01-29-2009 Special MeetingSPECIAL MEETING OF THE ISLE OF WIGHT COUNTY BOARD OF
SUPERVISORS HELD THE TWENTY -NINTH DAY OF JANUARY IN
THE YEAR TWO THOUSAND AND NINE
PRESENT: James B. Brown, Jr., Chairman
Phillip A. Bradshaw, Vice - Chairman
Al Casteen
Stan D. Clark
Thomas J. Wright, III
Also Attending: A. Paul Burton, Interim County Attorney
W. Douglas Caskey, County Administrator
Carey Mills Storm, Clerk
/I
1/
Chairman Brown called the special meeting to order at 6:00 p.m.
The Board acknowledged receipt of their meeting notices.
Interim County Attorney Burton requested that the Board enter a closed
meeting pursuant to Section 2.2-3711.A.7 of the Code of Virginia for the
purpose of consultation with legal counsel requiring the provision of legal
advice pertaining to the Water Rates Study and water rates.
Supervisor Bradshaw moved that the Board enter the closed meeting
for the reason stated by Interim County Attorney Burton. The motion was
adopted by a vote of (5 -0) with Supervisors Brown, Bradshaw, Clark,
Casteen and Wright voting in favor of the motion, and no Supervisors voting
against the motion.
Supervisor Casteen moved that the Board return to open session. The
motion was adopted by a vote of (5 -0) with Supervisors Brown, Bradshaw,
Clark, Casteen and Wright voting in favor of the motion, and no Supervisors
voting against the motion.
Supervisor Bradshaw moved that the following Resolution be adopted:
CERTIFICATION OF CLOSED MEETING
WHEREAS, the Board of Supervisors has convened a closed meeting on
this date pursuant to an affirmative recorded vote and in accordance with the
provisions of the Virginia Freedom of Information Act; and,
WHEREAS, Section 2.2- 3712.D of the Code of Virginia requires a
certification by this Board of Supervisors that such closed meeting was
conducted in conformity with Virginia law;
1
NOW, THEREFORE, BE IT RESOLVED that the Board of Supervisors
hereby certifies that, to the best of each member's knowledge, (i) only public
business matters lawfully exempted from open meeting requirements by
Virginia law were discussed in the closed meeting to which this certification
resolution applies, and (ii) only such public business matters as were identified
in the motion convening the closed meeting were heard, discussed or
considered by the Board of Supervisors.
VOTE
AYES: Bradshaw, Brown, Casteen, Clark and Wright
NAYS: 0
ABSENT DURING VOTE: 0
ABSENT DURING MEETING: 0
/1
Chairman Brown moved that the Board take a five (5) minute break.
The motion was adopted by a vote of (5 -0) with Supervisors Brown,
Bradshaw, Clark, Casteen and Wright voting in favor of the motion, and no
Supervisors voting against the motion.
Supervisor Bradshaw moved that the Board return to open session.
The motion was adopted by a vote of (5 -0) with Supervisors Brown,
Bradshaw, Clark, Casteen and Wright voting in favor of the motion, and no
Supervisors voting against the motion.
//
Chairman Brown called for the Re- Energy presentation.
County Administrator Caskey noted that he had previously provided
the Board with a copy of the proposal to acquire and privatize SPSA that was
provided by Re- Energy to the eight (8) participating jurisdictions.
Larry Richardson, Chief Executive Officer, Re- Energy, remarked that
responsive to the RFP issued by SPSA for the privatization of its waste -to-
energy facility, he had concluded that he did not believe that privatization of
that facility presented the best solution for the participating member
jurisdictions. He advised that a summary of his approach was presented to
SPSA in August of 2008 which resulted in a response being receiving from
SPSA that it was not interested. He advised that he then met with all member
jurisdictions and submitted a proposal from Re- Energy. He advised that he is
present tonight to request a more formal affirmation of interest from the
2
County of Re- Energy's proposal so that it can finalize the financial terms of
its proposal. He advised that to date, similar meetings have occurred with the
Cities of Franklin and Portsmouth and Southampton County and all three (3)
jurisdictions have adopted resolutions expressing their interest in Re-
Energy's proposal. He advised that the City of Chesapeake has determined
that it is not necessary to go through that formal process, but communications
between Re- Energy's local counsel and Kaufman & Canoles indicate that the
City is expressing their formal interest in taking the next step. He advised
that he is scheduled to make a similar presentation to the City of Suffolk next
week, as well as conduct additional meetings with the City of Virginia Beach
in order to move the process along. He stated that Re- Energy's proposal is to
acquire all of the assets of SPSA, to include the transfer stations, the regional
landfill in Suffolk and the transportation network. He stated that Re- Energy
is proposing to bring in private capital, new technology and an aggressive
form of management to present a fully integrated recycling based approach to
solid waste management in this region. He stated Re- Energy's consideration
for acquiring the assets comes in the form of a purchase price that is
sufficient to retire all of the outstanding SPSA debt, which is believed to be
approximately $205,000,000 as of June 30, 2009; that Re- Energy will take on
all of the liabilities related to the Suffolk landfill, closure and post- closure
liabilities, which based on Re- Energy's financial analysis have a net present
value of $20,000,000 +; accept the liabilities associated with SPSA's
arrangements with Virginia Beach on its landfill; that there will be new
services agreements with each of the eight (8) member jurisdictions, which
would have the same terms in the agreements for all communities and include
a defined tipping fee that would be the same that would be paid by each
