Faced with crushing debt, is smaller SPSA the answer?

Complaining of rising trash-disposal fees and calling the agency financially mismanaged, Chesapeake has wanted to leave the Southeastern Public Service Authority since at least 2006, when it sued unsuccessfully to free itself from the authority.

On the other hand, the fees for Virginia Beach, the state's largest city, have been capped. Suffolk, one of Virginia's fastest-growing cities, pays no fees because the authority's regional landfill is located there. Both cities have long-standing contracts with SPSA.

The various arrangements among the localities could complicate the efforts to downsize or dismantle SPSA. On Thursday, the authority unveiled a plan to downsize the agency, sell off enough assets to pay off $240 million in debt and contract out key services to private companies.

"It'll take every locality some time to sift through the information, and we'll see if they can cooperate," said Chesapeake Councilwoman Debbie Ritter. "This is the point where people will see if there's a future for regional government."

Officials with several of the region's cities were hesitant to detail their visions for the authority's future. Some expressed support for turning SPSA into a hybrid that manages contracts with

private companies that perform key services. Others said SPSA should definitely not be shut down.

On Friday, officials with Chesapeake said staffers are already researching whether a downsized SPSA would save money on trash collection. They also are looking into the cost of Chesapeake handling waste disposal on its own.

Virginia Beach has been studying its waste disposal alternatives for the past several years. The city has a capped tipping fee of $54 a ton, and residents don't pay a fee for trash collection. The cap is set to expire in 2015, and the Beach's tipping fee could nearly double to $22 million a year. The city also has looked into the possibility and cost of expanding the use of its landfill in Centerville, near the Chesapeake border.

Other officials are eyeing opportunities to purchase some of SPSA's key assets if the agency decides to sell some of them.

In Norfolk, for instance, garbage is collected by city trucks and hauled to a SPSA transfer station before making its way to a landfill. If SPSA decides to sell its assets, one councilman thinks that Norfolk should look into purchasing the transfer station from SPSA so it can take another step toward controlling its own trash-collection system. "If we do that, then we ask private companies to bid to haul our garbage away, and take the best offer," said Norfolk Councilman Don Williams, who's also the chairman of the SPSA board.

For the past 30 years, SPSA has collected and recycled most of the trash for Virginia Beach, Norfolk, Chesapeake, Portsmouth, Suffolk, Franklin, Isle of Wight County and Southampton County. Each locality has one voting member on the board.

All those members must agree on any major organizational changes, said agency spokesman Tom Kreidel. If that doesn't happen, SPSA will continue to go on in its current state. One recent report described it as an agency with poor financial discipline and lax oversight.

Executive Director Bucky Taylor and other top administrators plan to shop a plan to downsize SPSA with leaders from each locality by the end of January. It's likely that each council will vote on any plan.

Those meetings will be happening the same month SPSA is expected to increase the localities' trash disposal fees - which are already among the highest in the country. All the localities except Suffolk and Virginia Beach pay SPSA $104 for each ton of garbage the agency handles. That figure could rise to about $135 per ton soon, and to $250 per ton by 2018, when the authority is set to expire, SPSA officials told Chesapeake officials at a recent work session.

SPSA executives said they need to raise the fees to make up a $16 million budget shortfall created by the recession. The agency also plans to lay off 10 workers at its yard-waste mulching facility in Virginia Beach.

C ity leaders who sit on the SPSA board said allowing the agency to unload many of its assets will be the key in rescuing the agency from debt and lowering waste disposal fees.

If the waste-to-energy plant in Portsmouth is sold, that alone would retire $40 million in SPSA debt, Williams said. The agency also could sell its regional landfill in Suffolk.

"We've got enough assets to get out of debt," Williams said. "Our goal over the next two years is to liquidate enough assets to get us out of debt, and getting the tipping fees as low as possible.

"Norfolk is going to pay more in the next few months. But it's going to come down drastically in the near future."

 Pilot writers Harry Minium, Deirdre Fernandes and Hattie Brown Garrow contributed to this report.

Mike Saewitz, (757) 222-5207, mike.saewitz@pilotonline.com