Six Kentucky Banks Establish $150M P3 Infrastructure Fund
LOUISVILLE, KY Six of the biggest community banks in Kentucky have teamed up to form a $150 million infrastructure fund that will provide debt financing to private firms engaged in state and local public-private partnerships (P3s).
The formation of the Commonwealth Infrastructure Fund (CIF) follows Kentucky lawmakers' passage of legislation last year allowing the use of P3s on public projects. CIF officials said the availability of this new financing will allow more vital road and bridge, school and other public works projects to move forward.
Several other state and local governments are weighing the formation of a similar trust or bank to fund P3s.
P3s are gaining momentum in the U.S as public entities become more familiar with the concept and see it as a way to shift the risk of design, construction, financing, operation and maintenance for a project to the private sector.
Some agencies, like the Los Angeles County Metropolitan Transportation Authority (Metro), are using the model to capitalize on the private sector's flexibility and broader capacity around innovation as well as to complete projects faster.
Metro has begun preparing requests for proposals (RFPs) for three major transit projects after receiving unsolicited proposals from P3 teams. The agency is also taking advantage of funding opportunities made possible by a new regional half-cent sales tax increase, Measure M, which voters passed last year. The tax is expected to generate $860 million annually for transportation projects.
The Michigan Department of Transportation (MDOT) has also decided to use P3s to complete a $1 billion highway overhaul in Oakland County, Michigan. MDOT officials said handing over design, build, finance and maintenance duties to the private sector could reduce the schedule by as much as 10 years. Private sector partners will be selected sometime in 2018, and they will receive annual payments reimbursing them for the cost of developing the rest of the highway segments.
The P3 model has come up in conversations around President Donald Trump's anticipated $1 trillion infrastructure plan. However, last month the president backpedaled on his support of private-sector investment to fund that work, when he reportedly told a group of lawmakers that P3s were "more trouble than they're worth."
GOP leaders have repeatedly said they would scuttle attempts to pass any such public works legislation that resembles a stimulus plan, while Democrats are averse to private spending.