Many municipalities face significant challenges reconciling increased public demands for local government services with declining revenue bases, reduced state funding, escalating labor and pension costs, a restrictive regulatory environment, and limited access to capital.
Our Municipal Recovery practice can be a powerful ally to local governments and their municipal investors in these uncertain times. We understand the fiscal pressures and credit consequences facing municipalities and have a track record of success helping our clients to:
- access capital markets at affordable rates and terms;
- enhance revenues by maximizing taxing authorities;
- negotiate and arbitrate labor contracts;
- expand tax bases through economic development;
- identify opportunities for cost efficiencies;
- monetize and privatize assets;
- restructure outstanding bonds; and
- negotiate and litigate defaults and remedies.
Ballard Spahr has one of the premier public finance practices in the nation. For more than six decades, we have participated in the issuance of more than $1 trillion in tax-exempt obligations in all states, the District of Columbia, and three territories.
We are continuously listed as a nationally recognized bond counsel firm in The Bond Buyer's Municipal Marketplace (the "Red Book"). Each year Thomson Reuters ranks us among the top firms in the country by dollar volume.
Our attorneys are experienced in the most current issues facing municipal governments in the municipal-finance market. These issues include working capital financings, restructurings, direct loans from banks, pension disclosure, distressed municipality state laws, and Chapter 9 of the Bankruptcy Code. We advise our municipal clients on non-traditional alternatives to general obligation bonding, including the use of government incentives, brownfields, low-interest state loan and grant funding, and work-force grants and incentives.
We assist our municipal clients in rebuilding their tax bases through economic development and targeted redevelopment, including financings for enterprise zones, tax-increment districts, and business and neighborhood improvement districts. We advise our municipal clients on developing innovative ways to identify potential new revenue streams and to leverage under-valued existing assets to launch new mixed-use development and reinvigorate urban cores, thereby improving sustainable tax revenue.
Distressed municipalities sometimes lack the staffing and capability to manage an effective investor communication program to enhance ongoing market access. We can assist local governments in the creation, adoption, and implementation of policies and procedures designed to improve the quality and timeliness of the municipality’s compliance with its continuing disclosure undertakings.
We combine a national scope of practice with strong regional market knowledge. Our Municipal Recovery attorneys meet with and listen to local government officials and their financial advisers. Together, we analyze the task at hand and chart a course forward that minimizes disruption in governmental services and leverages our national experience to position our clients for fiscal health and structural balance in the long term.
Labor costs make up the single largest operating expense for most municipalities. Our labor and employment attorneys represent governmental agencies in union-management relations, including negotiations and arbitrations and before state labor relations boards and other administrative and regulatory agencies. We represent the City of Philadelphia and the Southeastern Pennsylvania Transportation Authority (SEPTA), and many other public employers.
Pension and Post-Retirement Benefits
Underfunded pension and post-retirement benefit liabilities of state and local governments are an increasingly significant problem nationwide. We advise Pennsylvania municipal clients on all aspects of public employee pension law, including Act 600, Acts 205 and 44, the Third Class City Code, and the Pennsylvania Municipal Retirement Act. Our public finance attorneys are also familiar with the most current legal developments in the tax issues surrounding the financing of pension funding obligations, disclosure of unfunded pension and other post-retirement benefits, and treatment of unfunded liabilities in Chapter 9 proceedings.
Municipal Bankruptcy and Workouts
The Deal has consistently ranked us a "top bankruptcy law firm." We have represented municipalities and authorities, trustees, letter of credit banks, bond insurers, and borrowers in a wide range of default and workout situations. Projects have included municipalities and municipal-owned facilities and enterprises, airports, public-transportation facilities, hospitals and academic medical centers, continuing-care retirement facilities, and social-service agencies. We have actively participated in negotiations among the parties in these situations, including trustees, bondholders, credit enhancers and borrowers, and, where appropriate, we have initiated litigation on behalf of indenture trustees in which we have sought to enforce the remedies made available by contract or by applicable law. We are presently actively pursuing litigation on behalf of indenture trustees in one of the major defaults by a municipality in the United States.
We have represented municipalities and authorities, trustees, letter of credit banks, bond insurers, and borrowers in a wide range of default and workout situations. Projects have included municipalities and municipal-owned facilities and enterprises, airports, public-transportation facilities, hospitals and academic medical centers, continuing-care retirement facilities, and social-service agencies. We have actively participated in negotiations among the parties in these situations, including trustees, bondholders, credit enhancers and borrowers, and, where appropriate, we have initiated litigation on behalf of indenture trustees in which we have sought to enforce the remedies made available by contract or by applicable law. We are presently actively pursuing litigation on behalf of indenture trustees in one of the major defaults by a municipality in the United States.
Our bankruptcy attorneys have hands-on experience representing parties involved in some of the nation’s landmark Chapter 9 cases. We understand state and local laws governing distressed municipalities, and their interplay with Chapter 9 of the Federal Bankruptcy Code.
