Virginia Law

A. A permit holder or applicant that satisfies the requirements of this section may demonstrate financial assurance using the local government financial test.

B. The permit holder or applicant shall satisfy the provisions of this section as applicable:

1. If the permit holder or applicant has outstanding, rated general obligation bonds that are not secured by insurance, a letter of credit, or other collateral or guarantee, he shall supply the department with documentation demonstrating that the permit holder or applicant has 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

2. If the permit holder or applicant does not have outstanding, rated general obligation bonds, he shall satisfy each of the following financial ratios based on the permit holder's or applicant's most recent audited annual financial statements:

a. A ratio of cash plus marketable securities to total expenditures greater than or equal to 0.05; and

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

C. The permit holder or applicant shall prepare his financial statements in conformity with generally accepted accounting principles for governments and have his financial statements audited by an independent certified public accountant or by the Auditor of Public Accounts.

D. A permit holder or applicant is not eligible to assure its obligations under this section if he:

1. Is currently in default on any outstanding general obligation bonds;

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

3. Operated at a deficit equal to 5.0% or more of total annual revenue in each of the past two fiscal years; or

4. Receives an adverse opinion, disclaimer of opinion, or other qualified opinion from the independent certified public accountant or Auditor of Public Accounts auditing his financial statements as required under subsection C of this section. However, the department may evaluate qualified opinions on a case-by-case basis and allow use of the financial test in cases where the department deems the qualification insufficient to warrant disallowance of the test.

E. The local government permit holder or applicant must submit to the department the following items:

1. An original letter signed by the local government's chief financial officer stating that the permit holder or applicant meets the requirements of this section;

2. 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;

3. A report of the local government from the local government's independent certified public accountant or the Auditor of Public Accounts based on performing an agreed upon procedures engagement relative to the financial ratios required by subdivision B 2 of this section, if applicable, and the requirements of this section. The certified public accountant's or state agency's report shall state the procedures performed and the certified public accountant's or state agency's findings; and

4. A copy of the comprehensive annual financial report (CAFR) used to comply with subdivision B 2 of this section.