2000 Annual Report: Market Development
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Market Development Topics |
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RMDZ Priority Materials |
Recycling Market Development Zone Program
The RMDZ program was authorized by the Legislature in late 1989 with the enactment of SB 1322 (Bergeson, Chapter 1096, Statutes of 1989). The RMDZ program objective is to promote local and regional markets for the materials recovered by local governments to meet their disposal reduction mandates. The program is a partnership between the IWMB and local governments, with local governments providing a variety of business incentives and the IWMB providing low-interest loans and technical assistance to support recycling manufacturers.
In 1990, the IWMB set a goal of establishing 40 zones throughout the state. During the next eight years, the IWMB established the zones after local government applications were competitively evaluated, based on the availability of recovered materials and local business incentives, commitment of program resources, and completeness of a marketing plan for attracting recycling-based manufacturers. Once the zones were established, the IWMB assured the success of the RMDZ program by providing technical assistance to local zone administrators and funding the low-interest loans for zone-located, recycling-based manufacturers.
The RMDZ program fosters the development of local markets for recovered materials. Zones are business development areas targeted by local jurisdictions and the IWMB. The IWMB provides support to the administrator of each zone, and to recycling-based manufacturers, in the form of feedstock analysis, siting information, training, and referrals to a wide array of business development resources.
- Since inception of the program, the IWMB has established over 40 zones representing more than 60 percent of the state’s population.
- In response to an earlier reduction in local government resources, the IWMB initiated a zone incentives program in 1999 to help partially offset this reduction. For this initial program that ended June 30, 2000, approximately $200,000 in reimbursements were made to local zone administrators for a wide variety of business outreach activities. Following the success of that program, the IWMB authorized the continuation of the incentives program for an additional two years.
- The IWMB concluded the first successful program for training local zone administrators. The training program was initiated because of the very high turnover of local zone administrators and their need for additional resources. The zone administrators reported that the training sessions were relevant and helpful. Based on successful completion of the first training series, the IWMB approved funding for two additional years of training.
- In an attempt to expand local and regional markets for recyclables in rural areas, the IWMB, in 1999, developed an electronic storefront--the RecycleStore--that included the recycled-content products of the rural RMDZ recycling businesses. The purpose of the Web site is to link recycling manufacturers with potential product distributors and retailers, thereby expanding the sales of recycling businesses. This year, there were annual sales of approximately $800,000 for the products included in the RecycleStore. The IWMB approved funds to expand the RecycleStore to include the recycled-content products of all 40 zones. Work has begun on redesigning the Web page and including additional products.
- All the above efforts have helped to increase local and regional markets. Based on a survey completed by IWMB staff, recycling businesses assisted by zone administrators were currently diverting approximately 3.5 million tons annually from landfills. (This figure does not include those RMDZs receiving IWMB low-interest loans.)
New Initiatives. In cooperation with the local zone administrators, the IWMB will be looking for options to provide long-term funding for the IWMB’s RMDZ Loan Program. The IWMB established a Leveraging Working Group in the last quarter of 2000. Short-term funding options recommended by this group will be brought to the IWMB for consideration in early 2001. During the year, the working group will continue pursuing additional long-term options for funding the loan program. The IWMB’s low interest RMDZ loan is still one of the most significant incentives offered to recycling businesses in the zones.
The IWMB staff will be working with local zone administrators to develop a statewide marketing plan to attract new and sustain existing RMDZ recycling businesses. A committee comprised of local zone administrators and IWMB staff has been established to develop this plan.
For additional information on the RMDZ program, please visit www.ciwmb.ca.gov/RMDZ/.
Recycling Market Development Revolving Loan Program
The companion to the local RMDZ and IWMB technical assistance function is the RMDZ loan program. The Recycling Market Development Revolving Loan Program provides loans to private businesses, nonprofit organizations, and local government entities. The goal is to help local jurisdictions achieve the mandated 50 percent diversion of non-hazardous solid waste from California’s landfills. The loan program was capitalized by an annual $5 million transfer from the IWMB’s Integrated Waste Management Account in fiscal years 1992–93 through 1999–00. Beginning in fiscal year 2000–01, existing loan repayments of principal and interest fund the program. The program is scheduled to sunset on July 1, 2006.
- To better leverage its limited loan funds, the Legislature authorized the IWMB to enter into a cooperative agreement with the California Pollution Control Financing Authority to participate in its California Capital Access Program (CalCAP). Under that agreement, the IWMB contributed $500,000 to provide much needed funds to smaller, yet riskier recycling manufacturers. Based on the existing high leveraging ratio (20:1) for the CalCAP program, up to $10,000,000 of additional public funds is now available to recycling manufacturers from the IWMB’s initial contribution.
- In fiscal year 1999–00, the IWMB approved and funded 16 loans totaling $12 million. Funded projects are expected to divert 279 thousand tons annually and create 224 new jobs. The administrative cost of the loan program was $.8 million in fiscal year 1999–00 and continued to decrease as the number and dollar amount of loans increased. For the first six months of this fiscal year, the IWMB approved and funded $5.9 million, whose projects are expected to divert 173 thousand tons annually and create 79 new jobs. At the end of last calendar year, the RMDZ portfolio consisted of 61 loans totaling approximately $37 million.
