Cal. Gov't Code § 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. Nothing in this chapter shall be construed as otherwise precluding other methods of funding for the long-term stewardship of the property. If an endowment is conveyed or secured at the time the property is protected, all of the following shall apply:
1. (1) The endowment shall be held, managed, invested, and disbursed solely for, and permanently restricted to, the long-term stewardship of the specific property for which the funds were set aside.
2. (2) The 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. (3) The endowment shall be held, managed, invested, disbursed, and governed as described in subdivision (a) of Section 65965 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 or any successor entity.
(d) If a local agency holds the endowment, the local agency shall do all of the following:
1. (1) Hold, manage, and invest the endowment consistent with subdivision (b) to the extent allowed by law.
2. (2) Disburse funds on a timely basis to meet the stewardship expenses of the entity holding the property.
3. (3) Utilize accounting standards consistent with standards promulgated by the Governmental Accounting Standards Board or any successor entity.
(e)
1. (1) Unless the mitigation agreement provides that another person or entity shall prepare the annual fiscal report described below, a governmental entity, community foundation, special district, a congressionally chartered foundation, or a nonprofit organization that holds funds pursuant to this chapter, including an endowment or moneys for initial stewardship costs, shall provide the local or state agency that required the endowment with an annual fiscal report that contains at least the following elements with respect to each individual endowment dedicated and held by that entity:
  1. (A) The balance of each individual endowment at the beginning of the reporting period.
  2. (B) The amount of any contribution to the endowment during the reporting period including, but not limited to, gifts, grants, and contributions received.
  3. (C) The net amounts of investment earnings, gains, and losses during the reporting period, including both realized and unrealized amounts.
  4. (D) The amounts distributed during the reporting period that accomplish the purpose for which the endowment was established.
  5. (E) The administrative expenses charged to the endowment from internal or third-party sources during the reporting period.
  6. (F) The balance of the endowment or other fund at the end of the reporting period.
  7. (G) The specific asset allocation percentages including, but not limited to, cash, fixed income, equities, and alternative investments.
  8. (H) The most recent financial statements for the organization audited by an independent auditor who is, at a minimum, a certified public accountant.
2. (2) If an entity is required to submit an identical annual fiscal report pursuant to paragraph (1) to the Department of Fish and Game and any other state or local agency, then that report shall be provided only to the Department of Fish and Game. In that instance, the Department of Fish and Game shall provide a copy of that annual fiscal report on its Internet Web site for a minimum of five years.
(f) If a state 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 the project proponent 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 and approving those holders. This one-time fee shall be collected only if the agency can demonstrate its actual review of qualifications and approval of holders.
(g) If a local agency authorizes a governmental entity, special district, or nonprofit organization to hold property or an endowment pursuant to this chapter, the agency may require the project proponent to pay a one-time fee that does not exceed the reasonable costs of the agency in reviewing qualifications of the parties identified in the mitigation agreement, approving those parties, and any regular oversight over those parties to ensure that the parties are complying with all applicable laws. This one-time fee shall be collected only if the agency can demonstrate its actual review of qualifications, approval of parties, or regular oversight of compliance and performance.
(h) 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.
(i) The local agency may contract with or designate a qualified third party to do any of the following:
1. (1) Review the qualifications of a governmental entity, special district, or nonprofit organization to effectively manage and steward natural land or resources pursuant to subdivision (c) of Section 65967.
2. (2) Review the qualifications of a governmental entity, community foundation, or nonprofit organization to hold and manage the endowment that is set aside for long-term stewardship of the property.
3. (3) Review reports or other performance indicators to evaluate the stewardship of lands, natural resources, or funds, and compliance with the mitigation agreement.
(j) 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 endowment held for the condemned property shall be held for the long-term stewardship of the replacement property.
(k) 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.
(l) Nothing in this section shall prohibit a state agency from exercising any powers described in subdivision (d), (g), or (h).
(m) A governmental entity, special district, or nonprofit organization may contract with a community foundation or congressionally chartered foundation at any time to hold, manage, and invest the endowment for a mitigation property and disburse payments from the endowment to the holder of the mitigation property consistent with the fund agreement.
(n) Except as expressly authorized in paragraph (1) of subdivision (e), the mitigation agreement shall not include any provision to waive or exempt the parties from any requirement, in whole or part, of this chapter.
(o) Subdivisions (b) to (e), inclusive, shall not apply to funds, including funds from mitigation fees, held for the long-term management and stewardship of property pursuant to either an interim or approved habitat conservation plan pursuant to Chapter 35 (commencing with Section 1531) of Title 16 of the United States Code or an interim or approved natural community conservation plan pursuant to Chapter 10 (commencing with Section 2800) of Division 3 of the Fish and Game Code, if, in the interim or approved plan documents, the permitting agency determines the endowment to be established with those funds will be adequate and provides a schedule for funding the endowment.