OMAHA, Neb. (FOX 42 KPTM) - The city of Omaha is now scrambling to find a new recycling option for 2021 after rejecting its sole bid for service Tuesday.
Omaha Mayor Jean Stothert announced the city’s rejection of the recycling bid from Firstar Fiber.
According to a press release issued by Stothert, Firstar’s bid exceeds the city’s budget. Firstar’s bid requested $4 million annually for a five year contract from 2021 until 2026.
In 2021 FCC Environmental will take over curbside collections for city trash, composting and recycling, meaning customers will soon switch out their 18 gallon green recycling bins for new 96 gallon carts.
According to the press release the city estimates the volume of recyclables collected will increase from 17,000 tons to 20,000 tons each year. Dale Gubbels, President and CEO of Firstar Fiber said he expects the current collection amount to more than double.
“When people have the opportunity to recycle beyond that little 18 gallon bin, they do,” Gubbels said.
According to the press release Firstar has been under contract with the city since 2006. The first contract from 2006 to 2015 required Firstar to pay the city based on the volume of materials recycled. The second contract from 2016 to 2020 required the company to continue payments, but due to a decline in the market for recyclables, the contract was amended. In September of 2019, the city began making payments to Firstar in the amount of $25.92 per ton to process recyclables. That fee is the same amount paid to dispose of waste in the landfill.
Stothert said the city would be charged $200 per ton of materials processed compared to $110 per ton rate the company charges other customers.
Gubbels said the increase is based on the city’s request to make a profit on the recycled materials.
“It’s not a $200 a ton processing fee alone. The city required that 60 percent of the market index aggregate value, they would take that revenue back,” Gubbels said. “The revenue would bring, even in this poor market condition, 60 percent of those revenues would actually lower our processing fee, the city’s charge would only be $150 a ton.”
Gubbels said the city is basing their projected profit off of materials in pristine condition when they arrive for processing, which is not always what is picked up on the street corner. Gubbels said because of the condition of the materials picked up, and the current state of the recycling market, if the processing fees remained the same it would be highly likely that would be operating at a loss.
“It became a simple matter of supply and demand.Suddenly supply outweighs the demand. Prices were dropping, not only prices but outright purchase orders, because nothing gets recycled until someone buys it,”Gubbels said.
Gubbels said he plans to meet with the Public Works Department in the next few weeks to discuss the possibility of continuing their services with the city
“If the city rebids, we would like to give the city some suggestions how to lower our risk so that we can also lower our processing charge and share the risks and rewards a little more equitably with the city,” Gubbels said.“We are reasonable people, we just need to protect ourselves for five years in an otherwise unstable market conditions.”
The city contract for processing recyclables will be separate from the collection contract. A $5 million curbside collection contract was awarded to FCC Environmental in August, that contract will take effect on January 1, 2021.
Firstar will continue processing the city’s recyclables until the current contract expires at the end of 2020. The city will soon be accepting new bids for a longer term contract.
