Institutions commit funds to advance state, local public-private partnership projects
Six Kentucky-based banks have launched a first-of-its kind investment fund to support public-private partnership (P3) projects throughout Kentucky. The institutions launching the $150 million Commonwealth Infrastructure Fund (CIF) are among the largest community banks in the state:
- Central Bank & Trust Co.
- Commonwealth Bank & Trust Co.
- Kentucky Bank
- Stock Yards Bank & Trust Co.
- Traditional Bank, Inc.
- United Bank & Capital Trust Co.
The Commonwealth Infrastructure Fund (www.cifp3.com) is an innovative, private fund established to provide debt financing to private-sector firms participating in public infrastructure projects at both the state and local levels. The fund is managed by John R. Farris, founder of Commonwealth Economics LLC.
The Kentucky General Assembly passed and Gov. Matt Bevin signed Kentucky’s P3 legislation (HB 309) last year, giving the Commonwealth one of the broadest and most comprehensive P3 laws in the country. The new law established a process that allows local governments to partner with private firms to finance and build capital projects that might not otherwise be possible.
“Although we were one of the last states in the country to pass P3 legislation, we can lead the nation in figuring out new and creative ways to finance critical infrastructure projects,” said Fund Manager John R. Farris, “I am pleased that these six, exemplary Kentucky banks have made this commitment to improving Kentucky infrastructure.”
The Fund will provide debt financing critically needed at both the state and local levels for projects such as the repair and replacement of roads and bridges, water and sewer systems, and social infrastructure projects such as student housing, treatment centers and charter schools.
In P3 projects, revenue generated from the projects themselves is generally the primary source of funding used to repay the upfront capital loaned to construct the public infrastructure.
Addressing infrastructure needs across the nation and throughout Kentucky has become a policy imperative. The leaders of these six banks recognize that P3s provide a solution and committed capital for projects that will improve services for Kentuckians, provide better access to facilities, expand and accelerate infrastructure development and create jobs in the Commonwealth.
“Loans made by the Commonwealth Infrastructure Fund will spur economic development and create jobs without asking for taxpayer dollars. In other words, it is the communities and people of Kentucky who will directly benefit from the Commonwealth Infrastructure Fund and the completion of additional critical infrastructure work,” said Luther Deaton, chairman, president and CEO of Central Bank & Trust Co.
“A dedicated fund and funding source, such as the Commonwealth Infrastructure Fund, could mean the difference between developing an infrastructure project in Kentucky and having no project at all,” said Darrell R. Wells, CEO and chairman, Commonwealth Bancshares Inc., the holding company for Commonwealth Bank & Trust.
“The Commonwealth Infrastructure Fund is designed to harness the potential of private funding from our local community banks to expand and accelerate infrastructure development in Kentucky. It’s a great thing for the entire Commonwealth,” said Louis Prichard, president and CEO, Kentucky Bank.
“Our belief is that the $150 million of debt capital dedicated to the Commonwealth Infrastructure Fund will provide the upfront dollars necessary to construct critical infrastructure projects in Kentucky,” said David Heintzman, CEO and Chairman, Stock Yards Bank & Trust.
“Kentucky’s community banks are the first in the nation to launch such a fund that will help finance public-private infrastructure projects through local banks. We recognize the immense value for our state in pooling our resources to help move these critical P3 projects forward,” said William Alverson, CEO, Traditional Bank.
“For a long time, our local community banks have wanted to lend to infrastructure projects in our state. The benefit of the Commonwealth Infrastructure Fund is that it enables like-minded community banks to band together and participate in loans that will address Kentucky’s infrastructure needs that are beyond the capacity of many public-funding sources,” Lloyd C. Hilliard Jr., CEO and chairman, United Bank & Capital Trust Co.