CHESAPEAKE
SPSA, the regional waste authority teetering on collapse, voted Wednesday to more than double its disposal fees for household trash, effective next month, to a staggering $245 per ton.
If approved after a public hearing on Jan. 28, the new tipping fees charged to six cities and counties in South Hampton Roads would be the highest in the United States by far, according to national waste experts.
The next closest rate is one proposed in Harrisburg, Pa., where a waste authority is seeking to hike fees $100 per ton, to $169.90. The matter has stirred legal action and is now involved in out-of-court arbitration.
"Rates generally are higher in the Northeast, but SPSA and Harrisburg are in a league of their own," said Chaz Miller, director of state programs for the National Solid Wastes Management Association, a trade group based in Washington, D.C. "I have never heard of a fee as high as $245."
The current tipping fee charged by the Southeastern Public Service Authority is $104 per ton. It was $57 two years ago.
But that was before public outcry erupted over SPSA's debts, now at about $245 million, and before the agency realized it needed to reform itself or die.
To alter itself after 30 years, SPSA is reviewing proposals from private companies to buy key assets and take over their operations. Another firm has offered to buy the agency outright, for at least $205 million.
John Daniel, a Richmond attorney representing a prospective buyer, Covanta Energy, said Wednesday's decision illustrates why SPSA needs to divest now. Privatization, Daniel said, "is what every report says SPSA should do, and what common sense says they should do in light of the extreme actions we saw today."
The proposed rate increase, which SPSA officials said is needed to plug a $16 million budget deficit amid shrinking revenues, would hit residents of Norfolk, Chesapeake, Portsmouth, Franklin, Isle of Wight County and Southampton County.
Suffolk pays no tipping fees because it hosts the regional landfill. Virginia Beach has its disposal rates capped, at about $58 per ton, under a separate agreement with SPSA.
"One thing is for sure," said Bucky Taylor, SPSA's executive director, "no one likes to go up on tipping fees like that. But we don't really have a choice."
Without such a hike, Taylor said, "there could come a time this year when SPSA would not have enough money to operate." In short, SPSA could go bust.
If the fees are adopted and take effect Feb. 1, homeowners in the six localities can expect their trash costs to rise. But because each city and county bills its residents differently, an exact impact is hard to measure.
According to SPSA figures, though, a $245 tipping fee would add significant costs to the budgets of affected localities. Chesapeake, for example, would pay $7.5 million more this year for waste disposal. Norfolk would pay $5.4 million more, and Portsmouth $3.1 million more.
The city of Norfolk has absorbed most of the recent SPSA tipping fee increases, paying for them from the general fund, and spared homeowners most of the rate increases. But the city doesn't have the money to absorb such an enormous increase, City Manager Regina V.K. Williams said Wednesday.
"I'm probably going to recommend to the City Council that most of this increase be passed on to our citizens," she said.
The fee increase was endorsed by a 6-2 vote of SPSA's board of directors. The board members from Chesapeake and Portsmouth voted no. "Everyone in America is hurting right now, and I think we just have to find another way to address this issue," said Chesapeake Councilman Bryan Collins, who represents the city on the board.
Also Wednesday, SPSA's board approved new contracts and new tipping fees, of $35 per ton, with seven of eight private waste companies that collect trash from businesses in South Hampton Roads.
The contracts effectively end a lingering and sometimes nasty debate about "flow control" in the region. The phrase refers to a government power to dictate where all trash must go for disposal within a jurisdiction - a power SPSA tried to flex last year following a Supreme Court ruling on the issue.
The biggest private hauler in the region, Waste Management, remains at odds with SPSA over its contract. On Wednesday, company officials threatened to take all their local trash, about 12,000 tons per month, to its own landfills outside the region - which would cost SPSA about $5 million in tipping fees.
"Here you have an agency facing huge financial problems and they're basically turning down $5 million," said Lisa Kardell, a Waste Management spokeswoman. "It's ridiculous."
SPSA said it had set a Dec. 17 deadline for waste companies to sign their new contracts, at $35 per ton. Waste Management did not meet that deadline but can still sign for $40 per ton, SPSA officials said.
The huge gap between private fees and municipal fees traces to SPSA's origins in the 1970s, when no private firms existed. They went into business and entered separate contracts with SPSA only after localities had signed up and agreed to pay tipping fees sufficient to cover all operations and costs.
