BILL ANALYSIS �
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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 Le�n, 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 8/26/11)
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
Capital Access Loan Program. This program provides small
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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
Hern�ndez, 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 P�rez,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Williams, Yamada,
John A. P�rez
NO VOTE RECORDED: Bonilla, Gorell
DLW:nl 8/29/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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