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									         California Integrated Waste Management Board
                                       Board Meeting
                                      June 14-15, 2005
                                     AGENDA ITEM 8
ITEM
Consideration Of The Recycling Market Development Revolving Loan Program Application For
Pacific Pallet Company (FY 05/06)
I.      ISSUE/PROBLEM STATEMENT
        This agenda item presents for consideration the Pacific Pallet Company application to the
        Recycling Market Development Revolving Loan Program (RMDZ Loan). Pacific Pallet
        Company is requesting a $712,000 loan for real estate, equipment and working capital.
        The Company manufactures wooden pallets from scrap pallets and discarded dunnage
        (large wooden planks used to stabilize cargo in ships). The project is located in Long
        Beach, California, within the Long Beach Recycling Market Development Zone.

II.    ITEM HISTORY
       None

III.   OPTIONS FOR THE BOARD
       1. Approve the RMDZ Loan application for Pacific Pallet Company.
       2. Approve with revisions the RMDZ Loan application for Pacific Pallet Company.
       3. Take no action and provide staff with further direction.

IV.    STAFF RECOMMENDATION
       Staff recommends that the Board approve Option No.1 and adopt Resolution Number
       2005-162 to approve a RMDZ Loan to Pacific Pallet Company in the amount of $712,000.

V.     ANALYSIS
       A. Key Issues and Findings
          Company Background
          Pacific Pallet Company was formed by equal owners and brothers, Sam and Steve
          Amato, in 1969 through the purchase of the used pallet repair division of then
          existing company, Select Pallet Company. Pacific Pallet took over Select’s lease in
          Long Beach and had operated at that location for over 25 years until recently when it
          had finally outgrown the site and constructed its own building and facility. The new
          site is still in Long Beach and only a few blocks away from the previous location.

           Pacific Pallet evolved into the manufacturing of refurbished and new pallets in the
           early 1970’s. Currently up to 60 percent of Pacific Pallet’s business is derived from
           the sale of recycled wooden pallets. Customers include Heinz Foods, Newark Pacific
           Paper, Fuji Corporation, American Honda, and many more.

           Board Approved Eligibility Criteria – August 2003
            Pacific Pallet Company qualifies under Board approved eligibility criteria as a
              reuse and recycling project.
            The project takes a finished product (scrap wooden pallet) that has served its
              useful life, and provides new value to the product that makes it usable again for its
              original intended purpose.
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Board Meeting                                                                          Agenda Item-8
June 14-15, 2005

                  The project also takes post consumer or secondary material (wood dunnage) and
                   produces a value-added finished product (wooden pallet).

             Feedstock Sources
              Discarded used pallets from various companies. Pacific Pallet caters mostly to
                the local community. It is a major supplier to many port businesses as well as
                other industrial, manufacturing and shipping companies located in the area. Very
                often, the companies which supply the scrap pallets are the ones who would buy
                them back once refurbished.
              The company also accepts dunnage from Long Beach and Los Angeles harbor
                stevedoring companies.

             Value-Added Product
              Pacific Pallet takes the scrap pallets, disassembles them with a band saw, then
                reassembles the usable wood materials into refurbished pallets. New wood is
                sometimes used for the manufacturing of refurbished pallets.
              It also takes wood dunnage and cuts them into sizes to manufacture pallets, cranes
                and skids.

             End Users
              Local manufacturing and shipping companies. Major customers include Heinz
                Foods, Newark Pacific Paper, American Honda, Fuji, Wolf Range, Dean Range
                and many others.

             Proposed RMDZ Loan Request
              Pacific Pallet Company has requested a RMDZ loan in the amount of $712,000.
                Loan proceeds will be used as follows:

                   1. Real Estate: $500,000 to pay off a portion of a $862,000      $500,000
                      construction loan Pacific Pallet had acquired to construct
                       its new facility. Pacific Pallet has a commitment from
                      International City Bank to finance the balance of $362,000.

                   2. Equipment: Multi Head Hydraulic horizontal ban saw $48,000
                          Nailer Machine with 5-piece nail guns     $85,000
                          Custom Made Dust Collector                 $25,000
                                                                              $158,000
                   3. Working Capital: Inventory/Equipment rental/personnel       $50,000

             RMDZ loan request total:                                               $712,000

             Interdivisional Reviews
              Permitting and Enforcement Division (P&E) has reviewed the applicant’s permit
                 requirements and has determined that a solid waste permit is not necessary for
                 Pacific Pallet Company’s operation.
              Staff from Diversion, Planning, and Local Assistance Division (DPLA) has
                 reviewed the project and has determined that the material to be processed by
                 Pacific Pallet Company is normally disposed of in a landfill.


