Spotlight on Public Finance: Spring 2021

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Spotlight on Public Finance

Spring 2021 Newsletter Featured Article 1 Practice Focus 4 Attorney Spotlight 5

Attorneys in Action

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Did You Know?

FEATURED ARTICLE A Bottoms-Up Infrastructure Strategy for American Renewal A brief overview of the Kinder Institute for Urban Research report is provided below. To view the full report, click here. Introduction As the United States emerges from the pandemic, it is clear that the nation faces a number of major challenges. Most of these challenges predate the pandemic, but COVID has highlighted them and made themmore urgent. Succinctly put, these six challenges are: 1. Economic recovery from the pandemic: The pandemic has created hardship for tens of millions of Americans, mostly with those with modest incomes. 2. Racial inequity and economic mobility: Together, the pandemic and the renewed interest in racial injustice have highlighted how persistent racial concerns are and how difficult upward mobility has become for most Americans. 3. Geographic dispersal of opportunity: Even as our cities and metropolitan areas prosper, our rural areas are struggling economically, falling farther and farther behind. 4. Global competitiveness: The United States is in danger of losing its premiere economic position in the world. 5. Digital transformation: New technology has opened the nation to new possibilities. But as the pandemic showed in critical areas such as schools and medical care, the growing “digital divide” has made it difficult for many Americans, both urban and rural, to benefit from these advances. 6. Climate change: Climate is the biggest overarching challenge the world faces today and holds the potential for significant population and economic disruption. One common thread here is the potential of infrastructure investment as a means to address all these challenges. As Adie Tomer and others at the Brookings Institution have pointed out , each of these challenges has “an inextricable relationship with our physical infrastructure systems.”

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After a long period of neglect, it appears likely that the federal government will place great emphasis on infrastructure when the Biden Administration takes office. Clearly, an infrastructure package is necessary both as an economic stimulus and to help the United States maintain its global competitiveness. But to be effective, a new infrastructure plan must take a new approach. Too often U.S. infrastructure policy has taken a top-down approach, dictating from the federal government what will be built, based on inside-the-Beltway lobbying. But to be truly effective – and address the nation’s challenges as listed above – a national infrastructure strategy must be responsive to the real structure of the American economy. The American economy is, in reality, a network of regional and metropolitan economies. Cities and metropolitan areas are the true engines of American prosperity, producing most of the economic output and most of the jobs. These cities and metropolitan areas are economically connected to small towns and rural areas when they are part of the same mega-region, such as Greater New York, Southern California/Southern Nevada, and the Texas Triangle. To meet the challenges listed above, the next American infrastructure strategy must include a market-based, bottom-up component that is responsive to the needs on the ground in cities, metros, and regions. The Kinder-Cisneros Survey: Trends in Local and Regional Infrastructure Priorities In late 2020, the Kinder Institute, in collaboration with Henry G. Cisneros, former Secretary of the U.S. Department of Housing & Urban Development, undertook a major survey of infrastructure priorities in 100 metropolitan areas and 134 cities.1 Among other things, we asked for: (1) The top five infrastructure priorities, and (2) Infrastructure projects that rose to the top of the priority list because of the COVID pandemic. Together with other sources, the survey provided the basis for the first-ever national database of local and regional infrastructure projects. This database includes 1,800 projects across the country – high-priority projects identified by local and regional officials. This database is not comprehensive by any means. But it provides a clear indication of what local and regional leaders have prioritized. The survey revealed five major infrastructure themes: 1. Transportation (including public transit) Transportation projects (37% of all projects) continue to be the primary building blocks of a national infrastructure strategy and should be given high priority. But federal transportation policy often focuses on expansion of highways. In particular, mass transit projects (21% of transportation projects) are vital to the transportation of essential workers and can help reduce carbon emissions. 2. Public facilities (including health care facilities and parks) Next to transportation, public facilities (33% of all projects) were identified most frequently as the priority infrastructure projects. Investment in public facilities is necessary in older cities and regions with obsolete facilities and in newer regions with rapid population growth – and such investment was proven to be an effective stimulus during the New Deal. Local and regional governments also require major technology upgrades to enhance the delivery of more effective public services. The pandemic especially highlighted the need for health facilities and parks. 3. Water and wastewater Investment in water and wastewater infrastructure (15.5% of all projects) can help secure clean water for the nation in the long term – but also address emerging issues associated with climate change, including the increasing problem of extreme weather events, whether they involve too much water (storms and floods) or too little (droughts). A half-century ago, the federal government played a critical role in financing water and wastewater facilities; renewing that commitment today would accelerate progress in localities around the nation. 4. Energy (including renewables) Energy projects (10% of all projects, mostly at the regional level) create opportunities to invest in rural areas and can help close urban/rural disparities in regional employment and economic development because 70% of those projects are located in rural areas. Renewable energy projects make up 53% of the energy projects identified in this study, signaling that local and regional leaders recognize that renewables are both cost-competitive and critical to reducing greenhouse gas emissions.

