest to a special district or to a nonprofit
organization that meets the requirements set forth in subdivision
(a).
(2) Provide funds to a special district or nonprofit organization
to acquire land or easements that satisfy the agency's mitigation
obligations.
(c) A state agency shall exercise due diligence in reviewing the
qualifications of a special district or nonprofit organization to
effectively manage and steward natural land or resources, as well as
the accompanying funds. The state agency may adopt guidelines to
assist it in that review process, which may include, but are not
limited to, the use of or reliance upon guidelines, standards, or
accreditation established by a qualified entity that are in
widespread state or national use.
(d) The state agency may require the special district or nonprofit
organization to submit a report not more than once every 12 months
and for the number of years specified in the mitigation agreement,
that details the stewardship and condition of the property and the
accompanying funds. The mitigation agreement shall specify the
reporting due dates and the elements of the report.
(e) The recorded instrument that places the title of the property
with a special district or nonprofit organization pursuant to
subdivision (a) or (b) shall include a provision that if the state
agency, or its successor agency, determines that the property is not
being held, monitored, or stewarded for conservation purposes in the
manner specified in that instrument or in the mitigation agreement,
the property shall revert to the state agency, or to another public
agency, special district, or nonprofit organization qualified
pursuant to subdivision (a) and approved by the state agency.
(f) The state agency may contract with or designate an independent
third party to do any of the following:
(1) Review the qualifications of a special district or nonprofit
organization to effectively manage and steward natural land or
resources pursuant to subdivisions (a) and (c).
(2) Review reports or other performance indicators to evaluate the
stewardship of lands, resources, or funds, and compliance with the
mitigation agreement.
(g) (1) If a state agency authorizes a special district or
nonprofit organization to hold property protected for mitigation
purposes, the state agency may require an administrative endowment
from the project proponent for costs associated with reviewing
qualifications, approving holders, and regular oversight of
compliance and performance. The administrative endowment shall be
held, managed, and invested to produce an annual revenue sufficient
to cover the costs of reviewing qualifications, approving holders,
and ongoing oversight.
(2) The state agency may require project proponents to provide a
one-time payment to provide for the initial stewardship costs for up
to five years while the endowment begins to accumulate investment
earnings. This one-time payment will be conveyed to the holder of the
accompanying funds by the project proponent.
(h) This section shall not apply retroactively to endowment funds
held by the state in the Pooled Money Investment Account as of
January 1, 2012.
(i) This section shall become operative on January 1, 2022.
SEC. 7. Section 65968 is added to the
Government Code , to read:
65968. (a) Any local or state agency that requires property to be
protected pursuant to subdivisions (a) or (b) of Section 65966 or
subdivisions (a) or (b) of Section 65967 shall identify how the
funding needs of the long-term stewardship of the property will be
met. If funds are set aside at the time the property is protected,
all of the following shall apply:
(1) The accompanying funds shall be held, managed, invested, and
disbursed solely for the long-term stewardship of the specific
property for which the funds were set aside.
(2) The accompanying funds shall be calculated to include a
principle amount that, when managed and invested, will produce
revenues that are reasonably sufficient to cover the annual
stewardship costs of the property in perpetuity.
(3) The principle amount shall be defined and managed as
permanently restricted funds.
(4) Any one-time payment, pursuant to paragraph (1) of subdivision
(h) of Section 65966 or paragraph (1) of subdivision (h) of Section
65967, and earnings from the principle, shall be managed as
temporarily restricted funds.
(5) The accompanying funds shall be held, managed, invested, and
disbursed consistent with the Uniform Prudent Management of
Institutional Funds Act (Part 7 (commencing with Section 18501) of
Division 9 of the Probate Code).
(b) A property that has been previously protected for conservation
purposes, including the placement of a conservation easement on the
property, may not be used for mitigation purposes.
(c) Any conservation easement that is used to satisfy a local or
state mitigation requirement shall be permanent in duration.
(d) If a property conserved pursuant to subdivision (a) or (b) of
Section 65966 or subdivision (a) or (b) of Section 65967 is
condemned, any funds received for the condemnation of the property
shall be used for the purchase of a replacement property with similar
natural resource characteristics as the original mitigation was
intended to protect, or as near as reasonably feasible. Any
accompanying funds held for the condemned property shall be held for
the long-term stewardship of the replacement property.
