AN EQUITABLE WATER FUTURE Louisville - Michigan State University

IncomeHousing affordability and residential segregationIncome is one of the strongest predictors of compromisedhealth and capacity to recover from disruptions. InLouisville overall, household income has remainedrelatively flat over the past decade. In 2017, the medianhousehold income for the Louisville/Jefferson metroarea was 57,279, which is 8,904 higher than the medianhousehold income in Kentucky and 3,057 less than themedian household income in the US.6The 2018 State of Metropolitan Housing Report found thatnearly 40 percent of the workforce does not earn a wagethat would support the rent of a modest two-bedroomapartment in the Louisville MSA.13PovertyOverall, 14.3 percent of Louisville’s residents lived belowthe federal poverty line in 2016, down from 15.1 percentin 2015 and 16.7 percent in 2014.7 Yet people of color inLouisville are at least twice as likely to live in poverty;35 percent of people of color in Louisville live below thepoverty line.8Recognizing poverty affects health and wellbeing innumerous ways, the Greater Louisville Project appliesa multi-dimensional poverty index, examining multiplemeasures of poverty: income, health, employment,education, and neighborhood quality. Their data show thatmulti-dimensional poverty in Louisville is highest in theRussell and Portland neighborhoods, both located in theWest End.9Educational attainmentEducational attainment is strongly correlated with theability to gain stable employment. Among Louisvilleresidents 25 and older, just over half (52 percent) have ahigh school diploma, and 36 percent have an associate’sdegree or higher.10 Among White residents, 47 percenthave an associate’s degree or higher; the percentage forBlack residents is 28 percent.11 Notably, there are alsolarge disparities in wealth between college-educatedWhite and Black residents. Between 1992 and 2013,the wealth of college-educated Whites increased by 86percent, while that of college-educated Blacks shrunkby 55 percent. Between 2013 and 2016, wealth grew forboth Black and White college graduates, but a pronouncedgap persists.126Residential segregation is a major driver of racial andeconomic inequality, as it affects access to employment,educational attainment, exposure to crime, environ mental pollution, access to food, access to recreation,and quality of life in general.14 Louisville’s population ishighly segregated by race, disability, being a femaleheaded household with children, and being Hispanic/Latinx.15 More than half of Black residents are estimatedto live in West End due to a tradition of redlining thatcontinues today.16Displacement is also a concern for some of Louisville’smost vulnerable populations. While evictions and fore closure sales are on the decline in the city overall, ratescontinue to be higher in the city’s western and southeasternareas where more minority and low-income residentslive.17 Some of the same areas are also at increased risk ofinvoluntary displacement due to neighborhood changes.Since 2014, Louisville has attracted 12.5 billion in capitalinvestment—much of it concentrated downtown butalso distributed through areas where more vulnerablecommunities live.18Employment and workforceAs of October 2018, Louisville had a low overall unemploy ment rate of 3.9 percent.19 For people of color in Louisville,unemployment is significantly higher at 11 percent.20While the Louisville area is known for its competitive jobmarket and typically has numerous job openings, barriersto employment remain for people of color and veterans.As of late 2018, the size of Louisville’s labor force wasjust over 662,000, and the number of monthly online jobpostings was slightly more than 18,000, with about athird of those requiring an associate’s degree or higherand just over 4,000 requiring a bachelor’s degree orhigher.21 Louisville’s job market is fairly competitive, andwhile job availability is strong, high school graduatesgenerally need more education and training to obtainliving-wage jobs.US Water Alliance

