BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



           ------------------------------------------------------------ 
          |SENATE RULES COMMITTEE            |                   SB 390|
          |Office of Senate Floor Analyses   |                         |
          |1020 N Street, Suite 524          |                         |
          |(916) 651-1520         Fax: (916) |                         |
          |327-4478                          |                         |
           ------------------------------------------------------------ 
           
                                         
                                 THIRD READING


          Bill No:  SB 390
          Author:   Kehoe (D)
          Amended:  1/25/10
          Vote:     21

           
           SENATE ENV. QUALITY COMMITTEE  :  7-0, 4/20/09
          AYES:  Simitian, Runner, Ashburn, Corbett, Hancock,  
            Lowenthal, Pavley

           SENATE APPROPRIATIONS COMMITTEE  :  9-0, 1/21/10
          AYES:  Kehoe, Cox, Corbett, Denham, Leno, Liu, Price,  
            Walters, Yee


            SUBJECT  :    Recycling Market Development Revolving Loan  
                      Program

            SOURCE  :     California Department of Resources, Recovery  
                      and Recycling


           DIGEST  :    This bill extends the sunset date from 2012 to  
          2022 and also updates the Recycling Market Development  
          Revolving Loan Program within the Department of Resources,  
          Recovery and Recycling which is formerly known as the  
          California Integrated Waste Management Board.

           ANALYSIS  :    

           Existing law  , under the California Integrated Waste  
          Management Act (Act) of 1989: 

                                                           CONTINUED





                                                                SB 390
                                                                Page  
          2

          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 percent of  
            solid waste from landfill disposal or transformation by  
            January 1, 1995, through source reduction, recycling, and  
            composting activities, and must divert 50 percent 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 California Integrated Waste Management Board  
            which was abolished and reestablished as the Department  
            of Resources, Recovery and Recycling (department) to  
            develop a comprehensive market development plan to  
            stimulate market demand for post-consumer water materials  
            generated in California. 

          3.Establishes a Recycling Market Development Zone (RMDZ)  
            Program within the department 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.

          5.Establishes the Recycling Market Development Revolving  
            Loan Subaccount (subaccount) in the Integrated Waste  
            Management Account and continuously appropriates funds  
            deposited in the subaccount to the department 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 two million dollars 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.








                                                                SB 390
                                                                Page  
          3

          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.

          4.Prohibits the department from funding a loan under the  
            program until it determines that the applicant has  
            obtained all significant applicable federal, state, and  
            local permits.  

          5.Extends the program and the continuous appropriation to  
            July 1, 2021, and the repeal date to January 1, 2022.

           Background

           The RMDZ program was established by Senate Bill 1322  
          (Bergeson), Chapter 1096, Statutes of 1989, 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 department 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 limited state resources, and provide RMDZ  
          opportunities to as many local jurisdictions as possible. 

           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  







                                                                SB 390
                                                                Page  
          4

          staff from local government waste management departments,  
          economic development, etc.  The program is unique for the  
          department, in that its intent is to "marry" recycling and  
          sustainability efforts with economic development effort.

           NOTE:  Please refer to the Senate Environmental Quality  
                 Committee's analysis for further information.

           Related legislation

           AB 1581 (Assembly Natural Resources Committee) would extend  
          the sunset date for the RMDZ loan program until 2016 (in  
          Senate Environmental Quality Committee).  
           
           FISCAL EFFECT :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee analysis:

                          Fiscal Impact (in thousands)

           Major Provisions                     2010-11     2011-12     
           2012-13          Fund  

          Program sunset extension                $4,000$4,000       
          Special*

          *Integrated Waste Management Account

           SUPPORT  :   (Verified  1/25/10)

          California Department of Resources, Recovery and Recycling  
          (source)
          California Recycling Market Development Zone Association  
          (if amended)
          City of Los Angeles
          City of Vernon
          Kings County Economic Development Corporation
          Regional Council of Rural Counties
          Sanitation Districts of Los Angeles County
          Siskiyou County Economic Development Council
          Tulare County Economic Development Corporation
          Waste Management








                                                                SB 390
                                                                Page  
          5

           OPPOSITION  :    (Verified  1/25/10)

          California Resource Recovery Association

           ARGUMENTS IN SUPPORT  :    The proponents of this bill  
          contend that this bill will greatly enhance the ongoing  
          effort of the current RMDZ Loan Program, while allowing the  
          Department of Resources, Recovery and Recycling to provide  
          larger loans for larger market development projects.  These  
          large loans will allow recycling businesses to phase  
          expensive equipment and help local jurisdictions to meet  
          the current mandate to increase diversion of solid waste  
          from California landfills.  The proponents contend that  
          this bill will help the state keep up with current market  
          conditions for recycling businesses to site, expand, and  
          purchase new equipment.

           ARGUMENTS IN OPPOSITION  :    The opponents of this bill  
          indicate  that the RMDZ Loan Program is going to be  
          expanded next year to its statutory limit of 40 zones,  
          which will likely increase overall demand for loan funds.   
          The opponents believe that this bill contains no safeguards  
          to ensure that the overall loan fund will be recapitalized  
          if funds are loaned out on larger projects in certain  
          zones.  The opponents believe that increasing the maximum  
          loan amount for these projects as proposed in this bill  
          could cause the fund to go from its current total reserve  
          of $13 million to under $5 million in just one or two years  
          of strong demand.  
           

          TSM:do  1/26/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

                                ****  END  ****