Fee Proposal to Provide
Bond and/or Disclosure Counsel Services
City of Gonzales
April 6, 2023
kutakrock.com
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FIRM OVERVIEW
Kutak Rock LLP is a national firm of more than 550 lawyers with locations in 19 cities nationwide. The firm serves local, regional and national clients in a multidisciplinary practice.
We encourage our attorneys to take advantage of the national resources and broad range of expertise the firm offers in order to provide the best legal services possible to our clients.
Kutak Rock has earned a reputation across the United States and abroad for providing excellent legal services in a practical, cost-conscious manner. The firm maintains that reputation by fostering an atmosphere in which firm lawyers actively communicate with their clients at the initial stages of each engagement to gain a complete and clear understanding of desired objectives.
Attorneys use their broad experience to help clients achieve those objectives in an economical and timely fashion.
The firm maintains expertise in the areas of public finance, general corporate law, corporate finance, real estate, litigation, intellectual property and technology law, labor and employment law, employee benefits law, securitization, tax, tax credits, banking, bankruptcy, health care law, insurance, antitrust, environmental law, federal practice, international trade and government relations. The attorneys of Kutak Rock work together in integrated, national practice groups to maintain and enhance their technical expertise and to reinforce and support one another in achieving client objectives.
Kutak Rock has a longstanding commitment to the hiring and advancement of women and minority attorneys and has achieved national recognition among major law firms for its fulfillment of that commitment. The firm maintains a Director of Diversity on staff to assist with recruiting minority attorneys and to mentor them once they join the firm. Kutak Rock has been named a “Best Law Firm for Minority Attorneys,” “Best Law Firm for LGBTQ Equality,” a “Bright Spot” for flexibility, a “Ceiling Smasher” for women partners, and “Invested in Diversity.” The firm is Gold Certified by the Women in Law Empowerment Forum and was Certified and Certified “Plus” in Mansfield Rule version 3.0.
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PUBLIC FINANCE PRACTICE
More than 130 Kutak Rock lawyers devote all or a major portion of their practice to the field of public finance and related aspects of law. The firm has served as bond counsel in more than 20,000municipal bond issues in all 50 states, the District of Columbia, the Virgin Islands, Guam and Puerto Rico. No opinion of the firm with respect to the tax-exempt status of a bond issue has ever been the subject of any court action.
The firm’s national prominence is attributable in part to the large number of subspecialties it maintains within the public finance field. These subspecialties run the gamut of tax-backed and revenue bond debt, including traditional general obligation bond issues, tax and revenue anticipation notes, municipal commercial paper, infrastructure financings (including water, sewer and electric bonds), clean water and drinking water revolving funds, higher education, health care and other 501(c)(3) conduit financings, special district and tax increment bonds, arena and convention center bonds, solid waste project financings, transportation financings (including airport, mass transit, port and toll road bonds), lease financings (including certificates of participation), single-family and multifamily housing bonds, student loan financings and a wide variety of municipal derivative products.
To complement this expertise, Kutak Rock has a 10-member Section 103 Tax Department (including a former IRS official) specializing in federal tax exemption matters and a number of nationally recognized authorities in the application of the federal securities laws to public finance.
The Tax Department attorneys meet weekly via conference call to discuss current tax issues and developments as well as to share information obtained from regular interactions with Department of Treasury and IRS personnel. These tax attorneys also regularly handle IRS bond audits—over 300 to date.
The National Public Finance Department is purposefully organized to match this breadth of expertise with the needs of a diverse client base. Consequently, the firm does not limit its practice focus to one particular role. The firm routinely serves as bond counsel, special tax counsel, issuer’s counsel, disclosure counsel, underwriter’s counsel, placement agent’s counsel, counsel to municipal bond insurance companies and to letter of credit banks and as borrower’s counsel in conduit financings.
Kutak Rock attorneys also take pride in their willingness to work with our clients to develop new and inventive approaches to satisfy the needs of our clients. Rather than only being able to replicate what other firms have done before, the firm has gained a reputation for undertaking sophisticated transactions that involve the application of creative approaches to difficult financing problems. In the past 30 years the firm has provided legal services in many financings that Institutional Investor magazine and The Bond Buyer have recognized as public finance “Deals of the Year.” Most recently, the firm served as bond and underwriter’s counsel for the 2020 P3 Financings of the Year. Kutak Rock also served as bond counsel for the “ESG/Green Financing” of 2018-19, a large “green bond” financing of the Los Angeles County Metropolitan Transportation Authority.
