MUA Contract with New Material Processing Company Lifts Hopes for Recycling Rebates

SWAINTON — Cape May County Municipal Utilities Authority is optimistic that recycling rebates for county municipalities’ may return in 2011, as it finalized a contract with a new material processing company Dec. 16.
Cape May County Municipal Utilities Authority approved a five-year contract with Hudson Baylor of Cape May to operate and maintain its Intermediate Processing Facility (IPF) from Jan. 1, 2010 through Dec. 31, 2014.
The MUA owns and operates the IPF at the Woodbine Sanitary Landfill, where recyclable products are received, processed and marketed by the authority’s national service partner, formerly FCR Camden LLC, now Hudson Baylor of Cape May.
County towns will not receive an annual municipal recycling rebate for 2009 in 2010.
However, “with the rebound of the market and this new contract, we’re cautiously optimistic that we can offer rebates for 2010 in 2011,” Executive Director Charles Norkis said.
He said market rates for second-hand materials are still low, but have been steadily climbing.
The authority’s service agreement with FCR for processing of source-separated recycled materials expires with the year 2009. The authority completed two five-year contracts with that company.
“FCR is a good vendor, but this is a better decision for the rate payers and that’s what it comes down to,” Board member William G. Burns, Jr. said.
“It is a better contract than with FCR, for us and the municipalities,” Norkis said.
Norkis said Hudson Baylor is willing to accept more risk and share more of the loss when revenues are down than FCR.
“Our concern is to protect ourselves and the municipalities when markets are bad,” Norkis said.
All plant employees will stay, with the exception of the plant manager, who decided to stay with FCR and “pursue other challenges,” Chairman George Betts said. He said it was not a matter of compensation. Hudson Baylor will hire an experienced local plant manager.
Executive Project Manager Diane Leonik authored the contract and worked with an evaluation committee that set certain goals for contract needs. Officials lauded Leonik and attributed her hard work to the success of the contract.
The new agreement with Hudson Baylor requires the MUA to pay a fixed service fee of $7,000 per month and a per-ton service fee of $50 for average commodity revenue. If the average commodity revenue (ACR) drops below $50 per ton, the authority does not have to reimburse Hudson Baylor.
“The economic deal we negotiated was better than the original deal they presented,” Leonik said. “We’re protected on the low side because we don’t have to reimburse.”
If the ACR is between $50 per ton up to $80 per ton, the MUA will receive a 50 percent revenue share. If the ACR is above $80 per ton, the MUA receives 80 percent of the revenue share over $80 per ton.
This basically means more opportunity for the MUA profit and pass the savings, via recycling rebates, on to Cape May County municipalities.
“FCR was doing a good job. It could have been easy to stay with FCR, but this is a better deal,” Betts said.
The MUA was able to agree with Hudson Baylor to establish a locked-in price of $60 per ton of recovered materials, with a contractual obligation requiring the IPF operator to sell these commodities at the Official Board Market Export price.
Therefore, the MUA is buffered from market fluctuations.
Every ton of material recycled saves the municipality $63 per ton, which is the waste disposal rate that would have been charged at the landfill, Betts said.
Dim market rates and a severe decrease in the amounts of materials received, both due to the economy, caused the authority to stop its annual municipal recycling rebates for 2009. Towns will need to factor this change in revenue into their municipal budgets.
Last January, the MUA authorized the first increases to solid waste and wastewater user and tipping fees for the first time since 1994.
The first disposal fee increase in 14 years raised the fee from $60.75 per ton to $63 per ton. Construction and demolition per ton fees were raised from $68.35 to $69 per ton. This also included a 3.89 percent wastewater rate increase, which varies among towns depending on population and flow.
Board members said tipping fee increases are necessary because of a 3.57 percent decrease in tonnage sent to the IPF; therefore, the authority does not receive enough materials to turn a profit, particularly when the commodity price of recyclables is down.
The agreement with Hudson Baylor is “financially superior to the terms of the current service agreement,” a Dec. 11 memo states. “This economic structure will provide significant benefits to the CMCMUA and all 16 Cape May County municipalities which participate in the county-wide source separation and recycling program.”
Any individuals or businesses with questions about what or how to recycle should contact the CMCMUA at www.cmcmua.com or 609-465-9026.