132 Neb. Admin. Code, ch. 8, § 015

Current through September 17, 2024

Section 132-8-015 - Local Government Financial Test

An owner or operator that meet the criteria of a local government as identified in 017 of this Chapter, and satisfies the requirements of Sections 015.01 through 015.03, may demonstrate financial assurance up to the amount specified in Section 015.04:

015.01 Financial component

015.01A The owner or operator must satisfy Section 015.01A1 or 015.01A2 as applicable:

015.01A1 If the owner or operator has outstanding, rated, general obligation bonds that are not secured by insurance, a letter of credit, or other collateral or guarantee, it must have a current rating of Aaa, Aa, A or Baa, as issued by Moody's, or AAA, AA, A, or BBB, as issued by Standard and Poor's on all such general obligation bonds; or

015.01A2 The owner or operator must satisfy each of the following financial ratios based on the owner or operator's most recent audited annual financial statement:

015.01A2(a) A ratio of cash plus marketable securities to total expenditures greater that or equal to 0.05; and

015.01A2(b) A ratio of annual debt service to total expenditures less than or equal to 0.20.

015.01B The owner or operator must prepare its financial statements in conformity with Generally Accepted Accounting Principles for governments and have its financial statements audited by an independent certified public accountant (or appropriate State agency).

015.01C A local government is not eligible to assure its obligations under this section if it:

015.01C1 Is currently in default on any outstanding general obligation bonds; or

015.01C2 Has any outstanding general obligation bonds rated lower than Baa as issued by Moody's or BBB as issued by Standard and Poor's; or

015.01C3 Operated at a deficit equal to five percent (5%) or more of total annual revenue in each of the past two (2) fiscal years; or

015.01C4 Receives an adverse opinion, disclaimer of opinion, or other qualified opinion from the independent certified public accountant (or appropriate State agency) auditing its financial statement as required under Section 015.01B. However, the Director may evaluate qualified opinions on a case-by-case basis and allow use of the financial test in cases where the Director deems the qualification insufficient to warrant disallowance of use of the test.

015.01D The following terms used in this section are defined as follows:

015.01D1 "Deficit" equals total annual revenues minus total annual expenditures;

015.01D2 "Total Revenues" include revenues from all taxes and fees but does not include the proceeds from borrowing or asset sales, excluding revenue from funds managed by local government on behalf of a specific third party;

015.01D3 "Total Expenditures" include all expenditures excluding capital outlays and debt repayment;

015.01D4 "Cash Plus Marketable Securities" is all the cash plus marketable securities held by the local government on the last day of the fiscal year, excluding cash and marketable securities designated to satisfy past obligations such as pensions: and

015.01D5 "Debt Service" is the amount of principal and interest due on a loan in a given time period, typically the current year.

015.02 Public notice component

The local government owner or operator must place a reference to the closure and post-closure care costs assured though the financial test into its next comprehensive annual financial report (CAFR) after the effective date of this section or prior to the initial receipt of waste at the facility, whichever is later. Disclosure must include the nature and source of closure and post-closure care requirements, the reported liability at the balance sheet date, the estimated total closure and post-closure care cost remaining to be recognized, the percentage of landfill capacity used to date, and the estimated landfill life in years. A reference to remedial action costs must be placed in the CAFR not later than 120 days after the remedial action workplan has been approved by the Department. For the first year the financial test is used to assure costs at a particular facility, the reference may instead be provided to the Department, and placed in the operating record until issuance of the next available CAFR if timing does not permit the reference to be incorporated into the most recently issued CAFR or budget. For closure and post-closure costs, conformance with Government Accounting Standards Board Statement 18 assures compliance with this public notice component.

015.03 Recordkeeping and Reporting Requirements

015.03A The local government owner or operator must provide the Department the following items and place a copy into the facility's operating record:

015.03A1 A letter signed by the local government's chief financial officer that:

015.03A1(a) Lists all the current cost estimates covered by a financial test, as described in Section 015.04;

015.03A1(b) Provides evidence and certifies that the local government meets the conditions of Sections 015.01A, 015.01Band 015.01C; and

015.03A1(c) Certifies that the local government meets the conditions of Sections 015.02 and 015.04.

015.03A2 The local government's independently audited year-end financial statements for the latest fiscal year, including the unqualified opinion of the auditor who must be an independent, certified public accountant or an appropriate State agency that conducts equivalent comprehensive audits;

015.03A3 A report to the local government from the local government's independent, certified public accountant (CPA) or an appropriate State agency based on performing an agreed upon procedures engagement relative to the financial ratios required by Section 015.01A2, if applicable, and the requirements of Sections 015.01B, 015.01C3 and 015.01C4. The CPA or State agency's report should state the procedures performed and the CPA or State agency's finding; and

015.03A4 A copy of the comprehensive annual financial report (CAFR) used to comply with Section 015.02 or certification that the requirements of General Accounting Standards Board Statement 18 have been met.

015.03B The items required in Section 015.03A must be provided to the Department and a copy placed in the facility operating record as follows:

015.03B1 In the case of closure and post-closure care, prior to the initial receipt of waste at the facility, or

015.03B2 In the case of remedial action, not later than 120 days after the remedial action workplan has been approved by the Department.

015.03C After the initial placement of the items in the facility's operating record, the local government owner or operator must update the information and provide to the Department the updated information and place a copy into the operating record within 180 days following the close of the owner or operator's fiscal year.

015.03D The local government owner or operator is no longer required to meet the requirement of Section 015.03 when:

015.03D1 The owner or operator substitutes alternate financial assurance as specified in this chapter; or

015.03D2 The owner or operator is released from the requirements of this chapter in accordance with Sections 004, 006, and 008.

015.03E A local government must satisfy the requirements of the financial test at the close of each fiscal year. If the local government owner or operator no longer meets the requirements of the local government financial test it must, within 210 days following the close of the owner or operator's fiscal year, notify the Department that the owner or operator no longer meets the criteria of the financial test, obtain alternative financial assurance that meets the requirement of this chapter, provide the Department the required submissions for that assurance, and place a copy into the operating record.

015.03F The Department, based on a reasonable belief that the local government owner or operator may no longer meet the requirements of the local government financial test, may require additional reports of financial condition from the local government at any time. If Department finds, on the basis of such reports or other information, that the owner or operator no longer meets the requirements of the local government financial test, the local government must provide alternate financial assurance in accordance with this chapter.

015.04 Calculation of Costs to be Assured

The portion of the closure, post-closure and remedial actions costs for which an owner or operator can assure under this section is determined as follows:

015.04A If the local government owner or operator does not assure other environmental obligations through a financial test, it may assure closure, post-closure, and remedial action costs that equal up to forty-three percent (43%) of the local government's total annual revenue.

015.04B If the local government assures other environmental obligations through a financial test, including those associated with underground injection control facilities, petroleum underground storage tank facilities, PCB storage facilities, and hazardous waste treatment, storage and disposal facilities, it must add those costs to the closure, post-closure, and remedial action costs it seeks to assure under this section. The total that may be assured must not exceed forty-three percent (43%) of the local government's total annual revenue.

015.04C The owner or operator must obtain an alternate financial assurance instrument for those costs that exceed the limits set in Sections 015.04A and 015.04B.

132 Neb. Admin. Code, ch. 8, § 015

Amended effective 5/17/2016.