The proximity of Fort Knox means there are a high numberof veterans seeking jobs, and they too face employmentchallenges. Approximately 100,000 soldiers transition fromactive duty service each year through the Army Soldierfor Life—Transition Assistance Program at Fort Knox.Though the veteran unemployment rate has improvednationwide, veterans still tend to experience higherunemployment and underemployment than the populationat large. Reasons range from certification and licensinghurdles, to cultural attitudes about veterans, disabilities,and difficulty in transitioning from military to civilian life.Louisville’s vulnerable communities include a dispropor tionately high number of formerly incarcerated individuals.Although 21.2 percent of Louisville’s population is AfricanAmerican, they represented 44 percent of arrests reportedby Metro Police in 2012.22 This disparity makes re-entryand recidivism critically important issues in Louisville.Transportation accessAccess to reliable and affordable transportation is a majorfactor in overall welfare. Louisville workers living inpoverty are four times more likely than others to rely onpublic transportation. This reliance can result in fewerjob prospects for those already living in poverty, since theirability to commute is constrained by the limits of thetransit system.23 The average commute for Louisvilleresidents is around 22 minutes, but a number of residentsin the city’s poorest neighborhoods have commute timesof an hour or more.24WATER EQUITYCHALLENGESWhile the Louisville Water Equity Taskforce is focused onseizing the workforce and contracting opportunities inthe water sector, it is important to situate this work in thebroader context of water equity challenges that impactvulnerable communities. This section briefly describesa range of water equity challenges facing residents inLouisville’s vulnerable communities, concluding withworkforce and procurement challenges.Aging infrastructureSince 2008, much of Louisville Metropolitan SewerDistrict’s (MSD) focus has been ensuring compliancewith the requirements of a sewer overflow consentdecree mandated by the US Environmental ProtectionAgency (EPA). MSD’s Integrated Overflow AbatementPlan (IOAP) is a long-term plan being carried out through2024 at an estimated cost of 940 million. Due to limitedresources and a desire to maintain sewer and drainagerates at or below the national average, developingand implementing the IOAP has meant lower priority hasbeen placed on infrastructure renewal and repair forfacilities not related to sewer overflow control over thepast decade. While IOAP implementation is only halfwaycomplete, the consequences of deferred rehabilitationand reinvestment in other areas are beginning to showin increased sewer collapses.In recent years, Louisville experienced flash floodingfrom increasingly intense rains challenging the agingflood protection system. More than half of Louisville’spump stations are beyond their designed lifespan. In2017, MSD initiated a Critical Repair and ReinvestmentPlan, with a price tag of 4.3 billion over the next20 years, to address these and other wastewater- andflooding-related challenges.An Equitable Water Future: Louisville7

Flooding, climate, and policy impactsThe lowest-lying ground in Louisville is on the city’s westside, where people of color are concentrated and havebeen constrained in their ability to acquire and pass downwealth due to redlining. Outlawed in 1968 by the FairHousing Act, redlining is one of the clearest examples ofinstitutionalized racism in the United States, and Louisvillewas not immune to pervasive historic redlining.25 Thecity’s west side is also where the worst flooding happenswhen it rains. Since 1997 when Louisville was hit bycatastrophic flooding, the city has purchased over 300flood-prone homes to mitigate repeated flooding.The city leverages federal funding through the FederalEmergency Management Agency’s (FEMA) HazardMitigation Assistance grant programs to complete themajority of these purchases. More funding is neededto fully address flood mitigation needs, and MSDplans to continue to apply for additional funding as itbecomes available.AffordabilityMSD’s wastewater rates are roughly equal to the nationalaverage. Yet as costs for water and wastewater infrastruc ture continue to increase, the reality is that many familiesin the community struggle to make ends meet eachmonth. The majority of MSD’s customers spend less thanone percent of their household income on wastewaterand drainage services which is considered a “low burden”on monthly finances by the EPA. However, almost 28percent of customers spend more than two percent oftheir household income on these services, a thresholdthe EPA considers a “high burden.”Affordability is also affected by decreasing levels of federaland state funding for infrastructure. Forty years ago,the federal government contributed 63 percent of totalcapital spending on water infrastructure nationwide.Today, water infrastructure accounts for just nine percentof federal capital spending.26 This increases the burdenon local utilities to fund infrastructure projects byincreasing customer rates.Funding constraintsIn the 1970s and 1980s, the federal government providedfederal grants to help support local communities inbuilding water and wastewater infrastructure through theClean Water Act and the Water Resources DevelopmentAct. In some cases, 75 percent of grants funded utilizationof innovative technologies. In essence, the federal gov 8ernment subsidized necessary investments that temperedthe true cost of services to local rate payers.Over the last 20 years, those federal grants have beendefunded by Congress and the White House, increasing theburden on local utilities to raise customer rates. Rateincreases generally have to be approved by local boardsor political governing bodies. The American Society ofCivil Engineers (ASCE) recently downgraded the state ofwater and wastewater infrastructure in Kentucky to aC and C- respectively. ASCE estimates 13 billion ininvestment is needed in water and wastewater systems inKentucky to improve asset conditions or sustain themat current levels.27The board that oversees MSD has the authority to raiserates 6.9 percent annually to fund the Operations andCapital needs of the Wastewater, Drainage and FloodProtection systems. Over the last decade, the majority ofthose increases were allocated to fund MSD’s IOAP,which includes projects for sanitary sewer overflows(SSOs) and combined sewer overflows (CSOs) mandatedunder a federal consent decree. Meanwhile, necessaryasset management and investments to address aginginfrastructure needs require a larger annual rateincrease by MSD, which must be approved by LouisvilleMetro Council.To ease constraints, MSD has sought funding for sixseparate projects utilizing alternative funding sources,such as the federal government’s Water InfrastructureFinance and Innovation Act (WIFIA) and the State RevolvingFund (SRF) loan program.State and local funding is also essential to public transit.In the Commonwealth of Kentucky, public transit hasno dedicated state funding. Like many municipalities,Louisville Metro lacks the resources available at thefederal level to fund the needs of the local transit agency.The Transit Authority of River City (TARC) is the recipientof .02 percent of the Occupational License Fee collectedin Jefferson County, just one of the five counties TARCserves. Transportation investments are necessary toremain competitive, and TARC could find itself taking onexcessive debt to fund essential public transportation.Funding for infrastructure projects and workforcedevelopment programs is critical to achieving equitythrough job creation and training opportunities forresidents in Louisville’s most vulnerable communities.US Water Alliance

