Cost Recovery Systems for Recycling: Orange County, NC


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Many local communities rely on the excess revenue generated from landfill tipping fees to fund non-landfill activities such as waste reduction and recycling services. The source of revenue generated by the sales of recyclables remains relatively unpredictable and only capable of supporting a small percentage of program costs. Revenues linked to the amount of tons disposed of in landfills have become problematic for a number of reasons.


The cost of landfill operation has increased in order to support environmental protection measures and communities are often unable to increase tipping fees due to flow control concerns (increasing the price sends waste haulers to other facilities thereby reducing overall revenue). Also, many communities have been unable to site new landfills and have lost this source of revenue altogether once their landfills reach capacity and close. Finally, as recycling programs have become more successful and the waste disposed of at landfills has decreased, the very source of revenue to continue to fund those programs also decreases leading to what one solid waste manager refers to as a “funding spiral of death.” This funding challenge has been especially apparent in Orange County, North Carolina, currently recognized as having one of the leading waste reduction programs in the Southeast. To date, Orange County is the only county in North Carolina to meet the State's per capita waste reduction goal of 40%. Orange County has also been unable to site a new landfill in their county and is planning on closing their landfill in 2009.


In 2004, the UNC EFC conducted a pilot project in Orange County to develop and evaluate alternative cost recovery systems for communities with extensive recycling programs. The UNC EFC worked with Orange County staff and a citizen's advisory board to make sure that program service objectives, as well as customer equity concerns were carefully considered and addressed. The project included preparation of financial planning and fee setting models capable of assessing a variety of different revenue options including district taxes, county wide taxes and targeted customer service fees.


In June 2004, the Board of Orange County Commissioners adopted a Waste Reuse, Reduction and Recycling services fee named the 3R Fee. This fee is assessed to all improved parcels in Orange County at varying rates, depending on the recycling services for which various parcels are eligible. This fee will provide approximately $2.5 million or 65% of the funds necessary to finance current recycling efforts. The remaining funds will come from a combination of landfill tipping fees and the Solid Waste Management equipment reserves funds.


For more information on this project see Orange County's Solid Waste Managment Department's webpage.