Posted on: Monday, April 11, 2005

Response mixed to bottle-law proposal

By Gordon Y.K. Pang
Advertiser Capitol Bureau

Lawmakers hoping to encourage retailers and other organizations to take part in the state's bottle law are proposing tax credits and grants for them to set up reverse vending machines where consumers can redeem their drink containers.

The plan, incorporated in Senate Bill 212 House Draft 2, has met with mixed reaction.

Kiera Zimmerman, a senior at the University of Hawai'i at Manoa, said she would redeem her empty containers more often if she could do it whenever she visited her neighborhood supermarket. Zimmerman, who was visiting a redemption center in a vacant Mo'ili'ili lot yesterday, said empty beer cans and bottles now pile up in a corner of her dorm lanai.

"They smell pretty bad," she said.

Members of the business community expressed some reservations about the proposal during a hearing last week, however. The proposal also was opposed by the state tax and health departments, and even raised concerns from the Sierra Club Hawai'i Chapter, one of the main proponents of the bottle law.

"While we recognize this bill is a very earnest effort to making the bottle (law) more workable, we unfortunately see it as a Band-Aid on something that needs major surgery, and to that extent, we oppose it," Tim Lyons, legislative liaison for Anheuser- Busch Companies, said during a House Finance Committee hearing Wednesday night.

Both retailers and the public have been calling for some relief from the bottle law that went into full implementation at the beginning of this year. It requires consumers to pay a 5-cent deposit and 1-cent administrative fee on aluminum, plastic and glass containers that hold 64 ounces or less. The state has been collecting about $2.5 million a month in deposits. Although the state paid back $1.59 million to consumers in March, it returned only about $300,000 in each of the two previous months.

Some have blamed a lack of available redemption sites as a reason for the low return rates. To date, a Kahului service station owner is the only retailer who has applied to become a certified redemption center with the Health Department and set up a reverse-vending machine for consumers. The public otherwise has needed to go to redemption sites set up by recycling companies across the state.

The proposal designed to address that concern surfaced this week, calling for tax credits of up to $50,000 for each redemption center, or a grant of up to $125,000 for an organization — with the grant money expected to come from the beverage container deposit fund. The bill advanced out of the Finance Committee, but left the maximum dollar amounts for tax credits and grants blank.

The tax credits are available to any organization setting up a redemption center during the tax year 2005, while the grants would be eligible to an organization setting up a redemption center as a one-time handout only. No organization could be eligible for both.

House Environmental Protection Chairwoman Hermina Morita, D-14th (Kapa'a, Hanalei), and Rep. Pono Chong, D-49th (Kane'ohe, Maunawili, Enchanted Lake), said they introduced the legislation as an attempt to make it easier for consumers to redeem beverage containers.

"We're trying to make sure that a portion of the money goes out to establish the infrastructure to make it more convenient to redeem," Morita said.

Retailers say a major reason they haven't set up reverse-vending machines are the startup capital costs, she said.

"People want to recycle but they want it to be more convenient," Chong said, noting that to be eligible for a tax credit, a redemption center must be in a retail store.

Chong said he sees the grants as something that would be attractive to smaller stores, schools or nonprofit organizations, whereas retailers with multiple stores may benefit more from tax credits.

Ed Thompson, executive director of the Hawai'i Food Industry Association, said the proposed legislation could help some supermarkets and other retailers that soon may be forced to set up redemption centers. Under the bottle law, stores on O'ahu larger than 5,000 square feet are required to have redemption centers by July if there are no other centers within two miles. Stores on the North Shore and rural sections of Windward O'ahu are exempted.

He's uncertain if it would be enough enticement for a retailer to voluntarily set up a redemption center. "If they find it to their economic advantage, if they feel that would attract people to their stores, they may jump on it," he said. "And if they were sitting on the fence all this time and this added incentive is now in place, that may change their mind and they may do it."

Thompson said he is uncomfortable with the language that dictates a redemption center must be inside a retail a store to qualify for a tax credit, citing space considerations.

The Health Department submitted testimony opposing the bill, calling it unnecessary because the agency is already drafting rules on a grant program designed to encourage development of new redemption sites. Lane Otsu, a planner with the Solid and Hazardous Waste Branch, said the grant program is expected to be in place in time to help those that may be required to set up redemption sites in July.

Carol Pregill, president of the Retail Merchants of Hawai'i, said the bill should contain language requiring that those receiving grants for redemption programs be certified to ensure the legitimacy of operators. She also is worried that there are no time restrictions on when a grant can be obtained.

Lowell Kalapa, president of the Tax Foundation of Hawai'i, said the proposal doesn't do enough to help retailers because tax credits and grants would not apply to the operational costs associated with running a redemption center.

Jeff Mikulina, director of the Sierra Club Hawai'i chapter, said although he supports the bill, he is worried too many tax credits and grants could tap out the fund and not leave enough for the public to get a return on their deposits. "We want to make sure we have enough to pay folks," he said.

Not even all consumers are happy with the proposed change. Keith Awohi, of Hawai'i Kai, said he likes that the recycling centers are now somewhat out of the way. Redemption centers in stores are "going to make the shopping centers and supermarkets more crowded," he said.

But Gerald Wong, a teacher at the Loveland Academy, a school for children with special needs, liked the proposal. If a tax credit or grant makes it feasible, Wong said, the school may want to consider establishing a redemption center on its own rather than make frequent trips to the existing recycling site to collect nickels that help offset the costs of school trips.

Efforts during this session to pass legislation that would both repeal the bottle law and require retailers to accept empties in exchange for store credit have stalled. A bill that would allow crushed cans to be redeemed for 5 cents, however, is advancing.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or at 525-8070.