A. Reimbursements by the Commonwealth to localities or regional jail authorities for a portion of the capital costs of a jail project, made pursuant to §§ 53.1-80, 53.1-81, 53.1-82, or § 53.1-95.19 may be effected by one of the following methods:
1. In one lump sum payment to be made upon completion of the project, for minor renovation projects, or two equal lump sum payments, one such payment to be made upon certification that the construction, enlargement or renovation is fifty percent complete and the second such payment to be made upon completion of the project, such payments to be paid by the State Treasurer out of funds appropriated to the Department of Corrections;
2. Over a specified period of time through a contractual agreement entered into by the Treasury Board and approved by the Governor, on behalf of the Commonwealth, and the locality, localities or regional authority or other combination of localities undertaking a jail project, such payments to be paid by the State Treasurer out of funds appropriated to the Treasury Board; or
3. In one lump sum payment to be made upon completion of the project by the Virginia Public Building Authority pursuant to § 2.2-2263, including the Commonwealth’s share of the interest costs expended by the locality or regional jail authority for financing such project during the period from fifty percent completion of construction to final completion of construction.
B. The General Assembly shall have the sole authority to determine whether reimbursement will be made pursuant to subdivision A 1, A 2, or A 3. The Department of Planning and Budget, after consulting with the Treasury Board, shall evaluate all proposed jail projects and make recommendations to the Governor regarding the method of reimbursement for inclusion in his biennial budget.
C. Any contract for reimbursement over a specified period of time entered into pursuant to subdivision A 2 shall include the following:
1. The Commonwealth shall reimburse a portion of financing costs as provided in subsection E below;
2. The Commonwealth’s reimbursement payments shall be subject to appropriation;
3. In the event that the jail project is financed through an issuance of securities, the Commonwealth’s reimbursement payments shall be calculated using the coupon interest rates received by the locality or jail authority at the time the securities for the project are sold and shall be made pursuant to a schedule to be set forth in the contract;
4. In the event that a jail project is financed through an issuance of securities, and coupon interest rates are not available due to the structure of the securities, the Treasury Board is authorized to make such adjustments as are necessary and reasonable to calculate the Commonwealth’s payments;
5. In the event that the jail project is financed through a method other than the issuance of securities, the Commonwealth’s payment shall include interest payments based on an interest rate assumption equal to the prevailing AA rate for tax-exempt bonds issued by the Commonwealth or agencies thereof, or the actual rate achieved, whichever is lower, and the schedule for the Commonwealth’s reimbursement payments shall be set forth in the contract; and
6. Such other terms and conditions as are necessary to specify the structure of the Commonwealth’s participation in project financing and as may be required by guidelines established by the Treasury Board. Reimbursement to localities pursuant to this section shall be available without regard to the security level of the facility constructed, enlarged or renovated, provided such facility satisfies applicable standards established by the Board pursuant to § 53.1-68.
D. For purposes of this article, “capital costs” includes, but is not limited to, actual construction costs, costs of land acquisition, if the land purchased is used exclusively for siting a jail facility, architectural and engineering fees, and fixed equipment. “Capital costs” does not include administrative costs nor a financial advisor’s, an investment banker’s, or attorneys’ fees incurred by local governments or, except in the case of minimum security facilities, loose equipment or furnishings.
E. For purposes of this article, “financing costs” means the total of all costs incurred by the locality, localities or regional authority or other combination of localities as are deemed reasonable and necessary by the Treasury Board to execute the financing of the Commonwealth’s payment of capital costs and to fund such funds and accounts as the Treasury Board determines to be reasonable and necessary.