City won’t privatize recycling

Aug. 08, 2013 @ 05:15 PM

The city will stay in the recycling business and not pursue privatizing the service following a City Council decision Thursday.
The council, minus absent members Foster Douglas and Jay Wagner, voted unanimously to proceed with a $3.5 million upgrade to the city’s Material Recovery Facility, or MRF, where its recycling program is based. The funding for the project is in the budget, but some council members questioned whether the city could save money by turning the service over to a private company.
City officials presented information that showed the costs of privately operated recycling programs in Greensboro and Winston-Salem are higher than High Point’s city-run program. In addition, officials said the MRF upgrades are projected to save money by reducing personnel costs and generate more revenue by increasing the volume of recyclable materials the city can process and sell.
The city already has invested about $1.5 million toward automating the MRF.
“I think the wise and prudent thing to do is for the city to stay in the recycling business,” said City Manager Strib Boynton.
The MRF has historically operated at a financial loss to the city.
For example, during the 2012-13 fiscal year, its operating costs were $1.8 million, and it reported $903,337 in total revenue, for a deficit of $957,908.
The upgrade will entail replacing two balers that were installed in the mid-1990s that compact recyclables into blocks. The facility’s processing lines will be replaced with more efficient equipment that will make the recyclable sorting process more automated and require less manpower, officials said.
Currently, the MRF is staffed with 26 full-time positions, and 12 to 16 temporary workers are typically hired during the High Point Market, when the MRF operates 24 hours a day, processing the 300 tons of cardboard and other recyclables generated by the furniture trade show.
Officials said the upgrade will enable the MRF to operate with 19 permanent staff and no temporary positions during market. The city hired an outside consultant, HDR Engineering Inc. of the Carolinas, based in Charlotte, to do a financial analysis of the MRF. The firm projects that, once complete, the upgrade will make the facility into a revenue generator, as a result of reduced labor requirements, increased sales of recycled materials and other factors.
The firm projects annual revenues of $96,483 for the first year after the upgrade is operational and $166,755 by the 10th year.
City officials said Winston-Salem and Greensboro both contract with private companies to handle recycling in each city and that both programs operate at a net loss — $439,800 for Winston-Salem and $584,848 for Greensboro. They project an annual loss of $521,278 if High Point moved to private collection.
Council members decided that the risks of privatization were too great for several reasons — the length of time it would take to transition to the new service, uncertainty over what would happen to the city’s existing solid waste facilities, concern that a private hauler might decide to terminate its contract if the program was deemed unprofitable and being subjected to the whims of the private marketplace.
“In many cases, the private sector has a responsibility to stock holders and, in some cases, the owner of the company,” said Councilwoman Judy Mendenhall. “We have a responsibility to the citizens. We have a responsibility not just to look at savings, which we are all concerned about, but to look at city services.”