(e) This section shall remain in effect only until January 1,
2022, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2022, deletes or extends
that date.
SEC. 8. Section 65968 is added to the
Government Code , to read:
65968. (a) Any local or state agency that requires property to be
protected pursuant to subdivisions (a) or (b) of Section 65966 or
subdivisions (a) or (b) of Section 65967 shall identify how the
funding needs of the long-term stewardship of the property will be
met. If funds are set aside at the time the property is protected,
all of the following shall apply:
(1) The accompanying funds shall be held, managed, invested, and
disbursed solely for the long-term stewardship of the specific
property for which the funds were set aside.
(2) The accompanying funds shall be calculated to include a
principle amount that, when managed and invested, will produce
revenues that are reasonably sufficient to cover the annual
stewardship costs of the property in perpetuity.
(3) The principle amount shall be defined and managed as
permanently restricted funds.
(4) Any one-time payment, pursuant to paragraph (1) of subdivision
(g) of Section 65966 or paragraph (1) of subdivision (g) of Section
65967, and earnings from the principle, shall be managed as
temporarily restricted funds.
(5) The accompanying funds shall be held, managed, invested, and
disbursed consistent with the Uniform Prudent Management of
Institutional Funds Act (Part 7 (commencing with Section 18501) of
Division 9 of the Probate Code).
(b) A property that has been previously protected for conservation
purposes, including the placement of a conservation easement on the
property, may not be used for mitigation purposes.
(c) Any conservation easement that is used to satisfy a local or
state mitigation requirement shall be permanent in duration.
(d) If a property conserved pursuant to subdivision (a) or (b) of
Section 65966 or subdivision (a) or (b) of Section 65967 is
condemned, any funds received for the condemnation of the property
shall be used for the purchase of a replacement property with similar
natural resource characteristics as the original mitigation was
intended to protect, or as near as reasonably feasible. Any
accompanying funds held for the condemned property shall be held for
the long-term stewardship of the replacement property.
(e) This section shall become operative on January 1, 2022.
SECTION 1. The Legislature finds and declares
all of the following:
(a) State and local laws protect a variety of natural resources,
and also require permits to be issued for the development of certain
projects or facilities.
(b) In furtherance of these laws, state or local public agencies
may require a property owner to transfer an interest in real property
to mitigate any adverse impact upon natural resources caused by
permitting the development of a project or facility.
(c) Funds may be simultaneously set aside for the long-term
management of the property transferred for mitigation purposes.
(d) Lands and real property interests transferred to achieve the
mitigation may be held by nonprofit organizations.
(e) Many state and local agencies work with nonprofit
organizations in valuable and cost effective public-private
partnerships to identify properties that meet the mitigation
requirements and to hold and provide long-term management of the real
property interests.
(f) There are tools and strategies available for improving the
effectiveness, cost efficiency, and durability of mitigation for
California's natural resources.
(g) Identifying mitigation needs on a regional basis may expedite
the planning and mitigation processes, as well as result ultimately
in consolidated mitigation areas that can be managed more cost
effectively.
(h) It is in the interest of the public, project proponents, and
local communities to ensure that the public benefits of mitigation
are achieved.
(i) It is in the best interest of the public to allow state and
local public agencies and nonprofit organizations to utilize the
tools and strategies they need for improving the effectiveness, cost
efficiency, and durability of mitigation for California's natural
resources.
SEC. 2. Section 65965 of the Government Code is
amended to read:
65965. (a) For the purposes of this section, the following
definitions apply:
(1) "Department" means the Department of Fish and Game.
(2) "Direct protection" means the protection and preservation of
natural lands or resources, including, but not limited to,
agricultural lands, wildlife habitat, wetlands, endangered species
habitat, open-space areas, or outdoor recreational areas.
(3) "Stewardship" encompasses the range of activities involved in
controlling, monitoring, and managing for conservation purposes a
property, or a conservation or open-space easement, as defined by the
terms of the easement, and its attendant resources.
(b) Notwithstanding any other provision of law to the contrary, if
a state or local public agency requires a property owner to transfer
to the agency an interest in real property to mitigate any adverse
impact upon natural resources caused by permitting the development of
a project or facility, the state or local public agency may
authorize a nonprofit organization to hold title to and manage that
interest in real property, provided that the nonprofit organization
is all of the following:
(1) Exempt from taxation as an organization described in Section
501(c)(3) of the Internal Revenue Code, and qualified to do business
in the state.