1 The survey covered the central cities in the 100 largest metropolitan areas as defined by the US Census Bureau and other cities that are in the top 100 in population but are not located in the 100 largest metropolitan areas.

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5. Communications (including broadband) Even before the pandemic, communications infrastructure (5% of all projects) – mostly broadband projects – were an important priority to local and regional officials. But the coronavirus revealed major gaps in equitable access to communications systems in both rural areas and underserved urban areas. Massive investment in communications will be necessary for education, public safety, medical care, and remote employment – and can help bridge the urban-rural divide. These themes must be integrated into the new infrastructure plan, as they reflect the priorities of America’s cities, metropolitan areas, and mega-regions. Doing so can further three vital national priorities described below. Three Big Priorities in American Infrastructure Based on the Kinder/Cisneros survey, we believe a national infrastructure strategy that is responsive to local and regional needs should focus on three major priorities that will help address all of the challenges America faces today. These three priorities are: • Essential Infrastructure: The pandemic has highlighted the need to reinforce overlooked but essential pieces of infrastructure, such as broadband access, emergency response and health facilities, and public transit, that serve essential workers. In our survey, 64% of respondents identified broadband as an infrastructure priority, while 55% identified public facilities (mostly health facilities) as a priority as well. An infrastructure plan that prioritizes this essential infrastructure should focus on short- term, back-to-work efforts and emphasize the needs of disadvantaged communities in order to ensure that recovery from the pandemic is equitable. • Climate Resilience: More than 500 of the 1,800 projects in our survey deal with climate resilience in some way, suggesting this is a major priority for cities and regions. Investment in public transit and renewable energy, which can reduce emissions, and clean water facilities, which can help mitigate the impact of climate change, can help build the nation’s resilience in a time a climate change. • Urban-Rural Connections: Even though our survey was primarily of cities and metropolitan areas, x more than 300 of the 1,800 projects – almost 20% – involve rural areas. Many of these infrastructure projects – including broadband, energy, and transportation – can help harness the prosperity of metropolitan centers to enhance economic opportunities in rural areas. A national program to advance rural broadband could be as transformative as the New Deal’s rural electrification successes. Conclusion: A Different Kind of American Infrastructure Strategy There is a broad bipartisan consensus that a major, federally led infrastructure strategy is vital to meet the nation’s challenges. But the traditional top-down approach won’t meet the nation’s needs. In devising a new infrastructure strategy, the nation must balance that top-down approach with a bottoms-up consultation process with regional and local leaders and focus on the three priorities listed above. Only then will a national infrastructure strategy be truly responsive to the needs of America’s cities and regions – and maximize infrastructure’s value to the nation. The Kinder Institute and the Authors The Kinder Institute for Urban Research is a multidisciplinary think-and-do tank housed at Rice University in central Houston, focusing on urban issues in Houston, the American Sun Belt and around the world. Henry G. Cisneros , Chair of Triple I Partners, is the former Mayor of San Antonio and Secretary of the U.S. Department of Housing & Urban Development. He is a fellow of the Kinder Institute. William Fulton is Director of the Kinder Institute. He is the former Mayor of Ventura, California, and Director of Planning and Economic Development for the City of San Diego. J.H. Cullum Clark is Director of the Bush Institute-SMU Economic Growth Initiative and an Adjunct Professor of Economics at Southern Methodist University. He is a fellow of the Kinder Institute.

