SPSA schedules Nov. 3 vote on 50% diversion contract with Commonwealth Sortation

The Southeastern Public Service Authority board on Oct. 22 set a special meeting for Nov. 3 to consider awarding a Waste Supply and Services Agreement (WSSA) to Commonwealth Sortation LLC that the presenters said would guarantee a 50% reduction in waste sent to the SPSA landfill.

Executive Director Dennis Bagley and special counsel Brad Nowak presented the draft agreement to the board, saying the contract would require the contractor to finance, design, install and operate sortation and biochar facilities. "The contract guarantees 50% waste diversion," Bagley said, adding that the diversion would be split into a guaranteed 20% recyclables recovery and 30% organics and fiber converted to biochar.

Nowak gave contract mechanics: Commonwealth Sortation would construct a Frederick sortation facility in Portsmouth, operate a Victory Sortation facility at SPSA’s Victory site and build a Victory Biochar facility there later. He described an initial 20-year contract term (with two possible five-year extensions) tied to project commencement and multiple performance assurances, including a parent-company guarantee and a letter of credit that steps up from $300,000 to $1.5 million after financial close.

The presenters described a delivery commitment of 450,000 processable tons per year (with contract mechanisms for adjustment) and said Commonwealth must process 100% of processable waste delivered to the sortation facilities up to a cap (540,000 tons/year). Nowak said liquidated damages are payable to SPSA if the processing or landfill-reduction guarantees are not met.

Bagley and Nowak outlined a ramp schedule for bringing member jurisdictions into processing and said the project would increase the regional recycling rate from roughly 7% (curbside average) to a guaranteed 20% and could extend SPSA’s landfill life into the 2090s. The presenters also said biochar produced by the process would be delivered to SPSA’s landfill for the first three years; after that Commonwealth would be responsible for marketing or disposing of it.

Board members asked for more detail before any award. Board Member Kiefer asked for a list of the 16 targeted recyclable commodities; Bagley said that schedule is being finalized and can be provided. Kiefer also asked whether the contract documents specify a single total dollar figure; presenters said they do not — overall cost depends on delivered tons and the per-ton tip fee under the agreement. "The tip fee is multiplied by actual tons," Bagley said, adding that preliminary tip-fee examples showed $71 in year one of processing and $78 in a subsequent year during a multi-year ramp-up.

McCoy asked whether SPSA would use biochar as daily cover; Nowak and Bagley said SPSA would accept the biochar to the landfill for the first three years to provide certainty while Commonwealth pursues offtake agreements. Hansen praised the guarantees and said the agreement appears to protect ratepayers with fixed recycling and diversion benchmarks.

Board Member Kiefer moved to call a special meeting on Nov. 3 at 1:30 p.m. in the Regional Boardroom at the Regional Building, 723 Woodlake Drive, Chesapeake, "for the purpose of considering an award of a contract under RFP O1-24 to Commonwealth Sortation LLC and authorizing the executive director to execute SPSA obligations if awarded." The motion carried and the special meeting was scheduled.

Next steps: the board will meet Nov. 3 to consider awarding the contract; if the board chooses to award, the contract contains performance milestones, liquidated damages and financial assurances the presenters said are designed to protect SPSA and its ratepayers.