14-116.002: Letters of Credit
PURPOSE AND EFFECT: Rule 14-116.002, F.A.C., is being amended to clarify language and to include updated procedures, including provision for electronic presentation of a draft via facsimile transmission or electronic mail, or both.
SUMMARY: Rule 14-116.002, F.A.C., is being amended.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: No Statement of Estimated Regulatory Cost was prepared.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
SPECIFIC AUTHORITY: 334.044(2) FS.
LAW IMPLEMENTED: 334.044(30), 334.187, 337.106, 337.175 FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN FAW.
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: James C. Myers, Clerk of Agency Proceedings, Florida Department of Transportation, Office of the General Counsel, 605 Suwannee Street, Mail Station 58, Tallahassee, Florida 32399-0458
THE FULL TEXT OF THE PROPOSED RULE IS:
14-116.002 Letters of Credit.
(1) Purpose. This rule establishes the requirements of the Department of Transportation Comptroller for the approval of letters of credit, which are provided by a bank or savings association financial institution at the request of an the applicant/professional service provider/contractor.
(2) Qualifications of Banks or Savings Associations Providing Letters of Credit.
(a) The letter of credit provided by the financial institution at the request of the applicant/professional service provider/contractor shall be issued by banks or savings associations which must:
1. Be organized and existing under the laws of this state; or
2. Be organized under the laws of the United States and have its principal place of business in this state; or
3. Have a branch office which is authorized under the laws of this state or of the United States to receive deposits in this state; and
4. Have and maintain an average financial condition ranking of 35 or more from two nationally recognized financial rating services, compiled quarterly by the Florida Department of Financial Services, Division of Treasury.
(b) In the event the required average financial condition set forth in subparagraph (2)(a)4. above is and net worth of the financial institution are not maintained, the Department will shall notify the applicant/service provider/contractor of such noncompliance. Within 30 days after receiving the notice of noncompliance, the applicant/professional service provider/contractor shall provide cause to have provided to the Department a substitute letter of credit issued by a bank or savings association, with an institution meeting the requirements of this rule.
(3) Requirements of Letter of Credit. Letters of credit shall be issued solely for the benefit of the Department. Letter of credit language must be approved by the Department’s Comptroller and must include, at a minimum, the following:
(a) The expiration date of the letter of credit shall be automatically extended without amendment, for one year from the expiration date unless otherwise authorized in writing by the Department. Letters of credit furnished under the requirements of Section 337.106, F.S., shall not be required to be extended beyond the duration required by that section. If the letter of credit is not automatically extended for such additional one year period then, at least 30 days prior to the expiration date then in effect, the bank or savings association shall notify the Department by registered or certified U.S. Mail or courier, postage prepaid, return receipt requested. This notification shall be sent to the Florida Department of Transportation, Office of Comptroller, 605 Suwannee Street, Mail Station 42B 24, Tallahassee, Florida 32399-0450, or to any other address specified in writing by the Department’s Comptroller, Florida Department of Transportation.
(b) If notice is given that the letter of credit will not be automatically extended and if the purpose for which the letter of credit was issued still exists, the Department shall draw down any remaining balance on the letter of credit unless a substitute letter of credit meeting the requirements of this rule is provided at least 14 days prior to the final expiration date of the letter of credit for which the substitute letter of credit is being provided.
(c) Once it is determined by the Department that the average financial condition ranking of a bank or savings association financial institution is less than 35, the Department will notify the bank or savings association financial institution and the applicant/professional service provider/contractor by registered mail that if a substitute letter of credit is not received within 30 days of notification, the Department will shall draw down any remaining balance on the letter of credit if the purpose for which the letter of credit was issued still exists.
(d) The letter of credit must provide for draws to be made on a bank or savings association located in the State of Florida and additionally must provide for draws by electronic presentation of a draft via facsimile transmission or electronic mail, or both.
(e) Letters of credit provided in lieu of professional liability insurance must remain valid for the time period specified in Section 337.106, F.S.
Specific Authority 334.044(2) FS. Law Implemented 334.044(30), 334.187, 337.106, 337.175 FS. History–New 3-23-93, Amended 8-24-93, 10-11-94, 10-5-97, 1-18-04,________.