(a) The chief elected official of a municipality designated as a tier I municipality pursuant to section 7-576a, or the legislative body of such municipality, by majority vote, may apply to the secretary to request designation as a tier III municipality after holding at least one meeting with the Municipal Finance Advisory Commission, if the municipality (1) has an equalized mill rate that is thirty or more, or (2) received thirty per cent or more of its most recent audited financial statement revenues in the form of municipal aid from the state. Prior to submission of such request by a chief elected official, such official shall provide notice of intent to apply for such designation to the legislative body of such municipality. Such legislative body shall have forty-five days from receipt of such notice to approve or reject the chief elected official’s decision to submit such a request. If such legislative body does not approve or reject such decision during such forty-five-day period, the chief elected official’s decision to submit such request shall be deemed approved by such legislative body. Any chief elected official or legislative body that submits a request pursuant to this subsection shall provide a copy of such request to the Municipal Finance Advisory Commission not later than ten days after submitting such request. The secretary shall designate a municipality as tier III if a request for such designation has been made pursuant to this subsection, and based on reports and findings of the Municipal Finance Advisory Commission, the secretary finds that the fiscal condition of the municipality warrants such designation.

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(b) Any municipality that (1) receives a bond rating below investment grade from a rating agency, (2) issues refunding bonds that (A) have a term of more than twenty-five years, (B) do not achieve net present value savings pursuant to the provisions of section 7-370c, and (C) have annual debt service obligations associated with any existing debt and such refunding bonds in any year that are greater than the first full year debt service obligation following the issuance of such refunding bonds, or (3) issues a deficit obligation shall be designated as a tier III municipality. Any municipality that meets one or more conditions described in subdivisions (1) to (3), inclusive, of this subsection, shall notify the secretary not later than ten days after having met such condition or conditions.

(c) The Municipal Finance Advisory Commission may, after holding at least one meeting with a designated tier I municipality, recommend to the secretary that such municipality be designated as a tier III municipality. Any such recommendation shall be made on the basis of such municipality’s financial condition, which shall be documented by the commission in a report submitted to the secretary. A copy of such report shall be provided to such municipality not later than ten days after such submission. Not later than forty-five days after such submission, the secretary may approve or reject such recommendation. If the secretary does not approve or reject such recommendation during such forty-five-day period, such recommendation shall be deemed rejected.

(d) The secretary shall refer any municipality that is a designated tier III municipality to the Municipal Accountability Review Board established pursuant to the provisions of section 7-576d.