BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 225|
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                              UNFINISHED BUSINESS


          Bill No:  SB 225
          Author:   Simitian (D), et al.
          Amended:  8/22/11
          Vote:     27 - Urgency

           
           SENATE ENVIRONMENTAL QUALITY COMMITTEE  :  5-0, 03/21/11
          AYES:  Simitian, Strickland, Hancock, Kehoe, Lowenthal
          NO VOTE RECORDED:  Blakeslee, Pavley

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           SENATE FLOOR  :  40-0, 04/25/11
          AYES:  Alquist, Anderson, Berryhill, Blakeslee, Calderon, 
            Cannella, Corbett, Correa, De León, DeSaulnier, Dutton, 
            Emmerson, Evans, Fuller, Gaines, Hancock, Harman, 
            Hernandez, Huff, Kehoe, La Malfa, Leno, Lieu, Liu, 
            Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio, 
            Runner, Simitian, Steinberg, Strickland, Vargas, Walters, 
            Wolk, Wright, Wyland, Yee

           ASSEMBLY FLOOR  :  78-0, 08/25/11 (Consent) - See last page 
            for vote


           SUBJECT  :    California Pollution Control Financing 
          Authority

           SOURCE  :     Author


           DIGEST  :    This bill allows the California Pollution 
          Control Financing Authority to establish loss reserve 
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          accounts for the purposes of terminal rental adjustment 
          clause (TRAC) leasing, if funds are available for 
          contribution into the loss reserve account from any source 
          other than the authority.

           Assembly Amendments  prohibit, for purposes of the loss 
          reserve accounts for terminal rental adjustment clause 
          leasing, the use of funds provided by the federal 
          government for the purposes of providing a loan loss 
          reserve program, and add a coauthor.

           ANALYSIS  :    Existing law:

          1.Establishes the California Pollution Control Financing 
            Authority (CPCFA) with specified powers and duties, and 
            authorizes CPCFA to approve financing for projects or 
            pollution control facilities to prevent or reduce 
            environmental pollution. 

          2.Authorizes CPCFA to establish loss reserve accounts for 
            financial institutions participating in the California 
            Capital Access Program (CalCAP) which provide loans to 
            qualifying small businesses. 

          3.Authorizes CPCFA to make use of funds provided by federal 
            capital access programs or other sources. 

          This bill authorizes the authority to establish loss 
          reserve funds for lending that include TRAC leases if and 
          only if funds from other sources than CPCFA are available.  
          This bill authorizes CPCFA executive director to establish 
          conditions for TRAC leasing loss reserve accounts.

           Purpose of the bill
           
          According to the author, the TRAC lease is a common form of 
          financing in the trucking industry.  Specifically for 
          trucks, it is often less expensive and offers some tax 
          benefits compared to typical loans.  Currently CPCFA is 
          unable to include TRAC leases among the financing tools 
          available under CalCAP.  This bill adds TRAC leases to the 
          list of permissible CPCFA financing tools.

           What is a TRAC lease?

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          Terminal rental adjustment clause leases are substantially 
          similar to a loan with a balloon payment.  Defined in 
          federal law, TRAC leases are specifically for motor 
          vehicles where a value of the vehicle at the end of the 
          lease term is predetermined.  At the end of the lease the 
          lessee is given the option to purchase the vehicle at the 
          predetermined price.  If the vehicle is sold above that 
          price the lessee is compensated whereas if it is below the 
          agreed upon price the lessor is compensated.

          The California Air Resources Board (ARB) recently 
          established new regulations with the goals of reducing 
          emissions of particulate matter, nitrogen oxides, and other 
          pollutants.  Compliance for some trucks begins in January 
          2012, with deadlines for credits beginning in July 2011.  
          The ARB has partnered with the State Treasurer's CalCAP to 
          provide financial assistance to truckers affected by these 
          recent regulations.  Eligible trucking companies have fewer 
          than 40 trucks, fewer than 100 employees, and less than $10 
          million in annual revenue.  This bill allows eligible 
          companies who use TRAC leases to participate in the CalCAP 
          program.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

           SUPPORT  :   (Verified 7/6/11 - per Assembly Jobs, Economic 
          Development and the Economy Committee)

          State Treasurer Bill Lockyer
          California Trucking Association
          Clean Fleets Coalition
          Pena's Disposal, Inc.
          South Tulare Richgrove Refuse, Inc.
          Westside Waste Management Co., Inc.

           ARGUMENTS IN SUPPORT  :    The California Trucking 
          Association states in support that this bill provides small 
          business trucking companies with access to an additional 
          financing tool, which is important during these tough 
          economic times.  It authorizes the California Pollution 
          Control Financing Authority to establish loss reserve 
          accounts for the purposes of TRAC leasing within the 

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          Capital Access Loan Program.  This program provides small 
          businesses with access to loans through participating 
          financial institutions, and TRAC leasing is designed for 
          purchase of vehicles and trailers.  The California Trucking 
          Association represents a range of companies, including 
          small businesses.  The trucking industry is facing 
          increasing regulatory pressure to ease the environmental 
          impact of their fleets.  The bill provides another 
          financing option, which may be more cost effective for some 
          operators for purchase of more environmentally friendly 
          vehicles.


           ASSEMBLY FLOOR  :  78-0, 08/25/11 (Consent)  
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, 
            Bill Berryhill, Block, Blumenfield, Bradford, Brownley, 
            Buchanan, Butler, Charles Calderon, Campos, Carter, 
            Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, 
            Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, 
            Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove, 
            Hagman, Halderman, Hall, Harkey, Hayashi, Roger 
            Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones, 
            Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, 
            Mendoza, Miller, Mitchell, Monning, Morrell, Nestande, 
            Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez, 
            Portantino, Silva, Skinner, Smyth, Solorio, Swanson, 
            Torres, Valadao, Wagner, Wieckowski, Williams, Yamada, 
            John A. Pérez
          NO VOTE RECORDED:  Bonilla, Gorell


          DLW:nl  8/26/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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