Provide staff with direction on which of the presented options to pursue.

Currently, the City contracts with Norton Environmental, Inc. to operate the Materials Recovery Facility (MRF), which sorts and markets the recyclables collected by the City’s Solid Waste Section. The existing contract is set to expire in September 2023 and the City needs to consider how to approach the end of this contract. Decision-making related to recycling and this MRF is critical for the goals included in the Rethink Waste Plan and Climate Action and Adaptation Plan. Ultimately, what materials are accepted for recycling, the City’s recycling rate, and quality of sorted material is dependent upon the City arrangement for the processing of recyclables.
 
Staff consulted WIH Resource Group (WRG) to research all options available to the City. Each of these options, along with staff’s corresponding ranking and justification are noted in the table below. Given current factors, such as the market for recyclable material, the volume of material generated in Flagstaff, and regional factors, staff recommends converting the MRF into a transfer operation that delivers material to a MRF in the Phoenix-area (Option 2). This option is the most cost effective, and will allow the City to expand the types of material that can be collected from residents.
 

Options	Staff Ranking	Justification
1) Develop a regional hub-and-spoke recycling model	4	Lacking support for participation from regional jurisdictions
2) Convert MRF into a transfer operation and haul to a Phoenix-area MRF	1	Cost savings, efficiencies, flexibility, and greater diversion potential
3) Operate the MRF internally after facility updates and upgrades	3	Higher direct capital and operating costs to the City than current costs
4) Procure the operation of the MRF by a private MRF operator	2	RFP or RFQ needs to be issued to refine costs and determine viability
5) Suspend recycling collections and processing	5	Not popular with residents and stakeholders

Existing Contract

The City entered into contract with Norton Environment, Inc. in January 1997 and the MRF has been operational since October 1998. The facility is responsible for sorting and selling to market all of the recyclable material collected by the City’s Solid Waste Section. The materials accepted as recycling, include number 1 and 2 plastics, mixed paper, cardboard, aluminum and steel cans. This contract will expire in September 2023.

 

Connection to City Goals

This contract and any future arrangement for the processing of recyclables will have a significant impact on the City’s capacity to achieve the goals outlined in the Rethink Waste Plan, specifically the goal to divert 90% of waste by 2050. What the City can accept for recycling and how well that material is sorted will be major determinants in achieving that goal. How the City processes recycling at the close of the existing contract, will have a significant effect on these factors.

 

The City’s recyclables processing arrangement will also have significant implications for the Climate Action and Adaptation Plan. Achieving the City’s waste diversion goals will reduce the amount of material sent to the landfill, as well as the amount of greenhouse gas emissions it produces.

Options
 

1) Develop a regional hub-and-spoke recycling model:

This option would make Flagstaff a centralized processing “hub,” where material is sorted, baled, and sold to market. Flagstaff would accept unsorted recyclables from surrounding communities, or “spokes,” to increase the volume and economies of scale of the centralized facility in Flagstaff. While this model would increase efficiencies by limiting the capital demand and investment required by each jurisdiction, WRG identified multiple barriers to implementing this model in Flagstaff, including

• Many surrounding cities and towns are tied to their own hauling and processing contracts that would prevent them from redirecting material flows to Flagstaff.
• Other cities and towns do not have municipal or franchised waste and recycling collection, which means that they do not have the means to direct collected material to their preferred destination.
• Lack of state leadership and financial support to develop this model. In states with significant hub-and-spoke infrastructure, there is administrative support and guidance, as well and funding for implementation.
• Inadequate volume to support this model. For the above reasons, WIH group found that there would not be enough recyclables from surrounding jurisdictions to sustain this recycling model.

2) Convert MRF into a transfer operation and haul to a Phoenix-area MRF:

The existing MRF would be converted into a transfer operation, where recyclables would be aggregated, stored, and transferred to the Phoenix metro area. Trips would take place approximately seven days per week. Multiple benefits are associated with this model, including the opportunity to increase the types of material accepted for recycling. Because Phoenix-area MRF’s benefit from greater economies of scale, they employ better technology than the Norton MRF, which allows them to properly sort materials, such as glass, polypropylene, and thermoform plastic. This option enables greater flexibility, as it would not require the capital investment or long-term contracts of other options. This flexibility and reduced costs could enable the City to explore other innovative diversion opportunities, such as a Center for Hard to Recycle Materials (CHARM) facility that captures other materials not captured by curbside recycling services.
 
One challenge associated with this option is the limited control of acceptable materials, as well as the loss of a MRF as an educational opportunity where residents can tour the facility to learn about how recycling works.

3) Operate the MRF internally after facility updates and upgrades:

Pursuing this option would require the City to upgrade nearly all existing equipment and the building, which could range between $1-10 million, depending on the quality of the technology employed. This option would mean that the City is responsible for management and staffing. While this option would provide for greater control of technology used, as well as the accepted materials, many of the necessary facility upgrades are significant. In order to limit costs, the City could choose to utilize lower-cost technology, but many of these technologies, such as Revolution Systems, would not be able to support the volume of recyclables that Flagstaff already generates. The costs per ton of material for multiple sorting technologies is shown below in comparison with the transfer of material to three different Phoenix-area MRFs.
 

Outsource to a Phoenix-area MRF (Option 2)	Cost per ton
To the City of Phoenix MRF	$72.14
To Waste Management’s Surprise MRF	$110.14
To Friedman’s MRF in Phoenix	$120.89
Process internally in Flagstaff (Options 1 and 2)	Cost per ton
BHS System #1 – update the current sort line	$127.02
BHS System #2 – Upgrade to new screens / robotics	$146.09
Revolution System #1 – single rotational system	$76.78
Revolution System #2 – dual rotation system	$134.09

4) Procure MRF operation by a private MRF operator:

This would be a continuation of the current model for recyclables processing, but with a new operator. The City would issue a solicitation for a MRF operator. The solicitation would include necessary facility upgrades, which could be completed under a low-interest loan or bond funding (estimates range from $2-10 million). Whether the City or the operator pays for these upgrades would depend upon contract negotiations. If the operator were to pay for upgrades, the resulting contract is likely to be 5-10 years longer than if the City were to pay.
 
WRG surveyed private sector operators to gauge interest. They identified six interested operators. While many details remain uncertain, the ideal contract length for these operators ranged from 10-20 years, depending on whether the City pays for facility upgrades.

5) Suspend recycling collections and processing:
 

This option would mean that recyclables would be collected as trash and delivered to the landfill. Doing so would result in cost savings, but prevent the City from achieving the goals identified in the Rethink Waste Plan and Climate Action and Adaptation Plan, and limit the life of the landfill
 
Staff Recommendation
WRG and staff recommend that the City pursue Option 2, which would convert the existing facility to a transfer operation. Of the options presented, this option would result in the lowest cost per ton of recyclables sorted, while likely increasing the accepted materials and Flagstaff’s recycling rate.