BILL NUMBER: SB 1094 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 9, 2012
INTRODUCED BY Senator Kehoe
FEBRUARY 16, 2012
An act to amend Sections 65965, 65966, 65967, and 65968 of the
Government Code, relating to land use, and declaring the urgency
thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 1094, as amended, Kehoe. Land use: mitigation lands: nonprofit
organizations.
The
(1) The Planning and Zoning Law
provides that if a state or local agency requires a person to
transfer to that agency an interest in real property to mitigate the
environmental impact of a project or facility, that agency may
authorize specified entities to hold title to, and manage that
interest in, real property, as well as any accompanying funds,
provided those entities meet specified requirements. Existing law
requires that if accompanying funds, as defined, are conveyed at the
time the property is protected, then the holder of those accompanying
funds must meet specified requirements. Existing law requires a
state or local agency to 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.
This bill would use the term "endowment" instead of
"accompanying funds ." This bill would
authorize an agency, in connection with the provisions described
above, to also permit a governmental entity to hold title to, and
manage that interest in, real property, as well as any
accompanying funds endowment . This bill would
remove the requirement that a state or local agency exercise due
diligence in reviewing the qualifications of a special district or
nonprofit organization to effectively manage the
accompanying funds endowment . This bill would
also modify the requirements that the holder of accompanying
funds an endowment must meet, and would provide
that those requirements also apply to accompanying funds
endowments that are secured at the time the
property is protected.
(2) Existing law authorizes a state or local agency, if that
agency authorizes specified entities to hold property pursuant to
these provisions, to require an administrative endowment from the
project proponent to cover reasonable costs to the agency.
This bill would revise that provision to authorize a state or
local agency to pay a one-time fee that does not exceed the
reasonable costs of the agency in reviewing qualifications of
potential holders of the property, approving those holders, and any
regular oversight over those holders to ensure that the holders are
complying with all applicable laws.
(3) Existing law provides that if a state or local agency, in the
development of its own project, is required to mitigate an adverse
impact upon natural resources, that agency may take any action it
deems necessary to meet its mitigation obligations, including, among
others, transferring an interest in the property to specified
entities.
This bill would additionally authorize a state or local agency to
hold an endowment in an account administered by an elected official.
Existing
(4) Existing law generally
requires that the accompanying funds described above be held by the
agency that requires the mitigation or by the special district or
nonprofit organization that holds the property. Existing law excepts
certain situations from this requirement, including, among others, if
the accompanying funds are held by another entity pursuant to a
natural community conservation plan or a safe harbor agreement that
is executed on or before January 1, 2012.
This bill would require that, in order to qualify for that
exception, the natural community conservation plan or safe harbor
agreement be at a recognized initial, interim, or final stage on or
before January 1, 2012. This bill also would add 2
additional exceptions to that requirement modify the
exceptions to that requirement by adding some and removing others,
including, among other changes, adding exceptions that would
authorize a community foundation, as defined, or the National Fish
and Wildlife Foundation to hold an endowment if speci
fied conditions are met .
This bill would authorize a state or local agency to allow the
accompanying funds endowments to be
temporarily held in an escrow account until a specified date, after
which time the bill would require the state or local agency to
transfer the accompanying funds endowments
to the entity that will permanently hold them.
This bill would require the National Fish and Wildlife Foundation,
if the foundation holds any endowment funds pursuant to these
provisions, to submit a report to the Legislature by a specified date
that contains specified requirements.
This bill would also make technical, nonsubstantive changes to
those provisions.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. It is the intent of the Legislature,
and in the best in terest of the public, that an endowment
dedicated to be held, managed, invested, and disbursed in
furtherance of the long-term stewardship of the property for which
the funds were set aside be held, managed, invested, and disbursed by
a diversified pool of qualified entities that are qualified to do
business in California, based in California, and that meet the
requirements of this chapter.
SECTION 1. SEC. 2. Section 65965 of
the Government Code is amended to read:
65965. For the purposes of this chapter, the following
definitions apply:
(a) "Accompanying funds" "Endowment"
means the funds that may be are
conveyed solely for the long-term stewardship of a property.
Also known as "endowments," these funds are held and managed
The initial endowment forms the principle that is held
and managed as a permanently restricted fund to generate annual
revenues for the long-term management and stewardship of the
property. The endowment shall be held consistent with
subdivision (b) of Section 65966 and with the Uniform Prudent
Management of Institutional Funds Act (Part 7 (commencing with
Section 18501) of Division 9 of the Probate Code).
