Public finance attorneys facilitate deals that build critical infrastructure, and oftentimes, they’re fortunate enough to see the fruits of their labor, such as roads and airports.
That’s particularly rewarding to Barron Wallace, who made the decision to go into public finance early in his career. In fact, he decided to become a bond lawyer while still a law student at the University of Michigan.
Although they don’t know him, users of Houston’s public facilities – including the two airports, NRG Stadium and area public schools – are glad he did. So are retired Houston city workers.
He’s currently negotiating a development agreement, on behalf of Midtown Redevelopment Authority, related to an almost $1 billion Midtown mix use project.
During the past eight years alone, Wallace has led more than 300 public finance projects valued at $37.26 billion.
Earlier this year, Houston’s two airports and United Airlines turned to Wallace for help restructuring $1.36 billion in debt, which provides them some financial relief at a time when revenues are down significantly due to the Covid-19 pandemic.
Wallace credits one of his law school professors, former U.S. Circuit Judge Wade McCree, who asked Wallace about his interests more than three decades ago. The judge sent his student to David Baker Lewis, a public finance attorney in Detroit and co-founder of Lewis & Munday, one of the oldest minority-owned law firms in the U.S. Lewis that suggested Wallace become a bond lawyer.
“I was very fortunate to have a mentor who suggested that,” Wallace said.
For Wallace, who majored in history and minored in finance at the University of Texas at Austin, public finance was a natural fit with his interests.
“Public finance is an area of law that blends public policy and finance,” Wallace said. “It fit a lot of buckets for me.”
Thirty years later, Wallace is a partner at Bracewell and considered one of the top bond lawyers in Texas. There are less than 100 public finance attorneys in Texas, Barron estimates; thirty of whom are at Bracewell.
Wallace’s largest clients, which he’s worked with for over 10 years, include City of Houston, Texas Public Finance Authority, Texas Water Development Board, Midtown Redevelopment Authority, Lone Star College System, the Houston, Aldine, and Spring Independent School Districts, Metropolitan Transit Authority of Harris County, Hidalgo County Regional Mobility Authority and City of Galveston.
Wallace’s journey to Bracewell included some stops along the way. After law school, Wallace worked in public service, first at the Texas Attorney General’s office at its bond desk and then at the City of Houston.
After a few years in public service, Wallace joined Vinson and Elkins. There, he was mentored by Hank Coleman, who Wallace said showed him tricks of the trade.
“At every practice level, I’ve tried to learn from lawyers that are senior to me,” Wallace said. “Also, frankly, from the associates that work with me. I try to be an active learner all the time.”
In 2012, the V&E public finance group, including Wallace, moved over to Bracewell. Since joining Bracewell, the firm’s public finance team has closed 2,667 transactions for a par (aggregate) amount of $194.655 billion. Of those, Wallace led almost 20 percent of the group’s total transactions, 301 deals totaling over $37.264 billion.
“It’s been a really great ride for us,” Wallace said of his time at Bracewell. “We’ve been able to expand our practice in many ways and really build on the strengths that we had when we came from V&E.”
Measured by total par amount, the firm is ranked by Refinitiv, formerly known as Thomson Reuters, as one of the top three public finance firms in Texas since 2018.
Wallace has experience in every aspect of public finance deals. He has served as bond and disclosure counsel for local and state government and government agencies as well as special districts, including local government corporations. Wallace has also represented investment banks as underwriter’s counsel. He enjoys it all.
“It’s nice to be able to do different things on different transactions,” Wallace said.
His deep knowledge of all aspects of public finance law, especially in Texas, is an asset that his clients and those that have worked with him really appreciate.
Melissa Dubowski, Deputy Director at City of Houston’s finance department, started working at the city in 2014. One of her first memories is attending a bond closing at the Bracewell offices.
“I was totally new to the municipal bond finance world, and everything went so smoothly that day,” Dobowski said. “It was like, oh this is so organized and wonderful; and there was Barron, the ringleader of it all.”
But it is Wallace’s institutional knowledge about the city of Houston, and his compassion for the city that stands out most, Dubowski said.
“He really cares about his client and really cares about the client’s work and wants them to be successful,” Dubowski said. “I don’t know how common that is in the Big Law world, but to me, that’s the most important quality that Barron has.”
Houston Pension Bond
In 2017, Wallace and Bracewell served as bond counsel for an almost $1 billion bond transaction for the City of Houston related to pension reform. It may have been one of Wallace’s, and Bracewell’s, most transformative transactions.
“They really led the way as far as legal analysis,” said Tina Peterman, director of Masterson Advisors, the city’s financial advisor.
The bond issue needed voter approval, Peterman said, and Wallace worked with Houston Mayor Sylvester Turner from Day One. Wallace and Bracewell were involved in putting the ballot language together.
“From my perspective, the bond deal was easy,” Peterman said. “The hard part was getting the legislative approvals to do the bond.”
The plan and related bond issue got both legislative and voter approval. Once the November votes were canvassed, they could price the bonds. The pension bond hit a roadblock even before it was priced, Peterman said.
It was a week before Christmas, and the bond had to close by the end of the calendar year.
Both Peterman and Dubowski had just gotten off the plane in New York when they found out a lawsuit had been filed for an injunction to block the sale of the bonds.
“It was Sunday, and I’m walking in New York,” Dubowski said. “I’m looking at my work email, and it was like, oh my God, I have to call Barron,” Dubowski said. “He already had his ‘go’ bag ready. He jumped in his car to drive to Austin so he could be at the attorney general’s office in the morning to do everything he could to make sure the bonds got approved by the attorney general.”
AG approval was a major part of making sure the restraining order that the plaintiffs were seeking didn’t get implemented. Without the bond, the city wouldn’t be able to implement the pension reformplan they had been working on for years.