Scott Harper, (757) 446-2340, scott.harper@pilotonline.com
Delicious
Digg
Reddit
Facebook
Google
Yahoo
don't know the history
As I read the posts below, it seems clear that a lot of people have problems with the original deal, which is a legal matter at this point. In the absence of VA Beach and Suffolk taking pity on the other parties in the deal, it will be tough sledding for a while for the rest.
But I am very curious about the allegations of mismanagement. I'm no trash expert, and I’m brand new to the discussion. In the 2008 financial statements, I see increases in repair and maintenance costs, increases in accruals from 2007, and I can’t quite figure the $15MM (!)increase YOY in non ops. But I also see consistent increases in productivity over the last many years (measured in tons per employee - no idea how it compares to the private sector).
So... honest and ignorant question....what has SPSA messed up so badly? What could they have done differently and, more to the point, what can be done differently going forward to ease the pain?
SPSA
Well, Bucky, how much of a golden parachute will you get on this one? If we are running a deficit...or shortfall...lets cut the fat off the top. When I saw the SPSA elected Bucky Taylor to the position of Exective Director, realized it would only be a matter of time before the SPSA was in this mess. One only need to look at his track record in Southampton and Franklin wher he was city manager.
Why do they have "Service" in their name?
I have watched the bills steadily and quickly increase. I really can't figure out if it's greed or just stupidity that have driven the fees to the highest in the nation. When I see that Harrisburg, Pa is the next closest rate at $169.90 (proposed), the increase would make us almost 50% higher than anyone else. They charge us to collect recyclables, and then sell the result. They charge us for yard waste, and sell the mulch. They burn the trash to create energy as they triple the rates. Has anyone ever seen a balance sheet to see where this money is going? Where are "60 Minutes" and "Dateline" when you need them????
TO FIND HUMOR IN THIS SITUATION
How very true about Dewey, Cheatem and Howe. For those who do not listen to Car Talk that's pronounced DO WE CHEAT EM AND HOW!!!
SPSA rates
To provide some perspective, it was Mike Barrett and the previous City of Virginia Beach Waste Mangement Division head who worked for years to bring accountability to SPSA. Other Board members at the time would not support those efforts or we would not be in the situation we are in now. The fact is that SPSA as currently structured, is and has been a strategic anachronism. Having a vertically integrated, publicly owned Waste Disposal operation may have made sense 25 years ago, but hasn't for some time. It seems to me that the Board is now on the right track of recasting SPSA as a much smaller agency with a more limited mission aimed at coordinating and using the trash volume of all the cities to leverage effective deals with the private sector. Whether or not the best course of action is to sell the entire operation to one company or to sell assets separately is both an economic and policy question. At this time, let's leave that judgement to the Board and the individual City Councils. As far as the new rates are concerned, they should be temporary, pending asset sales and new contracts with the private sector. Also, both Virginia Beach and Suffolk are entitled to the fruits of t
great idea!
Better to put competent and rational heads together in the spirit of regional cooperation and work this out.
All we have have to do is fire everyone and find some competent and rational leaders.
Mike, you make it sound so somple...but if it was so simple we wouldn't be in this mess.
Bankruptcy not an option
Well to me, it is unlikely that bankruptcy is an option. SPSA's most valuable asset is the pledge by each city through its Use and Support Agreement to pay the municipal tip fee necessary to pay operational expenses and maintenance and debt service. This is the proverbial blank check. If SPSA were to default, the bondholders would have every right to go to court to force the members to pay the necessary municipal tip fee. So why suffer the negative consequences of default when no city really gains any advantage. Better to put competent and rational heads together in the spirit of regional cooperation and work this out. SPSA has sought counsel from multiple sources and is committed to actions necessary to sell assets to reduce debt and to reduce the municipal tip fee. The board/staff is now in final negotiations to sell the RDF/WTE plants and will pursue the sale of other assets as well. There is light at the end of the tunnel.
chaos
it is really hard to understand how this much mismanagement can surface - when we have the highest rate to pay in the nation.
what, where, did it happen? how? why?...........
In any case, the land itself should be the premium.
Free Enterprise
Let's go with the most free enterprise solution...maybe its time to get rid of institutions, like SPSA, and let market forces determine a market rate for tipping fees.