Accompanying funds Endowments do not include
funds conveyed for meeting short-term performance objectives of a
project.
(b) "Community foundation" means any community foundation that
meets all of the following requirements:
(1) Meets the requirements of a community trust under Section
1.170A-9(f)(10)-(11) of Title 26 of the Code of Federal Regulations.
(2) Is exempt from taxation as an organization described in
Section 501(c)(3) of the Internal Revenue Code.
(3) Is qualified to do business in this state.
(4) Is a "qualified organization" as defined in Section 170(h)(3)
of the Internal Revenue Code.
(5) Has complied with National Standards for U.S. Community
Foundations as determined by the Community Foundations National
Standards Board, a supporting organization of the Council on
Foundations.
(b)
(c) "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)
(d) "Direct protection" means the permanent protection,
conservation, and preservation of 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.
(d)
( e) "Governmental entity" means any state
agency, office, officer, department, division, bureau, board, and
commission, and any city, county, or city and county.
(e)
(f) "Mitigation agreement" means a written agreement
between a public agency, the project proponent, and the governmental
entity, special district, nonprofit organization, for-profit entity,
or other entity that holds the property. A mitigation agreement
governs the long-term stewardship of a property and
accompanying funds an endowment , and shall
specify any reporting requirements or elements, including due dates
of reports.
(g) "National Fish and Wildlife Foundation" means a nonprofit
organization that meets all of the following requirements:
(1) Was chartered by the United States Congress in 1984.
(2) Is exempt from taxation as an organization described in
Section 501(c)(3) of the Internal Revenue Code.
(3) Is qualified to do business in this state.
(4) Is registered with the Registry of Charitable Trusts
maintained by the Attorney General pursuant to Section 12584.
(5) Has as its principal purpose and activity the administration
of donations of real or personal property, or the interest in
property, in connection with United States Fish and Wildlife Service
programs and conservation activities in the United States.
(h) "Nonprofit organization" means any nonprofit organization that
meets all of the following requirements:
(1) Is exempt from taxation as an organization described in
Section 501(c)(3) of the Internal Revenue Code.
(2) Is qualified to do business in this state.
(3) Is a "qualified organization" as defined in Section 170(h)(3)
of the Internal Revenue Code.
(4) Is registered with the Registry of Charitable Trusts
maintained by the Attorney General pursuant to Section 12584.
(5) Has as its principal purpose and activity the direct
protection or stewardship of land, water, or natural resources,
including, but not limited to, agricultural lands, wildlife habitat,
wetlands, endangered species habitat, open-space areas, and outdoor
recreational areas.
(f)
(i) "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.
(g)
(j) "Property" means fee title land or any partial
interest in real property, including a conservation easement, that
may be conveyed pursuant to a mitigation requirement by a state or
local agency.
(h)
(k) "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, or any resource conservation
district organized pursuant to Division 9 (commencing with Section
9001) of the Public Resources Code.
(i)
(l) "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.
SEC. 2. SEC. 3. Section 65966 of the
Government Code is amended to read:
65966. (a) Any conservation easement created as a component of
satisfying a local or state mitigation requirement shall be perpetual
in duration, whether created pursuant to Chapter 6.6 (commencing
with Section 51070) of Part 1 of Division 1 of Title 5 of this code
or Chapter 4 (commencing with Section 815) of Title 2 of Part 2 of
the Civil Code.
(b) Any local or state agency that requires property to be
protected pursuant to subdivision (a) or (b) of Section 65967 may
identify how the funding needs of the long-term stewardship of the
property will be met. If accompanying funds are
an endowment is conveyed or secured at the time the
property is protected, all of the following shall apply:
(1) The accompanying funds endowment
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 endowment
shall be calculated to include a principal amount that, when managed
and invested, is reasonably anticipated to cover the annual
stewardship costs of the property in perpetuity.
(3) The principal amount shall be defined and managed as
permanently restricted funds.
(4) Any one-time payment, as defined by subdivision (f)
(g) , and earnings from the principal shall be
managed as temporarily restricted funds.
(5) The accompanying funds endowment
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).
(c) If a nonprofit corporation holds the endowment, the nonprofit
shall utilize generally accepted accounting practices that are
promulgated by the Financial Accounting Standards Board.
(c)
(d) If a local agency holds the accompanying
funds endowment , the local agency shall do all
of the following:
(1) Hold, manage, and invest the accompanying funds
endowment consistent with subdivision (b) to the
extent allowed by law.
