A special report by the state Auditor of Public Accounts describes SPSA as an agency adrift, lacking a clear business plan and suffering from poor leadership, rising skepticism, heavy debts and lax oversight.
The report also says that the Southeastern Public Service Authority, which handles most trash and recycling in South Hampton Roads, spent bond money on projects not approved by its board of directors and that its staff could not fully explain where all such borrowed money had gone over the years.
"SPSA lacks a detailed, thought-out plan to implement its mission and determine exactly what businesses the authority should remain in or enter," according to one section of the 60-page document, released Friday.
Bucky Taylor, SPSA's executive director since August, said the audit "hardly is flattering." But he pledged to use its many recommendations as a guide to continuing to reform an agency that has served eight counties and cities in the region for the past 30 years.
"It's something we need to look at straight up, study and then implement the things that will help us be a better organization," Taylor said. He noted that the agency agrees with most of the findings.
Taylor replaced John Hadfield, who ran the agency for the past decade before retiring. Other top executives also have left SPSA in the past two years, including the personnel director, the public affairs director, the recycling coordinator and the operations chief.
Called a performance audit or special review, the report was requested by state Del. John A. Cosgrove, R-Chesapeake, and approved earlier this year by the Virginia General Assembly.
Since May, analysts have spent hundreds of hours poring over financial records, reviewing internal documents, interviewing agency employees and critics, and "basically trying to figure out the decisions SPSA has made over the years and why they did so," said Walter Kucharski, the state's auditor of public accounts.
The study found no wrongdoing or illegalities, Kucharski said, though he expressed concern about a lack of planning, insight, internal controls, bookkeeping and accounting.
"It's not what we're accustomed to seeing in government," he said.
Cosgrove, a former Chesapeake city councilman, frequently has questioned SPSA's policies and practices.
The report "pretty much solidifies what we've been saying for a long time now," he said: "that SPSA is a bloated, mismanaged, overly bureaucratic organization that has no chance of reforming itself in its current structure."
SPSA, he said, "has denied, denied and denied for years that they have a problem. But anyone who looks at this agency and sees 500 people doing the work of 50 knows that something's not right."
Cosgrove said he likely will seek to amend SPSA's state charter during the next legislative session, which begins in January in Richmond.
The agency owes about $234 million. But when interest is factored in, SPSA must pay about $314 million to retire its debts by 2018 - the year the agency's contracts with its member localities expire.
That number, though, does not include new borrowing, for items such as replacement trucks and equipment and improvements to its facilities.
Auditors suggest the total debt bill could reach nearly $500 million by 2018. And they question whether SPSA knows how to cope with such a tab.
Management and the board, according to the report, "have not developed a detailed plan on how they intend to repay their currently outstanding debt and new issuances over the next 10 years."
To curtail its reliance on borrowed money, SPSA two years ago sharply increased its fees for handling a ton of municipal garbage, from $57 per ton to the current $104.
The idea was to become more of a pay-as-you-go organization. Plus, SPSA needed to start socking away money to close and monitor its regional landfill in Suffolk.
But this approach has faded after just one year, the report says, and SPSA again is proposing to borrow money for capital improvements - more than $21 million this fiscal year - while setting aside less cash than promised.
Agency executives told the auditors they had no choice: Revenues are less than projected, and expenses are higher, especially at the power plant in Portsmouth.
SPSA's board of directors consists of eight voting members, one each from Virginia Beach, Norfolk, Chesapeake, Portsmouth, Suffolk, Franklin, Isle of Wight County and Southampton County. Most are elected officials with little background or expertise in the complex world of waste management.
According to the report, some members said in interviews that they received little information, training or orientation about their responsibilities, leading to a culture of board members often following what staff tells them to do.
SPSA is due to expire in 10 years. But officials still are not sure whether the agency will continue to exist as before, exist in a different form or simply dissolve. They have tried to plan for the future but have been sidetracked each time, the report says.
"They're kind of in limbo," said Kucharski, the state's top auditor. "Decisions and planning need to get done."
Scott Harper, (757) 446-2340, scott.harper@pilotonline.com
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incentives?
Incentive!? How about for the BIGGER picture. How about for SPSA, the authority that manages all the trash on the Southside of Hampton Roads? They were here before anyone else was to clean up this trash issue. And I might add they have done more educational based outreach to the community on proper trash (hazardous and non-hazardous) disposal and recycling than anyone to the point that their beloved "Spsaroo" has had to retire due to mere exhaustion!! And another incentive, let's not forget for the betterment of Hampton Roads itself and the people that make up this community? Yeah, Suffolk made a great deal years ago, so did those guys that bought land off the Indians but that was then and this is now. Fair is Fair. What ever happened to ideas like "...for the welfare of all..."? There's a much bigger picture at stake here. No Executive Director or President of a company is any bigger or better than the Board of Directors who direct them. That's why their called "Directors"!! Let's take some real ownership and accountability here.
who's zoomin who?
