Council voted Tuesday to dip into its General Fund Capital Reserves to pay for a $1.5 million short-term contract extension with the company that processes the city's recycling.
The move spares the taxpayer from a potential rate hike to cover the extension with SONOCO Recycling.
The ABC11 I-Team first reported about the rising operating costs at North Carolina's three major recycling companies, including SONOCO, in April.
.@RaleighGov opts against a recycling rate hike on the taxpayer, will dip into its savings to pay for a short-term contract extension with its cash-strapped contractor. @ABC11_WTVD #ABC11 pic.twitter.com/LrEHhdJ6sF— Andrea Blanford (@AndreaABC11) November 19, 2019
The companies, SONOCO, Republic Services, and Waste Management are struggling to break even on their sorting operations, citing an increase in the supply of contaminated materials and shrinking demand for items that can be reused.
The companies told the ABC11 I-Team that the business model for selling items for recyclables had been largely dependent on foreign buyers, including China. The Chinese government recently raised standards for what's considered acceptable.
In Raleigh, SONOCO issued the City a termination notice in August, citing what it called unsustainable losses of $100,000-$150,000 a month for recycling processing.
"I think there's some opportunities here with the way we're building the model because the way we built it before, I think may have created this dip in the industry," said Stan Joseph, Raleigh Solid Waste Services Director.
Turns out, people are throwing too much trash in the recycling, and companies that buy those items to be reused don’t want greasy pizza boxes and dirty peanut butter jars. Weeding out the garbage, therefore, is costly.— Andrea Blanford (@AndreaABC11) November 19, 2019
Joseph said the city should have focused more on contamination from the outset, better educating the public to keep items such as greasy pizza boxes and dirty peanut butter jars out of the recycling.
"There's a cost to putting the garbage in the recycling because it costs more to process it and pull it out,' Joseph said. "We obviously want to tell you what you should and shouldn't recycle. But for the folks who are just blatantly disregarding that, there needs to be level of enforcement that comes along with that."
City staff negotiated the six-month extension with SONOCO for $1.5 million, to keep processing and marketing of recyclables through June 30, 2020.
Council had the option to raise the recycling rate 66 cents, from $2.60 to $3.26 to pay for the short-term contract extension, but opted to use money from its savings, instead.