
DATE: Sunday, March 9, 1997                 TAG: 9703110532

SECTION: COMMENTARY              PAGE: J1   EDITION: FINAL 

SOURCE: BY SCOTT HARPER, STAFF WRITER 

                                            LENGTH:  207 lines

GARBAGE WARS EXECUTIVES IN FLASHY SUITS ARE WRESTLING OVER THE RIGHT TO ROOT THROUGH THE TRASH CAN YOU PUT AT THE CURB.

A turf war, minus the bullets and black sedans, is raging in South Hampton Roads over an unusual prize: Your garbage.

Instead of leather jackets, the adversaries here wear suits and ties and nice shoes. They meet in board rooms and hire lawyers and consultants. Each swears the other is wrong, and each can make a good argument as such.

Their once-quiet struggle for dominance of the local trash market, worth millions of dollars a year, has grown increasingly hostile recently, with each side accusing the other of misleading the public with false information and smoke-and-mirrors reporting.

VEEPS vs. SPSA.

Private waste companies vs. Public government officials.

Free-market capitalism vs. Not-for-profit government service.

Excited yet? Perhaps not. On its surface, the trash war seems to be one of those bureaucratic disputes that's hard to care about, or even comprehend. Of well-paid men and women quibbling over numbers on accounting ledgers.

But the stakes are undeniably high for The Average Homeowner. In the balance are such life basics as your tax rate, your liability for old City Hall debts, your philosophy about government's role - and yes, your trash service, including environmental items such as recycling and composting and practical stuff like when and how your garbage gets collected and whom you pay.

The nub of the debate, in abbreviated form, goes something like this, according to interviews with both sides, letters from each, memos, meetings and press conferences:

VEEPS - short for ``Virginians For Effective And Efficient Public Services'' - is a group financed by private waste companies that are trying to talk local officials into cutting them a bigger share of the South Hampton Roads trash pie.

The companies, including conglomerates Waste Management Inc. and Browning-Ferris Industries, already are making inroads here, but they feel blocked from expanding further in a system built and dominated by local government.

SPSA - short for ``Southeastern Public Service Authority'' - is a government agency created in 1977 to handle the region's trash safely and cheaply. It has constructed a $200 million network of trucks, plants and people to do so. And its managers see no reason to turn over their control to a bunch of profit-minded business people. Especially when those people are accusing SPSA of mismanagement and worse.

SPSA, the largest waste authority in Virginia, has service contracts with seven cities and counties: Norfolk, Virginia Beach, Chesapeake, Portsmouth, Suffolk, Franklin and Southampton and Isle of Wight counties. The contracts extend through the year 2018, with each jurisdiction guaranteeing millions of dollars that SPSA borrowed to build its network.

There appears to be little common ground between SPSA and VEEPS. Both sides have indicated a willingness to talk, but such discussions in the past have invariably broken down, with each side claiming the other was not really serious about finding a compromise.

VEEPS is the newcomer here, the challenger to the status quo. Created in December, the group has enlisted support of numerous business leaders and has hired a local TV news personality, Joel Rubin, and his public relations firm to blast home a central point:

Trash collection - like numerous other services that government has run for decades (public housing, utilities and roads, for example) - can be performed better and for less money by the private sector.

Privatization, the VEEPS argument goes, is the wave of the future. And instead of going with the flow, SPSA has done everything possible - including misleading the public about its financial condition, VEEPS leaders charge - to maintain its own existence.

``SPSA came along at the right time, they did a wonderful job and they've had a lot of success. But they don't know when to quit,'' said John Daniel, a former state secretary of natural resources now working as an environmental consultant. His clients include Waste Management.

``The issue here,'' Daniel continued, ``is this: When the private sector matures in a particular field, as they've done in solid waste, do you stay with the old system or move on? The national trend is clearly to do the latter.''

Durwood Curling, SPSA's executive director, himself a former city manager, said this argument would make sense if his agency charged an arm and a leg to dump trash.

But SPSA, he points out, maintains a reasonable disposal rate compared with other cities in Virginia - even those that rely on private companies. And SPSA does so while offering myriad environmental services to customers.

``We are competing with the private sector,'' Curling said in an interview. ``They keep saying we don't let them, but when you look at how we stack up against them, we're still a damned good buy.''

To Curling, a veteran of local politics, the real purpose of VEEPS is two-fold: 1.) To scare business leaders and local officials into thinking that SPSA is in financial trouble, and 2.) To then persuade local politicians to vote against projects that would keep the agency going.

The No. 1 project in this regard is a proposed addition to the regional landfill in Suffolk. The project, called Cell Five, is estimated to cost $17 million and would provide enough landfill space for SPSA through the year 2014, according to agency estimates.

