Lexington is considering a move to privatize its recycling program. There is no doubt that the city wants to contribute to reducing waste and improving overall landfill conditions, but there's more to the process than just this.
The city is losing money on its recycling center. Its options are to move to privatizing the recycling program or increasing the rate that it currently is charging to the 16 cities, counties and four businesses using its services.
A Look at the Current Financial Situation
According to the city, the material recovery center, operating as it is right now, had a $707,684 loss for the fiscal year that ended in June of 2015. In addition, the city saw the costs of operating the center rise 48 percent from 2007 to 2015. And, during that timeframe, there was a 38 percent drop in the number of sales of those products. This is creating a very limited opportunity for the city to move forward in its current position.
The city of Lexington sells and markets the usable recycled goods from the program. Then, it divides the profits among the 16 organizations based on how much material is sent to the center.
One of the proposed solutions to the recycling program is to raise prices. Currently, the city charges those 16 organizations $35 per ton of material. In order to maintain current operations, that price would need to rise to $50 or $55 per ton instead. This would generate as much as $282,000 in additional revenue for the program.
The current rate has not been raised since the location opened in 1992. There is concern that raising these rates would mean fewer cities and local organizations participating in the recycling program, though.
Privatization Might Be Better
The second option for the process is to privatize the operation, which could be costly (though there is no formal bid to estimate that cost). Many larger cities, such as Chicago and Cincinnati, have done this. This move could provide the city with the ability to limit its ongoing losses in operating the center as it is right now.
Other factors are impacting the Lexington recycling center's ability to be profitable. It may need as much as $1 million in capital investment in the future. Many city council members believe the organization is still running very inefficiently even after significant changes were made in 2014 to address these concerns.
What Are My Recycling Options?
Whether your business is in one of these cities or you need to explore your options in recycling, Central Kentucky Fiber Resources, LLC can help. Our team can work with your organization to determine the best route forward.
Industrial recycling is an important investment, and we can help you to make it a financially beneficial benefit for your company. Call us today to schedule a business consultation.