Let it Fail
Let SPSA go bankrupt and let's rid SPSA of its incompetent management which has mis-managed this company from the start. We then can look to place experienced and past proven successful management from the waste disposal industry in place who can lead SPSA to recovery via the renegotiation of contracts to all cities.
If not that, let's allow SPSA to simply fail, and allow private carting to come in an bid for all the cities contracts. Free Market will keep prices down via competition, and bureaucracy and greed that government involvement always cost taxpayers will be eliminated.
In no way shape or form should present SPSA management be involved in anything nor should they be bailed out on the backs of taxpayers for their incompetence.
Actually, No!
Aalto writes below..."Excuse me, did I read that correctly." Actually no, you did not read my post correctly. No surprise there. But the point is clear. If the Use and Support Agreements are not renegotiated to change the contractural relationships, then SPSA has no other choice than to sell assets and negotiate services with the buyers. The goal will be to pay off all the SPSA debt, have access to the plant and equipment that is sold at predetermined, reasonable rates, and use any excess cash to pay for needed expansion of capacity that is required to meet our contractural obligations through 2018. This strategy does protect the interests of the citizens of Virginia Beach as well because when our cap comes off in 2015, we will be obligated to pay the full municipal tip fee as well, and in 2012 our cap goes up by about $12/ton. While the particular interests of SPSA and Virginia Beach are not totally congruent, it is fair to say they are close.
Let them go BANKRUPT
Let them go bankrupt before they bankrupt US. As a Norfolk resident I find it unfair that VB & Suffolk have their rates lock in at $58 and $0 per ton and SPSA wants our rates to skyrocket to $245 ton.
After SPSA goes bankrupt them all rates can become be equal $60-70 range. And other dated practices can be fixed to better serve us the customer (maybe).
charlesr
Dump your trash in your city instead of ours then.
contact SPSA lawyers
SPSA is referring all inquiries to their legal team at the law offices of Dewey, Cheatem & Howe.
aalto's comments prove why this is happening.....
aalto's comments about the VB board representative suggesting that the deals his city and Suffolk have if changed would cost those cities more are exactly what I have been saying. The city goverments who appointed those board members dictated to them to keep the costs low. Norfolk, Portsmouth, Chesapeake, Franklin, Southhampton County and Isle of Wight County make up 54% of the population SPSA serve and generate 59% of the waste delivered to SPSA but will pay 100% of the cost increases. No wonder the representatives of Suffolk and Va Beach voted to approve this action, they will not pay one additional dime to SPSA. If the localities served by SPSA wanted what is best for everyone and not just their constituents then there would not be a need to increase fees.
Excuse me?
Did I read that correctly? The un-elected irresponsible member of the SPSA board who represents Virginia Beach is advocating getting rid of the cap that keeps the fees for VB taxpayers low? Who is he supposed to represent? Can the citizens have him recalled since he apparently does not represent the interests of VB taxpayers?
Typical
barrett doublespeak. But here is another proposal, since it seems to work this way: we build the new tunnels we need, but Portsmouth and Norfolk residents don't need to pay because they host the tunnels. Sounds as fair as not paying because you host a landfill.
Barrett, instead of listing the incompetence of the board from the past, wouldn't it be easier for SPSA to renegotiate with VB and Suffolk or stop collecting their trash. VB has never paid its fair share. It's time they do.
SPSA
SPSA has been mismanaged for years. It's technology is inadequate for Hampton Roads' requirements. A few years a go a small storm knocked out half its operations.
The waste disposal board overseeing SPSA has no one with a future vision. While other states improved their waste removal SPSA did not improve. Government mandated standards languished while fees have increased.
we need a new authority that is independent of SPSA and unadulterated by incompetence.
What
Why do VB and Suffolk even get to vote on this issue? If it doesn't affect them, sure we'll charge more. My proposal, SPSA go bankrupt, force the cities into renegoitiations and charge the same for all, regardless whether you host a landfill or negoitiated a seperate agreement (have you ever heard something so ignorant?)As a Portsmouth resident I'll be calling the city manager to voice my complaint. VB, Norfolk and Suffolk have held us captive for too long. If they want regionalism then they need to start acting like they do. All equal or none. I'll no longer subsidize VB and Suffolk's trash.
Excuses
We have heard many excuses from the SPSA Board over many years. Seems like nothing is ever their fault. They enjoy great trips, great food and never do the taxpayer business. Where do we sign up?