SPSA: IOW buyout unlikely

Published 8:25 am Friday, October 30, 2009

A letter from Southeastern Public Service Authority director Rowland “Bucky” Taylor to the Isle of Wight County Board of Supervisors chairman James Brown indicates a withdrawal from the authority will be very difficult, if not impossible.

Brown had drafted a letter last month to inquire about the possibility of the county’s withdrawing from the authority. The Isle of Wight County Board of Supervisors requested the letter by unanimous vote at its Sept. 3 meeting.

“The county is fully aware of its obligations to SPSA pursuant to the Use and Support Agreement provisions,” Brown wrote. “As such, the county hereby formally requests that you provide us with any and all proposed terms and conditions to allow for the county’s orderly withdrawal from SPSA.”

Rowland’s response laid out several reasons why he considers the withdrawal difficult.

“Any withdrawing member must honor all obligations to SPSA following withdrawal,” Taylor wrote, citing a stipulation in the Water and Waste Authorities Act. “In your letter, you noted that your board is aware that its obligations include duties under its Use and Support Agreement to deliver to SPSA provide 95 percent of disposable waste and to pay the tipping fees that SPSA assesses for the disposal of that waste. As you may know from reviewing that document, the agreement does not include a buy out provision.”

Taylor went on to say that no buyout from the authority is possible without the approval of SPSA’s bondholders and lenders, including the Virginia Resources Authority.

“The recent restructuring of SPSA’s debt with VRA includes your county’s guarantee of VRA’s obligations,” Taylor wrote. “Covenants included in the various restructuring documents have the effect of requiring that all eight member localities approve any buy out.”

Taylor wrote that the board would discuss buyout options at Wednesday’s board meeting, but little discussion occurred when the matter was brought up.