Instead of the board of directors being a united bunch looking out for the welfare of the company (SPSA) and it's employees they are instead a representative (and sometimes not a very good one) of each city representing their own agenda arguing over which city is going to get the better deal. "Not in my backyard" well, maybe someday soon and then let's see who has the upper hand and calls the shots.
Trapped
Well yes, could have, would have, should have. But there are reasons for these issues. None of the member cities have totally followed the 95% rule; there is some leakage from the system because local school board, agencies like RHA's, airports, and others use commercial collection and therefor have paid lower fees. And yes, the fiscal situation would be different if the Navy contract was written differently and if the municipal contracts had been written differently as well. But of course the state auditor essentially never really deals with the hard issues the current board needs to deal with. The Auditor even suggests some of these contracts should be renegotiated; what world does he live in? For example, what incentive does Suffolk have to give up free disposal?
scott harper has only one goal in life...
Scott Harper has only one goal in life...to constantly write negative articles about SPSA. That's how he keeps his job. Most of this is a bunch of boloney. Most of SPSA's fault in the past has been trying to keep costs down to cities for dumping their trash. Bending WAY over backwards. That's one BIG reason why they have the money problems they have today. my city, Va. Beach, is the biggest cry baby of them all. Mrs. "O" thinks her trash is "special" because it comes from the beach so they ought to pay less. some say it's a real trip to work there and see how city/state politics and journalism/sensationalism works. my friend was a victim of Scott Harper back in 1999 and when he saw him in the mall later he felt misogynized
Full disclosure would help
The finiancial situation is dire. If Virginia Beach had delivered and paid for the 95% of their waste that was contracted to be delivered over the past 20 years, that would have provided significant additional income, which may or may not have been used wisely. Likewise, if the private haulers were placed under franchise in the 8 communities, and thereby required to pay their fair share for the disposal system and required to deliver their waste to SPSA, another major income boost would be realized. And, if the Navy was required to either pay for steam at a rate needed to operate the WTE/RDF facilities or cancel the existing contract, SPSA could break even on WTE or go to a landfill only operation that would significantly reduce operating costs, without reducing income.
Another Alternative
Sale of some of SPSA's assets is already under active consideration. Perhaps sale of the rest is possible, but the participating jurisdictions may be wary of putting themselves at risk to a national conglomerate that could monopolize the market and set any rates they wanted to set. As you suggest, there is value in the RDF/WTE plants, in the recycling facilities, in the transfer stations, rolling stock, and other support facilities. With a properly constituted board of Directors, a revised fee structure, and new municipal contracts, SPSA could correct its governance and funding issues and provide value to its municipal partners well into the future. But until the partners decide if they want a regional solution, which is also under active consideration, needed reforms now cemented into place in the existing contracts are on hold.
Only one clear answer
There is only one clear answer to the SPSA debacle. SELL IT ALL!!! Face it folks, any attempt to fix SPSA using a Board of mostly policital people with absolutely no business sense is unrealistic. The fix will not be an efficient, cost effective and market driven approach. They will use bully tactics to try and force the small businesses and industry to eat the bill. Right now, the private enterprise system is providing business and industry with a fairly competitive solution. The "report" is pretty clear. These guys can't set a long term strategy because they are too fixated on the short term political issues. they can't focus on market solutions becuase they have the power to TAX us. Long story short, the "members" need to start reserving money for the day when they have to dip into thier funds and repay the massive debt. SPSA CAN NOT fix itself. On the other hand, if the "members" can sell it all for $200,000,000 and at the same time cut the "members" disposal costs in half, why would you even try to "fix" it??? The SPSA Emperor (board) is naked folks. Time to stand up and tell them.
Well Actually
Well actually had the HB 3202 been declared constitutional it would not have been a taxing authority. In fact, that it why it was disallowed. In 3202, the participating jurisdictions would have imposed the taxes that were auhorized by the General Assembly, not the authority itself. Had the bill been allowed to to into effect, thousands of workers in Hampton Roads would now be busy in the process of designing and building needed public infrastructure. Instead, because the republican majority in the House of Delegates refused to levy the taxes, nothing is happening, and we can all look forward to more closed bridges, more personal disruption due to traffic congestion, more potholes and grass uncut on the highway, and in fact, we can aspire to the status of some second rate republican rather than to be a world class destination and region.
Regional Boards
Wow, wouldn't a taxing Regional Transportation Authority have been a great thing!
Municipal Tip Fee
Actually, when I referred to tip fees, I meant the municipal tip fee that each participating jurisdiction pays SPSA to dispose of a ton of municipal waste. Some of that waste goes to the landfill, but most is converted into refuse derived fuel and is burned in the waste to energy plant to create steam for the Navy and electricity which SPSA sells into the electrical grid. SPSA provides many other services like recycling, tire shredding and disposal, proprietary waste disposal, all of which are priced separately, but after all expenses and other revenue are calculated, the municipal tip fee is set to ensure that SPSA balances its budget each year. Because SPSA is an industrial operation, the capital requirements for landfills, the plant, the transfer stations, and the fleet of trucks to transport the waste, is quite extensive, and these faciliites must be maintained to be operated safely. Citizens may dispose of their own househodl waste at the landfill as well.
