Funds received by local governments pursuant to the provisions of this chapter may be used for county, city, or city and county purposes, as the case may be, or may, but need not necessarily, be used for purposes of general interest and benefit to the state. The use of the funds shall include administration, supervision, and enforcement of any open-space program under which a local government receives the funds. The funds may also include an allocation of all or part of them to any special district or school district existing within boundaries of a local government in which land is assessed pursuant to Section 423, 423.3, or 423.5 of the Revenue and Taxation Code, and which has thereby suffered a reduction in its assessed valuation, when the local governing body determines:
(a)
That the loss of assessed value is substantial and will have an adverse effect upon programs of public importance carried on by the district.
(b)
The benefits flowing from the restrictions on the use of land within the district do not accrue solely or primarily to landowners or residents within the district.
(c)
That the taxes collected by the district are not devoted to expenditures primarily of benefit to land or landowners within the district.
Any special district or school district may make application for an allocation of the funds from the local government in the form and with such supporting evidence as the governing board of the local government may require. The governing board may also adopt such uniform standards as it believes necessary to determine the amount and method of payment of such assistance, and may provide for such payments to be reduced annually, according to a schedule, so as to cease financial assistance over a specified period of years. However, nothing herein shall be construed as requiring the governing board of the local government to make any allocation to any special district or school district, and the governing board of the local government shall be the sole judge of the entitlement of any special district or school district to any allocation and to the amount of the allocation if granted.