“When [the AG office] opened on Monday, Barron was there following through with the legal merits of the case,” Peterman said. ”We were able to get comfort from the AG’s office that they would approve the transactions,” Peterman said.
There was a lot of back and forth, and there was a question at the time of whether or not the pricing would go through, Peterman said. They were able to price the bonds, though it was delayed by a day.
“It had already been approved by the legislature, so [the AG approval] was the final piece, and it went down to the wire,” Dubowski said.
They decided it was too risky to try and get an approval from the attorney general’s office the week between Christmas and New Years. They might not make the deadline.
“So, we decided we needed to close these bonds before Christmas,” Dubowski said.
Wallace had an idea. He suggested doing a pre-closing before they even priced the bonds, Dubowski said.
“That way, once it comes time to do the pricing, all we need to do is update the official statement, and we can close.”
They were able to close two days after it was priced, which is unheard of in Texas, Peterman said. In Texas, all government bonds need to be approved by the attorney general. Usually, it is a two-week process; sometimes it can be more.
“It was all Bracewell leading that charge,” Peterman said.
“I have never heard of that in the municipal bond world, and we never had to do that again,” Dubowski said. “It was all of Barron’s leadership to say we can get all of this done ahead of time. We don’t usually do it, but you have a deadline.”
Underwriters Counsel
Wallace’s deep institutional knowledge of local and Texas law is why Allegra Ivey, managing director of public finance investment banking at Bank of America’s BofA Securities, often choses Wallace as counsel. Wallace represented them on transactions, but she has also worked with Wallace when he served as bond counsel for other clients.
“I worked with Barron on a number of municipal bond transactions — both to fund new capital projects and to refinance outstanding debt for interest cost savings,” Ivey said. “These have included bond offerings for airports, as well as water and wastewater facilities.”
Not only is Wallace smart, with a strong understanding of local and state law, Ivey said, he is also very adaptive, an important trait in an ever-evolving environment of regulations and product offerings affecting the marketplace.
For Wallace, representing underwriters is interesting, because of the interplay of public finance with capital markets and securities law.
“Barron was one of the first attorneys I met when I started covering clients in Texas, and he is very intelligent, approachable and patient,” Ivey said. “As a result, he is one of my go-to people when I have legal questions.”
Wallace’s experience has helped him during the current pandemic. When the country shut down in April, there were significant impacts on airlines and airports. Already involved in an airport transaction that began pre-pandemic, Wallace and his team had to think through legal questions, changes in the market, as well as logistics since people weren’t in their offices.
“In April, we were preparing voluntary filings to let the market know how the airport was doing, and that preceded the actual transaction in September,” Wallace said. “But it was important to get that information to flow out to the market.”
This year, they completed restructurings of debt for both Houston airports and United Airlines. The package included three transactions totaling more than $1.363 billion. Restructuring the Houston Airport System debt will give the airports some relief as revenues are expected to be lower over the next couple of years due to the pandemic. The United Airlines restructuring deal allowed the company to refinance debt related to construction of several buildings at the airport.
In addition to taking measure of the market, they also had to make sure they understood the CARES Act, the $2.2 trillion federal economic stimulus package passed in response to the economic fallout of COVID-19, and its impact on airports and issuers. As facts changed, they needed to make sure to adjust their advice to clients.
“What people thought about the pandemic in April really changed,” Wallace said. “A four-to-six-week thing turned into six to nine months, maybe a year issue. So, you keep learning about these things, and apply them in your trade.”
A key issue was the ability to explain the airport’s approach, and how they were going to manage through the pandemic, Wallace said.
“It was making sure you had clear communication with your clients so you can transfer that into disclosure for the market,” Wallace said.
Wallace enjoys working with the airports and the role transportation plays in our society.
“But I’m equally interested in community development and community empowerment,” Wallace said.
Once such deal was bringing a grocery to a Houston-area food desert. He worked with a number of organizations to bring a grocery store to that neighborhood. It involved a fairly complex structure and a loan from the U.S. Department of Housing and Urban Development
“Someone said, ‘I’m glad you worked on that’,” Wallace said. “‘We were afraid that deal wasn’t going to close. We had a deadline.’ Those are the things I look for: ‘How can I use my skills to better the community?’ Not personal, but how it affects everyone else.”
Wallace is currently representing the Midtown Redevelopment Authority and negotiating a development agreement with Rice Management Company. The agreement relates to the Ion Project and the Innovation District in Midtown. Once completed, it will be over 16 blocks of mixed-use development and will include workforce training, community and civic gathering spaces, technology incubators, office and housing. Total investment will be near $1 billion.
And while most of Wallace’s clients are some of the largest municipal entities and frequent issuers, he said some of his most important clients are ones that are infrequent issuers, issuers that didn’t think they could issue bonds.
“I think people want to see improvement in their community,” Wallace said. “I think in my profession, we can find ways to do it.”
At Bracewell, Wallace says he now plays the role of mentor to younger attorneys. He is a strong advocate for young people, Peterman said, particularly young people of color and/or women. Peterman said she considers him a mentor, though she joked that might make him feel old.
“Barron and I worked together for over twenty-years,” Peterman said. “If I have a question, there are a couple, maybe three people I will call, and Barron is certainly one of them.”
Wallace is not only knowledgeable about municipal law in Texas, but he is trustworthy as well, Peterman said. Peterman trusts when she needs to share a set of confidential circumstances when she needs advice, she can rely on Wallace. Those two characteristics are why she sees Wallace both as a mentor and a confidant.
Looking ahead, Wallace said his goal is to like to help expand Bracewell’s public finance practice on the national platform.
“We have an incredibly strong Texas presence, but we want to expand that,” Wallace said.