Public-Private Partnership Paying Off in Dallas Recycling Program Design

Space once reserved for trash now gives a business room to grow. A city no longer pays to process recyclables. And area communities welcome a new place to send their recyclables for processing, contributing financially to a municipal landfill’s operations at the same time.

That’s the story in Dallas, where an innovative public-private partnership (PPP) has helped the city toward its goal of an 80 percent diversion rate by 2040:

• The city provided land to a private company, which used it to build a materials recycling facility (MRF) to process plastics, paper, glass, metals and other items processed through the city’s curbside recycling program.
• The private company, FCC Environmental Services, paid for the $20 million project and is using revenues from sales of processed materials to pay off its investment.
• Dallas is not responsible for making up the difference if proceeds from selling recycled materials were to drop below the processor’s breakeven point. FCC has entered into a 15-year agreement, with a potential 10-year extension, that meets the city’s financial needs: In exchange for the land and the consistent business, FCC promises to never charge the city a dime.
• At 65,000 square feet, the new MRF is equipped with state-of-the-art sorting and processing equipment that enables FCC to accept materials not only from Dallas but also several surrounding communities. FCC contracts with participating communities — including Mesquite, Garland and University Park — then shares financially with Dallas.

Everybody wins.

The MRF at the McCommas Bluff Landfill in southern Dallas has been accepting and processing single-stream waste since January, 13 months after Dallas approved a contract for FCC to design, build and operate the facility.

It’s an innovative arrangement, one that grew out of our efforts to help the city come up with a viable way to avoid the financial uncertainty brought on by the collapse in commodity prices several years ago. The city had been operating under a processing contract for recyclable materials that had been viable in 2007, but had become less tenable as its expiration approached.

We helped the city solicit bids for a new arrangement under both traditional and nontraditional approaches. In the end, four companies followed the traditional approach: They would agree to process the city’s collected recyclables at their own solid waste management facilities. Another three companies, including FCC, instead sought to take the city up on an innovative approach to recycling program design: Dallas would provide land at its landfill for use by a company, provided that the company would use the land to process recovered materials.

The city partnered with FCC, whose agreement runs for 15 years and carries an option for 10 more. Among the terms:

• Dallas pays FCC a processing fee of $70.54 per ton.
• FCC, in turn, pays Dallas half of the revenue the firm generates through the sales processed at the MRF. The firm also pays the city another $15 for every ton brought in from other customers. Plus, FCC pays another $1 per city residential household annually to support public education. This generates about $240,000 per year.

For Dallas, the contract has removed the financial risk posed by market uncertainties, and it has strengthened its approach for reaching its program’s sustainability goals: a diversion rate of 40 percent by 2020, 60 percent by 2030 and 80 percent by 2040. Read how another community is meeting its visionary recycling goals.

Area communities are benefiting, too. FCC intentionally built additional capacity into its new MRF, both to meet anticipated growth in Dallas’ loads and to welcome materials being brought in from adjacent communities. Suburbs and rural areas alike find themselves with newfound flexibility, enabling them to explore opportunities for establishing or expanding their own solid waste management and recycling programs — all empowered by a PPP that works.

It is satisfying, and not at all surprising, to see Texas communities take the lead in embracing such an innovative approach. We look forward to the potential of this public-private partnership serving as an example for other large metropolitan areas in the state and elsewhere to follow.

Find out more about how the Dallas MRF cut its financial risk.