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In addition to its highly active National Public Finance Department, the firm has a strong contingent of lawyers who work in real estate, bankruptcy, banking, securities laws, litigation and other areas. These practitioners are available to support public finance clients of the firm as needed.
LEADERS IN BOND COUNSEL
Kutak Rock has been listed among the most active bond counsel firms in the nation in annual industry rankings since such statistics were first made available. Following are national rankings for the firm for recent years as compiled by Refinitiv (formerly Thomson Reuters), the statistician for the public finance industry (rankings based on dollar total):
Issuers for which the firm has served as bond counsel include traditional political bodies such as states, counties, cities and school districts, as well as numerous special-purpose financing authorities such as public power districts, institutions of higher education, state housing finance agencies and student loan agencies.
UNDERWRITER’S COUNSEL EXPERIENCE
Kutak Rock has acted as underwriter’s counsel for every major national and most regional investment banking firms. With respect to the variety and quantity of financings, in recent years the firm’s experience in the role of underwriter’s counsel has been unmatched by any law firm. In fact, statistics compiled by Refinitiv show that for the period 1992 through 2022 (cumulatively over the term) Kutak Rock served as underwriter’s counsel in a larger number of public finance issues than any other firm in the country. Following are Refinitiv’s national rankings (based on dollar total) for Kutak Rock as underwriter’s counsel for recent years:
National Underwriter’s Counsel Rankings
Year Rank Number of Issues Dollar Total
2022 7 215 $9.27 billion
2021 5 300 $14.21 billion
2020 5 293 $14.28 billion
2019 5 272 $11.73 billion
2018 6 250 $9.85 billion
National Bond Counsel Rankings
Year Rank Number of Issues Dollar Total
2022 2 406 $19.19 billion
2021 2 523 $25.43 billion
2020 5 499 $17.24 billion
2019 3 485 $19.42 billion
2018 4 369 $16.20 billion
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TAX EXPERTISE
An excellent indicator of the firm’s tax expertise is the number and quality of the bond structures developed by the firm’s tax lawyers. Kutak Rock developed the current floating rate tender bond program, convinced the IRS that a swap contract should be integrated with a floating rate bond issue with a resulting fixed “yield,” developed a contingent interest structure in which the contractor for a major toll road received contingent interest, and developed numerous refunding techniques replicated by many bond counsel firms.
Members of the Public Finance Tax Department frequently address client questions with regard to private use of bond-financed facilities. The depth and breadth of the group’s experience is an important resource for clients who face unpredictable challenges in attempting to make the best use possible of their facilities within the bounds of applicable tax law. The firm’s tax lawyers have obtained a number of positive rulings from the IRS on private use matters. Following are the rankings for Kutak Rock (based on dollar total):
National Special Tax Counsel Rankings
Year Rank Number of Issues Dollar Total
2022 6 3 $389 million
2021 14 2 $79 million
2020 9 8 $166 million
2019 8 16 $328 million
2018 4 16 $930 million
Every week the members of the Kutak Rock Public Finance Tax Department convene by conference call to discuss current financings in which the firm is involved. Members of the department use this forum to raise unusual or difficult questions concerning the tax implications of ongoing transactions and to solicit the counsel of their colleagues. By concentrating the expertise of all the firm’s tax lawyers in this way, the essential elements of a transaction are more likely to become clarified, and a resolution of the issue is more likely to emerge. The firm’s use of a group dynamic has been a highly successful approach to resolve what often appear to be intractable problems.
The group approach also serves to keep the firm’s tax attorneys fully coordinated with respect to the firm’s articulated positions on tax questions that arise repeatedly.
NATIONALLY RENOWNED DISCLOSURE COUNSEL
The firm’s public finance attorneys have also developed an extraordinary expertise in analyzing the SEC’s initiatives, such as the MCDC Initiative, the municipal advisor rules and Rules 15Ga-1 and 15Ga-2, the conduct of due diligence investigations, the evaluation of information for materiality, the preparation of disclosure documents and the development of disclosure policies and procedures as highly recommended (and effectively required) by the SEC.
