San Antonio will begin soliciting a new recycling contract this year, with City officials warning of cost increases on the horizon.
The City’s current deal with Republic Services runs through July 2024. The Phoenix-based giant in the North American solid waste industry acquired ReCommunity, the original contractor, in 2017 and took over the agreement that began in August 2014.
At Republic’s processing center at 1949 Hormel Dr., workers manning a fast-moving system of conveyor belts and sorting machines work to separate glass, aluminum, plastic, and cardboard to ship to buyers in surrounding states. Last year, the contract involved processing roughly 80,000 tons of residential recycling at $13 per ton, costing the City $1.1 million, Solid Waste Management Director David Newman said.
Republic was one of the four credible companies that responded to Solid Waste’s request for information last year and has expressed interest in renegotiating a contract with the City, Newman told council members in a B session briefing Wednesday. Others were Houston-headquartered Waste Management, one of Republic’s key competitors; FCC Environmental Services, a U.K.-based subsidiary of a Spanish construction firm; and Balcones Resources, an Austin processor with five other locations in Texas, Arkansas, and Florida.
Recycling costs are likely going up no matter who gets the contract.
San Antonio’s contract dates to before 2017, when China’s policy shift on recyclables upended the global markets for reused paper, plastic, and glass, among other commodities. In 2019, a Republic executive told the San Antonio Report that many of the company’s contracts with cities across the U.S. are “underwater.”
“It’s a good contract for us, but they view it as not favorable for them,” Newman said of San Antonio’s agreement with Republic.
Based on a review of other cities’ more recent contracts, Solid Waste officials expect recycling costs to rise to $25 per ton, the same rate it currently costs the City to dispose of waste in a landfill. The new contract would cost the City an estimated additional $960,000 per year, starting partially in 2024, with the first full year of higher costs in 2025, Newman said.
Solid Waste fees are based on the size of a resident’s brown trash carts and are collected via their monthly CPS Energy bills. If the $960,000 estimate is correct, it would translate to an additional 22 cents per month for each cart size, according to Solid Waste.
The new recycling contract would only cover recycling from single-family homes and small multifamily units. San Antonio requires owners of multifamily buildings with nine or more units to offer recycling collection for their residences. Businesses are not required to recycle, though the City tries to encourage it through its voluntary ReWorksSA program.
The new contract would allow vendors two options: process City’s residential waste at their own location or to build one on City-owned property. Solid Waste officials intend to offer their Northwest Service Center at 6802 Culebra Rd., currently a warehouse for plastic waste carts.
Initially, Solid Waste explored the idea of the City building and operating its own recycling center. Some waste experts have said that would give the City more options to work with small businesses to recycle a wider variety of products.
“it gives us a lot of flexibility,” Newman said in a March 25 briefing before City Council’s Community Health and Equity Committee. “After the capital is paid, it has the potential to be at a lower cost in the future.”
However, Newman has recommended against this idea since October, saying that the risks involved would be too high for the City to bear with no experience selling recycled products.
“We would be entering a very tight market as a virtual unknown,” Newman continued. “I think that would be very difficult for us to do.”
Councilwoman Ana Sandoval (D7), who chairs the committee, pushed for the City’s contract to include some disposal option for plastic bags. Most recycling processors want to stop taking plastic bags because they get caught in the sorting machinery, Newman said.
Sandoval and Councilman John Courage (D9) both wanted to see the contract address labor conditions and fair pay at the processing center, which Courage said he has toured multiple times.
“It is very labor-intensive,” Courage said. “It’s not just a bunch of machines that do the work. … I hate to see a bunch of people doing that work for $7.50, $8, $9 an hour.”
The contract would cover a 15-year term, with one five-year extension option, Newman said. Solid Waste officials plan to issue a request for proposals in May, gather responses by August, and award a contract by December.