22.1-167.1 - Refunding issues; pass-through of savings realized. - Virginia Statutes

§ 22.1-167.1. Refunding issues; pass-through of savings realized.

A. In the event the Authority refunds any bonds previously issued to financethe purchase of local school bonds, the Authority shall pass-through to theissuers of such local school bonds, an allocable share of any savingsrealized. Such pass-through shall be accomplished, at the option of theAuthority, by means of a debt service reduction over the remaining term ofthe local school bonds, by a lump sum payment of the present value of suchallocable share of the savings, or by such other method as the Authorityshall determine to be in the mutual best interests of the issuers of thelocal school bonds and the Authority.

B. For the purposes of this section, "savings" means the net reduction indebt service, if any, to be realized by the Authority, after subtracting thetotal costs, expenses, and equity contributions associated with the refundingand with the pass-through of such savings to the issuers of the local schoolbonds and of any Authority funds transferred, or required to be transferred,by mandate of the General Assembly, other than to the issuers of the localschool bonds.

Notwithstanding the provisions of this section, no savings shall bepassed-through to the issuers of local school bonds for which an interestrate subsidy has been paid or which were issued at below market interestrates. The savings in connection with the refunding of bonds issued by theAuthority and allocable to local school bonds for which an interest ratesubsidy has been paid, to the extent such subsidy was paid from the LiteraryFund, shall be transferred to the Literary Fund and used exclusively forLiterary Fund loans to local school boards pursuant to Chapter 10 (§ 22.1-142et seq.) of Title 22.1.

C. This section shall have no application if it conflicts with a preexistingtrust indenture.

D. Whenever the Authority shall defease its bonds previously issued tofinance the purchase of local school bonds, the Authority may, consistentwith the provisions of this section respecting the return of savings to theissuers of the related local school bonds, designate to such issuers of localschool bonds which issues, series and maturities with which interest ratesshall be deemed by the Authority to have been paid. Immediately upon suchdesignation, the local school bonds so designated shall likewise be deemeddefeased and no longer outstanding, the same as if the defeasance hadoccurred in accordance with the provisions of § 15.2-2623. Such defeasanceshall not require any action by the issuer of the affected local schoolbonds, shall be effective immediately, and shall be duly noted on the recordsof the Authority which shall no longer have any right to payment with respectto the issues, series and maturities so deemed by the Authority to have beenpaid. The elected officials and financial officers of the affected localityare hereby authorized to execute and deliver such federal tax forms,certificates, and other documents as the Authority may request in connectionwith the defeasance of its local school bonds and the bonds of the Authority.

(1994, c. 272; 2006, c. 223.)