Following are the firm’s national disclosure counsel rankings (based on dollar total) for recent years as compiled by Refinitiv:
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National Disclosure Counsel Rankings
Year Rank Number of Issues Dollar Total
2022 5 105 $9.09 billion
2021 4 140 $11.02 billion
2020 8 140 $5.05 billion
2019 7 148 $5.41 billion
2018 5 125 $5.47 billion
As one of the nation’s most active firms in the municipal disclosure arena (as evidenced by the firm’s consistently high national ranking as disclosure counsel, noted above), Kutak Rock’s public finance attorneys have developed an ongoing familiarity with market and regulatory expectations and developments, expertise in the conduct of due diligence investigations, and experience in the evaluation of information for materiality and the SEC-recommended development of disclosure-related procedures and staff training. The firm regularly advises government officials concerning the preparation of disclosure documents for primary offerings and secondary market continuing disclosure filings, as well as the making of public and private statements relevant to disclosure during press conferences and presentations. Kutak Rock has a concrete, firmwide system in place to monitor and keep abreast of regulatory requirements so that our attorneys and our clients stay informed of regulatory disclosure requirements. Our broad market knowledge and penetration ensures that we can assist our clients to understand regulatory trends, learn quickly of specific developments and be aware of practical developments as they occur across the country.
Clients include a few states where the firm has been specifically appointed as special disclosure counsel for their bond issues, other additional states where our role as bond counsel includes disclosure advice, numerous state agencies, counties, major metropolitan cities, small cities and towns, and numerous special districts.
Kutak Rock regularly submits comments to the SEC and others regarding proposed rules and regulations affecting the municipal market. The firm has closely monitored the guidance of the SEC regarding municipal disclosure and has kept up to date with the SEC’s program of heightened scrutiny of municipal issuers. Most recently, the firm identified various issues, and outlined policy and procedural implementation suggestions, in response to the August 20, 2018 release of the amendments to Rule 15c2-12, which added two reportable events effective February 27, 2019. The proposed amendments were in response to complaints by investors and analysts concerning the lack of information about private borrowings by issuers (such as bank lines of credit and leases) and about modifications of the terms or provisions of any type of financial obligation of an issuer. Based on our extensive experience with issuers of all sizes, we knew that the amendments, as proposed, would be very difficult for most issuers to comply with, and (we believed) were much broader than investors and analysts really required (for example, a lease of any size, even for an office copy machine, would have had to be reported). Kutak Rock submitted extensive comments to the SEC, and when the Final Amendments were published they were curtailed in many respects. (Our firm’s comments were cited in 14 footnotes to the accompanying SEC commentary, far more than any other commenting law firm.) We then prepared written 6 | kutakrock.com
advice for our clients on both the steps they should follow to implement the new Amendments, as well as technical advice on the terms and nuances of the new Amendments.
Kutak Rock was also intimately involved in the SEC’s preceding program, the MCDC Self-Reporting Initiative, assisting many issuers in analyzing whether—and how—to respond, and then representing seven (of the unlucky 72 selected issuers) in negotiating consent orders with the SEC. By virtue of these negotiations, the firm gained valuable insights about the SEC’s analysis of the disclosure rules—and both the important, and unimportant, issues.
The role of disclosure counsel in an individual transaction versus an ongoing period of time comprised of related transactions is substantively different. In all transactions, whether the former or the latter, disclosure counsel assists the issuer in complying with securities laws and regulations.
However, the role of disclosure counsel in an ongoing relationship extends beyond the transaction to assisting the issuer in implementing procedures, fulfilling secondary market continuing disclosure obligations and assuring itself that at all times, even between transactions, it is in compliance with applicable laws and regulations. In a transactional engagement, the role is akin to analyzing a snapshot of the issuer’s disclosure. In an ongoing relationship, the role is like watching a movie of the issuer’s disclosure with continuous footage.
