Section 29.2166a. Local government financial test.

a. Section 280.105 is amended to read as follows:

Section 280.105. (a) A local government owner or operator may satisfy the requirements of section 280.93 by passing the financial test specified  in this section. To be eligible to use the financial test, the local government owner or operator shall have the ability and authority to assess and  levy taxes or to freely establish fees and charges. To pass the local government financial test, the owner or operator shall meet the criteria of subsection (b)(2) and (3) of this section based on year-end financial statements for the latest completed fiscal year.

(b)     The local government owner or operator shall have all of the following information available, as shown in the year-end financial statements for the latest completed fiscal year:

(1)     Total  revenues:     Consists  of   the  sum     of    general     fund     operating     and nonoperating revenues, including all of the following:

(i)   Net local taxes.

(ii)   Licenses and permits.

(iii)   Fines and forfeitures.

(iv)   Revenues from use of money and property.

(v)   Charges for services.

(vi)   Investment earnings.

(vii)   Sales (property, publications, and the like).

(viii)   Intergovernmental revenues (restricted and unrestricted).

(ix)      Total revenues from  all  other  governmental   funds,  including enterprise, debt service, capital projects, and special revenues,  but excluding revenues to funds held in a trust or agency capacity. For purposes of this test, the calculation of total revenues shall exclude all transfers between funds under the direct control of the local government using the financial test (interfund  transfers),  liquidation  of  investments, and issuance of debt.

(2)     Total  expenditures:     Consists  of  the  sum  of  general  fund   operating     and nonoperating expenditures, including all of the following:

(i)   Public safety.

(ii)   Public utilities.

(iii)   Transportation.

(iv)   Public works.

(v)   Environmental protection.

(vi)   Cultural and recreational.

(vii)   Community development.

(viii)   Revenue sharing.

(ix)   Employee benefits and compensation.

(x)   Office management.

(xi)   Planning and zoning.

(xii)   Capital projects.

(xiii)   Interest payments of debt.

(xiv)   Payments for retirement of debt principal.

(xv)     Total expenditures from all other governmental funds  including enterprise, debt service, capital projects, and special revenues. For purposes of this test, the calculation of total expenditures shall exclude all transfers between funds under the direct control of the local  government using the financial test (interfund transfers).

(3)   Local revenues: Consists of total revenues, as defined in subsection (b)(1) of this section, minus the sum  of   all  transfers  from   other governmental entities, including all moneys received from federal, state, or local government sources.

(4)     Debt service: Consists of the sum of  all  interest  and  principal payments on all long-term credit obligations and all interest-bearing short- term credit obligations. Includes interest and principal payments on general obligation bonds, revenue bonds, notes, mortgages, judgments, and interest- bearing warrants.  Excludes payments on any of the following:

(i)   Non-interest-bearing short-term obligations.

(ii)   Interfund obligations.

(iii)   Amounts owed in a trust or agency capacity.

(iv)   Advances and contingent loans from other governments.

(5)   Total funds: Consists of the sum of cash and investment securities from all funds, including general, enterprise, debt  service,  capital projects, and special revenue funds, but excluding employee retirement funds, at the end of the local government's financial reporting year. Includes federal securities, federal agency securities, state and local government securities, and other securities, such as bonds, notes, and mortgages. For purposes of this test, the calculation of total funds shall exclude agency funds, private trust funds, accounts receivable, value of real property, and other non-security assets.

(6)    Population consists of the number of people in the area served by the local government.

(c)   The local government's year-end financial statements, if independently audited, cannot include an adverse auditor's opinion or a disclaimer of opinion. The local government cannot have outstanding issues of general obligation or revenue bonds that are rated as less than investment grade.

(d)  The local government owner or operator shall have a letter signed by the chief financial officer worded as specified in subsection (e) of this section.

(e)     To demonstrate that it meets the financial test under subsection (b) of this section, the chief financial officer of the local government owner or operator shall sign, within 120 days of the close of each financial reporting year, as defined by the 12-month period for which financial statements used to support the financial test are prepared, a letter worded exactly 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 the owner  or operator]. This letter is in support of the use of the local government financial 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 "nonsudden 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 financial test [list for each facility: the name and address of the facility where tanks assured by this financial test are located.  If  separate  mechanisms  or   combinations  of mechanisms are being used to assure any of the tanks at this facility, list each tank assured by this financial test by the tank identification number provided in the notification submitted pursuant to 40 C.F.R. Part 280.22 or the corresponding state requirements.]

This owner or operator has not received an adverse opinion, or a disclaimer of opinion from an independent auditor on its financial statements for the latest completed fiscal year. Any outstanding issues of general obligation or revenue bonds, if rated, have a Moody's rating of Aaa, Aa, A, or Baa or a Standard and Poor's rating of AAA, AA, A, or BBB; if rated by both firms, the bonds have a Moody's rating of Aaa, Aa, A, or Baa and a Standard and Poor's rating of AAA, AA, A, or BBB.