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PRACTICE FOCUS Public Transportation and Mobility

Bracewell is truly a one-stop-shop for structuring finance options for our public transportation and mobility clients. Our lawyers advise clients in connection with a variety of legal issues that emerge during the course of funding of public transportation and mobility projects. From infrastructure development and construction to public contracting and financing, we combine our diverse experience to assist our clients with a broad base of issues. This cross-over assures our clients that they will have access to lawyers who are well-versed in regulatory, antitrust, litigation, transactional, environmental, real estate, technology and governmental affairs matters cutting across all modes of transportation. Bracewell public finance lawyers have been key participants in many of the major public transportation and mobility public finance developments in the southwest region of the nation. Our lawyers are experienced in representing clients in the financing of transportation projects, including the issuance of toll revenue bonds, vehicle registration fee bonds, bridge revenue bonds, general obligation bonds, certificate of obligations, and contract revenue obligations (including pass-through revenue obligations). Bracewell has a wealth of experience as bond, disclosure and underwriter’s counsel, having been involved with a number of Texas complex transportation financings involving multiple sources of funding. With respect to federal law and regulation relating to disclosure requirements, Bracewell lawyers Paul Maco and Ed Fierro provide a unique combination of extensive experience in establishing SEC disclosure policy, defending issuers, issuer officials, bond counsel and underwriters in SEC investigations, serving as disclosure, bond and underwriters’ counsel in municipal securities offerings, and preparing and implementing disclosure policies and procedures and training issuer officials and employees in their use. Lawyers at Bracewell have advised public and private clients on local, state and federal procurement and contractor guidelines for transportation projects. We are familiar with funding guidelines and grant applications and compliance. Additionally, our lawyers have advised our clients on virtually every type and variation of transportation delivery method available, including, but not limited to, concessions, design-build, transit-oriented development, lease-lease back and lease purchase agreements, special districts and transportation and tax increment reinvestment zones. Bracewell lawyers have worked to help finance projects through federal grants and loans, including loans through the Build America Bureau at USDOT under the Transportation Infrastructure Finance and Innovation Act and the Railroad Rehabilitation and Improvement Financing Program. Bracewell plays an active role in Texas transportation legislation, including drafting and testifying on bills addressing financing and delivery tools. As it relates to public transit and mobility issuers, our lawyers were on the forefront in drafting much of the Texas legislation creating public transit authorities, and we continue our representations today. Bracewell provides government relations services at both the federal and state levels and understands the regulatory and financial requirements specific to transportation authorities. Furthermore, the firm’s Policy Resolution Group serves our clients in matters in Congress and the regulatory agencies. While infrastructure demands in Texas continue to expand, transportation clients can rely on Bracewell’s team of lawyers to help navigate any complex legal issues that such entities may face. If you are interested in learning more about our transportation practice, please contact Glenn Opel, Barron Wallace, Ben Brooks, Bill Mahomes, Blakely Fernandez, Elizabeth Bowes, Steve Bolden or Tim Deithloff.