jurisdiction which is less than the $105 per ton being paid by the County now
as the third year is reached into Re- Energy's ownership of the assets. He
advised that the only changes from the year three (3) point forward would be
dictated by an adjustment based on some published index that would then
adjust the tipping fee through the course of the balance of the term of the
agreement, which Re- Energy is proposing to be twenty (20) years. He stated
that the arrangement is also based on a locality only paying for the waste that
it delivers into the system and the waste amount that Re- Energy is requesting
each jurisdiction to commit is the residential waste that is generated and
controlled by either convenience center or municipal collection. He stated
that flow control is not a part of this process and since a jurisdiction only has
to pay for what it delivers, an incentive is built into the business arrangement
for increasing recycling. He stated that Re- Energy is currently discussing a
business arrangement with the Cities of Suffolk and Virginia Beach whereby
the City of Suffolk would be paid a host community fee for every ton of
waste that goes into the landfill and the liability associated with the closure
and post closure of the City of Suffolk is disproportionately borne by the City
of Suffolk. He stated that Re- Energy is having a similar discussion with the
City of Virginia Beach to accommodate its unique situation. He advised that
Re- Energy also intends to invest $40,000,000+ to the system, primarily at the
waste -to- energy facility, to improve its efficiency, reduce the environmental
footprint of the facility and put systems in place that will allow it to generate
3
additional energy. He advised that Re- Energy has also had discussions with
the Navy and has an increasing understanding of some of its energy demands
and there is opportunity for an enhanced relationship to be factored into Re-
Energy's financial analysis for how this system can be managed in the future.
He advised that technology will be implemented at the waste -to- energy
facility to improve the quality of the ash that is generated and to put in
technology to process the ash to recover recyclable materials ultimately to
produce an aggregate out of the ash that can be used in at least construction
applications in the regional landfill. He advised that other recycling based
initiatives will also be implemented, such as reinvigorating and enhancing the
landscape waste processing program so that that material is recycled into
mulch, topsoil and compost instead of it going into the landfill and also
encouraging the processing of construction and demolition debris. He
advised that Re- Energy believes, given access to the facilities and the needed
data, that it could be presenting a final proposal to the eight (8) member
jurisdictions within sixty (60) days and that the transaction could be closed
by the end of June 2009. He recalled that the first step in this process is a
formal indication of interest from this Board so that a final proposal can be
developed by Re- Energy, to include draft contracts and a definitive tipping
fee.
Supervisor Wright inquired if Re- Energy would be willing to monitor
all landfills, including those outside of Suffolk that are being monitored by
SPSA and the dumpsite in the County. He noted that there is also a transfer
site in the County that is not owned by SPSA that will need to be addressed.
Mr. Richardson responded that Isle of Wight and Southampton County
both have unique circumstances which need to be further investigated by Re-
Energy.
Supervisor Wright inquired if Re- Energy intends to haul any trash into
this area from out of state.
Mr. Richardson replied that based on his understanding of the waste
generation in this region, there is more than sufficient waste to satisfy the
needs of the system as it is configures today.
Supervisor Wright recommended that Isle of Wight have a cap on its
tipping fees to protect it should the fees increase.
Mr. Richardson responded that there may be some alternative ways to
ensure that the tipping fees stay within a certain range.
Chairman Brown remarked that Mr. Richardson eluded earlier that
there appears to be more than adequate waste tonnage available; however, the
tonnage received by SPSA has been declining drastically.
4
Mr. Richardson commented that he has also heard that the tonnage has
been declining, but that Re- Energy has reviewed the statistics that are
publicly available at this time and it would depend on which waste is being
targeting into the system. He stated that Re- Energy is targeting municipal
solid waste and believes that there is sufficient solid waste in this region to
support a financially viable operation of the system.
Chairman Brown noted that the Board needs additional details before it
can be in a position to support Re- Energy's proposal.
Mr. Richardson advised that as Re- Energy presents a final proposal
with a definitive tipping fee, a draft agreement will also be presented for the
Board's consideration.
Supervisor Bradshaw inquired if the proposal would still be valid if
SPSA decides to sell the waste -to- energy plant.
Mr. Richardson replied "no" that Re- Energy sees greater value in the
entire system. He confirmed that Re- Energy wants to purchase the waste -to-
energy system, transfer stations, landfill and all related equipment and
operations.
Supervisor Clark inquired if Mr. Richardson has made a presentation to
the Board of Directors of SPSA.
Mr. Richardson replied "no" because Re- Energy has not been invited to
address them. He advised that a letter was received from SPSA that stated
that it was not in a position to consider Re- Energy's option at that time.
Supervisor Bradshaw inquired if Re- Energy is currently in the waste
disposal business.
