SPSA completes deal to sell trash-burning site

SPSA on Thursday officially sold its trash-burning power plant in Portsmouth and a neighboring facility to a private company, Wheelabrator Technologies, for $150 million.

Officials from Wheelabrator and the Southeastern Public Service Authority, a government agency that handles most trash in eight cities and counties, signed legal documents in Richmond that sealed a deal more than two years in the making.

The power plant, with its twin brick smokestacks overlooking the Elizabeth River, burns about 45 percent of the garbage collected by SPSA in South Hampton Roads, converting it to electricity and steam energy. Also sold was a neighboring sorting center, known as the RDF plant, where tons of trash are unloaded from trucks and readied for the power plant each day.

The money from the sale will help SPSA retire much of its enormous debt, which last year threatened to bankrupt the agency. It owes more than $220 million and must repay the borrowed money by 2018, when the agency is due to expire.

The deal also signals a new era for how garbage will be managed in the region, with the private sector playing a much bigger role than one traditionally dominated by local governments.

"We finally hit the finish line, and we're very, very excited to be there," said Mark Schwartz, project manager for Wheelabrator, a New Hampshire-based subsidiary of Waste Management, the largest private trash company in the United States.

The deal, however, will do little to ease the disposal fees that residents of six localities - Norfolk, Portsmouth, Chesapeake, Franklin, Isle of Wight County and Southampton County - pay to SPSA. They now pay $170 per ton of garbage, one of the highest rates in the country.

Suffolk will continue to pay no money for disposal services, because it hosts the regional landfill. And Virginia Beach has its fees capped.

Under a preliminary fee schedule for the six affected localities, rates could increase to more than $200 per ton until they begin to taper off, reaching $124 per ton in 2018. Those fees still could be amended and are subject to approval by SPSA's board of directors.

Wheelabrator was set to take over the two plants and begin operating them on its terms at 11:59 p.m. Thursday, Schwartz said. Their new name will be Wheelabrator Portsmouth.

Schwartz said the 164 employees at the facilities will be retained and that a proposed $20 million upgrade of the plants and their surrounding lands will begin "almost immediately."

As part of the buyout, the company signed a "good neighbor agreement" with Portsmouth in which the properties off Victory Boulevard, next to the historic Cradock neighborhood, will be re-landscaped and better maintained.

Wheelabrator also agreed to pay Portsmouth $800,000 to settle a longstanding land dispute with SPSA.

Piecing together the purchase was a painstaking process, one that involved months of closed-door meetings and numerous outside consultants, lawyers and financial experts.

SPSA spent more that

$2.8 million on outside help, but Wheelabrator will reimburse the agency that money as part of the legal papers signed Thursday. The buyout also required the approval and assistance of Gov. Bob McDonnell, the Internal Revenue Service, the Navy and the Virginia Resources Authority, a state lending agency that holds most of SPSA's debts.

Scott Harper, (757) 446-2340, scott.harper@pilotonline.com