(2) A "qualified organization" as defined in Section 170(h)(3) of
the Internal Revenue Code.
(3) An organization that has as its principal purpose and activity
the direct protection or stewardship of natural land or resources,
or cultural or historic resources, including, but not limited to,
agricultural lands, wildlife habitat, wetlands, endangered species
habitat, open-space areas, and outdoor recreational areas.
(c) If a state or local public agency, in the development of its
own project, is required to protect an interest in real property to
mitigate an adverse impact upon natural resources, the agency may do
either of the following:
(1) Transfer the interest to a nonprofit organization that meets
the requirements set forth in subdivision (b).
(2) Provide funds to a nonprofit organization to acquire land or
easements that satisfy the agency's mitigation obligations.
(d) (1) Funds set aside for the long-term management of lands or
easements conveyed to a nonprofit organization pursuant to
subdivisions (b) and (c) may also be conveyed to the nonprofit
organization, subject to the limitations in paragraph (2). The
nonprofit organization shall hold, manage, invest, and disburse the
funds in furtherance of managing and stewarding the land or easement
for which the funds were set aside.
(2) (A) A nonprofit organization may not hold funds on behalf of
the department for the long-term management of lands unless that
nonprofit organization is certified by the department. The department
shall adopt regulations for a process to certify nonprofit
organizations to hold funds on behalf of the
department for the long-term management of
land. The department shall certify no more than 10 nonprofits to hold
funds for the long-term management of mitigation lands under this
section.
(B) A nonprofit organization that holds funds on the behalf of the
department for the long-term management of land shall be subject to
oversight by the Controller. The Controller shall annually review
independent audit statements, tax filings, or any other documents or
reports the Controller determines necessary to verify the sound
financial management of funds held by a nonprofit organization on
behalf of the department for the long-term management of land. All
costs incurred by the department or the Controller under this
subdivision shall be reimbursed by the nonprofit organization.
(e) (1) The state or local public agency may require the nonprofit
organization to submit a report not more than every 12 months and
for a specified number of years, that details the management and
condition of the property or easement and the accompanying funds. The
mitigation or funding agreement shall specify the reporting due
dates and the elements of the report.
(2) The funds of a nonprofit organization holding funds for the
long-term management of property shall revert to the state or local
public agency that required the mitigation if the nonprofit
organization does any of the following:
(A) Ceases operation.
(B) Is dissolved.
(C) Becomes bankrupt or insolvent.
(D) Fails to perform its duties for any reason, as determined by
the state or local public agency.
(f) The recorded instrument that places title with a nonprofit
organization pursuant to subdivision (b) shall include, at a minimum,
a provision that if the state or local public agency that authorized
the nonprofit organization to hold the title, or its successor
agency, determines that the interest in real property that is held by
the nonprofit organization is not being held, monitored, or managed
for conservation purposes in the manner specified in that instrument
or in the mitigation agreement between the state or local public
agency and the nonprofit organization, the interest in real property
shall revert to the state or that local public agency, or to another
public agency or nonprofit organization qualified pursuant to
subdivision (b), approved by the state or local public agency.
(g) (1) A state or local public agency shall exercise due
diligence in reviewing the qualifications of a nonprofit organization
to effectively manage and steward natural land or resources, as well
as the accompanying funds. The state or local public agency may
adopt guidelines to assist the agency in that review process, which
may include guidelines or standards established by a qualified
entity.
(2) The state or local public agency shall determine that the
holder of accompanying funds meets all of the following requirements:
(A) The holder has the capacity to effectively manage the
mitigation funds.
(B) The holder has the capacity to achieve reasonable rates of
return on investment of those funds similar to those of other prudent
investors over the life of the agreement.
(C) The holder utilizes generally accepted accounting practices,
and will be able to ensure that funds are accounted for, and tied to,
a specific property or project.
(D) The holder has an adopted investment policy that is consistent
with the Uniform Management of Institutional Funds Act (Part 7
(commencing with Section 18501) of Division 9 of the Probate Code)
with regard to endowment funds and that is consistent with Sections
18505 and 18506 of the Probate Code with regard to nonendowment
funds.
