HB309

## **Public-Private Partnerships (P3)**

Rep. Leslie Combs(D) & Sen. Max Wise (R) took the reins in the passage of HB 309, enabling the the state to accept competitive proposals from the private sector to improve fiscal efficiency, management, construction, and maintenance of public goods, ranging from basic infrastructure (sewers, airports, bridges, and highways), state parks, and even schools.  HB 309 requires the state and the private sector to collaborate when making decisions about a project. By bringing external resources and specialized expertise to a project, the state is expected to achieve certain benefits from a P3 that typically are not achievable when using a more traditional, public sector procurement approach. (FIG #1) The biggest supporter of the

legislation since it's first proposal, dating back 2009, has been the Kentucky Chamber (click for P3 overview).

In the Kentucky Legislature, Rep. Combs has previously sponsored this legislation in the General Assembly in 2013, 2014, & 2015. In 2014, HB 407 made it to Gov. Beshear's desk, but was vetoed as a result of phrasing that would outlaw the ability to raise revenue to pay for roads/bridges via tolls. In 2013 and 2015, the bill was derailed by the House GOP caucus.

Opponents, although few, fear that the bill would enable private entities exploit taxpayer dollars, employ corruption, enable fraud, bankruptcy, and tax-evasion, and don't feel that the state's economy will significantly benefit from these partnership in the long run, based on few cases where P3 policies have resulted in disastrous outcomes.

The dramatic increase in frequency of P3 legislation in states throughout the US has indicated a decrease in apprehension regarding these new economic policies. The National Conference of State Legislatures denotes this trend and identifies spread each year.

·     2009: 37 Bills in 20 states

·     2010: 22 Bills in 9 states

·     2011: 40 Bills in 20 states

·     2012: 30 Bills in 16 states

·     2013: 81 Bills in 28 states

·     2014: 68 Bills in 21 states

·     2015: 47 Bills in 25 states

The house passed HB309 in just a matter of days with a 83-11 vote, passing it off to the senate, who added a single amendment in a months time. The Senate passed HB 309 with a 29-9 vote on March 14th, 2016. On this evening Gov. Matt Bevin posted a video addressing HB 309 with promising but ominous message on his Facebook page (click here for video). In sum, he recommended that the bill be reconciled with inclusion of the Senate's amendment that would outlaw tolls (like 2014 HB 407, which was vetoed) or else he couldn't support it. His enthusiasm about the bill gave a positive impression of his plans to help the state improve provision of public goods in Kentucky.

The Senate Committee's substitute was passed by the House with an 86-8 vote the very next morning with little hesitation. The bill was delivered to the Governor on March 28th and signed into law April 8th, 2016.

#### **Other important supporters of HB 309 include:**

*Association of General Contractors, Kentucky Chamber of Commerce, Kentucky Association of Counties, Kentucky County Judge/Executive Association, Kentucky League of Cities, Greater Louisville, Inc., Commerce Lexington, American Council of Engineering Companies, Mayfield Graves County Chamber of Commerce, Hardin County Chamber of Commerce, Kentucky Network for Development Leadership and Engagement, Mercer Chamber of Commerce, Southern Kentucky Chamber of Commerce, Kentuckians for Better Transportation, Kentucky Association of Highway Contractors, Kentucky Association of Manufacturers, Big Ass Solutions, & W. Rogers Company*

### **Coverage**

* http://kychamberbottomline.com/2016/03/24/kentucky-chamber-priority-public-private-partnership-p3-bill-passes-senate/
* http://kychamberbottomline.com/2016/02/17/action-alert-urge-your-senator-to-vote-yes-on-public-private-partnership-p3-legislation/
* http://www.wymt.com/content/news/Lawmakers-finish-work-on-public-private-partnerships-bill-373614011.html
* http://www.bizjournals.com/louisville/news/2016/01/27/p3-legislation-introduced-with-bipartisan-support.html

### **Legislative Summary/Timeline**

#### **Cosponsors**

Overly , Sannie
Adkins , Rocky
Bell , Johnny
Richards , Jody
Stumbo , Greg
Thompson , Tommy
Denham , Mike
Shell , Jonathan
Clark , Larry
DeCesare , Jim
Donohue , Jeffery
Palumbo , Ruth Ann
Yonts , Brent
Heath , Richard
Keene , Dennis
Rader , Marie
Horlander , Dennis

