With passage of House Bill 309, Kentucky has joined the majority of states with public-private partnership (commonly referred to as "P3") legislation.  The legislation opens the door to public improvement projects in Kentucky at a time when funding for state and local projects has dwindled.

P3 is a contractual agreement between a public owner (the state, a city or a county) and a private sector entity in which the private entity assumes financial, technical, and/or operational risk for the project.  P3s allow public and private entities to share their resources and expertise in delivering a service or facility to the public. In addition to project proposals solicited by the public owner, Kentucky's P3 legislation allows private entities to submit unsolicited project proposals.  Combined local governments are permitted to jointly contract with private entities for projects that may benefit several cities or counties.

Examples of successful P3 projects in other states include state park improvement and operation, schools, water and wastewater projects, highway rest areas and transportation infrastructure.  The University of Kentucky's new dormitories are an example of a successful P3 project.  

The legislation contains state oversight for state and local P3 projects.

State Projects:

  • The Secretary of the Finance Cabinet must promulgate regulations to detail the P3 process
  • Copies of Requests for Proposals must be submitted to the Legislative Research Commission's Capital Projects and Bond Oversight Committee
  • State P3 projects over $25,000,000 must be authorized by the Legislature
  • The Contract must be submitted for review to the Legislative Research Commission's Government Contract Review Committee

Local Projects:

  • The Secretary of the Finance Cabinet must promulgate regulations for the local governments P3 process
  • A new board (the Kentucky Local Government Private Public Partnership Board) is created within the Finance Cabinet. Any local P3 for more than 30% of a local government's general fund shall be evaluated and approved by the Board.

The bill was signed into law on April 8, 2016, and is effective immediately. P3 offers new opportunities to invest in Kentucky infrastructures, capital, projects, and services.

Please click here to view the new law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.