Five Kentucky-based banks have launched an investment fund to support public-private partnership (P3) projects throughout Kentucky. The institutions launching the $125 million Western Kentucky Infrastructure Fund (WKIF) are among the largest community banks in the state:
- Field & Main Bank, Inc.
- The Paducah Bank & Trust Co.
- Security Bank & Trust Co.
- Stock Yards Bank & Trust Co.
- Traditional Bank Inc.
The Western Kentucky Infrastructure Fund 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 Jake Schirmer, manager of the Commonwealth Infrastructure Fund, a similar fund serving Central Kentucky.
According to Schirmer, “WKIF will provide debt financing to both the public and private sector for public-private partnerships (P3). Additionally, it will fund infrastructure projects in Western Kentucky where many of these may be direct with the municipality or with a private developer. Furthermore, the fund will look for transactions that are part of social infrastructure such as hospitals, charter schools, substance abuse recovery centers and opportunity zone projects, to name a few.”
The Kentucky General Assembly passed and Gov. Matt Bevin signed Kentucky’s P3 legislation (HB 309) in 2016, 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.
“For communities in the western part of the state, the Western Kentucky Infrastructure Fund will play a vital role in expanding infrastructure projects. Having community banks supporting their communities will be crucial in our efforts to rebuild our infrastructure,” said Mardie Herndon, President/COO of The Paducah Bank & Trust Co.
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 five 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.
“Kentucky’s community banks are the first in the nation to launch funds 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.
“This is a great way for us to partner with some of our member banks throughout the state. We are part of the first fund, and as a bank with its roots in Kentucky, we want to continue to support Kentucky as it looks to replace its infrastructure,” said Ja Hillebrand, CEO of Stock Yards Bank & Trust, Co.
“There is a need for the private sector to work with the public as a creative vehicle to rebuild Kentucky. Loans made by the Western Kentucky Infrastructure Fund will spur economic development and create jobs. I fully support it,” said Dale Sights, President of Field & Main Bank.
Barry “Boo” McIntosh, CEO of Security Bank of Tennessee said, “We have a strong presence in western Kentucky, and we see the Western Kentucky Infrastructure Fund as a way to continue to deepen our roots there. I believe the private sector and public sector working together will be a catalyst for future development. As a combined group, we have taken the same creative approach toward financing these large projects.”