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AB-1364 Recycling Market Development Loan Program.(1999-2000)

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Assembly Bill No. 1364
CHAPTER 467

An act to amend Sections 42002 and 42010 of, and to add and repeal Sections 42023.1, 42023.2, 42023.3, 42023.4, 42023.5, and 42023.6 of, the Public Resources Code, relating to solid waste.

[ Filed with Secretary of State  September 23, 1999. Approved by Governor  September 23, 1999. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1364, Migden. Recycling Market Development Loan Program.
The existing California Integrated Waste Management Act of 1989, which is administered by the California Integrated Waste Management Board, establishes an integrated waste management program. Under existing law, a local governing body is authorized, either by ordinance or resolution, upon the recommendation of the appropriate land use planning agency, to propose eligible parcels of property within its jurisdiction as a recycling market development zone. Existing law creates the Recycling Market Development Revolving Loan Subaccount in the Integrated Waste Management Account and continuously appropriates the funds deposited in the subaccount to the board for the purpose of providing loans for purposes of the Recycling Market Development Revolving Loan Program. Existing law authorizes the board to make low-interest loans to local governing bodies and private business entities within a recycling market development zone from money in the subaccount for specified purposes, and authorizes the board, upon appropriation by the Legislature in the annual Budget Act, to expend money in the subaccount for the administration of the recycling loan program. Existing law prohibits the term of any loan from exceeding 10 years, and prohibits the board from financing more than 1/2 of the cost of a project, or financing more than $1,000,000 for loans to the project, whichever is less. Existing law establishes specified requirements for those loans. Existing law authorizes the board to participate on a pilot basis in the Capital Access Loan Program and authorizes the board to participate in other state and federal lending programs that leverage funds based upon the ongoing success of the pilot program.
Existing law makes the provisions regarding the proposal for market development zones, the creation of the subaccount, and expenditures therefrom, inoperative on July 1, 2006, and repeals those provisions as of January 1, 2007.
This bill would reorganize and recast those provisions and in doing so, would delete the repeal of the provision authorizing a local government body to propose recycling market development zones and the provision specifying that the board’s participation in the Capital Access Loan Program be on a pilot basis. The bill would authorize the board to operate both inside and outside the recycling market development zones for purposes of participating in the Capital Access Loan Program or in any other program that leverages subaccount funds.
This bill would instead prohibit the term of a loan from exceeding 10 years when collateralized by assets other than real estate, or not more than 15 years when partially or wholly collateralized by real estate. The bill would prohibit the board from financing more than 3/4 of the cost of each project, or from financing more than $2,000,000 for each project, whichever is less.
The bill would authorize the board to expend the money in the subaccount to make loans to local governing bodies, private businesses, and nonprofit entities within recycling market development zones, or in areas outside zones where specified partnerships exist with other public entities.

The people of the State of California do enact as follows:


SECTION 1.

 Section 42002 of the Public Resources Code is amended to read:

42002.
 The following definitions govern the construction of this chapter:
(a) “Applicant” means a person, as defined in Section 40170, who applies for designation as a Recycling Market Development Zone.
(b) “Postconsumer waste material” means any product generated by a business or a consumer which has served its intended end use, and which has been separated from solid waste for the purposes of collection, recycling, and disposal, and which does not include secondary waste material.
(c) “Recycling-based business” means any business that increases market demand for, or adds value to, postconsumer waste material or secondary waste material.
(d) “Recycling market development zone” or “zone” means any single or joint, contiguous parcels of property that, based on the determination of the board, meets the following criteria:
(1) The area has been zoned an appropriate land use for the development of commercial, industrial, or manufacturing purposes.
(2) The area is identified in the countywide or regional agency integrated waste management plan as part of the market development area.
(3) The area is located in a city with an existing postconsumer waste collection infrastructure.
(4) The area may be used to establish commercial, manufacturing, or industrial processes which would produce end products that consist of not less than 50 percent recycled materials.
(e) “Revolving loan program” means the Recycling Market Development Revolving Loan Program established pursuant to Section 42023.1.
(f) “Secondary waste material” means industrial byproducts which would otherwise go to disposal facilities and wastes generated after completion of a manufacturing process, but does not include internally generated scrap commonly returned to industrial or manufacturing processes, such as home scrap and mill broke.
(g) “Subaccount” means the Recycling Market Development Revolving Loan Subaccount created pursuant to subdivision (a) of Section 42023.1.

SEC. 2.

 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.

SEC. 3.

 Section 42023.1 is added to the Public Resources Code, to read:

42023.1.
 (a) 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.
(b) 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.
(c) The board may expend interest earnings on funds in the subaccount for administrative expenses incurred in carrying out the Recycling Market Development Revolving Loan Program, upon the appropriation of funds in the subaccount for that purpose in the annual Budget Act.
(d) 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.
(e) All interest accruing on interest payments from loan applicants shall be deposited in the subaccount.
(f) The board may expend the money in the subaccount to make loans to local governing bodies, private businesses, and nonprofit entities within recycling market development zones, or in areas outside zones where partnerships exist with other public entities to assist local jurisdictions to comply with Section 40051.
(g) 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.
(h) The board may expend money in the subaccount for the administration of the Recycling Market Development Revolving Loan Program, upon the appropriation of funds in the subaccount for that purpose in the annual Budget Act. In addition, the board may expend money in the account to administer the revolving loan program, upon the appropriation of funds in the subaccount for that purpose 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 the administration of the program.
(i) 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.
(j) (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, 2007, 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.

SEC. 4.

 Section 42023.2 is added to the Public Resources Code, to read:

42023.2.
 (a) Upon authorization by the Legislature in the annual Budget Act, the Controller shall transfer a sum not to exceed five million dollars ($5,000,000) from the account to the subaccount as necessary to meet anticipated loan demand under the program. 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.
(b) (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, 2007, 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.

SEC. 5.

 Section 42023.3 is added to the Public Resources Code, to read:

42023.3.
 (a) 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.
(b) (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, 2007, 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.

SEC. 6.

 Section 42023.4 is added to the Public Resources Code, to read:

42023.4.
 (a) Loans made pursuant to Section 42023.1 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 (a) of Section 42023.3, 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 when collateralized by assets other than real estate, or not more than 15 years when partially or wholly collateralized by real estate.
(3) The board shall approve only those loan applications that 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 three-fourths of the cost of each project, or not more than two million dollars ($2,000,000) for each project, whichever is less.
(5) The Department of Finance may audit the expenditure of the proceeds of any loan made pursuant to Section 42023.1 and this section.
(b) (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, 2007, 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.

SEC. 7.

 Section 42023.5 is added to the Public Resources Code, to read:

42023.5.
 (a) The board shall, as part of the annual report to the Legislature, pursuant to Section 40507, include, notwithstanding Section 7550.5 of the Government Code, 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.
(b) 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, 2007, deletes or extends the dates on which it becomes inoperative and is repealed.

SEC. 8.

 Section 42023.6 is added to the Public Resources Code, to read:

42023.6.
 (a) 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 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.
(b) For purposes of participating in the Capital Access Loan Program, as specified in subdivision (a), or in any program that leverages subaccount funds, the board may operate both inside and outside the recycling market development zones.
(c) (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, 2007, 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.