D.C. Mun. Regs. tit. 20, r. 20-6706

Current through Register Vol. 71, No. 36, September 6, 2024

Rule 20-6706 - GUARANTEES

6706.1

An owner may satisfy the requirements of § 6700 by obtaining a guarantee that conforms to the requirements of this section.

6706.2

The guarantor shall be a firm that:

(a) Has a controlling interest in the owner;

(b) Has a controlling interest in a firm that has a controlling interest in the owner;

(c) Is controlled through stock ownership by a common parent firm that has a controlling interest in the owner; or

(d) Is engaged in a substantial business relationship with the owner and issues the guarantee as an act incident to that business relationship.

For purposes of this section, the phrase "controlling interest" means direct ownership of at least fifty percent (50%) of the voting stock of another entity.

6706.3

Each guarantee issued under this section shall be provided in the form prescribed by Appendix 67-3 (Guarantee).

6706.4

Not later than one hundred twenty (120) days after the close of each financial reporting year, the guarantor shall demonstrate that it meets the financial test criteria of §§ 6704 or 6705 based on year-end financial statements for the latest completed financial reporting year by completing a letter of assurance from the chief financial officer, as described in § 6703.3, and delivering the letter to the owner.

6706.5

If the guarantor fails to satisfy the financial tests of either §§ 6704 or 6705 at the end of any financial reporting year, the guarantor shall notify the owner by certified mail, return receipt requested, not later than one hundred twenty (120) days after the end of that financial reporting year, and before cancellation or non-renewal of the guarantee.

6706.6

If the Department notifies the guarantor that the guarantor no longer satisfie s the financial tests of either §§ 6704 or 6705, or the requirements of § 6703.3, the guarantor shall notify the owner by certified mail, return receipt requested, not later than ten (10) days after receiving the notification from the Department.

6706.7

The guarantee shall terminate not less than one hundred twenty (120) days after the date the owner receives the notification pursuant to §§ 6706.5 or 6706.6 as evidenced by the return receipt. The owner shall obtain alternative assurance in accordance with § 6701.6.

6706.8

An owner that uses a guarantee to satisfy the requirements of § 6700 shall establish a standby trust fund in accordance with § 6711 when the guarantee is obtained.

6706.9

Under the terms of the guarantee, all amounts paid by the guarantor under the guarantee shall be deposited directly into the standby trust fund in accordance with § 6712.

D.C. Mun. Regs. tit. 20, r. 20-6706

Final Rulemaking published at 43 DCR 2799 (May 24, 1996), incorporating text of Proposed Rulemaking published at 42 DCR 5765, 5775 (October 20, 1995); as amended by Final Rulemaking published at 46 DCR 7699 (October 1, 1999); amended by Final Rulemaking published at 67 DCR 1778 (2/21/2020)