Tip fees?
Are these the amount of $ we or anyone entering a landfill SPSA facility needs to pay?
I get soemthing like 12 free runs each year. After that, it's $15.
Appreciated Response
Clearly, we all are a little perturbed by the situation. I would be lying if I said I wasn't a bit critical of how things got to this stage in the game. I, myself, appreciate, Mike Barrett's responses to the comments presented. Most, when confronted by negative comments, hide by the obscurity of government and corporate bureaucracy.
His responses seem to help answer the intent and objective of the current leadership.
The Solution?
Well yes, of course, but the question remains, to be replaced by whom? Past members of the board preferred to keep their own municipal tip fees as low as possible, so they could report to their own taxpayers that they had done the best for them that they could. Problem was, that was not prudent fiscal management for SPSA. By failing to adequately fund SPSA, it forced the agency to borrow. But in the end, the contracts require the partners to fund SPSA by paying tip fees, so all these past directors did was postpone the inevitable. The problem is identified by the auditor in his report, but what is the solution? In the SCS report there is the suggestion that the SPSA board, or its successor, be populated with representatives who are business people who will understand how to run a quasi public business operation. But we have ten years to go; continued reform is needed now and fortunately is on going on the board today.
Mike I feel so much better
"A special report by the state Auditor of Public Accounts "
As Mike Barrett points out, not an actual audit. Makes you wonder what a formal audit would find....
Gomer says: Surprise, surprise, surprise
As Gomer Pyle used to say: Surprise, surprise, surprise. The Board of Directors of SPSA is appointed by the participating localities. The Board is supposed to provide oversight to SPSA management. So who is ultimately to blame? The Board of Directors, the majority of who are councilman or county supervisors. If these people got SPSA into this mess then they must be incompetent. Since they are incompetent, then they should be fired or resign from all public service positions.
Yes, of course. Consider
Yes, of course. Consider the proposals for the sale of the RDF/WTE to reduce debt but still meet Navy contractural requirements. Continue to repair and maintain the plant for safety, efficiency, and value. Build cell VI to provide landfill capacity through 2018; keep the transfer stations in good operational condition. Keep the fleet operational, but consider greater privatization of transportation than we now have to avoid capital expenditures. Evaluate all services and consider privatization if our municipal partners will allow. Implement the fiscal policies adopted two years ago in regard to the use of debt. Work with the HRPDC in the consideration of the comprehensive SCS report due in a month or so. Determine those municipal partners who will want disposal options from SPSA and begin contract negotiations. Plan for a new regional landfill for the post 2018 period if all or some partners want a regional option. I'm out of the 750 words, but those are the main points.
Captain Barret
What's the plan of action?
People are wary of things they do not understand. Inflammatory comments are made, etc.
So, from a goat locker perspective, can you explain SPSA's plan of action so it'll pass the CNN test?
Penalty for Piling on
Well, at the end of the day, the auditor's report (not an audit) leaves SPSA in exactly the same condition it was yesterday. Actually worse, if inflammatory comments ascribed to Delegate Cosgrove are true. Perhaps the delegate from Chesapeake will make a motion at the next meeting to reduce the workforce to 50; then garbage can pile up in every member city. Fact is, this is the time for cool and rational heads to prevail, for those of us on the board who have sought reform found nothing really new in the report. Yes, we must still deal with the end of the municipal contracts which limits the organizations ability to finance its capital needs. Yes, we must still deal with the past practices that leave us still dragging a large debt. Yes, we must deal with large industrial assets that must be repaired and maintained to keep their value. And yes, we must accept the municipal and commercial waste that our members bring to us and process it for fuel for the Navy to use for steam and electricity. Wise counsel and rational decision making are required, but neither will reverse the effects of past decisions.
Bury SPSA
SPSA is unredeemable, pure and simple. Too many lies, too much obfuscation, too many drinks and lunches and junkets on the taxpayers' dime, and too little expertise. Face it, these guys are just bumblers. Now way to salvage it, so just bury it. Cover it up with dirt. The larger and more important question is why Virginia Beach participates in these organizations where we have only one vote of eight, or eleven, or some such number? It's about time Virginia Beach asserted its size, wealth, and expertise and demanded exact proportional representation.
SPSA
Why is Bucky Taylor still in charge. This appointed authority is rampant with inefficiencies, spending overruns, and anything you can name....but ol' Bucky is still in charge. If we re-elect all new city councils,maybe this could start the ball rolling....nah! VOTE THE BUMS OUT and throw Bucky Taylor into his gargage heap.