BILL ANALYSIS SB 390 Page 1 SENATE THIRD READING SB 390 (Kehoe) As Amended August 20, 2010 Majority vote SENATE VOTE :35-0 NATURAL RESOURCES 7-0 APPROPRIATIONS 17-0 ----------------------------------------------------------------- |Ayes:|Chesbro, Gilmore, |Ayes:|Fuentes, Conway, | | |Brownley, | |Bradford, | | |De Leon, Hill, Huffman, | |Huffman, Coto, Davis, De | | |Logue | |Leon, Gatto, Hall, | | | | |Harkey, Miller, Nielsen, | | | | |Norby, Skinner, Solorio, | | | | |Torlakson, Torrico | |-----+--------------------------+-----+--------------------------| | | | | | ----------------------------------------------------------------- SUMMARY : 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 post consumer 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. SB 390 Page 2 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 purposes of the RMDZ Program. The funds are from the state solid waste tipping fee, not the General Fund. 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, repeals them as of January 1, 2012, and provides for disposition of funds remaining after sunset and repeal. FISCAL EFFECT : According to the Assembly Appropriations Committee, cost pressures of an unknown amount during the years 2010-11 through 2021-22 on other programs funded from the IWMA to the extent the continuation of the RMDZ Program results in those other programs receiving less IWMA funds than they otherwise would. COMMENTS : According to the author, the 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 post consumer 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. The RMDZ Program was established by SB 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, DRRR must provide the right combination of technical/financial incentives and resources to SB 390 Page 3 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. The program is intended to combine recycling and sustainability efforts with economic development. There are currently 33 zones located throughout the state. These zones include 220 cities and 29 counties (46% of all jurisdictions statewide). The RMDZs cover approximately 85,000 square miles, or 52% of California, and represent almost 20 million Californians (approximately 54% of the total population). The initial funding for the Program came from the Integrated Waste Management Account; the ongoing loan program is funded by loan repayments. Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0006382