BILL ANALYSIS
SB 390
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2009-2010 Regular Session
BILL NO: SB 390
AUTHOR: Kehoe
AMENDED: April 13, 2009
FISCAL: Yes HEARING DATE: April 20, 2009
URGENCY: No CONSULTANT: Caroll
Mortensen
SUBJECT : RECYCLED MARKET DEVELOPMENT ZONE LOAN
PROGRAM
SUMMARY :
Existing law , under the California Integrated Waste Management
Act (Act) of 1989:
1)Requires each city or county source reduction and recycling
element to include an implementation schedule that shows a
city or county must divert 25% of solid waste from landfill
disposal or transformation by January 1, 1995, through
source reduction, recycling, and composting activities, and
must divert 50% of solid waste on and after January 1, 2000.
2)Establishes a Market Development Program to assist local
governments in meeting the requirements of #1 above and
requires the Integrated Waste Management Board (IWMB) to
develop a comprehensive market development plan to stimulate
market demand for postconsumer water materials generated in
California.
3)Establishes a Recycling Market Development Zone (RMDZ)
Program within the IWMB that works with local zone
administrators to establish zones throughout California to
encourage recycling businesses through a variety of local
incentives.
4)Establishes the Recycling Market Development Revolving Loan
Program (loan program) to provide loans to recycling
businesses as specified.
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5)Establishes the Recycling Market Development Revolving Loan
Subaccount in the Integrated Waste Management Account and
continuously appropriates funds deposited in the subaccount
to the IWMB for making loans for the purposes of the loan
program. The funds are from the state solid waste tipping
fee, not the general fund.
6)Establishes a per loan cap of $2 million and not to exceed
three-fourths the total cost of the project.
7)Makes the provisions regarding the loan program, the
creation of the subaccount, and expenditures from the
subaccount inoperative on July 1, 2011, and repeals them as
of January 1, 2012, and provides for disposition of funds
remaining after sunset and repeal.
This bill :
1) Creates a two-tiered loan program that allows for larger
loans if there is sufficient money in the subaccount.
2) Establishes a sunset provision for the new, larger loans in
July 1, 2016.
3) Extends the sunset provisions for the loan program from
July 1, 2011 to July 1, 2021.
COMMENTS :
1) Purpose of Bill . According to the sponsor, this bill is
needed to extend and update the loan program.
2) History of the RMDZ Loan Program . The RMDZ program was
established by Senate Bill 1322 (Bergeson, Statutes of
1989, Chapter 1096) and codified in Public Resources Code
sections 42010-42024. The goal for the program is to
further the establishment of local and regional markets for
the increased materials being collected by local
jurisdictions. In order to accomplish this goal, the IWMB
must provide the right combination of technical/financial
incentives and resources to attract/retain recycling
manufacturers, ensure local Zone Administrators are
adequately trained, ensure the most efficient use of
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limited state resources, and provide RMDZ opportunities to
as many local jurisdictions as possible.
3) Program Description . There are currently 33 zones located
throughout the state. These zones are comprised of 220
cities and 29 counties (46 percent of all jurisdictions
statewide). The RMDZs cover approximately 85,000 square
miles or 52 percent of California, and represent almost 20
million Californians (approximately 54 percent of the total
population).
The RMDZs are managed at the local level by Zone
Administrators (ZAs). The ZAs are typically comprised of
staff from local government waste management departments,
economic development, etc. The program is unique for the
IWMB, in that its intent is to "marry" recycling and
sustainability efforts with economic development effort.
4) Loan Cap . The bill proposes to develop a two-tier system
for loans from the loan program. It would maintain the
current $2 million cap per loan amount, however, if there
is more than $5 million in the subaccount it would allow
for larger loans. These loans would be capped at $5
million and not more than three-fourths of the project
costs and would only be funded from funds in excess of $5
million in the subaccount. This will help ensure that the
lower dollar amount loans will always be available, but if
the subaccount can support it and demand is there, a higher
loan amount is available. The IWMB states that the ability
to offer larger loans will support the development of
larger recycling manufacturing facilities and to leverage
more private sector investment.
Some Zone Administrators have raised some concern that the
with the allowance of larger loans that the IWMB could only
fund one or two large loans annually and not provide
funding for smaller loans. The approach in the bill only
allows for the larger loans if there is more than $5
million in the subbacount. This should alleviate some of
that concern. Also the shorter sunset date (see # 5 below)
for the larger loans will allow for a Legislative review of
the IWMB's actions on loan distribution. According to an
IWMB agenda item in September 2008, there was approximately
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$13 million available for loans for the 2008/2009 fiscal
year.
As of January 14, 2009, the IWMB has approved and funded
153 loans totaling $100 million. The funded loans have
resulted in an estimated additional 4 million tons per year
of material being diverted from California landfills and
the creation of 1,930 jobs. The average loan amount has
been approximately $800,000.
The initial funds for the loans came from the Integrated
Waste Management Account, which is funded by a state solid
waste tipping fee, (not the general fund) and ongoing loans
come from loan repayments.
5) Sunset Date Extension . This bill proposes to extend the
sunset of this program until, 2021; a ten-year extension to
the existing program. This should provide surety to
program participants that the loan program will be
available and should encourage more program participation.
The interim sunset date on the allowance for the larger
loans will allow the Legislature to review this new
provision and evaluate its effectiveness and ensure that
loan funds are being distributed as directed in law.
6) Related Legislation . AB 1581 (Assembly Natural Resources
Committee) is pending in the Assembly Natural Resources
Committee. That measure would extend the sunset date for
the RMDZ loan program until 2016.
7) Proposed Amendment . To ensure that projects that have not
met statutory and regulatory standards are not funded
through the loan program, an amendment is needed to specify
that the IWMB shall not issue or fund loan until all local,
state and federal permits have been acquired.
SOURCE : California Integrated Waste Management Board
SUPPORT : City of Los Angeles
City of Vernon
Greater South San Joaquin Valley RMDZ (Kings
County)
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Greater South San Joaquin Valley RMDZ (Tulare
County)
Kings County Economic Development Corporation
Regional Council of Rural Counties
Siskiyou County Economic Development Council
Waste Management, Inc.
OPPOSITION : None on file