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Kentucky Transportation Cabinet

Kentucky Transportation Cabinet. Public-Private Partnerships (P3s) Possibilities for Transportation Projects in Kentucky. Budget Review Subcommittee on Transportation. July 25, 2013. Do we need P3 capability for Transportation projects in Kentucky?. YES , but “Perspective” matters….

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Kentucky Transportation Cabinet

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  1. Kentucky Transportation Cabinet Public-Private Partnerships (P3s)Possibilities for Transportation Projects in Kentucky Budget Review Subcommittee on Transportation July 25, 2013

  2. Do we need P3 capability for Transportation projects in Kentucky? YES, but “Perspective” matters… • KYTC: “Do we have potential P3 projects?” • Potential P3 Partner: “Can I make a profit?” • Governor and Legislature: “Can our laws, regulations and policies ensure solid P3 deals for our citizens?”

  3. Considerations for transportationP3s in Kentucky: • Is the project contained in the biennial portion of the Six-Year Highway Plan? • How much of the project’s cost will the P3 component support? • What other revenue sources will be required to complete a P3 deal? • How much financial and project delivery risk is being retained by KYTC? How much is being transferred? • No two projects are alike.

  4. How do KYTC, the Governor, and the Legislature weigh the appropriateness of a particular transportation P3 proposal? We must: • Educate ourselves about the “mechanics” of negotiating P3 deals. • Understand risk and the benefit/cost of retaining or transferring risk. • Recognize that P3 deals typically do not generate revenue, they require revenue. • Appreciate that a P3 partner is interested in a “for-profit” relationship. • Let the financial and project-specific data drive us to a P3 (not let the desire to do a P3 be the driver).

  5. Why doesn’t KYTC already have P3s for transportation projects? • We haven’t had the right situation emerge, as yet. • Through KRS 175B, we have latitude to pursue mega-project financing “off the books.” • The “transportation project” still takes precedence over the “business deal.”

  6. Does KYTC embrace the concept of P3s for transportation? • Yes, we need the P3 tool in our financing tool kit. • We would use it, where appropriate, to support our transportation strategy, not as a revenue generating measure. • We would not recommend a P3 approach unless it can be clearly shown to be the best option.

  7. Conclusion: • P3 legislation could help create new financial opportunities for transportation in Kentucky. • Taxpayers will always pay for public projects; there is no panacea with P3s. • It is time to give thoughtful consideration to P3 enabling legislation in Kentucky.

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