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Bill Avila | Partner, San Antonio

What are your specialties within public finance? My public finance practice is concentrated primarily on providing bond counsel and underwriter’s counsel services in the valid authorization and issuance of governmental bonds and private activity bonds for public debt. I work with cities, counties, school districts, hospital districts, water districts, utility districts, special district, public colleges and universities, economic development corporations, public facility corporations, local government corporation and other public nonprofit corporations created to issue tax-exempt governmental bonds for and on behalf of such units of local government for a variety of public purposes. The deals I work on are for development and rehabilitation of housing, hospitals and health facilities, educational facilities, cultural facilities, industrial facilities, economic and community development facilities, as well as facilities of a defense base development authority created for the redevelopment of closed or realigned military defense installations, just to name a few. In additional to my governmental bonds practice, my work also includes two types of tax-exempt private activity bonds. The first are qualified 501(c)(3) bonds for non-profit

charitable organizations, some of which include colleges and universities, private schools, and organizations providing affordable housing, hospitals and health care facilities and services, community and economic development facilities and services. The second are for exempt facilities bonds for governmentally-owned or privately-owned exempt facilities for airports, docks and wharves, mass commuting facilities, water, sewer and solid waste facilities, multifamily housing facilities, and electric and gas facilities. Overall, my practice has included the authorization and issuance of virtually every type of public debt authorized under Texas law for both new money and refunding financings. These financings are payable from an assortment of taxes, revenues (including utility systems, contract revenues, project revenues, lease revenues and other project and systems revenue sources), and combinations thereof, such as bond elections, economic development sales tax and athletic and community venue elections, general obligation tax bonds, certificates of obligation, notes, loans and other obligations, revenue bonds, lease purchases of both real and personal property, special project bonds, tax anticipation notes, time warrants, commercial paper programs (for both general obligation and revenue debt.) Additionally, I handle financings through the Texas Water Development Board, Texas Military Preparedness Commission, HUD, USDA, US Department of Commerce, North American Development Bank, and for fixed rate, variable rate, and multi-modal debt of all types. I also assist public and private clients in developing and negotiating the utilization of various economic development, community development, housing, and business development tools available to local governments. Projects which involve tax increment financing, tax phase-ins, tax abatements, special assessments, hotel tax and sales tax financings, along with – in the development of other tools through legislative initiatives – public/private partnerships and interlocal cooperation projects, financings involving federal funded grant and loan programs, small business lending programs, and Community Development Block Grant activities, projects, and programs are part of my practice.. How did you get started in the public finance practice? I got interested in economics in my junior year at Notre Dame when the Dean of the Arts and Letters College recommended economics as a quantitative area of study that could serve as a good pre-law program which would allow me to do something with math other than put a man on the moon. My first economics professor invited me to take her spring semester “Economics of Public Finance” class. That spring, for my public finance semester project, I put together a presentation on the economics of the Texas system of public school finance based on the evidence presented in the Rodriguez v. San Antonio ISD case that went to the US Supreme Court challenging the constitutionality of Texas public school funding. I decided then that I wanted to apply to law schools in hopes of becoming a better economic policy analyst.

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However, in my second year of law school, I was selected for an internship in the General Counsel’s Office of the Office of Management and Budget in The White House. Working with the lawyers for the President of the United States – together with Henry Cisneros’ first run for Mayor of San Antonio with a platform of creating jobs in San Antonio – got me interested in returning home to become a practicing attorney in hopes of assisting my home town in its economic development efforts. Once I was in the City Attorney’s Office, along with other general municipal law issues I was charged with handling, I got involved and gained professional experience in the legal work for the City’s small business lending program, its conduit private activity bond programs for industrial and commercial projects, educational facilities projects, and health facilities projects. I also got to work on bond elections and bond issuances by its water, sewer, electric and gas utilities. While I found these projects personally rewarding, I discovered that the law firms doing the bond counsel work were located in Dallas and Houston and was led to believe that no San Antonio law firms would ever get into that type of practice. Nonetheless, I left the City after six years and began my own practice and became the first Mexican I was five years old when I saw “Knute Rockne All American” and decided I wanted to attend the University of Notre Dame. I was eight years old when I saw “The Man Who Shot Liberty Valance” and got interested in going law school, ideally in the eastern part of the US and return home to “tame the wild west” with a law book. I still find inspiration from – and have developed a hobby in – observing and interpreting movies, literature, and other forms of visual and performing arts from an “art and economic” perspective. I have found that the study of a culture’s art gives you an insight into its soul and has helped me find a way of coming up with metaphors to describe the processes and nature of a bond issue. This practice has helped people who I have never met before understand and find trust in what I am trying to describe for them. Therefore, I have been told many times by clients and their citizens in attendance at their meetings, that “I can never understand anything that a lawyer is talking about, but when you describe it I can understand it. It makes sense! I have never heard it explained like that before.” American law firm listed in the “Red Book” of municipal securities dealers. What would people be most surprised to learn about you?

