The Virginian-Pilot
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For a second time this year, SPSA has rejected without public debate a proposal from a New York company to buy the troubled regional waste authority outright.
In a letter dated Wednesday, SPSA's board chairman said the offer from ReEnergy Holdings LLC would have left South Hampton Roads with just one provider of trash and recycling services, and would conflict with other studies and bids from private companies to buy pieces of the public agency.
"For all these reasons, SPSA cannot entertain your proposal at this time," board chairman and Norfolk Councilman Don Williams wrote to ReEnergy's executive officer, Larry Richardson.
Richardson, based in Albany, N.Y., was in Hampton Roads on Thursday, still meeting with local officials about his company's
possible buyout.
He said he was unaware that a letter had gone out. His local attorney, Vincent Mastracco, also had not seen the letter as of Thursday afternoon.
"That's one element in this that's been consistent," Richardson said from Mastracco's Norfolk law office. "It has been a little strange."
In the letter, Williams told Richardson that the eight-member board of the Southeastern Public Service Authority discussed the buyout offer on two occasions, in December and on Wednesday morning, before deciding to say no.
Both sessions took place behind closed doors and without a public vote or public discussion, said Tom Kreidel, a SPSA spokesman.
A similar offer from ReEnergy was handled the same way this past summer, and became public only when SPSA disclosed the talks in a memo to local government leaders.
Launched in the 1970s, SPSA serves Virginia Beach, Norfolk, Chesapeake, Portsmouth, Suffolk, Franklin, Isle of Wight County and Southampton County. Its board consists of one member from each locality.
Kreidel said Thursday that the board was within its rights to consider the matter again in closed session.
He stressed that one of the deal's underlying principles - of doing away with existing service contracts with SPSA and inking new contracts with ReEnergy - was too complex and disorderly to consider in a public venue.
"It's like putting the cart before the horse," he said.
By rejecting the buyout, SPSA signaled its future course of action to remedy $240 million in debts, falling revenues and rate increases like the one endorsed Wednesday, which would make municipal disposal fees the highest in the nation, at $245 per ton of household garbage.
It means that SPSA is likely to sell its waste-to-energy power plant in Portsmouth to one of two private bidders, Covanta Energy or Wheelabrator Technologies, which then would run the facility as a private asset.
The plant, located on the Elizabeth River, burns about half of all garbage accepted by SPSA, converting it to steam and electricity, which it then sells.
"SPSA will continue privatization efforts with a focus on selling its waste-to-energy facilities first," Williams wrote in his letter to ReEnergy.
John Daniel, a Richmond attorney representing Covanta, said rejecting the ReEnergy offer makes sense on several fronts.
"It was overdue, really," Daniel said. "It was confusing their ongoing negotiations and was kind of a distraction."
He called the rejection letter "a step forward" toward "coming to a conclusion of actually retiring some of
SPSA's debts," noting that Covanta has offered to pay cash for the Portsmouth plant.
Daniel declined to say how much cash is on the table, though he said it would "go a long way toward retiring their debt load."
ReEnergy had wanted to buy all of SPSA's assets, including the power plant, the regional landfill in Suffolk, and the yard waste facility in Virginia Beach, which has been temporarily closed because of budget problems.
The company has said it would have paid at least $205 million for SPSA.
Scott Harper, (757) 446-2340, scott.harper@pilotonline.com
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Pointing out the obvious
Well, let's consider your main points. First, exactly; the member jurisdictions will have to make these changes in organization, not the SPSA board members. That is exactly what we are saying about renegotiation. We did not set up these complicated arrangements of free service or capped fees, the framers of the authority did that. It was the only way to get agreement between the parties. Sure, replace the board with all knowing and experienced officials with solid waste management experience; problem is, name them. And lastly, I agree, past SPSA boards have not created a reservoir of good will, but part of that is that they kept tip fees too low, so now is the time to pay up. There is no silver bullet that will solve this dilemma, and SPSA is not the only political jurisdiction that has been crippled by this recession. There are other shoes yet to drop.
The SPSA Board of Directors
At this point we need to question whether or not the SPSA Board of Directors is really capable of making such important decisions for the municipalities of Hampton Roads. They have a well documented history of their mistakes. It also sounds as if they have managed to complicate the business agreements between the different communities too. The best solution could very well be to replace the BOD with a new group of people including those with a great deal of experience in handling municipal waste problems. The SPSA Board of Directors do not have much credibility at all with the people of Tidewater due to their past history.
