(a) Funds may be granted or loaned to a nonprofit organization under this chapter if the nonprofit organization enters into an agreement with the endowment, on such terms and conditions as the endowment specifies.

(b) (1) In the case of a grant for real property acquisition, the agreement shall provide all of the following:

(A) The purchase price of any interest in real property acquired by the nonprofit organization may not exceed the fair market value as established by an appraisal approved by the endowment.

(B) The endowment shall approve the terms under which the interest in land is acquired.

(C) The interest in land acquired pursuant to a grant from the endowment may not be used as security for any debt to be incurred by the nonprofit organization unless the endowment approves the transaction.

(D) The transfer of land acquired pursuant to an endowment grant shall be subject to the approval of the endowment and a new agreement sufficient to protect the interest of the people of California shall be entered into with the transferee.

(E) If any essential term or condition is violated, title to all interest in real property acquired with state funds shall immediately vest in the state.

(F) If the existence of the nonprofit organization is terminated for any reason, title to all interest in real property acquired with state funds shall immediately vest in the state unless another appropriate public agency or nonprofit organization is identified by the endowment and agrees to accept title to all interests in real property.

(2) Any deed or other instrument of conveyance whereby real property is being acquired by a nonprofit organization pursuant to this section shall set forth the reversionary interest of the state.

(c) The endowment shall also require an agreement sufficient to protect the public interest in any improvement or development constructed under a grant to a nonprofit organization for improvement and development of a project under this chapter. The agreement shall particularly describe any real property which is subject to the agreement, and it shall be recorded by the endowment in the county in which the real property is located.

(d) Any funds collected from a nonprofit organization pursuant to an agreement regarding a grant shall be deposited in the account created pursuant to Section 20060.

(Added by Stats. 2002, Ch. 1126, Sec. 1. Effective January 1, 2003.)