Sec.7-572-2. Standards for certification and supervision of Tier I and Tier II municipalities

(a) Standards for Certification: Any municipality that desires to issue general obligations under Section 14 or 17 of Public Act 93-421 shall apply to the Secretary for certification. The Secretary may certify as a Tier I or Tier II municipality any municipality which applies to be certified, provided that:

(1) The municipality has a long-term bond rating from at least one bond rating agency which is investment grade or higher;

(2) The municipality is unable to secure municipal bond insurance from any bond insurance company on reasonable terms and conditions on the date the Secretary certifies such municipality;

(3) The municipality, in the case of a municipality seeking to be a Tier II municipality, has not issued a deficit obligation in the last five years and has no outstanding deficit obligations; and

(4) There is no evidence of any unsound or irregular financial practices of, or other material fiscal concerns related to, the municipality in relation to commonly accepted standards for governmental management and finance which, in the opinion of the Secretary, renders the municipality a material risk in terms of a draw upon the special capital reserve fund and a transfer from the State general fund.

(b) Recertification and Decertification: The Secretary may recertify and decertify any municipality then certified, provided the Secretary shall not automatically decertify any municipality which is able to secure bond insurance after it has been certified by the Secretary.

(c) Supervision of Tier I and Tier II Municipalities

(1) As part of a Tier I or Tier II municipality's referral to the Municipal Finance Advisory Commission (the "MFAC") in accordance with the provisions of Section 14 and 17 of the Public Act 93-421, the Secretary may direct the municipality to provide the MFAC with certain information regarding the municipality's finances and its compliance with Public Act 93-421, and require the municipality to undertake, at its own expense, any special audits that the MFAC may require in order to help minimize the possible risk with respect to a draw upon the special capital reserve fund a transfer from the State general fund. The Secretary may impose that these requirements as provided in Section 12 of Public Act 93-421, be incorporated in the indenture or other agreement between the municipality and the trustee related to the establishment of any Special Capital Reserve Fund.

(2) The ability of the Secretary to require the municipality to provide certain information to the MFAC shall in no way limit the MFAC's ability to request information from these municipalities in accordance with General Statutes.

(3) Tier II municipalities shall work with and report to the MFAC in the manner prescribed in Section 18 of Public Act 93-421.

(4) The MFAC, in addition to its other requirements and responsibilities, shall monitor a Tier II municipality's plan to eliminate any deficit.

(Effective May 3, 1994)