### **Amendments**

1. **HCS**- Retain original provisions except: amend KRS 45A.030 to amend the definition of "private partner" to remove the exclusion for nonprofit organizations, and to amend the definition of "public-private partnership" to clarify that existing methods of procurement will continue to be employed, namely competitive negotiation, and that public-private partnership (P3) procurement will constitute a distinct method of project delivery; amend KRS 45A.075 to provide that only competitive negotiation methods may be utilized for a P3; remove certain explicitly named entities from groups that the Finance and Administration Cabinet must consult with in the regulatory promulgation process; amend original language in the bill that requires certain explicit General Assembly authorizations for P3 projects to clarify that this requirement is in addition to any other existing statutory authorizations required for capital projects generally; amend the unsolicited proposal provisions to require public notice of proposals received by a governmental body and to allow a 90-day period of time for submission of competing proposals to be considered along with the unsolicited proposal; clarify original language to more explicitly state that any procurement resulting from a review of any unsolicited proposal shall itself be undertaken through an open, competitive procurement process; make similar amendments as those previously stated to the local government provisions of the bill, including the amended definitions of terms and clarified unsolicited proposal procedures; provide that the provisions of Sections 1 to 3 of the Act relating to state agency P3 procurement shall apply only to a project for which the procurement process is initiated on or before the effective date of the Act.
2. **HFA1**(Moore, Tim) - Increase the project cost threshold at which prevailing wage requirements will apply, for applicable state agency or local government projects utilizing a public-private partnership delivery method, from $250,000 to $500,000.
3. **HFA2**(Moore, Tim) - Increase the project cost threshold at which prevailing wage requirements will apply, for applicable state agency or local government projects utilizing a public-private partnership delivery method, from $250,000 to $500,000.
4. **HFA3**(Combs, Leslie) - Provide that within 30 days of receiving an unsolicited proposal a local government may elect to consider it for further action, and that public notice of the proposal shall be provided at that time either pursuant to the provisions of KRS Chapter 424 or electronically on the website of the local government.

### **History**

Friday, April 8, 2016 - signed by Governor (Acts, ch. 67)

Monday, March 28, 2016 - delivered to Governor

Monday, March 28, 2016 - enrolled, signed by each presiding officer

Friday, March 25, 2016 - passed 86-8

Friday, March 25, 2016 - House concurred in Senate Committee Substitute (1)

Friday, March 25, 2016 - posted for passage for concurrence in Senate Committee Substitute (1)

Friday, March 25, 2016 - to Rules (H)

Friday, March 25, 2016 - received in House

Thursday, March 24, 2016 - passed 29-9 with Committee Substitute (1)

Thursday, March 24, 2016 - floor amendment (1) defeated

Thursday, March 24, 2016 - floor amendments (2) (3) (4-title) (5-title) (6) and (7) withdrawn

Thursday, March 24, 2016 - 3rd reading

Wednesday, March 23, 2016 - floor amendment (7) filed

Wednesday, March 23, 2016 - passed over and retained in the Orders of the Day

Tuesday, March 22, 2016 - floor amendments (4-title), (5-title) to Bill and (6) filed to Committee Substitute

Tuesday, March 22, 2016 - passed over and retained in the Orders of the Day

Monday, March 21, 2016 - floor amendments (1) and (3) filed to Committee Substitute, floor amendment (2) filed to Bill

Monday, March 21, 2016 - passed over and retained in the Orders of the Day

Friday, March 18, 2016 - posted for passage in the Regular Orders of the Day for Monday, March 21, 2016

Thursday, March 17, 2016 - reported favorably, 2nd reading, to Rules with Committee Substitute (1)

Wednesday, March 16, 2016 - returned to Economic Development, Tourism & Labor (S)

Wednesday, March 16, 2016 - 1st reading

Wednesday, March 16, 2016 - taken from Economic Development, Tourism & Labor (S)

Tuesday, February 16, 2016 - to Economic Development, Tourism & Labor (S)

Friday, February 12, 2016 - received in Senate

Thursday, February 11, 2016 - 3rd reading, passed 83-11 with Committee Substitutes (1) floor amendment (3)

Thursday, February 11, 2016 - floor amendments (1) and (2) withdrawn

Wednesday, February 10, 2016 - floor amendments (1) and (3) filed to Committee Substitute, floor amendment (2) filed to Bill

Wednesday, February 10, 2016 - posted for passage in the Regular Orders of the Day for Thursday, February 11, 2016

Wednesday, February 10, 2016 - 2nd reading, to Rules

Tuesday, February 9, 2016 - reported favorably, 1st reading, to Calendar with Committee Substitute (1)

Friday, February 5, 2016 - posted in committee

Monday, February 1, 2016 - to Appropriations & Revenue (H)

Wednesday, January 27, 2016 - introduced in House

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