Hampton Roads waste authority considers shutting down

CHESAPEAKE

The regional agency that has collected and recycled most of the region's trash for 30 years needs to either significantly cut back its services or shutter operations entirely, its top executives say.

Faced with $240 million in debt, an anticipated $16 million budget shortfall and declining revenue, Southeastern Public Service Authority announced a plan Thursday to sell off its assets, including a regional landfill, and relinquish trash collection to private companies.

Another, more dramatic, option would be for SPSA to close entirely.

Agency officials said they must come up with a plan to do one or the other within 24 months.

"Unless it changes, we don't feel like it can survive," said SPSA Executive Director Bucky Taylor. "We need to be dealing with these issues immediately."

Plans to drastically alter SPSA come two months after a special report by the state Auditor of Public Accounts said that the agency suffered from poor financial discipline and leadership. A separate study in November recommended a stronger role for private waste companies in the region's system.

Launched in the 1970s, SPSA serves Virginia Beach, Norfolk, Chesapeake, Portsmouth, Suffolk, Franklin, Isle of Wight County and Northampton County. Its board includes one voting member from each locality. The agency has an annual budget of about $102 million, and its assets include a regional land-fill in Suffolk and a waste-to-energy incinerator in Portsmouth, which burns about half of all local trash.

SPSA board members and executives spent more than four hours behind closed doors discussing the future of the agency. When the meeting was over, Taylor presented three alternatives. There was the "do-nothing" option. There was a second option in which SPSA ceases to exist, sells its assets to pay off its debt, and localities pick up the responsibility for waste disposal.

And then there was the third option, which involved reducing SPSA, selling its assets, and contracting with other companies for important services.

Under that option, the 460-employee agency could make do with about 180 employees, and maybe even fewer than 100 if it gets rid of its transfer stations and transportation components, Taylor said. The agency may be able to cut its operating budget from about $102 million to less than $15 million, he said.

Taylor and SPSA Board Chairman Don Williams, a Norfolk councilman, both say they will be advocating for the option that would make SPSA more of a hybrid agency that oversees the region's trash system. In that setup, SPSA would make sure that private haulers are adhering to contracts, Taylor said. The system would be similar to how waste is managed on the Peninsula, he said.

Selling its Suffolk landfill and other key assets to private bidders would help pay off the $240 million debt, Taylor said. Ultimately, any changes will reduce what residents pay for trash disposal, administrators say.

If the agency doesn't change, there's no way it will survive until 2018, when the authority is set to expire, top administrators said at a board meeting Thursday.

Shuttering the agency would leave South Hampton Roads cities on their own to arrange and operate trash collection service. If that happens, SPSA administrators say, they would develop a detailed transition plan.

By late January, Taylor and other officials plan to meet with leaders of South Hampton Roads cities to shop a plan that would keep SPSA around, but in a much smaller role as private companies take over the agency's key facilities and services. At least one official with Chesapeake said he would like to keep on the table an option for localities to handle trash disposal on their own.

Either way, SPSA executives hope to have the plans worked out in 18 to 24 months.

Crippled by the difficult economy, SPSA's financial situation is in trouble and may get worse by then, officials said. Between July and November, the agency's monthly tonnage slipped from about 117,800 to 88,600, which has meant a drastic decline in the disposal fees paid for each ton.

"People are not buying as much, and they're not throwing away as much," Taylor said. To combat the immediate woes, the agency will lay off 10 workers at its yard waste mulching facility at the Virginia Beach landfill.

The decline in trash means that cities' already high disposal fees won't be decreasing anytime soon, and neither will residents' bills. "That's disturbing," said Chesapeake City Manager William Harrell.

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