Transcendence and all that stuff
Thanks for your comments; it is a complicated situation. I am not attemtping to suggest what the outcome of renegotiation and/or reorganization should be, but I am suggesting that unless those discussions are seriously entertained, that the potential default of SPSA may create serious consequences for Hampton Roads and for the members of SPSA. For the Beach, and for Suffolk, they do have the potential loss of some value in their contracts, but there may be ways to compensate them for this value in return for creating a viable, sustainable regional waste management agency. The compensation may come in the form of support or cooperation in other areas. My point is that I don't know what the specific outcome of renegotiation would be, if any, but I do think that if these discussions don't occur, that the potential negative impacts on the region will transcend SPSA.
SPSA deal
Mike is correct about the PPEA process and the various proposals. It is also important that he point out the "system" tipping fee, if everyone paid, because that can serve as a basis for comparison with private sector proposals. Mike, you seem to be suggesting, however, that VB and Suffolk give up the benefits their contracts entitle them to. For VB, that would mean about a 12% increase in cost. For Suffolk, it would mean going from $0 to $65/ton. Hardly likely, I think. None of which changes the need to restructure SPSA as soon as possible. Finally, comments about Mike or the existing Board are misplaced. the mistakes were made by staff and board members many years ago and now come home to roost.
be careful what you ask for...
The parent company of that "New York Firm" is Covanta. This is the company that wanted to bring barge-loads of trash to our area a couple of years ago. No one was singing their praises then. What's to stop them from resurrecting the idea again after they own SPSA's operations. What needs to happen is that all of SPSA's management and BOD need to be replaced with someone who knows what they're doing. And the rest of Hampton Roads need to stopped being asked to subsidize the tipping fees for Suffolk and Virginia Beach. Talk about having someone in your pocket!!!
Wait a minute
Well, let's have an objective look. SPSA has selected two proposals from qualified firms under the statute that governs PPEA's in Virginia, and these firms have paid the money for SPSA to evaluate these proposals and to select the best one. The firms that make up ReEnergy could have made such a submission, but chose not to. In their concept, the members must agree to new contracts, and since SPSA has contracts with the cities now, SPSA has no ability to suspend these contracts unless all the members are willing to do so. The proposal was not rejected, it was simply not accepted, and any discussion of whether it has merit will have to wait until the members decide if they wish to pursue it. This wailing about the highest tip fee in the country ignores the basic issue; the system tip fee is about $65/ton; the issue is that some pay nothing, some pay less, and a few pay an exhorbitant amount. Unless we address the disparity, we are simply substituting anger for reason.
Different Options than a regional trash authority
Details of proposed asset divestiture on the part of any entity, public or private are often not disclosed until the negotiations are finalized because of the need to not give any party an unfair advantage when you have more then one bidder. If you think that SPSA has a monopoly on solid waste disposal then what would you call all the assests being sold to one company. The SPSA board realizes that to just jump at the first offer to sell everything to retire all debt may make sense in the near term but what about the long term? If any of you have ever lived in New York City you know about the "trash wars" that happened during the 80's between companies hauling NYC trash, the mayor and the citizens of NYC. Hampton Roads, tidewater area or whatever you choose to call the Southeastern part of VA would experience the same thing if you privatize the solid waste disposal system to just one company. Sell off your assets to different company and encourage competetive bidding amongst the companies and the public will be better served.
SPSA
I'm very neutral about selling SPSA...I'm very adamant about firing all the jerks who supervise and advise SPSA. Before we end up with a debt larger than the GNP, fire the director and the board members. SPSA's debts are more than the value someone is willing to pay...This is a typical Authority, you can't make them work and can't fire them. When a city asks for another authority, remember SPSA and NHRA. "JUST SAY NO!"
Status Quo
Apparently the inept BOD at SPSA didn't learn anything from reports regarding financial mis-management. Here is an offer on the table that will retire debt, provide lower tipping fees, and new contractural agreements, yet they say no. Instead they telegraph their intentions by voting for the largest fee in the country, and stay the course toward total destruction.
Why bother with a public hearing? It is apparent their closed minds have been made up, and they have no intention of doing anything sane.
Class action?
Perhaps we, as citizens forced to use this craptrap, should investigate our options for collectively earning the right to opt out of having our garbage collected by the SPSA. It is bad enough that natural gas customers are forced to use Virginia Natural Gas (another very poorly managed operation) but at least you can convert to electric and save yourself a major headache. But with the SPSA, if you "opt-out" right now, you'll have your water shut off too. Brilliant! I hope the cities are as passionate about protecting its citizens from being mugged at the faucet and curb by SPSA as Norfolk has been about protecting 15 homes in Willoughby from destruction by something that would benefit thousands. Hmm...