1 Comparison of Direct vs. Loan Guarantee RMDZ Direct Loan No leverage factor Prime Rate fixed beginning 11/12/03 Terms of 10 – 15 years Loan Guarantee Leverage factor is 1:4 Prime Rate + 2-4% floating Terms of 3 – 7 years Accepts residential property as collateral Funds construction projects

2 $10 Million in Bank Loans FY Board Funds$2,250,000 Leverage FactorX 4 Guaranteed Portion of Bank Loans $9,000,000 Unguaranteed Portion of Bank Loans $1,000,000 Total Available Bank Loans to Recycling Businesses $10,000,000

3 Funding RDMZ Sub Account Option 1: Staff Recommendation Option 2: Cancel IAA w/ CalCap Option 3: Committee Discussion Funds for Loans $10,000,000 Less: Loans Approved (5,657,555) Avail. For New Loans $4,342,445 Less: Loan Guaranteed Strategy (1,850,000) direct (500,000) C&P (1,350,000) direct (500,000) C&P (500,000) CalCAP (2,350,000) direct Remaining $ for New Loans $2,492,445$2,992,445$1,992,445, but capped at $1,300,000

4 Spending Authority for RMDZ C&P Services Public Resources Code, Section (h) states: The Board may expend money in the RMDZ Sub Account for the administration of the RMDZ program, upon the appropriation of funds in the Sub Account for that purpose in the annual Budget Act.

5 RMDZ Sub Account C&P $ Budgeted Amount$1,034,000 Outside Legal Services(100,000) Experian Credit Reports(1,000) D&B Credit Reports(5,000) Student Contract(39,000) Outside Loan Servicing(200,000) Administrative Services(30,000) Economic Gardening(30,000) Recycled Product Trade Show(50,000) State Loan Guarantee Leveraging(500,000) Unallocated$67,000

6 Staff Recommendation Staff recommends the Board approve a Revised Resolution Number that directs staff to: A. Initiate the development of regulations interpreting Public Resources Code Sections and 42024: 1) to clarify the Board’s authority to utilize RMDZ Sub-Account funds for leveraging; and if necessary, and 2) to allow the Board’s participation in the Small Business Loan Guarantee Program. B. Approve a contract concept in the amount of $2.35 million and authorize the development of a scope of work for contracting with one or more of the State’s fourteen Financial Development Corporations. C. Approve staff’s recommendation to fund the item with $1,850,000 from direct and $500,000 from C&P Services.