Hundreds of thousands of Texans could lose curbside recycling service if the Houston City Council rejects a new contract with Waste Management.
The City Council on Wednesday will consider approving a new contract with the nation’s largest hauler and materials recovery facility operator, which is headquartered in the city. The new contract requires Texas’ largest city to spend millions of dollars each year at a time when it’s already facing budget shortfalls.
The city’s Solid Waste Management Department serves more than 380,000 targeted households citywide with every-other-week single-stream recycling collection. Started in 2009, the recycling program was expanded to cover the entire city in early 2015. Houston is the only large city in Texas to fund its solid waste and recycling program without the use of a service fee, instead relying largely on taxes in its general fund.
Under a deal with Waste Management, city trucks deliver material to one of two WM MRFs. Through that agreement, called a “zero floor” contract, the city and WM share profits when the value of the commodities sold exceeds WM’s sortation costs, but if they fall short, WM eats the loss and the City pays nothing.
“Based on the strengths of its negotiating power, the City had enjoyed an unprecedented Zero Floor contract that had been in place since 2009, a highly enviable position,” a city document states. “This Zero Floor allowed the City the benefit of an avoided disposal cost of $27 per ton for materials that would normally be landfilled. Additionally, as the market has fluctuated, unlike other municipalities that operate a curbside recycling program, the City has never faced a negative recycling processing cost.”
WM has seen substantial drops in its recycling revenue because of depressed commodities values. Houston city documents noted the composite commodity selling price for recyclable materials in the region dropped from $68.30 per ton in June 2014 to $47.66 in January 2016, a 30 percent decrease.
With the pending expiration of the current agreement, originally signed in 2013, WM demanded changes in any new contract. Specifically, WM wanted to increase the contract’s processing fee, meant to account for its sortation costs, from $65 per ton to $94.80 per ton, a 46 percent increase. The proposed contract would also eliminate the “zero floor” and require the city pay WM the full amount of any shortfalls, estimated at $3.05 million per year.
The contract would also retain provisions granting the city 70 percent of any future profits from commodity sales. The draft contract would begin March 16.
If City Council does not approve the contract, the City will have nowhere to take recyclable materials, except for the landfill, city documents state.
“This would undo the efforts by the City to be champion of a sustainable and environmentally friendly city through our recycling programs aimed at diverting materials that would otherwise end up in a landfill to be find a beneficial reuse through recycling,” city documents note.
Houston estimates it has a roughly 30 percent recycling rate, according to the 2016 budget.
The decision comes at a time when the City is facing budget shortfalls. It has projected a shortfall of $800,000 for 2016 and $3 million for 2017. The Houston Press reported that council members at a February meeting talked about the importance of recycling but seemed primarily concerned with closing the budget gap and retaining city workers’ jobs, with one council member noting the $3 million annual expense in the new WM contract equals the payroll and benefits of 45 city employees.
Mayor Sylvester Turner said he is not considering a service fee on households to fund the solid waste program, according to Houston Public Media.