finance: Tipping Fee Impact Determines Private/ Public Decision

Felicia Walker Blow

Public or private? The pros and cons of private versus public solid waste management continue to be debated throughout the industry. And no one knows this better than the Southeastern Public Service Authority (SPSA), Chesapeake, Va., who confronted the public-private conundrum head on, when evaluating expansion of its landfill facilities in Suffolk, Va.

Although SPSA only landfills 43 percent of the solid waste it receives, its service area (eight southeastern Virginia communities) generates nearly 1 million tons of solid waste annually, leaving more than 398,000 tons to be landfilled. At this volume, SPSA estimates that its landfill would reach capacity in three years.

The options were clear: either SPSA would construct a new cell at their landfill or use private sites. The deciding factor would be the net impact on the municipal tipping fees.

"Government is forced to improve and reevaluate the work it does and to consider privatizing tasks that others may be able to do better, cheaper, or more efficiently," says SPSA Board Chairman Conoly Phillips.

The authority sought proposals late in 1997 for solid waste disposal services from private landfills, and, simultaneously, requested bids to construct a new 50-acre landfill cell named "Cell V." SPSA re-ceived two eligible proposals from private sector companies and 10 bids to construct the new cell.

After careful analysis, SPSA, with the help of Seattle-based R.W. Beck engineers determined Cell V to be the most cost-effective option because the cell construction and operations bids came in significantly lower than the prices offered by the private landfills (see chart above).

Based on this finding, SPSA's board voted to develop Cell V, which is estimated to cost $11.5 million and expected to provide capacity through 2015.

"We will not have to incur additional debt to build Cell V," reports Phillips, because SPSA is able to use existing funds for the project

SPSA's solid waste management system includes waste-to-energy, yard waste, composting, drop-off, curbside and used oil recycling, household hazardous waste collection, car tire and ferrous metal recycling, landfilling, landfill gas-to-energy and public education programs.

For more information, contact Felicia Walker Blow, Department of Public Information, 723 Woodlake Dr., Chesapeake, Va. 23320. (757) 420-4700. Fax: (757) 424-4133. E-mail: fblow@ spsa.com

Acquisition USA Waste Services, Houston, has acquired the waste divisions of City Management Holdings Trust. City Management provides solid waste services in Michigan, with some operations in Alabama.

Agreement Eastern Environmental Services Inc., Mt. Laurel, N.J., has agreed to acquire the city of Bethlehem, Pa.'s 200 -acre municipal solid waste landfill.

The landfill is projected to have revenues of approximately $8 million annually. The company also has agreed to acquire the Kelly Run Landfill, a 306 acre municipal solid waste landfill located southeast of Pittsburgh. This landfill is projected to have gross revenues of approximately $5 million annually.