NRC Congress: On the Dotted Line

In jurisdictions where environmental considerations alone will not safeguard recycling programs, then cost-sharing and revenue sharing aspects of contracts with haulers and processors must be planned and negotiated thoroughly.

A session on the topic of contracts held at the National Recycling Coalition (NRC) Annual Congress, held in Minneapolis Aug. 29-31, offered several examples of how municipalities have worked to ensure that they offer fiscal responsibility to their taxpayers and elected officials.

In Colorado, Charlotte Pitt of Denver Recycles says her agency had a variety of goals in mind when negotiating its current contract, including improving efficiencies, offering better safety conditions for workers, increasing the amount of material collected and maximizing fiscal responsibility.

The City of Denver collects curbside material itself, but contracted processing out to the former Tri-R Recycling plant, now owned by Waste Management Inc.’s RecycleAmerica Alliance. According to Pitt, the plant was centrally located to minimize hauling costs.

The contract also guarantees the City will receive $33 per ton for what is marketed, with an “upmarket clause” that can go into effect when secondary commodity prices increase.

In a separate presentation, Peter Engel of consulting firm TERRA, Newburyport, Mass., detailed how a regional MRF in Springfield, Mass., sought proposals from several bidders before ultimately deciding to again work with the RecycleAmerica Alliance division of Waste Management Inc., Houston.

Under terms of the current contract, communities are paid $15.67 for material that is collected by communities either through curbside service or at drop-off centers. There is also a revenue-sharing clause based upon market index pricing for a weighted blend of MRF commodities (with higher volume commodities such as ONP carrying greater weight).

Engel’s advice to communities preparing for the bidding or proposal process is to provide a proposal that can almost double as a final contract, so that all who submit bids will know the precise terms of the pending contract. He also recommends a revenue sharing arrangement, perhaps based on published market indexes.

In the Congress’ host city of Minneapolis, Solid Waste and Recycling Division Director Susan Young says her job is made easier by a pro-recycling attitude in the city. Nonetheless, the division has worked hard to earn a 98 percent approval rating for the recycling program within the city, which exceeds even that for the fire department, she notes.

The level of source-separation discipline and participation from the 108,000 households served provides the city with marketable commodities, says Young. “I make money. Selling garbage doesn’t work; selling recyclables does,” she told attendees.

The city has refrained from single-stream collection partly for this reason, she notes. In 2005, Minneapolis has been receiving $73 per ton for old newspapers (ONP), minus a $30 per ton processing fee, for a $43 per ton spread.

Overall, the Minneapolis department earned $800,000 in commodity revenue in 2003, $1.3 million last year, and is predicting up to $2 million for this year. “If you want to sell recyclables, you have to collect clean materials,” Young emphasized.

More than 800 government recycling program coordinators, private sector recyclers and industry suppliers gathered in Minneapolis in late August for the NRC Congress.