Bolstered by annexation and the capacity to handle a broader array of items, Memphis Tenn’'s curbside recycling program is reaching more households and collecting more material than ever before these days.
But because of a distant, seemingly unrelated event - the collapse of Enron Corp. - the city is reaping far fewer dollars from the program.
The December 2001 bankruptcy of the Houston-based energy giant, which owned a company that recycled newsprint, set off a chain of events that culminated with the city's having to renegotiate its contract with the company that processes the paper, plastic, glass and metal left on curbsides by local residents.
Until then, Memphis was receiving $50 a ton for the recyclable items it sent to FCR of Tennessee Inc., which operates a material recovery plant near Interstate 240 and Lamar. City and industry officials described the 1995 contract as one of the most lucrative in the nation.
The new extended contract, valid through the end of this decade, gives the city $25 a ton. As a result, revenues are expected to drop sharply from the approximately $321,000 generated during the fiscal year that ended June 30.
Still, city officials say the program is on solid ground and provides a range of environmental and fiscal benefits. By diverting material from landfills, the program saves Memphis more than $144,000 a year just in disposal costs.
"The cost-avoidance alone is the main thing," said Andy Ashford, recycling and composting administrator for the city.
"We're disappointed that we're not getting that full $50 a ton. But we're still very fortunate to be getting what we are."
Chaz Miller, director of state programs for the National Solid Wastes Management Association, said guaranteed contracts provide the financial stability needed to help sustain programs.
"There are some cities that don't have contracts for their recyclables," Miller added.
Across the nation, curbside programs have undergone increased scrutiny in recent years as cities grappled with unexpectedly high costs and weak markets for recyclable material.
"Occasionally, a program gets shut down, but that tends to be the exception and not the rule," Miller said.
That's not an immediate threat in Memphis, where the city began its curbside initiative more than a decade ago.
With recent annexations of Countrywood and other areas, the program now is available to some 194,000 homes. About 30 percent of those households participate weekly, Ashford said.
The renegotiated contract came after Enron's collapse forced the shutdown of Garden State Paper Co. Inc., which the energy firm had purchased in 2000.
Garden State, which operated mills that processed recycled newsprint, held a contract with FCR to handle the newspapers it collected. That contract was critical to FCR's Memphis operations, Ashford said.
"That basically funded this whole recycling program," he said.
The shutdown of Garden State "left FCR with all this paper and no place to go with it," Ashford added.
As a result, the company and the city agreed to reopen the contract. But while agreeing to the reduced per-ton charge, the city got some adjustments in its favor.
First, the contract was extended five years.
Secondly, FCR agreed to accept magazines in addition to the newspapers, plastic items and glass, aluminum and steel cans and containers it already was getting.
The program never has approached the city's original goal of collecting 20,000 tons a year. But thanks to the annexations, the acceptance of magazines and increased marketing by the city, collections are rising steadily.
For the 2001-02 fiscal year, the city collected 7,910 tons through the recycling program, up from 7,847 tons during the previous 12 months.
During the 2002 calendar year, Ashford said, Memphis should surpass 8,000 tons.
In July and August, collections were up more than 100 tons from the same months in 2001. For seven months in a row, the city has broken collection records for those months.
And in October, the city program enjoyed its biggest month ever, collecting 884 tons.
At the October rate, Memphis would collect more than 10,600 tons a year and reap $265,200 in revenues.
Gary Thibado, plant manager for FCR, credits the city's "aggressive attitude" in promoting the recycling program in helping to boost collections.
But Ashford foresees even bigger increases in collections. The city and FCR are working out details that will lead to the company's adding junk mail and office paper to the list of accepted items.
The rising collections should help the program, Ashford said.
"Of course, it remains to be seen if we'll make up that $25 a ton (in lost revenues)," he added. The (Tenn.) Commercial Appeal