Kentucky governor signs comprehensive P3 bill

The Commonwealth becomes the 34th US state to enact P3-enabling legislation.

After two weeks of deliberation, Kentucky Governor Matt Bevin signed into law legislation that allows the state to use private financing for the development of infrastructure projects. 

With the passage, Kentucky joins 33 other states, the nation's capital and the territory of Puerto Rico, which have all previously passed P3-enabling legislation. 

Representative Leslie Combs of Pikeville, who sponsored House Bill 309, said in a statement that in her view, it is “the strongest and most comprehensive of its kind in the country”.

“This will give Kentucky a competitive advantage and allow us to properly build our infrastructure and create good-paying jobs,” she said. “Outside the budget, this has potential to do more for the state than any other law the General Assembly has passed in recent years.”

In a call with Infrastructure Investor , Combs explained that the bill has been in the works for four years. It was born as a transportation P3 bill led by the current House majority caucus chair Sannie Overly, which she was co-sponsoring. While the bill didn't see any movement in its first iteration, Combs said that she received plenty of indication that Kentucky was ready for a comprehensive P3 bill, which she then built out of Overly's structure the following year. 

In 2014, a P3-enabling bill passed through the General Assembly but was vetoed by then-Governor Steve Beshear, who took issue with the exemption of the Brent Spence Bridge – the only project he really wanted to carry out as a P3 – and the inclusion of non-transportation P3s. Combs said that Beshear was also concerned that local governments did not have the capacity to negotiate the P3 mega-deals needed to develop their infrastructure. 

Combs shared this concern, she said, which is why the current iteration of the bill calls for the formation of an 11-member Kentucky Local Government Public-Private Partnership Board to evaluate and approve P3 agreements with a value worth 30 percent or more of local government revenues. The state auditor's office will also have authority to periodically review local P3 agreements. 

Partnerships authorised by the legislation include large transportation projects and management of utilities. The state will require public postings hearings and legislative oversight for P3s to move forward and no project costing more than $25 million will be cleared unless first authorised by the state legislature. Furthermore, any shared transportation projects between Kentucky and Ohio would need to be approved by a separate law. 

As chair of the House Budget Review Subcommittee on Transportation, Combs believes strongly that the legislation will greatly aid the state in fulfilling its road and bridge needs.

“The simple truth is, the federal government is no longer providing what it used to. If we're going to continue improving our infrastructure, P3 is the best way forward,” Combs said. “It gives us a way to accomplish things that would take two, three or four times as long if we as a government acted alone. By working with the business community, we can do what other states have been doing for years and do it more efficiently at less cost.”