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HomeMy WebLinkAboutCOM 0506.003 2010-2012 �U:''T Y CLERK h l _ Atlas Recycling Center, LL P.O.B. 5294, Hilo, HI 96720 LUIZ -'11 17 At1 9' 28 Phone: (808) 935-9328 County of Hawaii January 16, 2012 County Council Finance Committee Chairman Dominic Yagong RE: PROPOSAL: Develop a comprehensive community based recycling program for the residential sector and small commercial sector on the Big Island through the establishment of a fully funded Diversion Grants program. GOALS: - Develop a program that utilizes all recycling centers and haulers. - Promote recycling opportunities to a larger population base. - Increase recycling at an affordable cost to taxpayers. - Introduce a system that not only encourages recycling, but establishes rewards for doing so. CURRENT SYSTEM: In April 2007 the County of Hawaii implemented a two-bin Mixed Recycling collection program at various County transfer stations. The goal was to offer convenient recycling opportunities for households that utilized the transfer station for their waste disposal. A hauling contract was awarded to a private firm to place roll-off bins at these transfer stations to collect the recyclable material and then haul it to a processing facility at prices ranging from $100 to $200 per ton, receiving an additional payment for the mixed material under the County's current Diversion Grants program. According to January 2008 through June 2011 billings from the hauling contractor and the Diversion Grants program payments to the certified processor, it cost the taxpayers of the County an average of$230 per ton to operate the transfer station Mixed Recycling program. During the same period, 4 out of the 19 transfer station (Hilo, Keaau, Kealakekua, and Keauhou) accounted for 58% of the mixed materials collected. If the Waimea and Pahoa transfer stations were included, the six transfer stations accounted for 72% of the total collected. Comm. No. to. .3 Ref. To:,� Ref. Dote JAN 2 0 20 Fully Funded Diversion Grants Program .page 2 These six transfer stations are within well developed populated towns and in close proximity to large scale privately operated processing facilities in Hilo, Kona, and Keaau. The main problems that are inherent in the two-bin system and its focus on the transfer stations are: - Limits the participation to only those residents that utilize the transfer stations to discard their household trash, eliminating those that use private waste collection services. - Dependent on voluntary recycling. It limits the participation to only those residents who feel the need to recycle because it is the right thing to do. - Fails to reach the business community which is made up of many small businesses that have a larger percentage of recyclable material in their waste stream than do residential householders. - Allows for contamination and moisture which reduces market value of the commodities collected and increases the weight of the material thereby increasing the costs of hauling. - Costs the taxpayer millions of dollars in infrastructure expenses to set up transfer stations for a collection system that is too costly, too inefficient and may be outdated in the near future. - Is overly expensive, costing the taxpayers $230.00 per ton in hauling and recycling fees on average over a four and a-half year period, far outweighing the costs of landfilling and actual value of the commodities collected because of participation issues. - Creates no financial incentive to participate when consumers recycling behaviors are influenced by economic conditions. - Fails to create diversity, limiting users to a co-mingled or mixed collection approach and completely ignores source separation methods. - Fails to create competition, relying on one collection system and single contractor to provide services to the community, overlooking other certified community recycling centers that can provide services. • Fully Funded Diversion Grants Program .page 3 PROPOSAL: FULLY FUNDED DIVERSION GRANTS PROGRAM: Since 1994 the Diversion Grants program has remained a useful method for private recycling businesses to collect, transport, process, and market recyclables. Updating, restructuring, and strengthening the program will encourage more industry competition and promote higher diversion rates. It will benefit the County of Hawaii to upgrade the current Diversion Grants program and streamline the program to focus on the residential sector and the small business sector, removing the program's subsidies to large commercial businesses that bale and compact cardboard. Baled and compacted cardboard from large commercial businesses can be hauled and processed more economically and should be eliminated from the diversion program. The proposed fully funded Diversion Grants program would pay a $100 per ton diversion fee to fully certified recycling businesses for all mixed recyclable items including; cardboard, newspaper, magazines, all paper types, tin cans, aluminum foil, and #1, #2, #4, #5 plastic bottles and plastic bags to State permitted certified recycling businesses. Glass bottles would continue to be paid at a rate of$160 per ton through the State's Advance Disposal Fee (ADF) funds. The proposed program could stand alone as the County's single waste diversion effort or can work in unison with the transfer station program. The goal should be to move the County into a direction with respect to waste diversion that is cost