The hard lessons of SPSA

Published 8:55 am Saturday, September 5, 2009

The elected leaders of Franklin, Southampton County and Isle of Wight County owed a close look at a New York company’s bid to buy the region’s public garbage monopoly — the Southeastern Public Service Authority — and convert it to a private garbage monopoly.

Given that the current entity’s fiscal ineptness has produced the highest residential garbage tipping fees in the country, any serious proposal warrants a serious look.

County supervisors in Southampton and Isle of Wight and the Franklin City Council didn’t have to read far into ReEnergy Holdings’ proposed purchase of SPSA, however, to see that it is an unattractive deal for the taxpayers of Western Tidewater.

The paragraph in which ReEnergy insists on a 20-year contract for exclusive garbage-disposal rights in SPSA’s eight member localities is the place for local leaders to say, “Whoa.”

The 20-year provision, among other troublesome details, gave Franklin City Council members heartburn when they convened this week to discuss the ReEnergy proposal.

Except in rare cases, it’s this columnist’s belief that elected officials should not commit their governments to anything beyond the length of the terms to which they’ve been elected. In most cases, that is four years.

Bonded indebtedness for public infrastructure is a necessary exception on occasion, though even then, supervisors, councilmen and state legislators should proceed with extreme caution.

The danger of long-term contracts is best illustrated by the current agreement that governs SPSA. What seemed like a reasonable idea in 1983 — a regional garbage compact that would allow member localities to control costs in the volatile world of garbage disposal — is a disaster 26 years later. Worse yet, nine years remain on a 35-year contract.

A critical assumption by SPSA’s founders — that the agency would have exclusive rights to both residential and commercial garbage, guaranteeing a steady stream of waste throughout the agreement — went out the window a decade later when the U.S. Supreme Court ruled so-called “flow control” unconstitutional and freed businesses to make their own garbage-disposal arrangements. Though the court would reverse that ruling more than a decade later, SPSA sustained much fiscal damage and began piling up debt in order to stay afloat.

Inflexible provisions in the 35-year contract exempting Suffolk and Virginia Beach — two of the compact’s largest garbage producers — from the tipping fees that other localities pay compounded the agency’s woes and resulted in the decision earlier this year to enact the highest tipping fees in the country.

Localities change. The economy is constantly changing. The regulatory environment can change at the drop of a hat based on the whims of judges, lawmakers and Richmond and Washington bureaucrats. No contract, no matter how well intended its drafters, can anticipate and address circumstances decades down the road.

Based on their chilly reaction to the ReEnergy proposal, it appears that today’s leadership in Franklin, Southampton and Isle of Wight has learned from the mistakes of its predecessors. Western Tidewater’s waste-management goal should be simply surviving until 2018, when the fatally flawed SPSA contract expires, and resisting any urge to commit its taxpayers to another long-term contract whose consequences cannot be predicted.