(3) The department may contract with the Controller to provide
fiscal expertise for the evaluation of nonprofit organizations that
hold funds on behalf of the department for the long-term management
of mitigation lands.
(h) The state or local public agency may contract with or
designate an independent third party to do any of the following:
(1) Review the qualifications of a nonprofit organization to
effectively manage and steward natural land or resources.
(2) Review the qualifications of a nonprofit organization to hold
and manage the funds set aside for long-term management associated
with the property.
(3) Determine whether the holder of the funds meets the
requirements set forth in paragraph (2) of subdivision (f).
(4) Review reports or other performance indicators to evaluate the
management of lands, resources, or funds.
(i) (1) If a state or local agency authorizes nonprofit
organizations to hold lands or natural resources created for
mitigation purposes, the state or local agency may require an
administrative endowment from the project proponent for costs
associated with reviewing qualifications, approving holders, and
regular oversight of compliance and performance.
(2) The state or local public agency may also require project
proponents to provide a separate account that will provide for
initial management costs while the endowment matures.
(j) This section shall not apply retroactively to endowment funds
held by the state in the Pooled Money Investment Account as of
January 1, 2012.
(k) A property that has been previously protected for conservation
purposes, including the placement of a conservation easement on the
property, may not be used for mitigation purposes.
(l) This section is not intended to interfere with or prevent the
existing authority of an agency or department to carry out its
programs, projects, or responsibilities to identify, review, approve,
deny, or implement any mitigation requirements, and nothing in this
section shall be construed as a limitation on mitigation requirements
for the project, or a limitation on compliance with requirements
under this division or any other provision of law.
(m) This section shall remain in effect only until January 1,
2022, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2022, deletes or extends
that date.
SEC. 3. Section 65965 is added to the
Government Code, to read:
65965. (a) For the purposes of this section, the following
definitions apply:
(1) "Direct protection" means the protection and preservation of
natural lands or resources, including, but not limited to,
agricultural lands, wildlife habitat, wetlands, endangered species
habitat, open-space areas, or outdoor recreational areas.
(2) "Stewardship" encompasses the range of activities involved in
controlling, monitoring, and managing for conservation purposes a
property, or a conservation or open-space easement, as defined by the
terms of the easement, and its attendant resources.
(b) Notwithstanding any other provision of law to the contrary, if
a state or local public agency requires a property owner to transfer
to the agency an interest in real property to mitigate any adverse
impact upon natural resources caused by permitting the development of
a project or facility, the state or local public agency may
authorize a nonprofit organization to hold title to and manage that
interest in real property, provided that the nonprofit organization
is all of the following:
(1) Exempt from taxation as an organization described in Section
501(c)(3) of the Internal Revenue Code, and qualified to do business
in the state.
(2) A "qualified organization" as defined in Section 170(h)(3) of
the Internal Revenue Code.
(3) An organization that has as its principal purpose and activity
the direct protection or stewardship of natural land or resources,
or cultural or historic resources, including, but not limited to,
agricultural lands, wildlife habitat, wetlands, endangered species
habitat, open-space areas, and outdoor recreational areas.
(c) If a state or local public agency, in the development of its
own project, is required to transfer an interest in real property to
mitigate an adverse impact upon natural resources, the agency may
transfer the interest to a nonprofit organization that meets the
requirements set forth in paragraphs (1) to (3), inclusive, of
subdivision (b).
(d) The recorded instrument that places title with a nonprofit
organization pursuant to subdivision (b) shall include, at a minimum,
a provision that if the state or local public agency that authorized
the nonprofit organization to hold the title, or its successor
agency, determines that the interest in real property that is held by
the nonprofit organization is not being held, monitored, or managed
for conservation purposes in the manner specified in that instrument
or in the mitigation agreement between the state or local public
agency and the nonprofit organization, the interest in real property
shall revert to the state or that local public agency, or to another
public agency or nonprofit organization qualified pursuant to
subdivision (b), approved by the state or local public agency.
(e) A state or local public agency shall exercise due diligence in
reviewing the qualifications of a nonprofit organization to
effectively manage and steward natural land or resources. The state
or local public agency may adopt guidelines to assist the agency in
that review process.
(f) This section shall become operative on January 1, 2022.