WorkforceAs development continues at a rapid pace across the city,local utilities have committed to considerable investmentsin water, wastewater, and stormwater infrastructure torepair and rehabilitate aging systems and ensure continuedpublic health protection and regulatory compliance. Inlight of these investments, it is critical to strengthen localworkforce development efforts so members of all commu nities benefit from the local employment opportunitiesgenerated from investing in water infrastructure.In 2018, Louisville MSD participated in a BrookingsInstitute study, Renewing the Water Workforce, to explorecurrent water workforce challenges and develop generalrecommendations for addressing them.28 To support thiswork in Louisville, Brookings convened a team of repre sentatives from local government, water and transportationagencies, workforce development agencies, and nongovernmental organizations, including some members ofthe Louisville Water Equity Taskforce. Representationbeyond water infrastructure leaders, and inclusive of otherinfrastructure partners in transportation and transit,is important because other sectors experience similarworkforce challenges.Jobs in the water sector come from either directemployment with utility organizations or employment withthe various contractors and consultants that serve thewater sector. Generally, utilities account for 15 to 20percent of water sector jobs with other organizationsserving the sector accounting for the remaining 80 to 85percent.29 Nationwide, the water workforce includes morethan 200 occupations carrying out a range of activities,from system operations and equipment maintenance tooverseeing operations and service.While the majority of water sector jobs are in the skilledtrades, there are also many jobs in administration, finance,and management. Training and certification are typicallyrequired for jobs in the skilled trades, and an associate’sdegree or higher is frequently required for many jobs inadministration and management. Lack of awareness of water sector career paths andtraining opportunities; Lack of time and resources to pursue training and certification programs or time-consuming hiringprocesses;Limited childcare and transportation options that preventefficient commutes to training or jobs;Lack of on-the-job-training and paid trainingopportunities;Requirements for joining labor unions for the construc tion trades;Policy and cultural barriers for non-traditional workerssuch as veterans, formerly incarcerated individuals,people with prior criminal records, and disabledindividuals.Contracting and procurementUtilities need to understand and manage the impact oftheir contracting and procurement practices on localbusinesses. Specifically, utilities need to be intentionalabout making sure the dollars invested are returningbenefits to the community, including involvement of localbusinesses—with particular attention given to localbusinesses owned by minorities and women. In Louisville,water and wastewater utilities award contracts for con struction and construction-related services, engineeringand professional services, and materials and commodityservices. MSD typically spends between 200 million to 350 million on these services per year.In 2018, MSD completed a comprehensive DisparityStudy,30 which examined MSD’s contracting practices overa five-year period (2010–2015). The study found MSDunderutilized businesses owned by minorities and womenin awarding construction contracts. Out of the 661million in purchase order payments MSD made during thestudy period, 97 percent went to White, male-ownedbusinesses. The study made a series of recommendationsfor improving utilization of minority- and womenowned contractors in Louisville, some of which aresummarized below.While ongoing investment in the water sector will keepdemand for workers high, community members inLouisville’s vulnerable communities, like those in othercities, can experience barriers to obtaining water sectorjobs. These barriers include:An Equitable Water Future: Louisville9