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ATTORNEYS IN ACTION Bracewell LLP is pleased to announce that Dallas public finance lawyer Julie Melton Partain has been named partner. Julie concentrates on public debt offerings and business transactions involving cities, counties, school districts, universities, economic development corporations and water districts. She serves as bond counsel, underwriter’s counsel and disclosure counsel in financings for all types of public entities. Before entering private practice, Partain was a judicial clerk to Texas Supreme Court Judge Nathan L. Hecht. Partain earned her B.A. with honors from The University of Texas, her M.P.A. from University of North Texas and her J.D. with honors from The University of Texas School of Law. Congratulations, Julie! On June 8, 2021, Jonathan Frels will be delivering a presentation titled “Mind the Gap – Post Issuance Compliance and Planning for Your Next Election” at the 2021 Texas School Districts Conference presented by the Texas Society of Certified Public Accountants. Several Bracewell lawyers attended NABL U’s The Institute: Virtual 2021 on March 3-5, 2021. Barron Wallace presented on the “Understanding the Roles of Disclosure Counsel and Underwriter’s Counsel” panel. Other Bracewell lawyers who attended include Victoria Ozimek , Brian Teaff , Elizabeth Bowes , Todd Greenwalt , Bill Avila , Paul Maco , Ed Fierro , George Rodriguez , Paige Abernathy , and Sarah Tahir . On March 5, 2021, Jonathan Frels was on a Coalition for Responsible Infrastructure Finance panel delivering a presentation entitled “Bonds 101: Bond Authorization, Issuance and Regulation” to Texas House and Senate legislative staff. Brian Teaff presented on the topic of tax-exempt financing and tax-credit opportunities in the waste management space at the New Jersey Composting Council’s virtual spring member’s meeting on March 3, 2021. Brian Teaff authored an article for American Health Law Association titled “Takeaways for Hospitals from the IRS TE/GE Fiscal Year 2021 Program Letter.” UPDATES Since our last newsletter, our public finance team has distributed a number of federal securities and tax law updates as well as announcements and attorney commentaries. If you missed them the first time or would like to refresh your memory, we have compiled the most recent of our team’s updates here. Texas Governor Lifts Mask Mandate, but Employers Must Still Comply with the Occupational Safety and Health Act March 3, 2021 By Robert S. Nichols , Amy Karff Halev y and Rebecca L. Baker Florida Water System Hack Highlights Challenges for Public Utility Cybersecurity February 23, 2021 By Philip J. Bezanson , Vincent E. Morgan , David B. Springer , and Claire E. Cahoon Power Struggles: Maximizing Insurance Recoveries fromWinter Storms February 19, 2021 By Vincent E. Morgan, Ryan M. Eletto and Claire E. Cahoon

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DID YOU KNOW? • In 2019, Americans took 9.9 billion trips on public transportation. • Since 1995, public transportation ridership has increased by 28%—a growth rate higher than the 23% increase in US population. • Every $1 billion invested in public transportation supports and creates approximately 50,000 jobs. • 45% of Americans have no access to public transportation.

Bracewell LLP makes this information available for educational purposes. This information does not offer specific legal advice or create an attorney-client relationship with the firm. Do not use this information as a substitute for specific legal advice. Attorney advertising. Bracewell is a leading law and government relations firm primarily serving the energy, finance and technology industries throughout the world. Our industry focus results in comprehensive state-of-the-art knowledge of the commercial, legal and governmental challenges faced by our clients and enables us to provide innovative solutions to facilitate transactions and resolve disputes.

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