Title
Consider/Discuss/Act on a Resolution Authorizing an Annual CPI-U Cost Adjustment to the Circular Services (formerly Balcones) for Recycling Processing Services
Summary
COUNCIL GOAL: Operational Excellence
(2A: Balance Available Resources to Accommodate the Growth and Maintenance Needs of the City);
Enhance the Quality of Life on McKinney
(5C: Develop sustainable quality of life improvements in the City of McKinney)
MEETING DATE: September 15, 2026
DEPARTMENT: Public Works
CONTACT: Steve Tilton, Assistant City Manager
Ryan Gillingham, Public Works Director
Eric Hopes, Senior Environmental Services Manager
RECOMMENDED CITY COUNCIL ACTION: Approval of Resolution
ITEM SUMMARY: This resolution authorizes the annual contractual cost adjustment for recycling processing services provided by Circular Services (formerly Balcones Recycling Dallas, LLC). The proposed 2.66% adjustment would increase the Operating Cost component of the recycling processing fee from $53.85 to $55.28 per incoming ton, effective October 1, 2026.
BACKGROUND INFORMATION:
• The City Council authorized the City Manager to execute an agreement with Balcones Recycling Dallas, LLC, now Circular Services, for recycling processing services on August 21, 2023.
• The agreement has an initial term through September 30, 2039, and provides for optional renewal terms of up to five years each, with the combined renewal periods not to exceed ten additional years.
• Section 14 of the agreement provides for annual adjustments to the Operating Cost component of the recycling processing fee based on the U.S. Consumer Price Index - All Urban Consumers - All Items - Unadjusted 12-month average for the Dallas-Fort Worth area.
• Cost adjustments are subject to City Council approval and may not exceed 5% in any single year or a cumulative 20% over a four-year period.
• Based on the applicable CPI-U calculation, Circular Services has requested a 2.66% adjustment effective October 1, 2026. The proposed adjustment complies with the limitations established by the agreement.
Approval of the resolution will establish the recycling processing rate at $55.28 per ton effective October 1, 2026.
FINANCIAL SUMMARY:
• The proposed 2.66% adjustment will increase the Operating Cost component of the recycling processing fee from $53.85 to $55.28 per incoming ton, an increase of $1.43 per ton.
• The Capital Cost component of the recycling processing fee is not subject to the annual cost adjustment.
• Based on an estimated FY27 processing volume of 14,458 tons, the proposed adjustment is estimated to increase annual recycling processing costs by approximately $7,570.
• Payments to Circular Services are offset by the City's contractual share of revenues generated from the sale of recyclable materials. The City's estimated net payment to Circular Services in FY26 is $677,834.
• Funding is available in account 007-4405-503-8537.
BOARD OR COMMISSION RECOMMENDATION: N/A