Summary of Advantages of Sale of SPSA’s WTE Facilities

Presented toSPSA Member Communities

February 2010

Benefits of Selling WTE Facilities

• Reduce SPSA debt by approx. $142 million• Reduce debt service: average 60+% less• Reduce capital expenditures

– Cell VII expansion: $30 million– Two new transfer stations: $22 million

• Reduce operational expenses• Extend landfill life through diversion of non-

processables• Reduce operational risks and complexity –

more certainty

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SPSA Financial Viability• SPSA system remains unchanged

– WTE Facilities owned by Wheelabrator but remains part of SPSA system through the service agreements (i.e. commitment of municipal waste to Wheelabrator)

– Suffolk Landfill (SPSA)– Transfer Stations (SPSA)– Other services (SPSA)

• Use and Support Agreements valid• Funding of system remains same through the

tipping fees

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Key VRA Requirements• Member community guarantee of

outstanding reduced VRA debt (~$50M) (See slide 6 and 7 for lenders’ positions)

• Debt retirement plan– Proportional debt reduction among lenders– Levelized remaining debt service

• Inter-creditor agreements among SPSA lenders

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Debt Retirement Plan• Options Considered

– Pro rata reduction of all debt (Ambac, Wachovia, VRA, and Virginia Beach) – levelize remaining debt service.

– Retire all but VRA 2009 bonds and City of Virginia Beach debt (Considered a “non-starter with the VRA and CAO’s), backloads debt service (sinking fund considered)

– Pro rata reduction of all but Wachovia debt, which allows for full payback of Virginia Beach loan (note: approach is acceptable to Wachovia)

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Allocation of Guarantees

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Source: Mesirow Financial

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Pro-Rata Scenario with VA Beach Takeout

FY AMBAC Wachovia VA BeachVRA Subordinate

VRA Guaranteed Total Debt

% of Total

2011 - - 4,080,000 - 4,080,000 5.27%2012 90,000 5,230,000 - 3,250,000 - 8,570,000 11.07%2013 95,000 5,260,000 - 4,805,000 - 10,160,000 13.13%2014 100,000 8,460,000 - 2,045,000 - 10,605,000 13.70%2015 5,590,000 - - 885,000 3,000,000 9,475,000 12.24%2016 5,885,000 - - 2,880,000 3,435,000 12,200,000 15.76%2017 - - - 3,480,000 9,650,000 13,130,000 16.97%2018 - - - - 9,170,000 9,170,000 11.85%

Total 11,760,000 18,950,000 - 21,425,000 25,255,000 77,390,000 100.00%% of Total 15.20% 24.49% 0.00% 27.68% 32.63% 100.00%

Outstanding Principal After Pro-rata Scenario with VA Beach Takeout

Note: Excludes certain maturities for which funds have already been deposited with the Trustee.

FY Chesapeake Franklin Isle of Wight Norfolk PortsmouthSouthampton

County Virginia Beach Suffolk Total

% Obligation 22.49% 0.97% 3.98% 16.98% 10.27% 2.10% 30.34% 12.87%

2011 917,592 39,576 162,384 692,784 419,016 85,680 1,237,872 525,096 4,080,000 2012 730,925 31,525 129,350 551,850 333,775 68,250 986,050 418,275 3,250,000 2013 1,080,645 46,609 191,239 815,889 493,474 100,905 1,457,837 618,404 4,805,000

2014 459,921 19,837 81,391 347,241 210,022 42,945 620,453 263,192 2,045,000 2015 873,737 37,685 154,623 659,673 398,990 81,585 1,178,709 500,000 3,885,000 2016 1,420,244 61,256 251,337 1,072,287 648,551 132,615 1,915,971 812,741 6,315,000 2017 2,952,937 127,361 522,574 2,229,474 1,348,451 275,730 3,983,642 1,689,831 13,130,000 2018 2,062,333 88,949 364,966 1,557,066 941,759 192,570 2,782,178 1,180,179 9,170,000 Total 10,498,332 452,796 1,857,864 7,926,264 4,794,036 980,280 14,162,712 6,007,716 46,680,000

Principal Obligation by Municipality - Pro-rata Scenario with VA Beach Takeout

FY VRA Aggregate2011 6,133,981 7,479,941 2012 5,184,501 11,657,754 2013 6,546,890 12,838,758 2014 3,582,102 12,746,190 2015 5,312,199 11,336,199 2016 7,582,042 13,614,167 2017 13,965,206 13,965,206 2018 9,388,704 9,388,704 Total 57,695,624 93,026,919

Unrefunded Debt Service

Source: Mesirow Financial

Project Savings

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Fiscal Year Chesapeake Franklin Isle of Wight Norfolk PortsmouthSouthampton

CountyVirginia Beach Suffolk

Total Projected Savings

2011 12,997,000$ 629,000$ 2,649,000$ 10,668,000$ 6,253,000$ 1,249,000$ -$ -$ 34,445,000$

2012 12,273,000$ 594,000$ 2,520,000$ 9,965,000$ 5,850,000$ 1,180,000$ -$ -$ 32,382,000$

2013 14,194,000$ 685,000$ 2,935,000$ 11,403,000$ 6,703,000$ 1,365,000$ -$ -$ 37,285,000$

2014 13,155,000$ 633,000$ 2,741,000$ 10,455,000$ 6,155,000$ 1,266,000$ -$ -$ 34,405,000$

2015 5,958,000$ 286,000$ 1,251,000$ 4,684,000$ 2,762,000$ 574,000$ -$ -$ 15,515,000$

2016 3,944,000$ 189,000$ 833,000$ 3,068,000$ 1,812,000$ 380,000$ 2,750,000$ -$ 12,976,000$

2017 3,201,000$ 153,000$ 682,000$ 2,463,000$ 1,455,000$ 308,000$ 4,415,000$ -$ 12,677,000$

2018 (1,750,000)$ (83,000)$ (375,000)$ (1,332,000)$ (789,000)$ (169,000)$ (2,389,000)$ -$ (6,887,000)$ Totals 63,972,000$ 3,086,000$ 13,236,000$ 51,374,000$ 30,201,000$ 6,153,000$ 4,776,000$ -$ 172,798,000$ *Fiscal Year July-June

Note: FY 2018 is a partial year. Use and support agreements expire January 24, 2018

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Note: FY 2018 is a partial year. Use and support agreements expire January 24, 2018

10Note: FY 2018 is a partial year. Use and support agreements expire January 24, 2018

Source: SPSA Pro Forma, January 26, 2009, Pro Rate Debt Reduction, some variation may occur based on final debt retirement plan results

Bottom Line: Member communities will spend less for solid waste disposal through 2018 if the WTE Facilities are sold.11

Status• Responses to VRA Resolutions submitted on

Jan. 29• Volume cap requested from Governor• Requesting member community guarantees

in February• Inter-creditor agreements being finalized• Met with VRA Feb. 8-9• Final VRA approval Mar. 2010• Other consents being perfected for a closing

before May 1, 2010

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