Balcones Resources is expanding into Arizona after winning a contract from Phoenix to operate two of the city’s MRFs. The deal is worth an estimated $158 million over a 10-year period.
The Phoenix City Council approved a contract on Oct. 12 that will see the Texas-based company take over operations of two publicly owned MRFs that process an estimated 130,000 tons of material per year. Its operations will begin at the North Gateway MRF in February and the 27th Avenue MRF in September, bringing Balcones’ list of recycling facilities up to seven. It will be responsible for operations and maintenance as well as marketing the commodities.
“The City of Phoenix has always been a leader in sustainability, and they have high expectations for their recycling program,” said Balcones CEO Adam Vehik in a statement. “Recycling is our life’s work, so we are very excited to partner with the city to help them achieve their goals.”
The contract’s initial term is five years, followed by the opportunity to extend for up to five more years. According to Balcones, “the contract prioritizes creating local loops and keeping recycled materials within the local economy whenever possible,” and the company “has already identified multiple local end markets as potential outlets for Phoenix’s recyclable material.”
Republic Services is the city’s current MRF operator following its 2017 acquisition of previous operator ReCommunity, which was the nation’s largest independent recycling company at the time. The city’s contract decision now hands operations over to another company whose primary revenue stream is from recycling rather than collection or disposal services. According to council minutes, Phoenix received proposals from Republic, GFL Environmental and Recology (neither of which is currently in the local market), as well as CellMark.
The Phoenix Public Works Department, as well as representatives from the cities of Tucson and Glendale, evaluated the proposals. Phoenix has invested in upgrades to both facilities in recent years, including more recent work at the 27th Avenue facility. Prior upgrades to the North Gateway site were financed in part by a loan from Closed Loop Partners.
The Closed Loop Leadership Fund, an entity within that group, acquired a majority stake in Balcones in late 2019. Balcones, which also has operations in Arkansas, went on to acquire a Florida recycler and win a recycling contract in San Antonio (also previously held by Republic). That contract will lead to the construction of a new MRF for San Antonio that is set to open in 2024.