2005-07-26_PWETC_AgendaPacket - Laserfiche WebLink

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Profit Sharinl! Several times a year residents call the City and ask why they have to pay a recycling fee. "Shouldn't the sale of material cover the expenses?" they ask. On the post surveys residents registered a similar sentiment. When asked if they 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 are generating commodities that are sold and currently are not receiving any of the revenue from the sale. Meanwhile the price charged by vendors is based primarily on the transportation costs. In the early days of municipal collection ofrecycling there was little money in the sale of material. Roseville had a profit sharing provision with SuperCycle when the City's recycle program began in 1988. But the markets for many types of recyclable material were unstable. Thus)Rosevillereceived anywhere from a few hundred to a few thousand dollars a year in profit sharing. A rev(:nue sharin~(provision was not part of the contract when Roseville switched vendors to Waste Managelnellt in 1999. In the 21 st century markets are more stable both nationalfYlll1d internationally. For instance there is a huge demand for recovered paper from Chinese paper mills. In 200~,28'Y(Jof 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 that the priceJor rec.;Ycledn(:wsprint is rising. Cities that have retained profit sharillgpl"ovisions are receiving thousands of dollars in revenue. Roseville currently pays Waste Manager!1(:nt approximately $280,000 a year to collect and process recycling. Profit sharing would not cover the entire cost ofthe recycling program. But by multiplying the City's current tonnages by current pric~~for twoCstr(:ampros(:~s.~Al11~tel"ial, its estimated profit sharing could cover a quarter to a third oftl1e<iIll"lulll.9ost ofth(:program. Any profit sharing provision should contain price flooring in order to minimize th(:illlpactof Typically how a proBt sharing provision works is that the city and the vendor agree on the cost per ton to process recyclable mat~rial- called ajJrocessing fee. The city and the vendor also agree on a system to determine the price for ea.9P of the c?lllmodities to be sold. The prices are multiplied by the tonnages collected for a gross profit;the proc(:ssing fee is calculated and subtracted resulting in a net profit. This net profit is rebated either in wholeorin part to the city. Sorting and Profits There are generally three types of sorting - source separated in which homeowners sort material into 5 - 7 separate 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 material that is done by the homeowner means 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 manufacturers at a higher price than material that has been 39