(b)

1. (1) Except as permitted pursuant to paragraph (2), the endowment shall be held by one of the following:

   1. (A) The agency or agencies that required the mitigation.
   2. (B) The governmental entity, special district, or nonprofit organization that either holds the property, or holds an interest in the property, for conservation purposes.
   3. (C) The governmental entity or special district that retains the property after conveying an interest in the property for conservation purposes if that governmental entity or special district is protecting, restoring, or enhancing the property that was retained.

2. (2) The exceptions to paragraph (1) are the following:

   1. (A) An endowment that is held by an entity other than the state or holder of the mitigation property as of January 1, 2012.
   2. (B) An endowment that is held by another entity, which is qualified pursuant to this chapter, pursuant to the terms of a natural community conservation plan (Chapter 10 (commencing with Section 2800) of Division 3 of the Fish and Game Code) or a safe harbor agreement (Article 3.7 (commencing with Section 2089.2) of Chapter 1.5 of Division 3 of the Fish and Game Code). In order for this paragraph to apply, prior to setting aside any endowments, the implementation agreement that is a part of an approved natural community conservation plan, the planning agreement for any natural community conservation plan that has not yet been approved, or the safe harbor agreement shall specifically address the arrangements for the endowment including, but not limited to, qualifications of the endowment holder, capitalization rate, return objectives, and the spending rule and disbursement policies.
   3. (C) If existing law prohibits the holder of the mitigation property to hold the endowment, including for-profit entities.
   4. (D) If the project proponent and the holder of the mitigation property or conservation easement agree that a community foundation or a congressionally chartered foundation shall hold the endowment.
   5. (E) If the mitigation property is held or managed by a federal agency.
   6. (F) If any of the same mitigation property is required to be conveyed pursuant to both a federal and state governmental approval, and under the federal governmental approval the federal agency does not approve one of the entities described in paragraph (1) of subdivision (b) as chosen to hold the endowment by the agreement of the project proponent and the holder of the mitigation property or conservation easement.

(e) The holder of an endowment shall certify to the project proponent or the holder of the mitigation property or a conservation easement and the local or state agency that required the endowment that it meets all of the following requirements:

1. (1) The holder has the capacity to effectively manage the mitigation funds.
2. (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 for endowment funds and shall manage and invest the endowment in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances, consistent with the Uniform Prudent Management of Institutional Funds Act (Part 7 (commencing with Section 18501) of Division 9 of the Probate Code).

3. (3) The holder utilizes generally accepted accounting practices as promulgated by either of the following:

   1. (A) The Financial Accounting Standards Board or any successor entity for nonprofit organizations.
   2. (B) The Governmental Accounting Standards Board or any successor entity 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.
4. (4) The holder will be able to ensure that funds are accounted for, and tied to, a specific property.
5. (5) If the holder is a nonprofit organization, a community foundation, or a congressionally chartered 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).

(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, a congressionally chartered foundation, or nonprofit organization pursuant to subdivision (a) shall include a provision that requires the 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 (e), if any of the following occurs:

1. (1) The governmental entity, community foundation, special district, a congressionally chartered foundation, or nonprofit organization ceases to exist.
2. (2) The governmental entity, community foundation, special district, a congressionally chartered foundation, or nonprofit organization is dissolved.
3. (3) The governmental entity, community foundation, special district, a congressionally chartered foundation, or nonprofit organization becomes bankrupt or insolvent.
4. (4) The local agency reasonably determines that the endowment held by the governmental entity, community foundation, special district, or nonprofit organization, or its successor entity, is 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.