Wanganui's new recycling centre is due to open midway through next year.
Wanganui District Council decided in June to replace the Peat St recycling drop-off centre, which is being overrun by its increasing popularity.
More than 2000 vehicles go through the drop-off centre each week.
Councillor Rob Vinsen, the council's waste minimisation and environmental working party chairman, said the purpose of the new Resource Recovery Centre was in addressing the demand for recycling services.
It would ease the congestion seen at the Peat St centre and enhance the opportunity Wanganui residents had to recycle.
The new depot will be established on the old Wanganui Prison site in Maria Place Extension and run by Tupoho Whanau Trust, a registered charity.
Mr Vinsen said a similar operation was set up in Kaitaia 20 years ago and employed 75 people, turning over $6 million annually.
He said the Resource Recovery Centre (RRC) could potentially eliminate the rates allocated to waste minimisation activities if it earns enough to be self-funded.
A start on construction is planned for early next year.
Seed funding will come from levies collected by the Government from dump operators and passed on to local authorities, and an application has been lodged for $405,000 with the Ministry for the Environment.
Wanganui District Council waste manager Stuart Hylton said the new centre would initially collect the same recyclables accepted at the Peat St drop-off centre.
Other collections, like that of second-hand goods, green waste, construction waste, hazardous household waste, tyres, scrap metal and used oil, would be provided as funding allowed.
Mr Hylton said charges would be put on materials that were harder to recycle, but the dry goods collected at the drop-off centre would remain free to deposit.
While the costs associated with running the Peat St centre outweigh the revenue it generates, Tupoho Whanau Trust has been tasked with reducing this imbalance at the RRC, so the annual $172,000 Wanganui District Council has committed to fund the new centre can be gradually decrease.
That is the same amount it spends each year to operate the Peat St centre.
Mr Vinsen said the council was aware of survey results that indicated more than 60 per cent of Wanganui residents were in favour of a kerbside collection of recyclables.
He said providing such a service would cost about $600,000 per annum, and the council felt that was not affordable from a rating perspective.
Mr Hylton said it was hoped the RRC would compliment the development of kerbside recycling services in the future.