Gaithersburg residents can expect a roughly 20% increase next year in the fee they pay for recycling, a City Council member said.

The Gaithersburg City Council on Tuesday approved separate three-year contracts for single-stream recycling and materials processing, with a warning from one council member that fees could increase next year.

The council approved a three-year curbside recycling contract for Greenbelt-based Goode Companies Inc. and a three-year processing contract for Capitol Heights-based Olive Street Processing LLC.

Under the terms of the contracts, each company after three years will have the option of two one-year renewals.

The city has estimated that the combined value of recycling and processing costs has increased 20%, and that the city’s current per-household fee of $107 per year could increase next fiscal year.

“As we go into our strategic planning session and budget session, I just want folks to have a heads up that there’s going to be a $20 or so increase in your annual recycling fee per household,” Council Member Ryan Spiegel said.

The city sent out solicitations for contracts for curbside collection and processing on Nov. 13, and they were due to the city on Dec. 27.

Goode Companies, which bid $1.1 million, and Olive Street, which bid $346,500, were the only contractors that placed bids, said Deborah Moran, the city’s sustainability coordinator.

Asked by Mayor Jud Ashman why there was no competition for the contracts, Moran said the recycling market is subject to “fluctuation,” which has made contractors reluctant to get into the recycling business.

“No one really wants to jump into the recycling markets to date because they’re really fluctuating a lot,” she said.

Moran said the city has in the past contracted with one company for both recycling and processing. However, having separate contracts for the two operations will help account for changes in the cost structure of recycling, she said.

It also lets the city detect recycling “contamination,” the amount of nonrecyclable materials placed into recycling bins.

“Doing that gives us control over what kind of cost fluctuations we’ll see and it also allows us to get information about contamination we can use in our education initiative,” she said.

Council member Mike Sesma said in an interview after the meeting that some cities around the country have stopped taking materials, such as glass, to save money.

“What’s happened in the whole business sector is that the value of recycling … nobody’s making money. he said.