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Proposed Bill Would Promote P3s in Kentucky

In July, the Kentucky Chamber of Commerce released a report entitled Private Solutions to Public Problems: Partnerships to Build a Better Government. The Chamber report, which was the subject of an earlier post, describes the benefits that public-private partnerships ("P3s") can provide to the Commonwealth. As a refresher, a public-private partnership typically involves a working relationship between a state or local government unit and a private business under which the business builds, finances and/or operates a project the governmental agency would have financed, built and operated in years past. The Kentucky Chamber report provides a broader definition that includes the provision by private entities of a wider variety of government services.

The comprehensive report was just the first step to encouraging the use of P3s. Now, state leaders are embracing the idea through legislation which mirrors the recommendations made in the Chamber's report. If it passes, House Bill 407 will:

· Encourage competition for innovative private sector investments in the Commonwealth;

· Establish reliable procedures that encourage such private sector investments; and,

· Promote transparency and accountability in project delivery.

The bill not only allows for state-level P3s, but also the use of public-private partnerships by local governments. Because of this provision, the bill has received wide support from many local chambers of commerce.

The majority of states, including all of Kentucky's surrounding states, rely on P3s to build projects and/or provide public services. If the proposed legislation becomes law, it will show contractors that Kentucky is open to new ways of doing business and is serious about improving the state's infrastructure.

Today, the bill won approval from the House Appropriations and Revenue Committee. We will closely monitor it as the session continues.

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Thomas D. Flanigan is a member of McBrayer, McGinnis, Leslie & Kirkland, PLLC in the Lexington, KY office. Mr. Flanigan specializes in the areas of entrepreneurial business, lending and commercial services and mergers and acquisitions. He can be reached at tflanigan@mmlk.com or 859-231-8780.

This article does not constitute legal advice.

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