effective, broad-based, and efficient in maximizing both the participation and the levels of diversion. The County of Hawaii has placed all its emphasis on `convenience', over-selling it as the most important factor for a successful recycling program. As important as convenience "can" be, it is limited by the willingness to participate. This is where the current program falls short. There are only a small percentage of transfer station users that voluntarily recycle. The "need" to recycle and then the "effort" to recycle have not been sufficiently established to rely on the transfer stations program as the sole opportunity to divert waste from the landfill. This is why the County must look beyond the transfer station program to help achieve its goals of Zero Waste. It is vital to work more closely with the private sector to expand recycling opportunities for all the islands residents and businesses and to do so in the most cost effective manner as to minimize the burdens on the taxpayers. Fully Funded Diversion Grants Program ..page 4 The fully funded Diversion Grants program is so critical at this point in time. It puts a greater amount of the responsibility on the private sector recycling industry which has the expertise, equipment, resources, and interest to expand recycling and to do so in a cost effective way. A healthy local recycling industry and cost effective programs are an undeniable benefit for the success of achieving Zero Waste. There are 4 key factors that are enhanced by a fully funded Diversion Grants program: 1) Stability 2) Outreach 3) Economy of Scale 4) Financial Incentives An examination of each of these factors and how they contribute to better recycling efforts is as follows: 1) Stability: The current Diversion Grants program establishes funding levels on a year-to-year basis. A recycling company is required to estimate the tonnage it will collect before the beginning of each current year. The estimates of funding needed are based on both the amount of funding the County has available and the tonnage anticipated being recycled. A `funding cap' is then placed on the individual company for the fiscal year. If a company out-performs its tonnage estimates, it runs the risk of not having the financing to continue the programs it has established. Think of a company that has to start and stop programs as the funding allows. The community can never get on-board or adjust with the fluctuating programs because there is no stability. Habit plays an important role in creating an acceptable and successful recycling program. Today a person can recycle newspaper, but because of funding restrictions, tomorrow they can't. The system should be modified. A fully funded Diversion Grants program will stabilize the recycling industry and allow for the recycling businesses to expand efforts and programs for the communities they serve. Fully Funded Diversion Grants Program .page 5 2) Outreach: A fully funded Diversion Grants program will allow the private recycling industry to reach out to the local residents and businesses, working more closely with both large and small communities to establish long term recycling programs within these communities that are more participant friendly and comprehensive in scope. Create an environment where the community works diligently to expand recycling because it is both environmentally and economically beneficial is tantamount to the success of recycling, including efforts of schools, businesses, and non-profits will expand recycling and diversion to higher levels. Recycling should be a community effort with little restrictions on participation and an opportunity to include value in the equation. 3) Economy of Scale: It does not benefit the County to only provide funds for transfer station recycling or to promote an inefficient and ineffective open roll-off mixed recycling method that financially encumbers the County at a very high cost ($230 per ton to taxpayers). This expensive system dries up available funds to increase recycling opportunities to residents that want to use private recycle centers or curbside collection programs. Mixing or co- mingling recyclables together is a convenience for some people, but it is only one approach that the County should implement to encourage participation. The convenience of mixing and co-mingling without supervision or quality control drives up the cost of recycling. Dealing with contamination and underweight loads creates real costs. By increasing the responsibilities of all participants to sort and segregate, collect efficiently, and take recyclables directly to established recycling centers realizes tremendous cost savings. Creating these economies of scale and encouraging more competition within the private recycling industry will result in tremendous saving for the County and its taxpayers. Fully Funded Diversion Grants Program page 6 4) Financial Incentives: Any analysis of the recycling industry will arrive at one important conclusion: Financial incentive is the most important component of any recycling program. Although there do exist those people who feel a personal responsibility to recycle because they want to "do the right thing." Short of mandatory requirements, financial incentive remains the driving force behind recycling. Recycling is a business. The industry cannot survive without profit and people are more inclined to recycle for an economic benefit. The economy of scale discussed previously will