(2) Disburse funds on a timely basis to meet the stewardship
expenses of the entity holding the property.
(3) Utilize accounting standards consistent with standards
promulgated by the Governmental Accounting Standards Board.
(d)
(e) A governmental entity, community foundation,
special district, or a nonprofit organization that holds funds
pursuant to this chapter, including, but not limited to,
accompanying funds an endowment , moneys to
acquire land or easements, or moneys for initial stewardship costs,
shall provide the local or state agency with an annual fiscal report
that contains at least the same information as required by Internal
Revenue Service Form 990 regarding the funds.
(e)
(f) If a state or local agency authorizes a
governmental entity, special district, or nonprofit organization to
hold property pursuant to subdivision (a) or (b) of Section 65967
in connection with a development project , the agency may
require an administrative endowment from the
project proponent , as a one-time payment for reasonable
costs associated with reviewing qualifications, approving holders,
and regular oversight of compliance and performance.
to pay a one-time fee that does not exceed the reasonable costs of
the agency in reviewing qualifications of potential holders of the
property, approving those holders, and any regular oversight over
those holders to ensure that the holders are complying
with all applicable laws. The administrative endowment
one-time fee shall be held, managed, and
invested to produce an annual revenue sufficient to cover the costs
of reviewing qualifications, approving holders, and ongoing
oversight.
(f)
(g) A local agency may require a project proponent to
provide a one-time payment that will provide for the initial
stewardship costs for up to three years while the endowment begins to
accumulate investment earnings. The funds for the initial
stewardship costs are distinct from the funds that may be conveyed
for long-term stewardship, construction, or other costs. If there are
funds remaining at the completion of the initial stewardship period,
the funds shall be conveyed to the project proponent.
(g)
(h) The local agency may contract with or designate a
qualified third party to do any of the following:
(1) Review the qualifications of a governmental entity, special
district, or nonprofit organization to effectively manage and steward
natural land or resources pursuant to subdivisions (c) and
(d) of subdivision (c) of Section 65967.
(2) Review the qualifications of a nonprofit
governmental entity, community foundation, or nonprofit
organization to hold and manage the accompanying funds
endowment that are is
set aside for long-term stewardship of the property.
(3) Review reports or other performance indicators to evaluate the
stewardship of lands, natural resources, or funds, and compliance
with the mitigation agreement.
(h)
(i) If a property conserved pursuant to subdivision (a)
or (b) of Section 65967 is condemned, the net proceeds from the
condemnation of the real property interest set aside for mitigation
purposes shall be used for the purchase of property that replaces the
natural resource characteristics the original mitigation was
intended to protect, or as near as reasonably feasible. Any
accompanying funds endowment held for the
condemned property shall be held for the long-term stewardship of the
replacement property.
(i)
(j) Unless prohibited by law, no provision in this
chapter is intended to prohibit for-profit entities from holding,
acquiring, or providing property for mitigation purposes.
(j)
(k) Nothing in this section shall prohibit a state
agency from exercising any powers described in subdivision
(c), (f), or (g) (d), (g), or (h) .
(l) A governmental entity, special district, or nonprofit
organization may contract with a community foundation at any time to
hold, manage, and invest the endowment for a mitigation property and
disbursing payments to the holder of the mitigation property
consistent with the fund agreement.
(m) The mitigation agreement shall not include any provision to
waive or exempt the parties from any requirement, in whole or part,
of this chapter.
SEC. 3. SEC. 4. Section 65967 of the
Government Code is amended to read:
65967. (a) If a state or 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 agency may authorize a governmental entity, special
district, a nonprofit organization, a for-profit entity, a person, or
another entity to hold title to and manage that property.
(b) If a state or 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 take any action that
the agency deems necessary in order to meet its mitigation
obligations, including, but not limited to, the following:
(1) Transfer the interest to a governmental entity ,
special district, or nonprofit organization that meets the
requirements set forth in subdivision (c).
(2) Provide funds to a governmental entity , nonprofit
organization, a special district, a for-profit entity, a person, or
other entity to acquire land or easements that satisfy the agency's
mitigation obligations.
(3) Hold an endowment in an account administered by an elected
official provided that the state or local agency is protecting,
restoring, or enhancing its own property.
(c) If a state or local agency authorizes a nonprofit organization
to hold title to and manage the property, that 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 this 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, including, but not limited to, agricultural
lands, wildlife habitat, wetlands, endangered species habitat,
open-space areas, and outdoor recreational areas.