Note: The results for 2000/01 represent only a half of the year’s data.
As the recycling industry has emerged during the first nine years of the RMDZ loan program, there has been a greater demand for access to capital. To meet this need, AB 1364 (Migden, Chapter 467, Statutes of 1999), which went into effect on January 1, 2000, authorizes loans up to $2 million or 75 percent of a project, whichever is less; and repayment of loans up to 15 years when secured by real estate. Recycling businesses utilizing a variety of recovered materials, including construction and demolition, organics, plastics, and paper, have been funded. RMDZ loan funds have been used to finance machinery and equipment, purchase real property and leasehold improvements, and for working capital. Businesses funded by these loans are diverting approximately 3.5 million tons annually from landfills in the state. RMDZ loans funded in 2000 totaled $10,584,375 and included the following:
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Stockton Advanced Recycling Technologies, Inc. $1,000,000
Vernon
Gardena
Lodi
Richmond
Auburn
Fresno
Spreckles/Salinas
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Oakland St. Vincent de Paul Society of Lane County, Inc. $250,000 Coachella Victorville Camarillo Arcata Santa Cruz Sacramento |
New Initiatives. Private banks are still hesitant to lend to recycling business, especially those who are using new technologies and developing novel products. This has created the continued need for low-interest public financing for this type of business. The demand for RMDZ loans has increased significantly during the past three years and is expected to exceed $10 million annually in future fiscal years. To meet the anticipated future demand for loan funds, the IWMB directed that a Leveraging Working Group, consisting of IWMB board members, IWMB staff, and zone administrators, be formed. The working group formed in September 2000 and met several times during the last quarter of the calendar year. Its mission is to identify financial options that would help secure adequate long-term financing for recycling-based businesses. In early 2001, short-term leveraging options will be brought to the IWMB for consideration. The RMDZ loan program’s Web site is located at www.ciwmb.ca.gov/RMDZ/Loans/.
1998 Jobs Through Recycling Grant Project
In keeping with the IWMB’s market development strategies to ensure that appropriate local and regional markets exist for materials diverted from solid waste facilities, the 1998 Jobs Through Recycling (JTR) Grant Project is assisting related recycling businesses to become established in close proximity to the major sources of recycled feedstock in Alameda County. The objective of the U.S. EPA Jobs Through Recycling grant project is to maximize the joint benefits of economic development and diversion. These joint benefits for the JTR 98 Grant Project are being achieved through initial selection and subsequent active participation of a variety of state and local partners. The stakeholders for the project (partners) include the IWMB, the California Trade and Commerce Agency, a major waste collector and materials processor, two nonprofit entities with expertise in recycling-based industries, a nonprofit with expertise in assisting small- and medium-sized businesses, and local government entities that promote waste diversion and local economic development.
- As a result of this collaboration and an initial grant of $200,000 from the U.S. EPA and a subsequent contribution of $50,000 from the California Trade and Commerce Agency, the project has had a significant impact on waste diversion in Alameda County. To date, the efforts of JTR Partners have resulted in the siting of 10 businesses that have diverted 30,481 tons of solid waste per year (planned diversion for these businesses is estimated at 152,233 tons of diversion per year at peak capacity), and the creation of 47 new jobs. Originally approved as a 24-month “pilot” project, JTR 98’s successes in waste recovery and job creation have earned the project a one-year extension, through October 2001.
New Initiatives. The JTR Grant Project will serve as a model for other jurisdictions to emulate within the State of California. Upon the JTR grant expiration in October 2001, two comprehensive reports (the Economic and Environmental Benefits of Establishing Regional Markets Report, and a detailed case study) will be released outlining the benefits of this project. These studies will be widely circulated to promote other projects of this type.
Well on its way to achieving proposed diversion and job creation goals, the 1998 Jobs Through Recycling Project is proving to be an effective public/private partnership in the effort to increase recycling in California.
Private Buy Recycled
Even though businesses generate more than half the state's waste, they are generally not subject to the mandates of AB 939. In order to realize and sustain the vision of AB 939, business must be called upon to do its part not only in reducing and recycling the waste it creates, but also in making a more concerted effort to buy and use recycled-content products (RCP). An excellent example of how one group of businesses joined together is the Recycled Paper Coalition: Bank of America, GAP, Inc., George Lithograph, and others have remained committed to buying 20 percent postconsumer paper.
IWMB research has shown that the public does not perceive products made from recycled materials to be inferior to those manufactured from more traditional materials. While some businesses have seized upon the opportunities presented by this positive public perception, many more assert the demand is insufficient to manufacture RCPs. The IWMB, endeavoring to do a better job of bridging this gap, maintains a growing database of recycled-content products, emphasizing those manufactured in California using materials recovered from California. Not only does this collection of information benefit those in the private sector seeking to market and secure environmentally preferable products, it also complements the efforts of the IWMB State Agency Buy Recycled Campaign, which administers the mandate requiring State agencies to procure RCPs at specified levels.
- The RCP database contains 347 California companies offering more than 900 products and 2,102 companies nationwide, offering 7,024 products.
- New companies surveyed and information verified in 2000: 383.
For more information on the Board’s private sector buy recycled efforts, please see www.ciwmb.ca.gov/BuyRecycled/
About the CIWMB http://www.ciwmb.ca.gov/BoardInfo/
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