SPSA may shut down

Published 12:58 am Saturday, December 20, 2008

Board members for the Southeastern Public Service Authority, which has been disposing of the region’s garbage since the 1970s, said Thursday that the agency must either downsize or go out of business.

After a lengthy closed-door meeting, SPSA officials announced a plan to sell some of the agency’s assets — a waste-to-energy incinerator in Portsmouth, the regional landfill in Suffolk and recycling centers — in order to pay off $234 million in debt. The agency would look to contract with private companies to operate its transfer stations and transportation system.

According to a press release announcing the proposal, changes were “precipitated by a number of factors,” including a shortfall in the amount of garbage the authority is currently receiving and staggering debt.

“SPSA staff advised the board on three possible scenarios which could be used in moving forward to a more sustainable regional organization,” Rowland L. “Bucky” Taylor, the authority’s executive director, said in the written statement. “We believe it is in the best interest of our member communities to decide on a new way forward now instead of later. Continuing to use the current business plan will not allow SPSA to operate in a business-like manner.”

The three scenarios were dubbed Plans A, B and C. Plan A is the “do nothing different” option. Municipalities would pay increasingly higher tipping fees, already among the nation’s highest, to keep the agency afloat.

Under Plan B, SPSA would cease to exist. The authority would sell all of its assets to pay off its debt and member localities, including Franklin, Southampton County and Isle of Wight County, would assume the responsibility of disposing of their waste.

Some of those localities could eventually form alliances among themselves.

Plan C is to downsize and partner with private companies.

SPSA handles most of the garbage in eight communities: Isle of Wight and Southampton counties, and the cities of Franklin, Suffolk, Portsmouth, Norfolk, Chesapeake and Virginia Beach. The contracts that maintain the alliance among these municipalities expire in 2018.

Area officials hinted that SPSA’s member communities are leaning toward some combination of Plans B

and C.

“Clearly, there were not any proponents of Plan A,” said Southampton County Administrator Michael Johnson, who serves as an alternate on the SPSA board. He said he believes Plan B or Plan C — “or some sort of hybrid of the two” — will ultimately be selected.

“I think it’s become plainly obvious that SPSA is no longer able to operate like it’s ‘business as usual,’ ” Johnson said. “There will be a series of dramatic steps needed over the next 12 to 24 months if there’s going to be any successful plan to continue to manage the region’s waste.”

Barry Cheatham, a member of the SPSA board and a Franklin city councilman, agreed.

“SPSA can’t continue to do business the way it’s been doing,” he said. “I don’t think anybody could have thought that SPSA could have kept going the way it was going.”

According to Cheatham, Plan C “makes more sense in some respects because SPSA would be setting up contracts instead of being a competitor (to the private companies).”

Cheatham said that one aspect of Plan B, the idea of having some municipalities forge new alliances, should definitely be considered. A recent report from SCS Engineers suggested that Southampton and Isle of Wight counties and the city of Franklin could some day cooperate on waste disposal.

“A (Franklin-Southampton-Isle of Wight) partnership could still be on the table after 2018,” Cheatham said.

James Brown, vice chairman of the Isle of Wight County Board of Supervisors and a SPSA board member, said the authority would be releasing a public statement in the coming days.

“We have some challenges to overcome,” Brown said.

Brown predicted that a decision on which plan to implement would be made “within the next couple of weeks.”

“Either (Plan) B or C will depend on how the rest of the participating municipalities vote,” he said.

Taylor told the board Thursday that SPSA is facing a $16.1 million revenue shortfall. Additionally, the authority currently has $234 million in outstanding debt; with interest payments, SPSA is projected to pay $314 million in debt service by 2018.

Johnson said he believes the news for SPSA’s customers will get worse before it gets better.

“In the short term, municipal tipping fees will rise substantially,” Johnson said. In the long term, “we’re still looking for the light at the end of the tunnel.”

The decision on SPSA’s future will also affect the debate over the possibility of building a regional landfill in eastern Southampton County.

“Clearly it could (be affected) if SPSA contracts out or shuts down,” Johnson said. “Given the direction that SPSA is moving, it is highly unlikely that it would site a regional landfill.”

Johnson described Thursday’s board meeting as “fairly grave and somber.”

Added Cheatham: “It’s tough to be in the waste disposal business these days.”