We can assist clients with the establishment of operating authorities to spin off enterprises from traditional government functions, saving money and increasing efficiency. We have handled long-term working capital financings on a tax-exempt basis, as well as all types of refinancings and restructurings of outstanding debt. We understand both the tax implications that may arise from the restructuring of these obligations and the interplay between them and the Bankruptcy Code.
Privatization and Monetization of Public Assets
Our Public-Private Partnership (P3) practice group can help local governments evaluate opportunities to successfully privatize or monetize under-performing public assets while still maintaining different elements of public control.
Our government relations attorneys offer a range of services to municipal clients in state capitals nationwide. We monitor and provide data on the activities of state government and give direct assistance in legislative and administrative efforts, ensuring that our clients' voices are heard by policy makers and regulators. In economic development and government contracting matters, we help clients identify and pursue opportunities that fit their fiscal and operating needs.
Our Municipal Recovery practice includes members of Ballard Spahr's real estate team. We represent governmental entities in real estate transactions as well as in administrative and judicial proceedings involving open space financings and redevelopment, master planning, zoning, leasing, subdivision, land development, enforcement actions, and condemnation and regulatory takings. We regularly collaborate with the firm's construction, eminent domain, water and environmental law, taxation, and public finance attorneys.
- We are serving as Special Tax Counsel to a fiscally distressed Midwestern city in connection with a proposed long-term, tax-exempt working capital financing.
- We represented a municipal bond financial guarantor in connection with negotiations with the State of Connecticut concerning the potential bankruptcy of the City of Hartford and the State's decision to provide annual debt service subsidy payments to prevent a payment default by the City.
- Our bankruptcy lawyers prepared and filed an amicus curiae brief with the First Circuit Court of Appeals on behalf of the National Federation of Municipal Analysts in connection with an appeal of an adverse ruling by a U.S. District Court in a proceeding under PROMESA regarding the diversion of special revenues.
- We represented affiliates of a large European bank in the City of Detroit's Chapter 9 bankruptcy case. In 2005 and 2006, the client purchased more than $500 million of certificates issued as part of a transaction designed to satisfy the City's pension liabilities. Ballard Spahr was involved in all aspects of the City's bankruptcy case and participated at the forefront of most of the litigation until late in the process when we assisted our clients in executing a series of secondary market transactions thereby eliminating their position.
- We represented an affiliate of a large European bank in the City of San Bernardino's Chapter 9 bankruptcy case. In 2005 the client purchased more than $50 million of pension obligation bonds issued by the City with respect to its unfunded pension liabilities. Since being engaged, Ballard Spahr has been involved in all aspects of the City's bankruptcy case and has participated at the forefront of much of the litigation. A settlement has been reached with the City regarding treatment of the bonds under the City's plan, a treatment much more favorable than that originally proposed by the City.
- We represented a major financial institution, who was the largest owner of bank bonds when the liquidity facilities securing Jefferson County, Alabama, sewer revenue bonds were drawn. The representation involved multiple forbearance periods and structuring proposals; the commutation of a bond insurance policy issued by a bond insurer who itself had been placed into receivership by New York insurance regulators; state court litigation relating to the appointment of a receiver and exercise of other remedies; the Chapter 9 bankruptcy; and distressed debt trading. The Jefferson County case involved federal government claims and settlements related to kickbacks and other illegal activities, as well as failure to disclose material information.
- We participated as underwriter's counsel to the 2016 issuance of $15.5 million tax and revenue anticipation notes issued by the City of Compton, California.
- One of our attorneys is serving as special tax counsel to the trustee in connection with the initial debt restructuring of the Puerto Rico Electric Power Authority that involves an ad hoc committee of bondholders. The workout is approximately $8.3 billion.
- We served as special tax counsel to the trustee for bondholders in connection with a workout of a multibillion-dollar municipal bond issuer.
- We served as bond counsel on the City of Bethlehem's long-term tax-exempt working capital financing, which was successfully undertaken in connection with a broad financial recovery plan developed and implemented by the prior administration. That transaction, which required for federal tax purposes the projection of acute liquidity shortages in each of the succeeding five years, was part of a broader financial recovery plan—designed by the City and its financial adviser—that included debt restructurings, workforce reductions, spending cuts in all departments, significant tax and fee increases, and major tax increment financing of the City's Bethlehem Steel Redevelopment Area to promote significant economic development. These financings closed between 2010 and 2014 totaled more than $87 million.
- We represented the bond trustees in a major default and workout involving revenue bonds guaranteed by a large American city to finance improvements to a municipal utility. We have assisted the trustees in the preparation of default notices, document review and interpretation, and discussions and negotiations with the issuer and bond insurer.
- We represent a special service district established at the request of seven developers that filed for protection under the U.S. Bankruptcy Code. We succeeded in getting the bankruptcy case dismissed and the case remanded to the state district court. We also secured a dismissal of the plaintiffs' constitutional claims that their rights to due process were being violated.
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