By Ed Green
P3 Kentucky Editor
As the federal government and many Kentucky leaders continue to promote public-private partnerships as a way to unlock private investments and move forward long-needed infrastructure projects, local leaders may wonder how P3s can serve their needs.
Understanding how P3s can be used for large transportation projects or to support housing and other amenities at large universities is easy. These high-demand projects have easy-to-identify revenue streams, such as tolling or other types of user fees.
However, the P3 model is used successfully across the country to support other types of community projects. Here are a few that could be relevant for mayors, county judge-executives and other local leaders in Kentucky.
Many leaders have expressed the need to improve livability in their cities or towns by investing in public parks. In addition to the environmental benefits of increased green space, parks provide recreational and leisure benefits that appeal to many citizens and support economic development. Unfortunately, in an era of tight budgets, parks projects often fall low on priority lists for funding and communities can’t find ways to pay for them.
In many cities nationwide, local governments have turned to private partners – often involving nonprofit entities that can help raise money – to help develop, maintain and improve parks systems. Private partners often have inherent advantages and can generate funds without relying on tax revenue. A developer might provide the upfront costs for improvements and use a combination of public funds, fund-raising and user fees to generate a return on the investments. In the end, the parks provide a new community asset.
An example of a successful parks partnership can be found in Madison, Wisc.
Increasingly, local entities are turning to the private sector to help finance expensive drinking water and sewer projects to serve their citizens and businesses. Kentucky has an estimated $12.4 billion in need for these types of projects over the next 20 years, but it’s not alone. Last year, the EPA identified water infrastructure investment needs totaling $655 billion nationwide, according to Bloomberg.
As this article points out, many cities and towns turn to private operators and investors to help resolve their water needs – either as consultants, construction, operators, investors or a combination of all these roles. Some projects have had mixed results, but this Wharton School articles suggests some smart solutions for local leaders.
At the state level, Kentucky officials already are exploring options for replacing and expanding public office buildings as part of the Capital Plaza P3. This build-lease P3 option is becoming more popular, even at the local level, because the long-term lease payments can often fund the full cost of the project and deliver an improvement that is needed now.
For instance, local leaders in Baltimore are considering using a P3 model to replace a 173-year-old courthouse that has become too old and crowded to serve the community’s needs.
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