The role of disclosure counsel is especially important at a time when the SEC is expanding its scrutiny of municipal disclosure, as illustrated by recent enforcement actions and inquiries regarding pension disclosure, federal legislation, including the Dodd-Frank Act, rulemaking, such as the expansion of Rule 15c2-12, and statements by SEC staff in various forums to the effect that the SEC is expanding its authority over the municipal markets. While much of the existing authority the SEC and Municipal Securities Rulemaking Board (“MSRB”) have over the municipal market runs to underwriters and market participants other than bond issuers, it is important for bond issuers to keep abreast of such regulatory requirements, as they significantly impact bond issuance, and some regulatory requirements are, of course, passed on to bond issuers through contractual mechanisms in bond purchase contracts and elsewhere. Recent SEC actions against municipal officials and their financial advisors underscore the SEC’s intentions.
EXPERIENCE WITH WATER AND SEWER FINANCINGS
Kutak Rock has accrued significant experience providing legal services to municipal issuers of debt to finance water and sewer system projects. In its history Kutak Rock has provided bond counsel services in more than 1,310 bond issues for water and sewer facilities having an aggregate principal amount exceeding $40.7 billion. The firm has taken part in water and sewer project financings for issuers large and small—for states and major metropolitan areas as well as townships and villages.
In recent years the firm has provided bond counsel services in water and wastewater project financings for issuers such as the Cities of Conway, Clarksville, Fayetteville, Little Rock, Mountain Home and Texarkana, Arkansas; Holiday Island (Arkansas) Suburban Improvement District #1; the Fulton County (Arkansas) Water Authority; the Industrial Development Authority of the County of Maricopa, Arizona; the City of Phoenix, Arizona; the California Pollution Control Financing Authority; the Cities of Long Beach and Bakersfield, California; the Cities of Boulder, 7 | kutakrock.com
Central City and Englewood, Colorado; Johnson County, Kansas; the Cities of Burlington, Gardner, Hutchinson, Lenexa, Mission Hills, Overland Park, Spring Hills and Wichita, Kansas; Camden and Greene Counties, Missouri; the Cities of Lake Ozark, Laurie, Parkville and Versailles, Missouri; the Cities of Omaha, Lincoln and Tecumseh, Nebraska; the Village of Ewing, Nebraska; the Oklahoma Water Resources Board; the Cities of Janesville and Madison, Wisconsin; the Town of Greybull, Wyoming; and many others.
LEASE REVENUE BOND EXPERIENCE
Kutak Rock has provided legal services in more than 685 lease revenue bond financings having an aggregate principal amount in excess of $15.6 billion. In California, the firm has participated in more than 80 lease revenue bond issues exceeding more than $2.8 billion in aggregate principal amount. California issuers in whose lease revenue bond financings the firm has provided services include the California Public Finance Authority, Madera Unified School District, the California Municipal Finance Authority, the City of Pomona, the City of Rancho Cucamonga, the City of Richmond, the City of Brentwood, the California Community College, the Gold Coast Transit District, the Finance Authority of Long Beach, Menifee Union School District, the City of Redondo Beach, the City of Los Angeles, The Community Redevelopment Agency of the City of Los Angeles, the San Diego County Board of Education, the County of Orange, Sutter County, the Municipal Water District of Orange County, the County of Riverside, the City of San Jose Financing Authority, the Anaheim Public Financing Authority, the California Special Districts Association Finance Corporation, the California Statewide Communities Development Authority and the California Transit Finance Corporation, among many others. 8 | kutakrock.com
FEE PROPOSAL
Kutak Rock has always been flexible in its billing arrangements with clients, developing fee structures that are fair to the firm for the time, effort and level of expertise to be devoted to the client, while at the same time providing the client adequate assurances that legal services are being provided on a timely, cost-effective basis.
Kutak Rock prides itself on providing responsive financing options for its clients.
Accordingly, the firm proposes the following fees for our services as bond counsel and/or disclosure counsel. Please note we are agreeable to discussing variations.
Type of Issue Fee
Lease financing for a community
center/library/teen center (interim financing
private placement)
$27,000 (bond counsel)
Lease Revenue Bond or Short-Term Note
financing for a community
center/library/teen center (public offering)
$70,000 (bond counsel and disclosure
counsel)
USDA financing for a community
center/library/teen center
$40,000 (bond counsel)
$27 million State Revolving Fund loan for
industrial wastewater project
$8,500 (bond counsel)
In addition, we note that our fees quoted above include ordinary expenses incurred in connection with the anticipated financing(s). Any extraordinary fees would be incurred only with the prior approval of the City of Gonzales and would be billed separately to the City of Gonzales. .