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Board Meeting                                                                              Agenda Item-8
June 14-15, 2005

                  Pacific Pallet Company has certified that the project complies with all local and
                   federal laws, regulations, requirements and rules, including CEQA.

             Loan Committee
              The Loan Committee will meet on June 2, 2005 to consider staff’s analysis of
                Pacific Pallet Company’s loan application, and their ability to repay and
                collateralize the loan.
              The results will be presented at the June 7, 2005 Sustainability and Market
                Development Committee.

         B. Environmental Issues
             The newly constructed facility is located at 2110 Gaylord Street, Long Beach,
               California 90813. The site is 44,000 square feet in size with 11,700 square feet of
               covered space for manufacturing and storage. The site is zoned Industrial General
               (“IG”), a Long Beach zoning designation for heavy industrial and manufacturing
               uses. The property has concrete walls on three sides and a rod iron fence on the
               remaining side.

         C. Program/Long Term Impacts
             Based on the information in the jurisdiction’s Source Reduction And Recycling
               Element (SRRE), discarded wood waste that will be used in feedstock for this
               project is normally disposed of in landfills.
             Pacific Pallet Company is projected to increase its processing of discarded wood
               waste from the current 6,000 tons per year to 20,000 tons per year and will
               contribute to the diversion of that material from the waste stream, thereby
               assisting the local jurisdiction’s compliance with the disposal reduction mandate
               under the Integrated Waste Management Act, Assembly Bill (AB) 939.

         D. Stakeholder Impacts
             The Los Angeles County recycling coordinator, zone administrator and the local
               jurisdiction are the key stakeholders for this project.
             This new project will divert an additional 14,000 tons per year of discarded wood
               waste from California landfills.
             It is projected that five new jobs will be created as a result of this loan.

         E. Fiscal Impacts
             Public Resources Code, Section 42023.1, provides the authority that funds this item.
             This item is funded by the Recycling Market Development Loan Program Sub
                account.

         F. Legal Issues
            None

         G. Environmental Justice
            The U.S. Census Bureau 2000 depicts for Census Tract No. 5775, Los Angeles
            County, California the following:




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Board Meeting                                                                            Agenda Item-8
June 14-15, 2005



                  Demographics
                    7.5%        Black or African American
                   36.1%        White
                    2.8%        Asian
                    1.2%        American Indian & Alaska Native
                    1.2%        Native Hawaiian & Other Pacific Islander
                   51.2%        Other including Hispanic and Latino Non White

                  Economic Profile
                   $13,750      Median household income
                   $ 6,992      Per capita income
                    77.3%       Persons living below poverty

             Project Site Information
              Site location is 2110 Gaylord Street, Long Beach, California 90813.
              The site is zoned “IG”. The Industrial General district is considered
                Long Beach City's "industrial sanctuary" district where a wide range of
                industries that may not be desirable in other districts may locate. The
                emphasis is on traditionally heavy industrial and manufacturing uses.
              This area is predominantly industrial. Nearest residence is about ½
                mile away.

         H. 2001 Strategic Plan
            This item supports the Board’s 2001 Strategic Plan as follows:

                  Goal 2, Objective 2, Strategy B: Process low interest loans for companies that
                   either convert non-hazardous solid waste into a recycled raw material or use a
                   recycled raw material to ultimately produce a recycled content product.

                  Goal 3, Objective 2, Strategy B. Promotes economic development in underserved
                   areas.

                  Goal 6, Objective 1, Strategy B: Promotes the Board’s Environmental justice
                   policies into program eligibility.

                  Goal 7, Objective 2, Strategy B: Program staff works with business in local
                   jurisdictions to increase diversion of materials from landfills.

VI.      FUNDING INFORMATION

         1. Fund            2. Amount        3. Amount to     4. Amount         5. Line Item
            Source             Available        Fund Item        Remaining
         RMDZ Loan          $11,097,000     $    712,000      $10,385,000       Direct Loan
         Sub-account

VII.     ATTACHMENTS
         1. Resolution Number 2005-162

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Board Meeting                                                                          Agenda Item-8
June 14-15, 2005

VIII. STAFF RESPONSIBLE FOR ITEM PREPARATION
      A. Program Staff: Daisy Kong                                       Phone: (916) 341-6528
      B. Legal Staff: Michael Bledsoe                                    Phone: (916) 341-6058
      C. Administration Staff: N/A                                       Phone: N/A

IX.      WRITTEN SUPPORT AND/OR OPPOSITION
         A. Support
            The Zone Administrator for the Long Beach Recycling Market Development Zone
            has provided input and support for this project.
         B. Opposition
            Staff has not received any written opposition at the time this item was submitted for
            publication.




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