Comprehensive Annual Financial Report 2007 - MSD

Profile of MSDMSD was created in 1946 as a public body corporate and subdivision of theCommonwealth of Kentucky (“the Commonwealth”). MSD has complete control,possession and supervision of the sewer and drainage systems within themajority of Louisville Metro, which now comprises all of Jefferson County,Kentucky. Chapter 76 of the Kentucky Revised Statutes authorizes MSD toconstruct additions, betterments, and extensions within its service area and torecover the cost of its services in accordance with rate schedules adopted by itsBoard.MSD is now considered a component unit of the new Louisville-Jefferson CountyMetro government (“Louisville Metro government”). The Louisville Metro Mayorappoints, with the approval of the Louisville Metro City Council, the members toMSD’s governing Board. The Board, which has statutory authority to enter intocontracts and agreements for the management, regulation and financing of MSD,manages its business and activities. The Board has full statutory responsibility forapproving and revising MSD’s budgets, for financing deficits and for dispositionof surplus funds. MSD has no special financial relationship with the LouisvilleMetro government; however effective July 1, 2006 MSD began providing freesewer and drainage services to the Metro government. The estimated annualcost of these services is $1.45 million.Economic Condition and OutlookMSD’s sanitary sewer and drainage service areas lie within Jefferson Countywhich, with a 2006 population of approximately 701,500, is Kentucky’s largestand the center of the seven Kentucky and Indiana counties which comprise theLouisville metropolitan area (“Greater Louisville”).The total non-farm employment count for the Louisville Metropolitan StatisticalArea (MSA) increased in June 2007 to 631,900; a 1.1% increase from the June2006 level of 625,300. The June 2007 unemployment rate for the Louisville MSAwas 5.0% compared to a national average of 4.7% and a state average of 5.7%for this same time period.During 2007, the United Parcel Service (UPS) continued with upgrades to itsglobal air hub called WorldPort. This $1 billion investment is expected to createmore than 5,000 jobs. The WorldPort facility serves more than 200 countries andterritories, making Louisville International Airport the 10 th largest cargo airport inthe world and the 4 th largest in the United States. This expansion marked thethird time over a seven year span that UPS has expanded its Louisville facilities.This latest expansion will nearly double the capacity of WorldPort which alreadyhas 4 million square feet and sorts more than 300,000 packages an hour.WorldPort continues to attract dozens of companies to Louisville that are seekingto increase their profitability by improving the distribution of their products.2