Four Steps to Successfully Negotiate the P3 Process in Kentucky

By Ed Green
P3 Kentucky Editor

Colleen Chaney

The idea of creating public-private partnerships in Kentucky remains a hot topic across the Commonwealth, and many leaders realize they can use this tool to serve long-term public needs. P3 Kentucky and members of our P3 Kentucky Roundtable continue to field questions about P3s and how they can be used to expand public infrastructure or services.

During the recent Governor’s Local Issues Conference, one county leader told me his county is intrigued by P3s, but has so many needs it can’t take the time to figure out how to start. And during a meeting this week of the Kentucky Chamber’s P3 Workgroup, Madison County Deputy Judge-Executive Colleen Chaney said she thinks more local leaders want to see a local success story before trying it themselves.

Chaney and Madison County Judge-Executive Reagan Taylor are early adopters of the model, leading the state’s first local P3 under the legislation passed last year in Kentucky. She told the chamber workgroup that the process is advancing, and their team has learned a lot along the way that might benefit other communities interested in P3s.

Here are some suggested starting points for those interested in dipping their toes into the P3 pool.

  • Review the P3 regulations and statutes. It’s best to know the rules before you start. For instance, Section 2 of the administrative regulations states a P3 can be used if the head of a governmental body or local government determines that a P3 is the “most advantageous method of awarding and administering a capital project or other contract.” Jay Ingle, an attorney with Jackson Kelly PLLC who is working with Madison County, noted that the determination requires a qualitative and quantitative analysis of the project before proceeding with a request for proposals. “The factors are laid out, which is really helpful for any local government trying to get started. I can say the process they went through was to analyze the cost to keep doing what we are doing and build a $50 million jail and run the economic model … to see if it was even feasible to move down this (P3) route.“ (You can find links to the legislation, regulations and statutes here.)
  • Do your homework. Chaney said one of the best things the Madison County team did was to study the issue thoroughly before deciding the path to take on their project. They engaged leaders in the community and experts on the issues they are trying to address. In their case, the challenges they are trying to address relate to criminal justice, social services, healthcare, employment and economic development. Representatives with interests in all those areas took part in a more than six-month conversation with county leaders before they chose a path. That process allowed them to gather enough data to provide potential partners and to develop a vision for what they wanted to accomplish. (Watch the video above to learn more.)
  • Ask plenty of questions. P3s are relatively new, so there isn’t a clear template for most projects. These are complex deals that are negotiated among partners, and the P3 approval process is new. This provides flexibility to get creative solutions for financing and services, but it also can create uncertainty about how to proceed. Chaney said her team has had countless conversations not only with local stakeholders and advisers but also Kentucky Finance Cabinet officials to get the answers they need.
  • Find the right partners. Madison County hired financial (Commonwealth Economics) and legal (Jackson Kelly) partners to determine if a P3 was right and to help negotiate the P3 process. Chaney said they did a widespread search for the right partners who met their criteria. They wanted firms experienced with P3 deals but also creative thinkers who were willing to be patient and flexible to help them.

P3 Kentucky was created to educate and connect, so if you have a question about where to go next, feel free to reach out: (502) 544-2917 or ed@c2strategic.com.

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