BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 390| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 390 Author: Kehoe (D), et al Amended: 8/20/10 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 SENATE FLOOR : 35-0, 1/28/10 AYES: Aanestad, Ashburn, Calderon, Cedillo, Cogdill, Corbett, Correa, Cox, Denham, DeSaulnier, Ducheny, Dutton, Florez, Hancock, Harman, Hollingsworth, Kehoe, Leno, Liu, Lowenthal, Maldonado, Negrete McLeod, Oropeza, Padilla, Pavley, Price, Romero, Simitian, Steinberg, Strickland, Wiggins, Wolk, Wright, Wyland, Yee NO VOTE RECORDED: Alquist, Huff, Runner, Walters, Vacancy ASSEMBLY FLOOR : 77-0, 8/23/10 - See last page for vote SUBJECT : Recycling Market Development Revolving Loan Program SOURCE : Author DIGEST : This bill extends the sunset on California's CONTINUED SB 390 Page 2 Recycling Market Development Zone Program from July 1, 2011 to July 1, 2021, and makes related technical and clarifying changes. Assembly Amendments delete the provision that provided for larger loans if there was sufficient money in the subaccount. ANALYSIS : 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 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 SB 390 Page 3 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. This bill: 1.Extends the sunset provisions for the loan program from July 1, 2011 to July 1, 2021. 2.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. 3.Extends the program and the continuous appropriation to July 1, 2021, and the repeal date to January 1, 2022. Comments According to the author's office, 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 Senate Bill 1322 (Bergeson), Chapter 1096, Statutes of 1989, and codified in Public Resources Code sections 42010-42024. The goal for SB 390 Page 4 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 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 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. SB 390 Page 5 SUPPORT : (Verified 8/24/10) 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 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. ASSEMBLY FLOOR : AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall, Bill Berryhill, Tom Berryhill, Block, Blumenfield, Bradford, Brownley, Buchanan, Caballero, Charles Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore, Eng, Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Gaines, Galgiani, Garrick, Gatto, Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande, Niello, Nielsen, Norby, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra Strickland, Swanson, Torlakson, Torres, Torrico, SB 390 Page 6 Tran, Villines, Yamada, John A. Perez NO VOTE RECORDED: Furutani, Vacancy, Vacancy TSM:do 8/24/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****