ARENAS FOR ACTIONWhile the challenges are significant, there is tremendousopportunity to advance equity and opportunity throughcollaboration and smart water investments in the Louisvilleregion. The Louisville Water Equity Taskforce highlightsthe following arenas for forging equitable and sustainableprogress.Regional Collaboration andShared ServicesUse regional collaboration to reduce costsof service and create economies of scale in thegreater region.As water and wastewater utilities grapple with aginginfrastructure, affordability, shifting populations, demo graphic changes, and changing climate conditions, theyare increasingly challenged to meet their mandate toprotect public health. These difficulties are particularlyacute for smaller utilities.Because of these challenges, many in the sector promotewater system partnerships, shared services, regionaliza tion, and consolidation to sustain reliable and affordableservice for residents. Regionalizing water and wastewaterservices involves structural and non-structural methodsof capturing economies of scale and improving operationalperformance among geographically proximate systems.Kentucky is a leader in regional water managementcollaboration. The state had more than 3,000 public watersystems in the 1970s compared to fewer than 800 today.A range of consolidation models can work to addresssignificant public health or environmental risks and threats,but the decisions must be made locally, with a focus oncommunity priorities.31To remove historical barriers to regional utility collab oration, Louisville, MSD worked with the state legislature,state officials, and local government leaders to modifya law prohibiting ownership of sewer assets outside ofjurisdictional boundaries. The modified law was approved10by the governor of Kentucky in April 2018 and authorizesthe acquisition and consolidation of sewer utilities. Thispolicy change can be beneficial to smaller utilities facingincreased costs due to regulatory requirements, risingpension costs, and failure of existing assets. MSD hasbegun negotiations and due diligence efforts with severalsurrounding cities and counties to assess the feasibilityof acquisition or consolidation of assets. These efforts,in most cases, will lower the overall cost of service forcustomers served by smaller utilities and create aneconomy of scale that will help the region save on costsand create efficiencies for decades to come.Expand opportunities for shared services withinthe City of Louisville.Louisville Water Company and MSD have an effectiveOne Water Partnership through which both utilitiespursue opportunities for efficiency, increased revenue,cost savings, and improved service. The work is doneunder an Interlocal Agreement to identify and implementshared service opportunities. A One Water Board overseesthe effort and includes two members from the MSDboard and the Board of Water Works. As a result of theOne Water Partnership, the two utilities jointly managefleet services, procurement, information technology,innovation, and communications and customer services.To date, the One Water Partnership has sustainedapproximately 13 million in annual savings to ratepayingcustomers.Going forward, next steps for the partnership include: Innovation. A Chief Innovation Officer will identify andimplement new lines of business and services that canbe provided regionally and nationally to generate newnon-rate revenue for both utilities. Information Technology. A Security Administrator andStorage Administrator will provide services to bothorganizations and begin using a jointly purchased offsite data recovery center.US Water Alliance

Human Resources. Both utilities plan to review theirhuman resource functions and look at job descriptionsto ensure alignment and equity in staff positions,compensation, and hiring practices.As Louisville Water Company and MSD continue exploringways to align HR policies and procedures, sharerecruit ment strategies, and align job descriptions andpay grades, both utilities will look at opportunities tojointly launch a Small Business Program and share inoutreach opportunities.in the form of a financial contribution, volunteer hours,and other in-kind services to community organizationsand schools within Louisville/Jefferson County. Proposingvendors are eligible to receive a percentage of theevaluation points for their proposed Community BenefitCommitments. Adherence to these commitments ismonitored throughout the contract term. Going forward,MSD can ensure this policy contributes to equitableoutcomes by monitoring its impacts and making adjust ments as needed.Increase supplier diversity.Contracting and ProcurementExpand local labor preference policies.In 2015, MSD adopted a Local Labor Preference Policyfor construction contracts valued at 10 million andhigher. The policy was intended to promote employmentof people living in the Louisville/Jefferson County MetroGovernment geographic area. In 2017, the MSD boardreduced the local labor threshold from 10 million to 5million to increase the economic impact in the communityby utilizing local labor. E

An Equitable Water Future: Louisville 3 The Louisville Water Equity Taskforce convened to consider opportunities for our community to create a roadmap to improve the equitable distribution of resources in Louisville. We understand that race and socioeconomic status impact access. This roadmap is designed to move us toward