(d)
(c) A state or local agency shall exercise due
diligence in reviewing the qualifications of a governmental entity,
special district, or nonprofit organization to effectively manage and
steward land, water, or natural resources. 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.
(e)
(d) The state or local agency may require the
governmental entity, 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 any other requirements
pursuant to the mitigation agreement for the property.
(f)
(e) The recorded instrument that places the fee title
or partial interest in real property with a governmental entity,
special district, nonprofit organization, or for-profit entity,
pursuant to subdivision (a) or (b) shall include a provision that if
the state or local agency or its successor agency reasonably
determines that the property conveyed to meet the mitigation
requirement 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
or local agency, or to another public agency, governmental entity,
special district, or nonprofit organization pursuant to
subdivisions (c) and (d) subdivision (c) and
subject to approval by the state or local agency. If a state or local
agency determines that a property must revert, it shall work with
the parties to the mitigation agreement, or other affected entities,
to ensure that any contracts, permits, funding, or other obligations
and responsibilities are met.
SEC. 4. SEC. 5. Section 65968 of the
Government Code is amended to read:
65968. (a) Notwithstanding Section 13014 of the Fish and Game
Code, if accompanying funds are an endowment
is conveyed pursuant to Section 65966 for property conveyed
pursuant to Section 65967, the accompanying funds
endowment may be held by the same governmental entity,
special district, or nonprofit organization that holds the property
pursuant to this section.
(b) Except as permitted below, the accompanying funds
endowment shall be held by the agency or
agencies that require the mitigation or by the governmental entity,
special district, or nonprofit organization that holds the property
or holds an interest in the property for conservation purposes. The
exceptions to this requirement are the following:
(1) Accompanying funds An endowment
that are is held by an entity other
than the state or holder of the mitigation property as of January 1,
2012.
(2) Accompanying funds An endowment
that are is held by another entity
pursuant to the terms of a natural community conservation plan or a
safe harbor agreement. In order for this paragraph to apply, on or
before January 1, 2012, a natural community conservation plan or a
safe harbor agreement shall be at a recognized initial, interim, or
final stage as reflected in the completion of planning agreements,
framework plans, subarea plans, implementing agreements, or other
documents that are part of the recognized natural community
conservation plan process as described in Chapter 10 (commencing with
Section 2800) of Division 3 of the Fish and Game Code, or a safe
harbor agreement as described in Article 3.7 (commencing with Section
2089.2) of Chapter 1.5 of Division 3 of the Fish and Game Code.
(3) If existing law prohibits the holder of the mitigation
property to hold the endowment, including for-profit entities.
(4) If the project proponent and the holder of the mitigation
property or conservation easement agree that a community foundation
shall hold the endowment.
(4)
(5) If the mitigation property is held or managed by a
federal agency , the agency may hold the endowment itself or
designate a qualified entity, including a community foundation or the
National Fish and Wildlife Foundation, to hold the endowment .
(5) If a federal agency objects to the qualifications of the
proposed endowment holder.
(6) If the same mitigation property is required to be conveyed
pursuant to both a federal and state permit, and the federal agency
directs that a community foundation or the National Fish and Wildlife
Foundation shall hold the endowment with the agreement of the holder
of the mitigation property.
(c) An entity that holds an endowment pursuant to paragraphs (1)
to (6), inclusive, of subdivision (a), shall meet all the
qualifications and requirements of this chapter for holding,
managing, investing, and disbursing the endowment funds.
(c)
(d) The governmental entity, special district,
community foundation, National Fish and Wildlife Foundation, 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.
(d)
(e) The holder of accompanying funds
an endowment shall meet certify
to the project proponent or the holder of the mitigation property or
a conservation easement that it meets all of the following
requirements:
(1) The holder has the capacity to effectively manage the
mitigation funds.
(2) The holder has the capacity to achieve reasonable rates of
return on the investment of those funds similar to those of other
prudent investors.
(3) The holder utilizes generally accepted accounting practices as
promulgated by either of the following:
(A) The Financial Accounting Standards Board for nonprofit
organizations.
(B) The Governmental Accounting Standards Board for public
agencies, to the extent those practices do not conflict with any
requirement for special districts in Article 2 (commencing with
Section 53630) of Chapter 4 of Part 1 of Division 2 of Title 5 of the
Government Code.