The existing landfill, on the lush northern fringe of the Great Dismal Swamp, is projected to fill up by the end of 2000. So, in short, SPSA needs more storage space.

If the expansion is defeated, however, SPSA would be forced to take its trash to private landfills elsewhere, beginning in the year 2001 or so. This would mean that SPSA would not only have to pay to dump trash at those private landfills, but also would lose its major source of money - namely, the ``tipping fees'' that are charged for each ton of garbage unloaded at the Suffolk landfill.

Without that revenue, SPSA would be hard pressed to pay its bills and cover its debts. ``Then we've got some problems,'' Curling said.

Problems indeed.

SPSA owes $260 million, borrowed over the years to upgrade and expand its services. If the agency can't cover its debts, SPSA would have to turn to its member cities and counties to somehow foot the bill. And they'd have to comply; it's required under their SPSA contract.

Cities and counties - that is, you, the local taxpayer - would likely do so through significantly higher trash fees, according to Curling.

VEEPS does not talk much about this scenerio. In releasing a sharply critical report last week of SPSA's finances, VEEPS members did not have an answer for what they would do if SPSA is pushed to raise rates.

``I can tell you this, though: If you're in debt like they are, you don't go out and dig a deeper hole,'' said Edward M. Cross, chief author of the report, and a professor at the College of Business and Public Administration at Old Dominion University.

In his analysis, based on SPSA's financial reports, Cross found SPSA engulfed in debt and without a plausible plan to get out of it. He described the agency ``in a state of technical insolvency,'' nearing bankruptcy.

Cross and his two co-authors - Christopher Colburn, a business colleague at ODU; and William M. Bodnar, of William M. Bodnar Associates - called for an independent audit of the agency and for SPSA to drop plans for Cell Five.

``We've created a Frankenstein,'' Cross said of SPSA, ``a Frankenstein that's become extremely good at borrowing money.''

Patrick M. Barberich, who helps compile SPSA's financial statements for the accounting firm Coopers & Lybrand, called the VEEPS analysis ``extremely flawed . . . and outright wrong in some places.'' He noted that Cross never interviewed him or anyone at SPSA to explain how its books are prepared.

SPSA admittedly is not in the best financial shape. Curling has lamented in recent years about a slow loss of business and revenue to private companies - although he now says that conditions are better, given recent actions to make the agency more competitive.

The privates, Curling has argued, invested millions of dollars in the early 1990s to build landfills in eastern Virginia. They now need trash - and more importantly, tipping fees - to make their ventures pay off.

These companies often can charge trash haulers a lower fee than SPSA because they don't offer as many environmental services. ``They're garbage isn't screened through a recycling process like ours is,'' Curling said. ``They just dump it into a hole.''

SPSA, by contrast, has invested heavily in what it calls ``integrated waste management.'' This basically means that the agency offers environmental services to customers, which, not surprisingly, costs more.

For example, SPSA has curbside recycling. It runs a tire shredder to process used tires that otherwise are tossed into fields and creeks. There are several household hazardous-waste drop-off centers. A waste-to-energy plant where trash is burned and converted to steam for the Norfolk Naval Shipyard.

As Curling is fond of saying, SPSA thinks that most people, given the choice between paying a little more, will choose a more environmentally conscious system than what the private sector offers.

The chairman of VEEPS, Michael J. Barrett, who's also the CEO of Runnymede Corp., a commercial real estate firm, said he got interested in the group because SPSA's disposal fees increased - and likely will continue to go up for the agency to balance its books.

He also is worried about a new idea on the table. He points to a $100,000 consulting contract, approved last week by SPSA's board of directors, that will study several ways for the agency to raise revenue.

Under consideration, according to the contract, will be a ``special assessment'' on taxpayers in SPSA's service area. Barrett and others call this a ``plan for higher taxes.''

Curling said the assessment is just one suggestion that other waste authorities have tried that will be reviewed by the consultant over the next 6-8 months.

In the end, after all the pushing and shoving, after the public statements and press conferences, SPSA's board of directors will have to make some crucial decisions in the coming months. About Cell Five. About how SPSA can continue to offer its services amid growing competition from private haulers.

While no bullets will fly, this turf war should provide plenty of fireworks before any sort of truce is called. ILLUSTRATION: STAFF FILE COLOR PHOTOS

Hauling and processing Hampton Roads' trash is a massive operation,

and big players in private enterprise are angling for their share of

the work.

Graphics

About SPSA

Created in 1973 and started managing solid waste in South Hampton

Roads in 1977.

More than 1 million customers

Handles more than 1 million tons of waste a year from Norfolk,

Virginia Beach, Portsmouth, Chesapeake, Suffolk, Franklin and

Southampton and Isle of Wight counties.