Local Government Bond Rating Test

PURPOSE: This rule describes the requirements for use of a local government bond rating test for demonstrating financial responsibility. (1) A general purpose local government owner or operator, local government, or both, serving as a guarantor may satisfy the requirements of 10 CSR 26-3.093 by having a currently outstanding issue(s) of general obligation bonds of one (1) million dollars or more, excluding refunded obligations, with a Moody’s rating of Aaa, Aa, A, or Baa, or a Standard & Poor’s rating of AAA, AA, A, or BBB. Where a local government has multiple Substance Storage Tanks outstanding issues, or where a local government’s bonds are rated by both Moody’s and Standard & Poor’s, the lowest rating shall be used to determine eligibility. Bonds that are backed by credit enhancement other than municipal bond insurance may not be considered in determining the amount of applicable bonds outstanding. (2) A local government owner or operator or local government serving as a guarantor that 1) is not a general purpose local government and 2) does not have the legal authority to issue general obligation bonds may satisfy the requirements of 10 CSR 26-3.093 by— (A) Having a currently outstanding issue(s) of revenue bonds of one (1) million dollars or more, excluding refunded issues; and (B) Having a Moody’s rating of Aaa, Aa, A, or Baa, or a Standard & Poor’s rating of AAA, AA, A, or BBB as the lowest rating for any rated revenue bond issued by the local government. Where bonds are rated by both Moody’s and Standard & Poor’s, the lower rating for each bond shall be used to determine eligibility. Bonds that are backed by credit enhancement may not be considered in determining the amount of applicable bonds outstanding. (3) The local government owner or operator, guarantor, or both, shall maintain a copy of its bond rating published within the last twelve (12) months by Moody’s or Standard & Poor’s. (4) To demonstrate that it meets the local government bond rating test, the chief financial officer of a general purpose local government owner or operator, guarantor, or both, shall sign a letter worded as specified in Form 11, included herein. (5) To demonstrate that it meets the local government bond rating test, the chief financial officer of local government owner or operator, guarantor, or both, other than a general purpose government shall sign a letter worded as specified in Form 12, included herein. (6) The director may require reports of financial condition at any time from the local government owner or operator, local government guarantor, or both. If the director finds, on the basis of the reports or other information, that the local government owner or operator, guarantor, or both, no longer meets the local government bond rating test requirements of 10 CSR 26-3.112, the local government owner or operator shall obtain alternative coverage within thirty (30) days after notification of the finding. (7) If a local government owner or operator using the bond rating test to provide financial assurance finds that it no longer meets the bond rating test requirements, the local government owner or operator shall obtain alternative coverage within one hundred fifty (150) days of the change in status. Wording of Financial Assurance Instruments Form 11—General Purpose Local Government Bond Rating Test The following text should be used to comply with the requirements of 10 CSR 26-3.112(4) as follows, except that the instructions in brackets are to be replaced by the relevant information and the brackets deleted: Letter from Chief Financial Officer I am the chief financial officer of [insert name and address of local government owner or operator, or guarantor]. This letter is in support of the use of the bond rating test to demonstrate financial responsibility for [insert “taking corrective action” and/or “compensating third parties for bodily injury and property damage”] caused by [insert “sudden accidental releases” and/or “non-sudden accidental releases”] in the amount of at least $[insert dollar amount] per occurrence and $[insert dollar amount] annual aggregate arising from operating (an) underground storage tank(s). Underground storage tanks at the following facilities are assured by this bond rating test: [List for each facility the name and address of the facility where tanks are assured by the bond rating test]. The details of the issue date, maturity, outstanding amount, bond rating, and bond rating agency of all outstanding bond issues that are being used by [name of local government owner or operator, or guarantor] to demonstrate financial responsibility are as follows: [complete table] Issue Date: Maturity Date: Outstanding Amount: Bond Rating: Rating Agency [Moody’s or Standard & Poor’s] The total outstanding obligation of [insert amount], excluding refunded bond issues, exceeds the minimum amount of one (1) million dollars. All outstanding general obligation bonds issued by this government that have been rated by Moody’s or Standard & Poor’s are rated as at least investment grade (Moody’s Baa or Standard & Poor’s BBB) based on the most recent ratings published within the last twelve (12) months. Neither rating service has provided notification within the last twelve (12) months of downgrading of bond ratings below investment grade or of withdrawal of bond rating other than for repayment of outstanding bond issues. I hereby certify that the wording of this letter is identical to the wording specified in 10 CSR 26-3.112(4) as the regulations were constituted on the date shown immediately below. [Signature] [Name] [Title] [Date] Substance Storage Tanks Form 12—Local Government Bond Rating Test The following text should be used to comply with the requirements of 10 CSR 26-3.112(5) as follows, except that the instructions in brackets are to be replaced by the relevant information and the brackets deleted: Letter from Chief Financial Officer I am the chief financial officer of [insert name and address of local government owner or operator, or guarantor]. This letter is in support of the use of the bond rating test to demonstrate financial responsibility for [insert “taking corrective action” and/or “compensating third parties for bodily injury and property damage”] caused by [insert “sudden accidental releases” and/or “non-sudden accidental releases”] in the amount of at least $[insert dollar amount] per occurrence and $[insert dollar amount] annual aggregate arising from operating (an) underground storage tank(s). This local government is not organized to provide general governmental services and does not have the legal authority under state law or constitutional provisions to issue general obligation debt. Underground storage tanks at the following facilities are assured by this bond rating test: [List for each facility the name and address of the facility where tanks are assured by the bond rating test]. The details of the issue date, maturity, outstanding amount, bond rating, and bond rating agency of all outstanding revenue bond issues that are being used by [name of local government owner or operator, or guarantor] to demonstrate financial responsibility are as follows: [complete table] Issue Date: Maturity Date: Outstanding Amount: Bond Rating: Rating Agency [Moody’s or Standard & Poor’s] The total outstanding obligation of [insert amount], excluding refunded bond issues, exceeds the minimum amount of one (1) million dollars. All outstanding revenue bonds issued by this government that have been rated by Moody’s or Standard & Poor’s are rated as at least investment grade (Moody’s Baa or Standard & Poor’s BBB) based on the most recent ratings published within the last twelve (12) months. The revenue bonds listed are not backed by third-party credit enhancement or are insured by a municipal bond insurance company. Neither rating service has provided notification within the last twelve (12) months of downgrading of bond ratings below investment grade or of withdrawal of bond rating other than for repayment of outstanding bond issues. I hereby certify that the wording of this letter is identical to the wording specified in 10 CSR 26-3.112(5) as the regulations were constituted on the date shown immediately below. [Signature] [Name] [Title] [Date] AUTHORITY: section 319.114, RSMo 2000.* This rule originally filed as 10 CSR 2011.112. Original rule filed Aug. 3, 1993, effective April 9, 1994. Moved and amended: Filed April 15, 2011, effective Dec. 30, 2011. *Original authority: 319.114, RSMo 1989.