Funds granted pursuant to category (2) of subdivision (c) of Section 5096.151 may be expended for development, rehabilitation, or restoration only on lands owned by, or subject to a lease or other interest held by, the applicant city, county, or district. If such lands are not owned by the applicant, the applicant shall first demonstrate to the satisfaction of the Executive Officer of the State Coastal Conservancy that the development, rehabilitation, or restoration will provide benefits commensurate with the type and duration of interest in land held by the applicant.
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