Mr. Richardson responded that while the company is relatively new,
the principals in Re- Energy have been in that type of business in excess of
twenty (20) years. He stated between the management team and the investor
partner who has over $15 billion of funds invested in the energy sector, Re-
Energy has both the experience and the financial capabilities to undertake
this effort.
Interim County Attorney Burton advised that the Re- Energy proposal is
an unsolicited proposal and if SPSA decides to sell all of its assets, the
County may want to do this through some sort of public bid process and in
order to get the best deal for the County, that the opportunity be given for an
open competitive process. He advised that if the County were to enter into a
twenty (20) year agreement, the County would have to go through a process
to enter into an agreement with Re- Energy, as required under the Virginia
Procurement Act. He stated with respect to the part of the letter that speaks
5
to reviewing the financial information of SPSA, he believes that to do that
now, before we have begun a negotiation process, is premature.
Supervisor Clark remarked that the message needs to be sent to the
SPSA Board of Directors that it should be considering any viable options
brought before them. He stated that there are eight (8) member jurisdictions
that are concerned about SPSA's current financial situation.
Supervisor Clark moved that, following the Interim County Attorney's
review of the response letters from the other jurisdictions, that the Interim
County Attorney be directed to draft a letter expressing this Board's desire
for the Southeastern Public Service Authority (SPSA) Board to talk with Re-
Energy so that SPSA is in a position to advise this Board regarding the merits
of Re- Energy's proposal. This letter is to be acceptable to Chairman Brown
and shared with the other Board members before its dissemination. The
motion was adopted by a vote of (5 -0) with Supervisors Bradshaw, Brown,
Casteen, Clark and Wright voting in favor of the motion and no Supervisors
voting against the motion.
/1
Interim County Attorney Burton requested that the Board enter a closed
meeting pursuant to Section 2.2- 3711.A.7 of the Code of Virginia for the
purpose of consultation with legal counsel requiring the provision of legal
advice pertaining to the Southeastern Public Service Authority.
Supervisor Bradshaw moved that the Board enter the closed meeting
for the reason stated by Interim County Attorney Burton. The motion was
adopted by a vote of (5 -0) with Supervisors Brown, Bradshaw, Clark,
Casteen and Wright voting in favor of the motion, and no Supervisors voting
against the motion.
Supervisor Bradshaw moved that the Board return to open session.
The motion was adopted by a vote of (5 -0) with Supervisors Brown,
Bradshaw, Clark, Casteen and Wright voting in favor of the motion, and no
Supervisors voting against the motion.
Supervisor Bradshaw moved that the following Resolution be adopted:
CERTIFICATION OF CLOSED MEETING
WHEREAS, the Board of Supervisors has convened a closed meeting on
this date pursuant to an affirmative recorded vote and in accordance with the
provisions of the Virginia Freedom of Information Act; and,
WHEREAS, Section 2.2- 3712.D of the Code of Virginia requires a
certification by this Board of Supervisors that such closed meeting was
conducted in conformity with Virginia law;
6
NOW, THEREFORE, BE IT RESOLVED that the Board of Supervisors
hereby certifies that, to the best of each member's knowledge, (i) only public
business matters lawfully exempted from open meeting requirements by
Virginia law were discussed in the closed meeting to which this certification
resolution applies, and (ii) only such public business matters as were identified
in the motion convening the closed meeting were heard, discussed or
considered by the Board of Supervisors.
VOTE
AYES: Bradshaw, Brown, Casteen, Clark and Wright
NAYS: 0
ABSENT DURING VOTE: 0
ABSENT DURING MEETING: 0
Supervisor Bradshaw moved that due to the desperate situation being
faced by the Southeastern Public Service Authority (SPSA) and the lack of
factual financial information presented to the Board, that the Board of
Supervisors of Isle of Wight County hereby duly requests the following of
the SPSA Board of Directors: Financial Statements, to include Income
Statements, Balance Sheet and Cash Flow Statement for each month
beginning July 1, 2007 through January 2009; a daily cash flow analysis to
be completed and supplied to the budget and finance directors of the eight (8)
participating localities each day; an immediate financial evaluation of all
SPSA assets to be performed; request that the Board not enter into any
binding agreements; to utilize in -State bond lawyers and legal counsel; the
immediate termination of the financial consultant's PFM; the immediate
termination of all out of state consultants and lawyers; that the SPSA Board
of Directors meet on a weekly basis until this crisis is resolved; that County
Administrator Caskey be directed to present this motion at the meeting to be
held at SPSA on Monday, February 2, 2009; and, that a copy of this motion
be provided to the Board of Directors of each of the eight (8) participating
member jurisdictions. The motion was adopted by a vote of (5 -0) with
Supervisors Bradshaw, Brown, Casteen, Clark and Wright voting in favor of
the motion and no Supervisors voting against the motion.
//
7
At 10:15 p.m., Supervisor Clark moved that the Board adjourn its
special meeting. The motion was adopted by a vote of (5 -0) with Supervisors
Bradshaw, Brown, Casteen, Clark and Wright voting in favor of the motion
and no Supervisors voting against the moti
a 0171 1
Carey IvPtls Storm, Clerk
8
. Brown, Jr., Chairman