Store bottle
returns pushed

Tax credits to set up redemption
centers are being considered

The state plans to encourage Hawaii stores to set up their own bottle and can redemption centers by offering grants of up to $125,000 or tax credits of $50,000 a year.

The idea is moving forward on two fronts -- as a new bill at the Legislature and in a proposal from the state Department of Health, which oversees the state's beverage container deposit program.

The details are still being worked out, but the point of both efforts is to encourage retail stores to take in bottles and cans for redemption.

Consumers currently have to go to redemption centers away from most stores to get the nickel deposit back for their empties.

"We understand the public wants more redemption centers and we're trying to help with that," said Larry Lau, DOH deputy director for environmental health.

The concept has the support of both retail trade associations, the Sierra Club and several operators of existing redemption centers.

"The idea everyone shares is that we need to set up more redemption centers to make recycling more acceptable to folks," said Jeff Mikulina, Hawaii Sierra Club director. "If we had a redemption center at every grocery store, it would erase the biggest gripe about the bill."

On Jan. 2, when deposits began to be refunded to consumers under Hawaii's new "bottle bill" law, there were 43 state-certified redemption centers. That number has grown to 56 fixed redemption centers and a number of mobile centers, with recycling companies planning several more by May.

The volume of containers recycled for a deposit mushroomed in March, the third month of the program, Health Department figures show. Almost 32 million containers were redeemed in March, compared to 12 million containers in January and February combined.

The state projects that it will take in $48 million a year in 5-cent deposits and 1-cent nonrefundable container fees on 800 million beverage containers used annually in Hawaii. Of that, about $30.7 million is projected to be refunded to consumers, $13 million paid to certified redemption centers and $4.3 million to pay for government administrative costs.

The ultimate convenience is to return containers at the store where you bought them, said state Rep. Mina Morita, a Kauai Democrat who worked for years to pass a Hawaii bottle bill. Requiring retailers to refund deposits at their stores -- as is done in most other states with a bottle bill -- was deleted from the original bill as a compromise with store owners.

"We want reverse vending machines (which return money for cans and bottles) placed in convenient locations, such as retail outlets where they can be available seven days a week and at more convenient hours," Morita said.

Through SB212, HD2, "we're looking at state fronting the cost of these machines, through tax credits or grant programs," Morita said.

The bill was changed Wednesday by the House Finance Committee to provide qualified redemption centers tax credits of up to $50,000 a year and directing the Health Department to set up a grant program offering up to $125,000 per organization for redemption center set-up costs.

Funding would come from money collected from the 5-cent deposit and 1-cent handling fee charged since Nov. 1 on beverages labeled HI-5.

Through the end of February, the state has collected $14.4 million in fees and deposits and paid out less than $3 million.

The Hawaii Food Industry Association, which represents retail grocery stores, and the Retail Merchants of Hawaii both testified in support of the measure.

Since some stores will have to become redemption centers by July, "the grant would allow them to do it without ranting and raving" about cost, said Dick Botti, a lobbyist for the Hawaii Food Industry Association.

The association estimates that setting up a redemption center at a retail store would cost $150,000 to $200,000, said spokesman Ed Thompson.

The Health Department opposes the bill, because it thinks the tax credit will be unwieldy, Lau said. The department already has statutory authority to offer grants, so legislation isn't needed, he said.

Lau said he hopes to have a "request for proposals" ready by May, which retailers could use to apply for grants.

July 1 is a deadline in the bottle bill for having at least one redemption center every two miles in urban Honolulu. The Health Department is looking at ways it might give a higher priority to applicants from underserved areas, Lau said.

Two of the Oahu recyclers already running redemption centers, Reynolds Recycling and RRR Recycling Service, said they support state assistance to set up redemption centers.

A grant or tax relief "absolutely would help," said Dominic Henriques, RRR Recycling owner, who has built three mobile recycling trucks at a cost of about $50,000 each. RRR offers redemption at 12 mobile sites and two permanent locations.

"We'd like to see this grant money help the retailers participate more," Henriques said. "I think if the retailers get it, it's going to trickle down to us."

"We need to bring convenience to the marketplace," agreed Reynolds President Terry Telfer. Reynolds has 25 redemption sites, with five more planned, and has doubled its volume since January, he said.

Sierra Club's Mikulina said he doesn't want the grants to be too generous and wants safeguards to make sure someone doesn't get a grant, then go out of business.

"We want to provide a strong incentive, but not give away the farm," he said.

Meanwhile, two other bills remain active that would change the bottle bill:

Gas stations busy
with redemptions

Businessman, dad and soccer coach Paul Hanada of Maui is always telling youngsters on his team to "go beyond your comfort zone."

A month ago, when he paid $25,000 for two reverse vending machines for his Kahului gas stations, Hanada did just that.

So far, Hanada is the only retail business in the state to become a state-certified redemption center to refund the nickel deposit on HI-5 labeled beverages.

"It's busy," Hanada said of the 5,000-containers-per-day action at his "OneStop Junior" reverse vending machines at his Ilima Shell and Aloha Shell stations, which are about a block away from each other.

Though the machines hold 950 aluminum cans, 220 plastic bottles and about 600 glass bottles, "sometimes after one customer I have to empty it out," Hanada said.

"Some people wait 45 minutes on a Sunday (for a turn at the machine) because on Sunday nobody else is open," Hanada said.

"Some of them are laughing and having a good time," Hanada said. "They say they really appreciate it, that I'm giving them an opportunity to get their money back."

Hanada said he may recoup his investment within months. He may add more machines at his stations and has already shared his experience with others who have asked.

One was Brian Lum, who with his brother Alan operates B and A Automotive at 1739 Liliha St.

The Lum brothers are considering buying reverse vending machines and setting up their sons, Justin, 19, and Aric , 21, to run an evening-and-weekends redemption center at their auto shop.

"If we can get the state certification, we're going to do it," Brian Lum said, especially if there might be grants to help purchase machines.

Lum said his family in the past has recycled by taking items to bins at a nearby school.

His auto shop doesn't even have a soda machine, but he thinks its location at Liliha and Kuakini streets would be convenient.

Hanada said he told state Rep. Mina Morita, a bottle bill sponsor, "I think retailers are hesitant because it's an investment on their part. But there is an opportunity here, if you want to take it, a tremendous opportunity."