(a) Pursuant to Education Code, Section 17078.62(b)(3), the school district in which the Charter School is physically located may take possession and title of the facility only after having demonstrated due diligence in soliciting alternative Charter Schools within the local area to take possession and title of the facility, as permitted by Education Code Section 17078.62(b)(2). Such demonstration of due diligence shall be at the Authority's discretion, but shall include, but not be limited to, documentary evidence of solicitation of Charter Schools within the district boundaries, where applicable.

(b) Title to project facilities may be held by the school district in whose boundaries the facility is to be physically located, in trust, for the benefit of the state public school system.

(c) Title to project facilities may be held by a Charter School or a local governmental entity other than the school district in accordance with Sections 17078.57, 17078.62, and 17078.63 of the Education Code.

(d) Any person or entity providing a substantial contribution that is applied to the costs of the project in excess of the state share and the local matching share may be granted a security interest to be satisfied from the proceeds, if any, realized when the property is ultimately disposed of. If the contribution was made for the explicit purpose of purchasing any asset with a normal life expectancy of less than twenty years, the security interest will be adjusted to reflect the depreciation of the asset(s).

(e) Any person or entity that provides a contribution to the Applicant which is used solely to assist the Applicant in meeting its Local Matching Share shall not be entitled to a security interest as provided in subsection (b). Where the contribution results in total Project funding beyond the State share and Local Matching Share, the contributor's security interest shall be limited to the amount in excess of the State share and Local Matching Share.

(f) If a default occurs and all Matching Share Payments have not been made, the security interest of any person or entity providing a substantial contribution to the costs of the Project shall be satisfied only after the account is reimbursed for any remaining unpaid local matching share.

(g) Specific terms of security provisions for persons or entities providing a substantial contribution shall be determined on a case-by-case basis.

(h) Prior to the release of funds, the Applicant shall submit evidence of a separate and distinct account for deposits of all Program loan proceeds.