Last month, the city of Chicago made a meaningful downpayment on changing the health trajectory for hundreds of thousands of children and women of childbearing age.
The city used that oldest of impact financing tools: the general obligation municipal bond.
Chicago financed the replacement of lead water service lines through a small allocation of the proceeds of $695 million of bonds, which will mostly go to fund the Chicago Works Program and the Chicago Recovery Program to address deferred infrastructure projects and fuel economic recovery from the COVID-19 pandemic.
Tucked away with very little fanfare in the offering documents, is a declarative statement indicating that up to $76 million of proceeds will go toward replacing lead service lines in the city.
Together with a recent loan of $336 million under the federal Water Infrastructure Finance and Innovation Act, there appears to be momentum, willingness and ability to meet the existential health crisis of lead water pipes in Chicago.
Environmental racism
Lead is a horrific neurotoxin that stunts and impedes the cognitive development of children resulting in lower IQ along with learning and behavioral difficulties, in addition to causing acute reproductive issues. From a consumption perspective, there are no safe levels of lead. According to Mona Hanna-Attisha, the pediatrician who was at the center of uncovering the Flint water crisis, “If you were going to put something in a population to keep them down for generations to come, it would be lead.”
There are an estimated 9.2 million homes across the country that have water service lines made of lead. And without proper corrosion control, water will eat at a lead pipe, dislodging it into the water that is then consumed by the residents of the home.
Chicago holds the dubious distinction as the most impacted city, with an estimated 400,000 lead service lines – more than double the next largest number, in Cleveland. This is also a devastating example of environmental racism: the majority of lead service lines are on the west and south sides of the city, disproportionately communities of color. A study last year from the Johns Hopkins Bloomberg School of Public Health estimates that nearly 70% of children under six in Chicago may be exposed to lead-contaminated tap water.
The daunting task that Chicago faces was recognized by the EPA when it gave the city 20 years to address the issue, as opposed to 10 years for the vast majority of other localities in the United States. The cost of replacement is estimated to be between $8,000 and $30,000 per line or an estimated total cost between $3.2 billion and $12 billion.
Chicago’s demonstrated ability to replace lead service lines has been challenging. Bold proclamations have been followed by halting progress and small numbers of lines dug up. As of last July, Lead-Safe Chicago, a city project, reported having replaced just 6,820 service lines across five programs.
Lead pipe replacement
No community can prosper without access to clean drinking water. No economic development can take root without access to clean drinking water. There is no more generative and transformative impact investment than funding the replacement of lead service lines through municipal bonds.
Clarion Call Capital has invested in lead service line replacement in larger cities like Newark, New Jersey, small ones like Inkster, Michigan, as well as last month’s Chicago general obligation deal via Series E. And my investment and activism around this issue has been ongoing for close to a decade.
Municipalities are stepping up to protect their residents and invest in their futures. While Lansing, Michigan, Madison, Wisconsin and Newark, New Jersey are far smaller than Chicago, they have all succeeded in eradicating lead service lines. Let these cities serve as guides and the North Star for all cities to move with urgency and purpose. Time is of the essence.
Advocates, activists, investors, philanthropists, and civil society who seek to uplift and center racial, social and environmental justice must partner with government to promote and execute on this scalable solution.
Clean water from a reservoir, watershed, or groundwater via an individual tap is a human right. The right to clean water (and sanitation) needs to be enforced and protected because our health and prosperity and the health and prosperity of all future generations is dependent on it.
Eric Glass is CEO and founder of Clarion Call Capital.