create an opportunity for financial incentives or monetary rewards for program participants. Recycling rates by participants increase proportionately to the value they receive, creating a benefit for the County and the general public. Two prime examples on the Big Island are the implementation of the landfill tipping fee and the HI-5 Redemption program. The cost to the commercial sector for landfilling became high enough to realize that diverting their refuse from the waste stream through recycling was the smart thing to do. Many began in-house recycling programs because of the costs of landfilling. When the State of Hawaii implemented the HI-5 program, the recycling of aluminum cans was at an 18% rate, today it is over 85%. The rate for plastic bottles increased from about 2% to 80%, and the same for glass bottles. Financial incentives changed the mood and habits of businesses and residents alike. Financial incentives helped to transform recycling in the community. The expansion of financial incentives to the mixed recycling commodities will have the same positive effect. The more value placed on a recycle commodity, the higher the participation rate. HOW WILL THE FULLY FUNDED DIVERSION GRANTS PROGRAM INCREASE PARTICIPATION? The County of Hawaii has stated support for a Zero Waste goal. Their effort to reach zero waste will not be accomplished by committing to a single program, working with a single recycling company, or targeting a single audience (people who recycling voluntarily). As can be seen with the transfer station program the result will be high costs due to lack of competition and growth stagnation due to the targeting of selective group of participants The fully funded Diversion Grants program will be successful because it will stimulate competition, expand outreach, and create economic incentive. Fully Funded Diversion Grants Program page 7 HOW WILL THIS BE DONE? Thousands of customers that visit community based recycling centers each week, in most cases recycle HI-5 commodities, would now be able to conveniently include the cardboard, newspaper, magazines, other paper types, tin cans, aluminum foil, assorted plastic bottles and bags, and ADF glass bottles into their recycling activities. There would be a tremendous cost savings for the recycling center as a result. All transportation costs to centralized processing centers would be shared with the HI-5 program. Recycling centers would realize savings on collection, transportation, handling, and processing of the material. These savings allow for financial incentives for the customers. The community based recycle centers can now reach out to schools, churches, and non-profit and private organizations and offer participants fundraising opportunities by filling large, enclosed, water resistant collection containers to amass pre-determined, contamination-free, dry recyclables. The participants would load the containers in an organized fashion to maximize volume and weight. This will result in heavier loads hauled, reducing hauling costs. Processing clean separated commodities will increase their market value and in-turn all of these savings can now be used for financial incentive payouts to the fundraising participants. Finally, cottage industries would be created. Small business minded people in the community would start neighborhood and small business collection programs. These newly formed large and small scale collectors would also bring their recyclable material to the community based recycling centers in a predetermined form for the highest value. Again, the recycling centers would avoid transportation and collection costs which would allow for an economic incentive for their efforts. IN SUMMARY: A fully funded Diversion Grants program would double the tonnage of recyclables in the first year and may not cost more than the current annual Mixed Recycling program. The higher recycling diversion rate from the island's landfills will bring the County closer to its goal of Zero Waste. Its benefits would include a tremendous cost savings to the taxpayers by reducing what the County would pay for the program in per ton costs and infrastructure investment. It would increase the outreach to the community, continuing to include volunteer participation but expanding its reach to those of the community motivated by financial incentive. Fully Funded Diversion Grants Program ..page 8 The restructured Diversion Grants program would now include the overlooked and unused community based recycling centers involvement. Allowing this idle industry to invest in new financial incentive collection programs will stimulate participation. Additional savings could be maximized if the County structures the bidding for transfer station hauling contract in such a way as to promote the volumes at the aforementioned six largest transfer station two-bin sites and their close proximity to privately owned material processing centers. The larger volumes collected at these six sites may be financially beneficial for the County to bid these sites individually to encourage competition to haul from the sites. The County must also find an incentive for the smaller haulers to get involved since more competition should drive down the price. Sincerely Submitted, Michael J. Allen Owner, Atlas Recycling Center, LLC cc: County of Hawaii Mayor: Billy Kenoi Council Members: Donald Ikeda J. Yoshimoto Dennis Onishi Fred Blas Brittany Smart Brenda Ford K. Angel Pilago Pete Hoffman