Recent RFPs Illustrate Need for Local P3 Projects in Kentucky

Lexington, Louisville Are Latest Examples of Kentucky Cities Turning to P3

By Ed Green
P3 Kentucky Editor

For those of us watching closely, 2017 was a transitional year for the concept of public-private partnerships in Kentucky. One thing was clear, the financing model is being embraced by more communities, and we’re likely to see P3 use spread across the Bluegrass State in 2018 and beyond.

The rise in local P3 activity seems to be a response to two factors:

1. Communities have pent up demand to improve or replace facilities.

2. Local budgets are tight, and leaders are seeking partners who can bring upfront capital and new ideas that create value.

The latest examples of local P3 projects are in Louisville and Lexington, where leaders are considering options to expand or improve government facilities with the help of private-sector partners. These projects follow Madison County Fiscal Court’s efforts to use a P3 model to build a Healing Center in Richmond, Ky., to address the drug epidemic that has led to overcrowding in its local jail.

Louisville releases RFP for downtown space study

As we’ve reported, Louisville is commissioning a consultant to study its facilities and space needs and to make a recommendation for a public-private partnership model to address those needs. Just before the holidays, Louisville officials released an RFP for the study, and responses are due Jan. 29.

The RFP says the consultant would be paid up to $100,000 to help local leaders assess the condition of two downtown buildings and estimate the costs to repair or replace the facilities. It also calls for a commercial real estate market study, a review of current and future space needs for the local government and a proposal “for potential financial structures for a public‐private partnership in the development of City Hall Lot.” The lot is south of Market Street, between Sixth and Seventh streets in downtown Louisville.

It seems likely that this study will result in an RFP to develop new downtown space for local government offices and to replace the Louisville Metro Police Headquarters. The location also seems well-suited for a mixed-use project that would allow a private developer to provide the needed facilities and offset some of the public costs by developing adjacent retail, commercial and/or residential space.

Click here to see the Louisville RFP.

Lexington RFP seeks new downtown government center

In Lexington, local leaders also added to their Christmas wish list late last month, dropping an RFP for a private partner to finance, design, develop, construct, lease, maintain and operate a new Government Center. This project was approved by local leaders in the fall and calls for construction or redevelopment of space for local government offices.

Lexington currently spends $4 million annually to operate five downtown buildings, and officials are seeking cheaper alternatives.

The RFP released last month calls for the private development of space that would be leased to Lexington government for up to 35 years, at which time Lexington would have an option to acquire all the property.

Click here to see the Lexington RFP.

More projects could bring more competition

The rise of P3 projects, particularly at the local level, is potentially good news for communities across the Commonwealth. An increasing number of P3 deals should bring more competition from private-sector partners and investors willing to invest time and money in public projects.

Of course, these partners will want a return on their investments, but our state and communities can benefit from having more options for potential project partners.

Our hope would be that the more potential proposals local leaders have to choose from, the better value they will find for these much-needed projects.

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

Join P3KY Newsletter