2005 Recycling Pilot Program Report

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Proft Sharing Several tim�s a year residenis call the City and ask why ihey have to pay a recycling fee. "Shouldn't the sale of material cover the expenses?" Yhey ask. On the post surveys zesidents registered a simxlar sentiment. When asked iithey would be willing to pay more for a new type of collection a number of residents wrote in a response wondering why the sale of material didn't cover the cost of collection. It's an appropriate question to ask. Residents axe generating comFnodities that are sold and currently are not receiving any of the revenue from the sa1e. Meanwhile the price charged by vendors is based prima,rily on the transportation costs. In the early days of municipal collection of recycling there was little money in the sale of material. Roseville had a profit shar�ag prQVisian with SuperCyele when the City's re�ycle progra�n began in 1988. But the markets for many types of recyclable material were unstable. Thus Roseville received anywhere from a few hundred to a few thousand dallars a yeax in profit sharing. A revenue sharing provision was not pari of the contraci when Roseville switched vendors to Waste 1Vianagement in 1999. In the 21S' century markets are more stable both nationally and internationally. For instance there is a huge demand for recovered paper from Chinese paper mills. In 2003, 28% of newsprint recovered for recycling was exported — 42% sent to China. Projections indicate that exports to China are expected to increase through the end of the decade and beyond (Bill Moore, Moore and Associates, presentation to National Recycling Coalition conference September 2004). The result of increased demand means ihat the price for recycled newsprint is rising. Cities that have retained prafit sharing provisions are receiving thousands of dollars in revenue. Raseville currently pays Waste Management approxiinately $280,000 a year to collect and process recyciing. Profit sharing would not cover the entire cost of the recycling pragram. But by multiplying the City's current tonnages by current prices for two-stream processed maleriai, its estimated profit sharing could cover a quarter to a third of the annual cost of the program. Any profit sharing provision should contain pnce flooring in order to minimize the impact of a downtum in markets. Typically havv a profit sharing provision works is that the city and the vendor agree on the cost per ton to process recyclable material — called a processing fee. The city and the vendor also agree on a system to detern�ine the price for each of t�ie comt�nodities to be sold. The prices are multiplied by the tonnages collected for a gross profit; the processing fee is calculated and subtracted resulting in a net profit. This net profit is rebated either in whole or in part to the city. Sorting and Pro�ts There are generally three types of sorting -- source separated in which homeowners sort material into 5— 7 separaie categories, two-sort in which all paper products are put together and all bottles and cans are co- mingled, and single-stream in which all recyclables are collected together. The more sorting of mate�ial that is done by the homeowner ncieans less sorting is done at the materials recovery facility {MRF}. It also means there is less mixing of recyclable material which results in a cleaner end product. That end product is often sold to tnaz�ufachuers at a higher price than material that has been 39