BILL NUMBER: SB 1535 CHAPTERED BILL TEXT CHAPTER 615 FILED WITH SECRETARY OF STATE SEPTEMBER 19, 1996 APPROVED BY GOVERNOR SEPTEMBER 18, 1996 PASSED THE SENATE AUGUST 29, 1996 PASSED THE ASSEMBLY AUGUST 28, 1996 AMENDED IN ASSEMBLY AUGUST 21, 1996 AMENDED IN ASSEMBLY JULY 7, 1996 AMENDED IN SENATE MAY 29, 1996 AMENDED IN SENATE MAY 7, 1996 INTRODUCED BY Senator Killea (Principal coauthor: Assembly Member Kuykendall) and (Coauthor: Senator Dills) FEBRUARY 14, 1996 An act to amend Section 42010 of the Public Resources Code, relating to solid waste, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST SB 1535, Killea. Solid waste: recycling market development loan programs. Existing law, the California Integrated Waste Management Act of 1989, regulates the management and handling of solid waste and is administered by the California Integrated Waste Management Board. The act, until July 1, 1997, provides for the designation of recycling market development zones, provides for a recycling market development loan program, and creates the Recycling Market Development Revolving Loan Subaccount in the Integrated Waste Management Account. The act requires the board to report on its loan program in the annual report that the board is required to file on or before March 31, 1996, with the Legislature, and to report on its progress in developing and implementing the market development plan in the annual report. This bill would continuously appropriate the funds deposited in the subaccount to the board for making loans pursuant to the bill. The bill would specify additional terms and conditions for making loans and related powers of the board. The bill would specify elements of the report. The bill would extend the operative date of those provisions until July 1, 2006, but would not extinguish any loan obligation or the authority of the state to seek collection of a loan. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 42010 of the Public Resources Code is amended to read: 42010. (a) The local governing body may, either by ordinance or resolution, upon the recommendation of the appropriate land use planning agency, propose eligible parcels of property within its jurisdiction as a recycling market development zone. (b) The proposal of a recycling market development zone shall be based upon the following findings by the local governing body: (1) The current waste management practices and conditions are favorable to the development of postconsumer waste material markets. (2) The designation as a recycling market development zone is necessary to assist in attracting private sector recycling investments to the area. (c) (1) The Recycling Market Development Revolving Loan Subaccount is hereby created in the account for the purpose of providing loans for purposes of the Recycling Market Development Revolving Loan Program established pursuant to this article. (2) Notwithstanding Section 13340 of the Government Code, the funds deposited in the subaccount are hereby continuously appropriated to the board without regard to fiscal year for making loans pursuant to this article. (3) The board may, upon appropriation by the Legislature in the annual Budget Act, expend interest earnings on funds in the subaccount for administrative expenses incurred in carrying out the Recycling Market Development Revolving Loan Program. (4) The money from any loan repayments and fees, including, but not limited to, principal and interest repayments, fees and points, recovery of collection costs, income earned on any asset recovered pursuant to a loan default, and funds collected through foreclosure actions, shall be deposited in the subaccount. (5) All interest accruing on interest payments from loan applicants shall be deposited in the subaccount. (6) The board may make low-interest loans to local governing bodies and private business entities within a recycling market development zone from money in the subaccount for the purpose of assisting the board and local agencies in complying with Section 40051 and to assist counties and cities in complying with Section 41780. (7) The board shall establish and collect fees for applications for loans authorized by this section. The application fee shall be set at a level that is sufficient to fund the board's cost of processing applications for loans. In addition, the board shall establish a schedule of fees, or points, for loans which are entered into by the board, to fund the board's administration of the revolving loan program. (8) The board may, upon appropriation by the Legislature in the annual Budget Act, expend money in the subaccount for the administration of the Recycling Market Development Revolving Loan Program. In addition, the board may fund administration of the revolving loan program from the account upon appropriation by the Legislature in the annual Budget Act. However, funding for the administration of the revolving loan program from the account shall be provided only if there are not sufficient funds in the subaccount to fully fund administration of the program. (9) The board, pursuant to subdivision (a) of Section 47901, may set aside funds for the purposes of paying costs necessary to protect the state's position as a lender-creditor. These costs shall be broadly construed to include, but not be limited to, foreclosure expenses, auction fees, title searches, appraisals, real estate brokerage fees, attorney fees, mortgage payments, insurance payments, utility costs, repair costs, removal and storage costs for repossessed equipment and inventory, and additional expenditures to purchase a senior lien in foreclosure or bankruptcy proceedings. (d) Loans made pursuant to subdivision (c) shall be subject to all of the following requirements: (1) The terms of any approved loan shall be specified in a loan agreement between the borrower and the board. The loan agreement shall include a requirement that the failure to comply with the agreement shall result in any remaining unpaid amount of the loan, with accrued interest, being immediately due and payable. Notwithstanding any term of the agreement, any recipient of a loan that the board approves shall repay the principal amount, plus interest on the basis of the rate of return for money in the Surplus Money Investment Fund at the time of the loan commitment. Except as provided in subdivision (g), all money received as repayment and interest on loans made pursuant to this section shall be deposited in the subaccount. (2) The term of any loan made pursuant to this section shall be not more than 10 years. (3) The board shall approve only those loan applications which demonstrate the applicant's ability to repay the loan. The highest priority for funding shall be given to projects which demonstrate that the project will increase market demand for recycling the project's type of postconsumer waste material. (4) The board shall finance not more than one-half of the cost of the project, or not more than one million dollars ($1,000,000) for loans to the project, whichever is less. (5) The board shall encourage applicants to seek participation from private financial institutions or other public agencies. For purposes of enabling the board and local agencies to comply with Sections 40051 and 41780, the board may, on a pilot basis, participate, in an amount not to exceed five hundred thousand dollars ($500,000), in the Capital Access Loan Program as provided in Article 8 (commencing with Section 44559) of Chapter 1 of Division 27 of the Health and Safety Code. (6) The Department of Finance may audit the expenditure of the proceeds of any loan made pursuant to this section. (e) Upon authorization by the Legislature in the annual Budget Act, the Controller shall transfer the sum of five million dollars ($5,000,000) from the account to the subaccount for the purpose of making loans pursuant to this section. Commencing July 1, 2000, upon authorization by the Legislature in the annual Budget Act, the amount of the funds transferred pursuant to this section shall be a sum not to exceed five million dollars ($5,000,000) as necessary to meet anticipated loan demand. Those amounts shall be a loan to the subaccount, repayable with interest to the account at the rate of return for money in the Surplus Money Investment Fund. (f) The board shall, as part of the annual report to the Legislature, pursuant to Section 40507, include a report on the performance of the Recycling Market Development Revolving Loan Program, including the number and size of loans made, characteristics of loan recipients, projected loan demand, and the cost of administering the program. (g) All money remaining in the subaccount on July 1, 2006, and all money received as repayment and interest on loans shall, as of July 1, 2006, be transferred to the account and any money due and outstanding on loans as of July 1, 2006, shall be repaid to the board and deposited by the board in the account until paid in full, except that, upon authorization by the Legislature in the annual Budget Act, interest earnings may be expended for administrative costs associated with the collection of outstanding loan accounts. (h) (1) Except as provided in paragraph (2), this section shall become inoperative on July 1, 2006, and as of January 1, 2007, is repealed, unless a later enacted statute, which becomes effective on or before January 1, 1998, deletes or extends the dates on which it becomes inoperative and is repealed. (2) The repeal of this section pursuant to paragraph (1) shall not extinguish any loan obligation or the authority of the state to pursue appropriate actions for the collection of a loan.