BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 390
                                                                  Page  1

          Date of Hearing:  June 21, 2010

                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES
                                Wesley Chesbro, Chair
                     SB 390 (Kehoe) - As Amended:  April 26, 2010

           SENATE VOTE  :  35-0
           
          SUBJECT  :  Solid waste:  recycling market development 

           SUMMARY  :  This bill extends the sunset on California's Recycling  
          Market Development Zone (RMDZ) Program from July 1, 2011 to July  
          1, 2021 and makes related technical and clarifying changes.  

           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 50% of solid waste from landfill  
            disposal or transformation by January 1, 2000, through source  
            reduction, recycling, and composting activities.

          2)Establishes a Market Development Program to assist local  
            governments in meeting the requirements of #1 above and  
            requires the Department of Resources Recovery and Recycling  
            (DRRR) to develop a comprehensive market development plan to  
            stimulate market demand for postconsumer waste materials  
            generated in California. 

          3)Establishes the RMDZ Program within DRRR 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 DRRR for making loans for the purposes of the  
            loan program.  The funds are from the state solid waste  
            tipping fee, not the General Fund. 








                                                                  SB 390
                                                                  Page  2


          6)Establishes a per loan cap of $2 million, 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.

           FISCAL EFFECT  :  This bill would extend the RMDZ loan program  
          until July 1, 2021.  

           

          COMMENTS  :

           1)Purpose of Bill  .  According to the author, he RMDZ Loan  
            Program provides direct low-interest loans to businesses and  
            non-profit organizations located in RMDZs that increase  
            diversion of non-hazardous solid waste from California  
            landfills and that promote market demand for secondary and  
            postconsumer materials.  The loan program encourages banks to  
            jointly fund projects.  In addition, the businesses receiving  
            loans get free technical assistance in permitting, business  
            plans, feedstock, and identifying potential markets.  This  
            bill will preserve a financing program specifically for  
            California recycling manufacturers and provides stability to  
            borrowers.  

           2)History of the RMDZ Loan Program  .  The RMDZ Program was  
            established by Senate Bill 1322 (Bergeson, Chapter 1096,  
            Statutes of 1989).  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 DRRR 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. 

           3)How the RMDZ Program works  .  There are currently 33 zones  
            located throughout the state.  These zones are comprised of  
            220 cities and 29 counties (46 percent of all jurisdictions  








                                                                  SB 390
                                                                  Page  3

            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.  The program is  
            intended to combine recycling and sustainability efforts with  
            economic development.

          As of January 2009, DRRR had funded 153 loans totaling $100  
            million.  The 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 funding for the Program came from the Integrated  
            Waste Management Account; the ongoing loan program is funded  
            by loan repayments.

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          California Recycling Market Development Zones Association
          California Resource Recovery Association
          City of Hesperia
          City of Los Angeles
          City of Vernon
          Golden By-Products, Inc. 
          Kings County Economic Development Corporation
          Pinnacle Plastic Containers, Leading Industry, Inc. 
          Regional Council of Rural Counties
          Sanitation Districts of Los Angeles County
          Siskiyou County
          Solid Waste Association of North America
          Tulare County
          Waste Management 
           
            Opposition 
           
          None on file










                                                                  SB 390
                                                                  Page  4

           Analysis Prepared by  :  Elizabeth MacMillan / NAT. RES. / (916)  
          319-2092