Worksheet For Municipal Financial Test

PART I, BASIC INFORMATION

1.            Total Revenues

(a)            Revenues (dollars) Value of revenues excludes liquidation of and issuance of debt. Value includes all general fund operating and non-operating revenues, as well as all revenues from all other governmental funds including enterprise, debt service, capital, and special revenues, but excluding revenues to funds held in a trust or agency capacity.

(b)           Subtract interfund transfer (dollars)

(c)           Total Revenues (dollars)

2.            Total Expenditures

(a)                         Expenditures (dollars) Value consists of the sum of general fund operating and non-operating expenditures including interest payments on debt, payments for retirement of debt principal, and total expenditures from all other governmental funds including enterprise, debt service, capital projects, and special revenues.

(b)           Subtract interfund transfers (dollars)

(c)           Total expenditures (dollars)

3.            Local Revenues

(a)           Total Revenues (from 1c) (dollars)

(b)           Subtract total intergovernmental transfers (dollars)

(c)           Local revenues (dollars)

4.            Debt Service

(a)           Interest and fiscal charges (dollars)

(b)           Add debt retirement (dollars)

(c)           Total debt service (dollars)

5.            Total funds (dollars)

(Sum of amounts held as cash and investment securities from all funds, excluding amounts held for employee retirement funds, agency funds, and trust funds)

6.            Population (persons)

PART II. APPLICATION OF TEST

7.            Total Revenues to Population

(a)           Total revenues (from 1c)

(b)           Population (from 6)

(c)           Divide 7a by 7b

(d)          Subtract 417

(e)           Divide by 5,212

(f)          Multiply by 4.095

8.            Total Expenses to Population

(a)           Total expenses (from 2c)

(b)           Population (from 6)

(c)           Divide 8a by 8b

(d)          Subtract 524

(e)           Divide by 5,401

(f)          Multiply by 4.095

9.            Local Revenues to Total Revenues

(a)           Local Revenues (from 3c)

(b)           Total Revenues (from 1c)

(c)           Divide 9a by 9b

(d)          Subtract .695

(e)           Divide by .205

(f)          Multiply by 2.840

10.          Debt Service to Population

(a)           Debt Service (from 4d)

(b)           Population (from 6)

(c)           Divide 10a by 10b

(d)          Subtract 51

(e)           Divide by 1,038

(f)          Multiply by -1.866

11.          Debt Service to Total Revenues

(a)           Debt Service (from 4d)

(b)           Total Revenues (from 1c)

(c)           Divide 11a by 11b

(d)          Subtract .068

(e)           Divide by .259

(f)          Multiply by -3.533

12.          Total Revenues to Total Expenses

(a)           Total Revenues (from 1c)

(b)           Total Expenses (from 2c)

(c)           Divide 12a by 12b

(d)          Subtract .910

(e)           Divide by .899

(f)          Multiply by 3.458

13.          Funds Balance to Total Revenues

(a)           Total Funds (from 5)

(b)           Total Revenues (from 1c)

(c)           Divide 13a by 13b

(d)          Subtract .891

(e)           Divide by 9.156

(f)          Multiply by 3.270

14.          Funds Balance to Total Expenses

(a)           Total Funds (from 5)

(b)           Total Expenses (from 2c)

(c)           Divide 14a by 14b

(d)          Subtract .866

(e)           Divide by 6.409

(f)          Multiply by 3.270

15.          Total Funds to Population

(a)           Total Funds (from 5)

(b)           Population (from 6)

(c)           Divide 15a by 15b

(d)          Subtract 270

(e)           Divide by 4,548

(f)          Multiply by 1.866

16.     Add 7f + 8f + 9f + 10f + 11f + 12f + 13f + 14f + 15f + 4.937.

I hereby certify that the financial index shown on line 16 of the worksheet is greater than zero and that the wording of this letter is identical to  the wording specified in 40

C.F.R.   Part    280.105(c)    as    such    regulations    were constituted on the date shown immediately below.

[Signature] [Name] [Title] [Date]

(f)   If a local government owner or operator using the test to provide financial assurance finds that it no longer meets the requirements of the financial test based on the year-end financial statements, then the owner or operator shall obtain alternative coverage within 150 days of the end of the year for which financial statements have been prepared.

(g)   The director of the implementing agency may require reports of financial condition at any time from the local government owner or operator. If the director finds, on the basis of the reports or other information, that the local government owner or operator no longer meets the financial test requirements of (b) to (e), then the owner or operator shall obtain alternate coverage within 30 days after notification of the finding.

(h)   If the local government owner or operator fails to obtain alternate assurance within 150 days of finding that it no longer meets the requirements of the financial test

based on the year-end financial statements or within 30 days of notification by the director of the implementing agency that it no longer meets the requirements of the financial test, then  the  owner   or operator shall notify the director of the failure within 10 days.

History: 1998-2000 AACS.