PURPOSE: This rule describes the requirements for use of a local government bond rating test for demonstrating financial responsibility.

1. (1) A general purpose local government owner or operator, local government, or both, serving as a guarantor may satisfy the requirements of 10 CSR 20-11.093 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 outstanding issues, or where a local government’s bonds are rated by both Moody’s and Standard and 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. (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 20-11.093 by—

   1. (A) Having a currently outstanding issue(s) of revenue bonds of one (1) million dollars or more, excluding refunded issues; and
   2. (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 and 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. (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. (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 10 CSR 20-11 Appendix, Form 11 (see 10 CSR 20- 11.115).
5. (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 10 CSR 20-11 Appendix, Form 12 (see 10 CSR 20-11.115).
6. (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 20-11.112, the local government owner or operator shall obtain alternative coverage within thirty (30) days after notification of the finding.
7. (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
8. (150) days of the change in status.

AUTHORITY: sections 319.114, RSMo (Cum. Supp. 1989) and 644.026, RSMo (Cum. Supp. 1993).* Original rule filed Aug. 3, 1993, effective April 9, 1994. *Original authority: 319.114, RSMo (1989) and 644.026, RSMo (1972), amended 1973, 1987, 1993.