(4) The holder will be able to ensure that funds are accounted
for, and tied to, a specific property.
(5) If the holder is a nonprofit organization, a community
foundation, or the National Fish and Wildlife Foundation, it
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).
(f) If a government entity, community foundation, special
district, nonprofit organization, or the National Fish and Wildlife
Foundation meets the requirements of this chapter, it is qualified to
be a holder of the endowment for the purpose of obtaining any
permit, clearance, agreement, or mitigation approval from a state or
local agency.
(e)
(g) Except for a mitigation agreement prepared by a
state agency, the mitigation agreement that authorizes the funds to
be conveyed to a governmental entity, community foundation,
special district, or nonprofit organization pursuant to
subdivision (a) shall include a provision that requires the
accompanying funds endowment be held by a
governmental entity, special district, or a nonprofit organization to
revert to the local agency, or to a successor organization
identified by the agency and subject to subdivision (d)
(e) , if any of the following occurs:
(1) The governmental entity, community foundation,
special district, or nonprofit organization ceases to exist.
(2) The governmental entity, community foundation,
special district, or nonprofit organization is dissolved.
(3) The governmental entity, community foundation,
special district, or nonprofit organization becomes bankrupt or
insolvent.
(4) The local agency reasonably determines that the
accompanying funds endowment held by the
governmental entity, community fo undation,
special district, or nonprofit organization, or its successor entity,
are not being held, managed, invested, or disbursed for conservation
purposes and consistent with the mitigation agreement and legal
requirements. Any reverted funds shall continue to be held, managed,
and disbursed only for long-term stewardship and benefit of the
specific property for which they were set aside. If the funds revert
from the governmental entity, community foundation,
special district, or nonprofit organization, the special district or
nonprofit organization may choose to relinquish the property. If the
property is relinquished, the local agency shall accept title to the
property or identify an approved governmental entity, community
foundation, special district, or nonprofit organization to
accept title to the property.
(f)
(h) Nothing in this section shall prohibit a state or
local agency from determining that a governmental entity,
community foundation, special district, or nonprofit
organization meets the requirements of this section and is qualified
to hold the accompanying funds endowment
, or including a provision in the mitigation agreement as
described in subdivision (e) (g) .
(g)
(i) A state or local agency may allow the
accompanying funds endowment to be held
temporarily in an escrow account until December 31, 2012, after which
time the funds shall be transferred to the entity that will
permanently hold the accompanying funds
endowment .
(h)
(j) Subject to subdivision (e)
(g) , any accompanying funds endowment
that are is conveyed to and held
by a governmental entity, special district, or nonprofit organization
pursuant to this section shall continue to be held by the entity if
this section is repealed and those funds are conveyed prior to the
date this section is repealed.
(i)
(k) A state or local agency shall not require, as a condition of
obtaining any permit, clearance, agreement, or mitigation approval
from the state or local agency, that a preferred or exclusively named
entity by the state or local agency be named as the entity to hold,
manage, invest, and disburse the funds in furtherance of the
long-term stewardship of the property for which the funds were set
aside.
(l) (1) If the National Fish and Wildlife Foundation holds
endowment funds conveyed pursuant to Section 65966 for property
conveyed pursuant to Section 65967, it shall provide, no later than
July 1, 2013, and annually thereafter, a report to the Legislature
that provides all of the following:
(A) An audited financial statement for the previous financial year
that states the organization's investment policy, return objectives
and other items required by generally accepted accounting principles
related to endowment management by nonprofit corporations.
(B) A list of all mitigation properties conveyed pursuant to
Section 65967 that the National Fish and Wildlife Foundation is the
holder of the endowment.
(C) For each endowment identified in
subparagraph (B), the following items shall be provided in the
report:
(i) Beginning of year balance.
(ii) Contributions.
(iii) Investment earnings or losses.
(iv) Grants.
(v) Program expenses.
(vi) Administrative expenses.
(vii) End of year balance.
(viii) The estimated percentage of the year-end balance held as a
board-designated endownment or quasi-endowment, held as a permanent
endowment, and held as a term endowment.
(ix) Endowment funds not in the possession of the organization
that are held and administered for the organization by unrelated
organizations, or related organizations.
(2) The report required to be submitted pursuant to subdivision
(a) shall be submitted in compliance with Section 9795.
(m) 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. 5. SEC. 6. This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to ensure that mitigation projects are approved in a
timely manner, particularly in relation to desert renewable energy
projects, it is necessary that this act take effect immediately.